WELL POWER, INC

 

CONVERTIBLE DEBENTURE

 

$133,000.00 August 21, 2014

 

THIS DEBENTURE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933
(THE "ACT"} OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AS TO TIDS DEBENTURE OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

THE PRINCIPAL SUM DUE TO LENDER SHALL BE PRORATED BASED ON THE CONSIDERATION
ACTUALLY PAID BY LENDER. THE ORIGINAL ISSUE DISCOUNT IS PRORATED BASED ON THE
CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER INTEREST OR FEES.
THE BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND IS NOT REQUIRED TO
REPAY ANY UNFUNDED PORTION OF THIS NOTE.

 

FOR VALUE RECEIVED , the undersigned , Well Power, Inc, a Nevada corporation
(the "Company"), hereby promises to pay to Macallan Partners, LLC (the
"Lender"), or its registered assigns, the principal sum of ONE HUNDRED TIDRTY
THREE THOUSAND DOLLARS ($133,000.00) (or so much thereof as shall have been
advanced by the Lender to the Company hereunder subject to an approximate
Original Issue Discount of 9.77%, together with interest (computed on the basis
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months)
on the unpaid principal balance of this Debenture from the date of this
Debenture until paid, at the rate of Five percent (5%) per annum.

 

1.PAYMENT.

 

(a)                 Payments of the principal of and interest on this Debenture
shall be made in lawful money of the United States of America at the current
address of the registered holder of this Debenture as recorded in the Company's
books.

 

(b)                 Interest accruing on the outstanding principal balance of
this Debenture during the term of this Debenture shall be paid at the Maturity
Date, which shall be February 27, 2015. Upon the occurrence of any Event of
Default (as such term is defined hereinafter) and acceleration of the
indebtedness hereunder, or after the Maturity Date (including without limitation
any time from and after the entry of a judgment for sums due), any unpaid
principal of this Indenture shall bear interest at the rate of eighteen percent
(18%) per annum until paid. There shall be a 10 day grace period for payments to
be made hereunder (but interest shall be computed to the actual date of
payment).

 

 

 

(c)                 The outstanding principal balance of this Debenture,
together with all accrued but unpaid interest thereon, may be prepaid, at the
Company's option at any time prior to the Maturity Date, provided that the
Company shall give written notice of any such prepayment to the registered
holder of this Debenture no later than ten (10) days prior to the date filed for
prepayment (the "Prepayment Date"). Upon the Prepayment Date the Company shall
pay a prepayment penalty on the outstanding principal balance plus all accrued
and unpaid interest thereon and any applicable fees and expenses. (the
"Prepayment Penalty"). Upon the Prepayment Date the Company shall pay a
prepayment penalty based upon the following schedule: Ifprepayment is made
within 60 days from the date of this debenture then 125% of the outstanding
principal balance plus all accrued and unpaid interest thereon, if prepayment is
made between 61-120 days from the date of this debenture then 135% of the
outstanding principal balance plus all accrued and unpaid interest thereon, if
prepayment is made between 121-180 days from the date of this debenture then
150% of the outstanding principal balance plus all accrued and unpaid interest
thereon, (the "Prepayment"). No prepayment shall be permitted after 180 days
from the date of this debenture.

 

2.REGISTRATION AND TRANSFER.

 

(a)                 The Company shall maintain at its principal executive
offices a register for this Debenture, in which the Company shall record the
name and address of the person in whose name this Debenture has been issued and
the name and address of each transferee and prior owner thereof. The Company may
deem and treat the person in whose name this Debenture is so registered as the
holder and owner thereof for all purposes and all notices hereunder to the
registered holder may be to the address indicated on such register.

 

(b)                 This Debenture may be transferred only by the surrendering
thereof for registration of transfer duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder. The Company may
condition its registration of such transfer upon (a) the opinion of counsel
reasonably acceptable to the Company that the transfer of this Debenture does
not violate the Act or any state securities or blue sky laws, and (b) the
payment to it of a sum sufficient to cover any stamp tax or other governmental
charge imposed in respect of such transfer.

 

3.COMMON STOCK CONVERSION RIGHTS AND SHARE RESERVATION RIGHTS.

