Exhibit 10.6

THIS SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF A CONVERTIBLE NOTE (THE
“NOTE”) IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS
DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE “1933 ACT”).

THE NOTE TO WHICH THIS SUBSCRIPTION AGREEMENT (THE “SUBSCRIPTION AGREEMENT”)
RELATES HAS NOT BEEN REGISTERED UNDER THE  1933 ACT, OR ANY U.S. STATE
SECURITIES LAWS, AND, UNLESS SO REGISTERED, IT MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE NOTE MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.   "UNITED STATES" AND
"U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

SUBSCRIPTION AGREEMENT

(Offshore Subscribers)

 

TO:         Toron Inc. (the “Company”)
a company with offices at 1000 de La Gauchetiere Street West – 24th Floor,
Montreal, Quebec

Purchase of Convertible Note

1.                                           SUBSCRIPTION AND USE OF PROCEEDS

1.1                                        ON THE BASIS OF THE REPRESENTATIONS
AND WARRANTIES AND SUBJECT TO THE TERMS AND CONDITIONS SET FORTH HEREIN, XXXXXXX
(THE “SUBSCRIBER”) HEREBY IRREVOCABLY SUBSCRIBES FOR AND AGREES TO PURCHASE ONE
CONVERTIBLE NOTE (THE “NOTE”) FROM THE COMPANY FOR AN AGGREGATE PURCHASE PRICE
OF $XXXX.XX (THE “SUBSCRIPTION PROCEEDS”), SUBSTANTIALLY IN THE FORM ATTACHED TO
THIS SUBSCRIPTION AGREEMENT AS EXHIBIT “A” (THE SUBSCRIPTION AND AGREEMENT TO
PURCHASE BEING THE “SUBSCRIPTION”).   

1.2                                        ON THE BASIS OF THE REPRESENTATIONS
AND WARRANTIES AND SUBJECT TO THE TERMS AND CONDITIONS SET FORTH HEREIN, THE
COMPANY HEREBY IRREVOCABLY AGREES TO SELL THE NOTE TO THE SUBSCRIBER.

1.3                                        SUBJECT TO THE TERMS HEREOF, THE
SUBSCRIPTION WILL BE EFFECTIVE UPON ITS ACCEPTANCE BY THE COMPANY.

1.4                                        UNLESS OTHERWISE PROVIDED, ALL DOLLAR
AMOUNTS REFERRED TO IN THIS SUBSCRIPTION AGREEMENT ARE IN LAWFUL MONEY OF THE
UNITED STATES OF AMERICA.

2.                                           PAYMENT 

2.1                                        THE SUBSCRIPTION PROCEEDS PERTAINING
TO THE PURCHASE OF THE NOTE SHALL BE PAID ON OR BEFORE THE CLOSING DATE (AS
DEFINED IN SECTION 4.1, BELOW) BY CHEQUE OR WIRE TRANSFER TO THE COMPANY.

 

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3.                                           DOCUMENTS REQUIRED FROM SUBSCRIBER

3.1                                        THE SUBSCRIBER MUST:

                                (A)           COMPLETE, SIGN AND RETURN TO THE
COMPANY AN EXECUTED COPY OF THIS SUBSCRIPTION
                                                                             
AGREEMENT PRIOR TO THE CLOSING DATE; AND,

(B)           COMPLETE, SIGN AND RETURN TO THE COMPANY AS SOON AS POSSIBLE, ON
REQUEST BY THE COMPANY, ANY DOCUMENTS, QUESTIONNAIRES, NOTICES AND UNDERTAKINGS
AS MAY BE REQUIRED BY REGULATORY AUTHORITIES AND APPLICABLE LAW

(COLLECTIVELY THE “TRANSACTION DOCUMENTS.”) 