 

1.                   The Lender has the right, at any time after the Effective
Date, at its election, to convert all or part of the outstanding and unpaid
Principal Sum and accrued interest (and any other fees) under any convertible
balance due by the Company, into fully paid and non-assessable shares of common
stock of the Company as per this conversion formula: Number of shares receivable
upon conversion equals the dollar conversion amount divided by the Conversion
Price. The Conversion price is equal to 55% of the lowest traded price during
the 15 trading days prior to the election to convert. If conversion shares are
not deliverable by DWAC then an additional 5% discount will apply to the
conversion price. If the shares are ineligible for deposit into the DTC system
for any reason and only eligible for "X clearing" then an additional 10%
discount will apply to the conversion price. Notice of Lender's conversion may
be delivered to Borrower by method of Lender's choice (including but not limited
to email, facsimile, mail, overnight courier, or personal delivery), and all
conversions shall be cashless and not require further payment from the Lender.
If no objection is delivered from Borrower to Lender regarding calculations in
the conversion notice within 24 hours of delivery of the conversion notice, the
Company shall have been thereafter deemed to have irrevocably confirmed and
irrevocably ratified such conversion notice and waived any objection thereto.
The Company shall deliver the shares from any conversion to Lender (in any name
directed by Lender) within 2 (two) business days of conversion notice delivery.
At no time will the lender convert any amount of the debenture into common stock
that would result in the lender owning more than 4.99% of the company's common
stock outstanding.

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2.                   The Borrower shall irrevocably place 20,000,000 shares of
the Company's common stock on reserve with the Company's Transfer Agent to
ensure that there are sufficient shares available for the conversion of this
Debenture. So long as any of the Notes are outstanding, the Company shall take
all action necessary to reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the conversion of the
Notes, a number of shares of Common Stock equal to, at minimum, 4 times (4x) the
value of the outstanding principal and interest of the note as shall from time
to time be necessary to effect the conversion of all of the Notes then
outstanding (without regard to any limitations on conversions) (the "Required
Reserve Amount' ).

 

3.                   Insufficient Authorized Shares. If, not withstanding
Section 3(b), and not in limitation thereof, at any time while any of the Notes
remain outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Notes at least a number of shares of Common
Stock equal to the Required Reserve Amount (an "Authorized Share Failure"), then
the Company shall immediately take all action necessary to increase the
Company's authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the Notes then outstanding.
Without limiting the generality of the foregoing sentence, as soon as
practicable after the date of the occurrence of an Authorized Share Failure, but
in no event later than twenty (20) days after the occurrence of such Authorized
Share Failure, the Company shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of Common Stock. In
connection with such meeting, the Company shall provide each stockholder with a
proxy statement and shall use its reasonable best efforts to solicit its
stockholders' approval of such increase in authorized shares of Common Stock and
to cause its board of directors to recommend to the stockholders that they
approve such proposal.

 

4.                   In the event that the outstanding shares of the common
stock subject to the conversion are changed into or exchanged for a different
number or kind of shares of the Company or other securities of the Company by
reason of merger, consolidation, re capitalization, re-classification, stock
split, stock dividend or combination of shares, the Company shall make an
appropriate and equitable adjustment in the number and kind of shares as to
which the conversion shall be applicable, to the end that after such event the
Lender's proportionate interest is preserved after the occurrence of such event.

 

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5.                   If Borrower fails to deliver shares in accordance with the
timeframe stated this Section; the Lender, at any time prior to selling all of
those shares, may rescind any portion, in whole or in part, of that particular
conversion attributable to the unsold shares and have the rescinded conversion
amount returned to the Principal Sum with the rescinded conversion shares
returned to the Company (under Lender's and Borrower's expectations that any
returned conversion amounts will tack back to the original date of this
Debenture). In addition, for each conversion, in the event that shares are not
delivered by the fourth business day (inclusive of the day of conversion), a
penalty of $2,000 per day will be assessed for each day after the third business
day (inclusive of the day of the conversion) until share delivery is made; and
such penalty will be added to the Principal Sum of this Debenture (under
Lender's and Borrower's expectations that any penalty amounts will tack back to
the original date of this Debenture).

 

4.                   ADJUSTMENT FOR CAPITAL CHANGES; MERGER OR CONSOLIDATION;
NON-DILUTION PROVISIONS.

 

(a)                 In the event of a stock dividend, stock split,
recapitalization, combination, subdivision or other similar corporate change
with respect to the capital stock of the Company, the Board of Directors of the
Company shall make an appropriate and proportional adjustment in the aggregate
number of shares of Common Stock into which this Debenture is convertible and/or
the Conversion Price per share of Common Stock.

 

(b)                 If any merger or consolidation of the Company or the sale of
all or substantially all of its assets shall occur, then, as a condition to such
merger, consolidation or sale, lawful and adequate provision shall be made
whereby the registered holder of this Debenture shall thereafter have the right
to receive upon the basis and upon the terms and conditions specified herein
(including without limitation payment of the applicable Conversion Price) and in
lieu of the shares of Common Stock of the Company immediately theretofore
receivable upon conversion of this Debenture, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for such
shares of Common Stock immediately theretofore receivable by such holder had
such merger or consolidation not taken place. The Company shall not effect any
such consolidation or merger, unless prior to or simultaneously with the
consummation thereof, the successor (if other than the Company) resulting from
such consolidation or merger shall assume, by written instrument executed and
delivered to the holder, the obligation to deliver to the holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
holder may be entitled to receive.

 

(c)                 The Conversion Price shall be subject to automatic
adjustment from time to time as follows:

 

1)                   If the Company shall at any time or from time to time
hereafter issue (an "Issuance") any Common Stock, options or other securities of
the Company convertible into or exchangeable for Common Stock without
consideration or for a consideration per share less than the Conversion Price
then in effect for this Debenture immediately prior to such issuance, the
Conversion Price shall forthwith be adjusted to a price equal to:

 

(i)an amount equal to the sum of:

 

A.(i) The total number of shares of Common Stock outstanding immediately prior
to such Issuance, plus the maximum amount of all additional Common Stock
issuable upon conversion of this Debenture, multiplied by (ii) the Conversion
Price in effect immediately prior to such Issuance, and

 

B.the aggregate consideration received or receivable by the Company on account
of the Issuance, divided by

 

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(ii)the total number of shares of Common Stock outstanding immediately after the
Issuance (including for such purpose the maximum amount of additional Common
Stock issuable upon conversion of this Debenture plus the maximum amount of
Common Stock issued or issuable pursuant to the Issuance).

 

For purposes of the above calculations, the number of shares of Common Stock
outstanding immediately prior to the Issuance shall not include any additional
Common Stock issuable solely as a result of the adjustment of the Conversion
Price resulting from the application of the foregoing provisions.

 

2)                   For the purposes of any adjustment of the Conversion Price
as set forth above:

 

(i)In the case of the issuance of Common Stock for cash, the consideration shall
be deemed to be the amount of cash paid therefor.

 

(ii)In the case of the issuance of Common Stock for a consideration in whole or
in part other than cash, the consideration other than cash shall be deemed to be
the fair market value thereof, as determined in good faith by the Board of
Directors.

 

(d)                 In the event of the occurrence of any event or transaction
not specifically provided for herein that would equitably require an adjustment
to the Conversion Price to remain consistent with the anti-dilution intent and
purpose of this Article, then the Board of Directors of the Company shall make
such adjustment to the Conversion Price as they shall deem reasonable and
consistent with the intentions and purposes of this Article.

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(e)                 Upon any adjustment of the Conversion Price, the Company
shall give written notice to the registered holder of this Debenture, which
notice shall state the Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.

 

(f)                  The Company will at all times reserve and keep available
out of its authorized Common Stock, for the purpose of issuance upon conversion
of this Debenture as herein provided, the maximum number of shares of Common
Stock as shall then be issuable upon the exercise of the conversion privileges
set forth herein. The Company covenants that all shares which shall be so
issuable shall, upon the conversion of this Debenture as herein provided, be
duly and validly issued and fully paid and nonassessable by the Company.

 

5.                   EVENTS OF DEFAULT.

 

(a)                 If one or more of the following events of default shall
occur (an "Event of Default"):

 

                                                               i.      the
Company shall fail to pay any principal under this Debenture when due and
payable (or payable by conversion) thereunder; or

 

                                                              ii.      the
Company shall fail to pay any interest or any other amount under this Debenture
when due and payable (or payable by conversion) thereunder; or

 

                                                            iii.      a
receiver, trustee or other similar official shall be appointed over the Company
or a material part of its assets and such appointment shall remain uncontested
for twenty (20) days or shall not be dismissed or discharged within sixty (60)
days; or

 

                                                            iv.      the Company
shall become insolvent or generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to applicable grace
periods, if any; or

 

                                                             v.      the Company
shall make a general assignment for the benefit of creditors; or

 