4.                                           CLOSING 

4.1                                        THERE SHALL BE NO FORMAL CLOSING
CEREMONY WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
INSTEAD, THE PARTIES SHALL EXECUTE AND EXCHANGE THE TRANSACTION DOCUMENTS BY
FACSIMILE AND EMAIL AND THE CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT SHALL BE DEEMED TO HAVE OCCURRED (THE "CLOSING") ON THE DATE (THE
"CLOSING DATE") THAT THE COMPANY RECEIVES THE SUBSCRIPTION PROCEEDS IN FULL.
THERE MAY BE MULTIPLE CLOSINGS

5.                                           ACKNOWLEDGEMENTS OF SUBSCRIBER

5.1                                        THE SUBSCRIBER ACKNOWLEDGES AND
AGREES THAT:

(A)                 NEITHER THE NOTE NOR THE SHARES OF COMMON STOCK (“SHARES”)
THAT MAY BE ISSUED UPON A CONVERSION OF THE NOTE (THE NOTE AND THE SHARES MAY BE
HEREINAFTER REFERRED TO COLLECTIVELY AS THE “SECURITIES”) HAVE BEEN OR WILL BE
REGISTERED UNDER THE 1933 ACT, OR UNDER ANY STATE SECURITIES OR “BLUE SKY” LAWS
OF ANY STATE OF THE UNITED STATES, AND, UNLESS SO REGISTERED, NONE OF THEM MAY
BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO A U.S.
PERSON, AS THAT TERM IS DEFINED IN REGULATION S UNDER THE 1933 ACT (“REGULATION
S”), EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS;

(B)                 THE COMPANY HAS NOT UNDERTAKEN TO, AND WILL HAVE NO
OBLIGATION TO, REGISTER THE SECURITIES, OR ANY OF THEM, UNDER THE 1933 ACT;

(C)                 IT HAS RECEIVED AND CAREFULLY READ THIS SUBSCRIPTION
AGREEMENT;

(D)                 THE DECISION TO EXECUTE THIS SUBSCRIPTION AGREEMENT AND
ACQUIRE THE NOTE HEREUNDER HAS NOT BEEN BASED UPON ANY ORAL OR WRITTEN
REPRESENTATION AS TO FACT OR OTHERWISE MADE BY OR ON BEHALF OF THE COMPANY, AND
SUCH DECISION IS BASED ENTIRELY UPON A REVIEW OF INFORMATION (THE ADEQUACY OF
WHICH IS HEREBY ACKNOWLEDGED) ABOUT THE COMPANY THAT IS AVAILABLE TO ANY MEMBER
OF THE PUBLIC ON THE EDGAR DATABASE MAINTAINED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION (THE “SEC”) AT WWW.SEC.GOV;

(E)                 THERE ARE RISKS ASSOCIATED WITH AN INVESTMENT IN THE COMPANY
INCLUDING, BY WAY OF EXAMPLE AND NOT IN LIMITATION, THE SPECIFIC RISKS
IDENTIFIED IN THE COMPANY’S MOST RECENT PERIODIC REPORTS FILED WITH THE SEC AND
AVAILABLE FOR VIEWING AT THE SEC’S WEBSITE AT WWW.SEC.GOV;

(F)                  IT AND ITS ADVISOR(S) HAVE HAD A REASONABLE OPPORTUNITY TO
ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY IN CONNECTION WITH THE
SALE OF THE NOTE HEREUNDER, AND TO OBTAIN ADDITIONAL INFORMATION, TO THE EXTENT
POSSESSED OR OBTAINABLE BY THE COMPANY WITHOUT UNREASONABLE EFFORT OR EXPENSE;

 

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(G)                 ALL INFORMATION WHICH THE SUBSCRIBER HAS PROVIDED TO THE
COMPANY IS CORRECT AND COMPLETE AS OF THE DATE THE SUBSCRIPTION AGREEMENT IS
SIGNED, AND IF THERE SHOULD BE ANY CHANGE IN SUCH INFORMATION PRIOR TO THIS
SUBSCRIPTION AGREEMENT BEING EXECUTED BY THE COMPANY, THE SUBSCRIBER WILL
IMMEDIATELY PROVIDE THE COMPANY WITH SUCH INFORMATION;

(H)                 THE COMPANY IS ENTITLED TO RELY ON THE REPRESENTATIONS AND
WARRANTIES OF THE SUBSCRIBER CONTAINED IN THIS SUBSCRIPTION AGREEMENT AND THE
SUBSCRIBER WILL HOLD THE COMPANY HARMLESS FROM ANY LOSS OR DAMAGE IT MAY SUFFER
AS A RESULT OF THE SUBSCRIBER’S FAILURE TO CORRECTLY COMPLETE THIS SUBSCRIPTION
AGREEMENT;

(I)                   THE SUBSCRIBER HAS BEEN ADVISED TO CONSULT THE
SUBSCRIBER’S OWN LEGAL, TAX AND OTHER ADVISORS WITH RESPECT TO THE MERITS AND
RISKS OF AN INVESTMENT IN THE SECURITIES AND WITH RESPECT TO APPLICABLE RESALE
RESTRICTIONS, AND IT IS SOLELY RESPONSIBLE (AND THE COMPANY IS NOT IN ANY WAY
RESPONSIBLE) FOR COMPLIANCE WITH:

(I)                   ANY APPLICABLE LAWS OF THE JURISDICTION IN WHICH THE
SUBSCRIBER IS RESIDENT IN CONNECTION WITH THE DISTRIBUTION OF THE SECURITIES
HEREUNDER, AND

(II)                 APPLICABLE RESALE RESTRICTIONS;

(J)                  NONE OF THE SECURITIES ARE LISTED ON ANY STOCK EXCHANGE OR
AUTOMATED DEALER QUOTATION SYSTEM AND NO REPRESENTATION HAS BEEN MADE TO THE
SUBSCRIBER THAT ANY OF THE SECURITIES WILL BECOME LISTED ON ANY STOCK EXCHANGE
OR AUTOMATED DEALER QUOTATION SYSTEM, EXCEPT THAT CURRENTLY CERTAIN MARKET
MAKERS MAKE MARKET IN THE SHARES OF THE COMPANY ON THE OTC BULLETIN BOARD
OPERATED BY THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (“FINRA”);

(K)                 NONE OF THE SECURITIES MAY BE OFFERED OR SOLD BY THE
SUBSCRIBER TO A U.S. PERSON (AS DEFINED IN SECTION 6.2, BELOW, OR FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON (OTHER THAN A DISTRIBUTOR) PRIOR TO THE END
OF THE DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED HEREIN);

(L)                   THE SUBSCRIBER IS NOT ACQUIRING THE NOTE AS A RESULT OF,
AND WILL NOT ITSELF ENGAGE IN, ANY “DIRECTED SELLING EFFORTS” (AS THAT TERM IS
DEFINED IN REGULATION S UNDER THE 1933 ACT) IN THE UNITED STATES IN RESPECT OF
THE SECURITIES WHICH WOULD INCLUDE ANY ACTIVITIES UNDERTAKEN FOR THE PURPOSE OF,
OR THAT COULD REASONABLY BE EXPECTED TO HAVE THE EFFECT OF, CONDITIONING THE
MARKET IN THE UNITED STATES FOR THE RESALE OF ANY OF THE SECURITIES; PROVIDED,
HOWEVER, THAT THE SUBSCRIBER MAY SELL OR OTHERWISE DISPOSE OF THE SECURITIES
PURSUANT TO REGISTRATION THEREOF UNDER THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNDER AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS;

(M)               THE COMPANY WILL REFUSE TO REGISTER ANY TRANSFER OF THE
SECURITIES NOT MADE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN
EACH CASE IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS;

(N)                 NEITHER THE SEC NOR ANY OTHER SECURITIES COMMISSION OR
SIMILAR REGULATORY AUTHORITY HAS REVIEWED OR PASSED ON THE MERITS OF THE
SECURITIES;

(O)                 NO DOCUMENTS IN CONNECTION WITH THE SALE OF THE NOTE
HEREUNDER HAVE BEEN REVIEWED BY THE SEC OR ANY STATE SECURITIES ADMINISTRATORS;

(P)                 THERE IS NO GOVERNMENT OR OTHER INSURANCE COVERING ANY OF
THE SECURITIES;