                                                            vi.      the Company
shall file a petition for relief under any bankruptcy, insolvency or similar law
(domestic or foreign); or

 

                                                          vii.      an
involuntary insolvency proceeding shall be commenced or filed against the
Company; or

 

                                                         viii.      the Company
shall lose its status as "DTC Eligible" or the Company's shareholders shall lose
the ability to deposit (either electronically or by physical certificates, or
otherwise) shares into the DTC System; or the shares of the Company no longer
allow for DWAC transfer for the shares; or

 

6

 

 

                                                            ix.      the Company
shall become delinquent in its filing requirements as a fully-reporting issuer
registered with the SEC,

 

                                                             x.      the company
shall fail to maintain sufficient common shares authorized and available to
satisfy the lender's conversions for as long as this debenture remains unpaid in
whole or in part.

 

then during the continuance of any such Event of Default, the registered holder
of this Debenture may declare by written notice all the then unpaid principal
amount of this Debenture to be due and payable as if a Prepayment Penalty was to
be enforced, upon which the same shall forthwith become due and payable,
together with the interest accrued thereon, without presentation, demand,
protest or notice of dishonor, all of which the Company hereby waives. In the
event of any default, the outstanding principal amount of this Debenture, plus
accrued but unpaid interest, liquidated damages, fees and other amounts owing in
respect thereof shall be accelerated and shall become, at the Lender's election,
immediately due and payable in cash at the Mandatory Default Amount. The
Mandatory Default Amount means the greater of (i) the outstanding principal
amount of this Debenture, plus all accrued and unpaid interest, liquidated
damages, fees and other amounts hereon, divided by the Conversion Price on the
date the Mandatory Default Amount is either demanded or paid in full, whichever
has a lower Conversion Price, multiplied by the VWAP (volume weighted average
price) on the date the Mandatory Default Amount is either demanded or paid in
full, whichever has a higher VWAP, or (ii) 150% of the outstanding principal
amount of this Debenture, plus 100% of the accrued and unpaid interest,
liquidated damages, fees and other amounts hereon. Commencing five (5) days
after the occurrence of any event of default that results in the acceleration of
this Debenture, a default interest rate shall be applicable to all borrowings.
The default interest rate shall accrue at an interest rate equal to the lesser
of 18% per annum or the maximum rate permitted under applicable law. In
connection with such acceleration described herein, the Lender need not provide,
and the Company hereby waives, any presentment, demand, protest or other notice
of any kind, and the Lender may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and all other
remedies available to it under applicable law. Such acceleration may be
rescinded and annulled by Lender at any time prior to payment hereunder and the
Lender shall have all rights as a holder of the note until such time, if any, as
the Lender receives full payment pursuant to this Section 10. No such rescission
or annulment shall affect any subsequent event of default or impair any right
consequent thereon. Nothing herein shall limit Lender's right to pursue any
other remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Debenture as required pursuant to
the terms hereof.

 

(b)                 Should the indebtedness represented by this Debenture or any
part thereof be collected in any proceeding or placed in the hands of attorneys
for collection, the Company agrees to pay, in addition to the principal and
interest due and payable hereon, all costs of collecting this Debenture,
including reasonable attorneys' fees and expenses.

 

7

 

 

6.                   MISCELLANEOUS.

 

(a)                 If the date of any payment required by this Debenture be
Saturday, Sunday or a bank holiday, such payment shall be payable on the first
business day following such date.

 

(b)                 The Company hereby expressly waives presentment, demand,
protest or any other notice whatsoever.

 

(c)                 Borrower shall have the right to enter into secured or
unsecured borrowings from commercial banks and comparable commercial credit
institutions for the purpose of financing inventory and fixed assets, upon
approval of the Board of Directors of the Company ("Permitted Borrowings").
Permitted Borrowings shall not require the prior approval of the Lender. All
other borrowings by the Company shall be subject to the prior written approval
of the Lender.

 

(d)                 This Debenture shall be binding upon and shall inure to the
benefit of the parties hereto, their successors, heirs and assigns.

 

(e)                 The invalidity or partial invalidity of any provision of
this Debenture shall affect only such provision or part thereof and the balance
of this Debenture shall remain in effect.

 

(f)                  It is understood and agreed that no failure or delay in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.

 

7.                   CHOICE OF LAW & VENUE

 

(a)                 All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Any
claim or controversy arising out of or relating to the interpretation,
application or enforcement of any provision of this Agreement, shall be
submitted for resolution to a court of competent jurisdiction in New York. The
parties hereby consent to personal jurisdiction and venue in New York.

 

8

 

 

IN WITNESS WHEREOF, the Company has caused this Debenture to be executed, sealed
and delivered on the date first above written.

 

 

 

Well Power, Inc

 

 

By: /s/ Dan Patience

Name: Dan Patience

Title: President

 

 

Macallan Partners LLC.

 

 

 

By: /s/ Adam Didia

Name: Adam Didia

Title: Member

9

 

 

FINANCING AGREEMENT

 

FOR VALUE RECEIVED, Well Power, Inc, ("WPWR"), a Nevada corporation (the
"Borrower") with at least 107,000,000 common shares issued and outstanding,
promises to pay to Macallan Partners, LLC or its Assignees (the "Lender") the
Principal Sum along with the Interest and any other fees according to the terms
herein . This Agreement will become effective only upon execution by both
parties and delivery of the first payment of consideration by the Lender (the
"Effective Date").

 

The Principal Sum is $133,000 plus accrued and unpaid interest and any other
fees. The loan amount will be evidenced by a Convertible Debenture issued by the
Borrower to the Lender, including all material terms of this Agreement. The
Convertible Debenture shall be issued at an approximate 9.77% Original Issue
Discount, such that the total amount that the Lender shall provide to the
Borrower under this Agreement shall be $120,000 (the "Discounted Amount"). The
Discounted Amount shall be paid by Lender, as follows: (i) $120,000 in cash
initially, after the lender has received proof from the borrower and its
transfer agent of common shares being irrevocably placed in a reserve account
for benefit of the lender (ii) such further amounts as shall be agreed by the
Lender and the Borrower, up to the Discounted Amount. All installments shall be
payable under a full recourse Convertible Debenture(s) for $133,000 (the
"Investor Note"), subject to certain prepayment requirements, set forth below.

 

The prepayment of any amount of the Principal Sum shall be subject to a
prepayment penalty. Upon prepayment, the Company shall be required to pay the
principal amount outstanding, plus all accrued and unpaid interest plus all
expenses and fees plus a prepayment penalty as further outlined herein.

 

The Maturity Date is February 27, 2015 unless earlier converted pursuant to the
Conversion section below.

 

At no time will the Lender convert any amount of the Debenture into common stock
that would result in the Lender owning more than 4.99% of the common stock
outstanding.

 

Furthermore:

 

1.                   Prepayment Penalty. Prepayment of any amount of the
Principal Sum shall be subject to a prepayment premium. Upon prepayment, the
Borrower shall be required to pay the principal amount outstanding, plus all
accrued and unpaid interest plus all expenses and fees plus a prepayment penalty
premium. Upon the Prepayment Date the Company shall pay a prepayment penalty
based upon the following schedule: If prepayment is made within 60 days from the
date of this debenture then 125% of the outstanding principal balance plus all
accrued and unpaid interest thereon, if prepayment is made between 61-120 days
from the date of this debenture then 135% of the outstanding principal balance
plus all accrued and unpaid interest thereon, if prepayment is made between
121-180 days from the date of this debenture then 150% of the outstanding
principal balance plus all accrued and unpaid interest thereon, (the
"Prepayment"). No prepayment shall be permitted after 180 days from the date of
this debenture.

 

2.                   Conversion(s). The Lender has the right, at any time after
the Effective Date, at its election, to convert all or part of the outstanding
and unpaid Principal Sum and accrued interest (and any other fees) under any
convertible balance due by the Borrower, into fully paid and nonassessable
shares of common stock of the Borrower as per this conversion formula: Number of
shares receivable upon conversion equals the dollar conversion amount divided by
the Conversion Price. The Conversion price is equal to 55% of the lowest traded
price during the 15 trading days prior to the election to convert. Notice of
Lender's conversion may be delivered to Borrower by method of Lender's choice
(including but not limited to email, facsimile, mail, overnight courier, or
personal delivery), and all conversions shall be cashless and not require
further payment from the Lender. If no objection is delivered from Borrower to
Lender regarding calculations in the conversion notice within 24 hours of
delivery of the conversion notice, the Borrower shall have been thereafter
deemed to have irrevocably confirmed and irrevocably ratified such conversion
notice and waived any objection thereto. The Borrower shall deliver the shares
from any conversion to Lender (in any name directed by Lender) within two (2)
business days of conversion notice delivery.

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In the event that the outstanding shares of the common stock subject to the
conversion are changed into or exchanged for a different number or kind of
shares of the Borrower or other securities of the Borrower by reason of merger,
consolidation, re-capitalization , re-classification, stock split, stock
dividend or combination of shares, the Borrower shall make an appropriate and
equitable adjustment in the number and kind of shares as to which the conversion
shall be applicable, to the end that after such event the Lender's proportionate
interest is preserved after the occurrence of such event.

 

3.                   Convertible Debenture. The borrowings under this Agreement
shall be evidenced by a Convertible Debenture, in the form attached as Exhibit
A, hereto.

 

4.                   Conversion Delays. If Borrower fails to deliver shares in
accordance with the timeframe stated in Section 2; the Lender, at any time prior
to selling all of those shares, may rescind any portion, in whole or in part, of
that particular conversion attributable to the unsold shares and have the
rescinded conversion amount returned to the Principal Sum with the rescinded
conversion shares returned to the Borrower (under Lender's and Borrower's
expectations that any returned conversion amounts will tack back to the original
date of the Debenture). In addition, for each conversion, i n the event that
shares are not delivered by the fourth business day (inclusive of the day of
conversion), a penalty of $2,000 per day will be assessed for each day after the
third business day (inclusive of the day of the conversion) until share delivery
is made; and such penalty will be added to the Principal Sum of the Debenture
(under Lender's and Borrower' s expectations that any penalty amounts will tack
back to the original date of the Debenture).

 

5.                   Notification about balance of Authorized Shares. During the
course of this Agreement, the Borrower will notify the Lender if the balance of
the unissued authorized shares falls below 15% of the authorized shares limit
and if so, the Lender has the right to suspend its impending installments until
more shares are authorized to accommodate further conversions.

 

6.                   Terms of Future Financings. So long as the Debenture is
outstanding, upon any issuance by the Borrower or any of its subsidiaries of any
security with any term more favorable to the holder of such security or with a
term in favor of the holder of such security that was not similarly provided to
the Lender in the Debenture, then the Borrower shall notify the Lender of such
additional or more favorable term and such term, at Lender's option, shall
become a part of the transaction documents with the Lender. The types of terms
contained in another security that may be more favorable to the holder of such
security include, but are not limited to, terms addressing conversion discounts.

 

During the course of this agreement, the Borrower must notify the lender if any
of these conditions occur:

 

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        I.            If conversion shares are not deliverable by DWAC.

      II.            If the shares are ineligible for deposit into the DTC
system and only eligible for Xclearing deposit.

 

7.                   Default. The following are events of default under the
Debenture and this Agreement: (i) the Borrower shall fail to pay any principal
under the Debenture when due and payable (or payable by conversion) thereunder;
or (ii) the Borrower shall fail to pay any interest or any other amount under
the Debenture when due and payable (or payable by conversion) thereunder; or
(iii) a receiver, trustee or other similar official shall be appointed over the
Borrower or a material part of its assets and such appointment shall remain
uncontested for twenty (20) days or shall not be dismissed or discharged within
sixty (60) days; or (iv) the Borrower shall become insolvent or generally fails
to pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any; or (v) the Borrower shall make a
general assignment for the benefit of creditors; or (vi) the Borrower shall file
a petition for relief under any bankruptcy , insolvency or similar law (domestic
or foreign); or (vii) an involuntary insolvency proceeding shall be commenced or
filed against the Borrower; or (viii) the Borrower shall lose its status as "OTC
Eligible" or the borrower's shareholders shall lose the ability to deposit
(either electronically or by physical certificates, or otherwise) shares into
the DTC System; or the shares of the Borrower no longer allow for OWAC transfer
for the shares; or (ix) the Borrower shall become delinquent in its filing
requirements as a fully-reporting issuer registered with the SEC; or (x) the
borrower shall fail to maintain sufficient common shares authorized and
available to satisfy the lender's conversions for as long as this debenture
remains unpaid in whole or in part.

 

8.                   Remedies. In the event of any default, the outstanding
principal amount of the Debenture, plus accrued but unpaid interest, liquidated
damages, fees and other amounts owing in respect thereof shall be accelerated
and shall become, at the Lender's election, immediately due and payable in cash
at the Mandatory Default Amount. The Mandatory Default Amount means the greater
of (i) the outstanding principal amount of the Debenture, plus all accrued and
unpaid interest, liquidated damages, fees and other amounts hereon, divided by
the Conversion Price on the date the Mandatory Default Amount is either demanded
or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP
(volume weighted average price) on the date the Mandatory Default Amount is
either demanded or paid in full, whichever has a higher VWAP, or (ii) 150% of
the outstanding principal amount of the Debenture, plus 100% of the accrued and
unpaid interest, liquidated damages, fees and other amounts hereon. Commencing
five (5) days after the occurrence of any event of default that results in the
acceleration of the Debenture, a default interest rate shall be applicable to
all borrowings. The default interest rate shall accrue at an interest rate equal
to the lesser of 18% per annum or the maximum rate permitted under applicable
law. In connection with such acceleration described herein, the Lender need not
provide, and the Borrower hereby waives, any presentment, demand, protest or
other notice of any kind, and the Lender may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such acceleration may
be rescinded and annulled by Lender at any time prior to payment hereunder and
the Lender shall have all rights as a holder of the note until such time, if
any, as the Lender receives full payment pursuant to this Section 10. No such
rescission or annulment shall affect any subsequent event of default or impair
any right consequent thereon. Nothing herein shall limit Lender's right to
pursue any other remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Borrower's failure to timely deliver certificates representing
shares of Common Stock upon conversion of the Debenture as required pursuant to
the terms hereof.

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9.                   No Short Selling. Lender must agree that as long as the
Debenture from Borrower to Lender remains outstanding, Lender will not short
sell the Common Stock or hedge the transaction which establishes a net short
position with respect to the Common Stock of Borrower. Borrower agrees that upon
delivery of a conversion notice by Lender, Lender will own the shares of Common
Stock described in the conversion notice and any sale of those shares issuable
under such conversion notice would not be considered a short sale.

 

10.                Assignability. The Borrower may not assign the Debenture. The
Debenture is binding upon the Borrower and its successors and will inure to the
benefit of the Lender and its successors and assigns and may be assigned by the
Lender to anyone of its choosing without Borrower's approval.

 

11.                Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to the conflict of laws principles thereof. Any action brought by
either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts for located in New York. Both parties and the individuals signing
this Agreement agree to submit to the jurisdiction of such courts.

 

12.                Delivery of Process by Lender to Borrower. In the event of
any action or proceeding by Lender against Borrower, and only by Lender against
Borrower, service of copies of summons and/or complaint and/or any other process
which may be served in any such action or proceeding may be made by Lender via
U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or
process server, or by mailing or otherwise delivering a copy of such process to
the Borrower at its last known attorney as set forth in its most recent SEC
filing.

 

13.                Attorney Fees. In the event any attorney is employed by
either party to the Debenture with regard to any legal or equitable action,
arbitration or other proceeding brought by such party for the enforcement of the
Debenture or because of an alleged dispute, breach, default or misrepresentation
in connection with any of the provisions of the Debenture, the prevailing party
in such proceeding will be entitled to recover from the other party reasonable
attorneys' fees and other costs and expenses incurred, in addition to any other
relief to which the prevailing party may be entitled. In connection with the
issuance of the Convertible Debenture, the Borrower shall pay attorney fees
incurred by the Lender of $5,000. Borrower shall also be responsible for payment
of banking fees as agreed with the investment banker.

 

14.                Permitted Borrowings. Borrower shall have the right to enter
into secured or unsecured borrowings from commercial banks and comparable
commercial credit institutions for the purpose of financing inventory and fixed
assets, upon approval of the Board of Directors of the Borrower ("Permitted
Borrowings"). Permitted Borrowings shall not require the prior approval of the
Lender. All other borrowings by the Borrower shall be subject to the prior
written approval of the Lender.

 

15.                Opinion of Counsel. In the event that an opinion of counsel
is needed for any matter related to the Debenture, Lender has the right to have
any such opinion provided by its counsel. Lender also has the right to have any
such opinion provided by Borrower's counsel.

 

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16.                Notices. Any notice required or permitted hereunder
(including Conversion Notices) must be in writing and either personally served,
sent by facsimile or email transmission, or sent by overnight courier. Notices
will be deemed effectively delivered at the time of transmission if by facsimile
or email, and if by overnight courier the business day after such notice is
deposited with the courier service for delivery.

 

 

The Borrower

 

 

 

/s/ Dan Patience

Well Power, Inc.

The Lender

 

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