(Q)                 THE ISSUANCE AND SALE OF THE SECURITIES TO THE SUBSCRIBER
WILL NOT BE COMPLETED IF IT WOULD BE UNLAWFUL OR IF, IN THE DISCRETION OF THE
COMPANY ACTING REASONABLY, IT IS NOT IN THE BEST INTERESTS OF THE COMPANY;

 

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(R)                  THE SUBSCRIBER IS PURCHASING THE SECURITIES PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION AND THE PROSPECTUS REQUIREMENTS OF APPLICABLE
SECURITIES LEGISLATION ON THE BASIS THAT THE SUBSCRIBER IS NOT A RESIDENT OF
EITHER THE UNITED STATES OR CANADA AND, AS A CONSEQUENCE:

(I)                   IS RESTRICTED FROM USING MOST OF THE CIVIL REMEDIES
AVAILABLE UNDER SECURITIES LEGISLATION,

(II)                 MAY NOT RECEIVE INFORMATION THAT WOULD OTHERWISE BE
REQUIRED TO BE PROVIDED UNDER SECURITIES LEGISLATION, AND

(III)                THE COMPANY IS RELIEVED FROM CERTAIN OBLIGATIONS THAT WOULD
OTHERWISE APPLY UNDER SECURITIES LEGISLATION; AND

(S)                  THE STATUTORY AND REGULATORY BASIS FOR THE EXEMPTION FROM
U.S. REGISTRATION REQUIREMENTS CLAIMED FOR THE OFFER OF THE NOTE, ALTHOUGH IN
TECHNICAL COMPLIANCE WITH REGULATION S, WOULD NOT BE AVAILABLE IF THE OFFERING
IS PART OF A PLAN OR SCHEME TO EVADE THE REGISTRATION PROVISIONS OF THE 1933 ACT
OR ANY APPLICABLE STATE SECURITIES LAWS; .

6.                                           REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE SUBSCRIBER

6.1                                        THE SUBSCRIBER HEREBY REPRESENTS AND
WARRANTS TO AND COVENANTS WITH THE COMPANY (WHICH REPRESENTATIONS, WARRANTIES
AND COVENANTS SHALL SURVIVE THE CLOSING), AND ACKNOWLEDGES THAT THE COMPANY IS
RELYING THEREON, THAT:

(A)                 THE SUBSCRIBER IS NOT A U.S. PERSON AS THAT TERM IS DEFINED
IN REGULATION S;

(B)                 THE SUBSCRIBER IS NOT ACQUIRING THE NOTE FOR THE ACCOUNT OR
BENEFIT OF, DIRECTLY OR INDIRECTLY, ANY U.S. PERSON AS THAT TERM IS DEFINED IN
REGULATION S;

(C)                 THE SUBSCRIBER IS RESIDENT IN THE JURISDICTION SET OUT UNDER
THE HEADING “NAME AND ADDRESS OF SUBSCRIBER” ON THE SIGNATURE PAGE OF THIS
SUBSCRIPTION AGREEMENT AND THE SALE OF THE SECURITIES TO THE SUBSCRIBER AS
CONTEMPLATED IN THIS SUBSCRIPTION AGREEMENT COMPLIES WITH OR IS EXEMPT FROM THE
APPLICABLE SECURITIES LEGISLATION OF THE JURISDICTION OF RESIDENCE OF THE
SUBSCRIBER; 

(D)                 THE SUBSCRIBER HAS THE LEGAL CAPACITY AND COMPETENCE TO
ENTER INTO AND EXECUTE THIS SUBSCRIPTION AGREEMENT AND TO TAKE ALL ACTIONS
REQUIRED PURSUANT HERETO AND, IF THE SUBSCRIBER IS A CORPORATION, IT IS DULY
INCORPORATED AND VALIDLY SUBSISTING UNDER THE LAWS OF ITS JURISDICTION OF
INCORPORATION AND ALL NECESSARY APPROVALS BY ITS DIRECTORS, SHAREHOLDERS AND
OTHERS HAVE BEEN OBTAINED TO AUTHORIZE EXECUTION AND PERFORMANCE OF THIS
SUBSCRIPTION AGREEMENT ON BEHALF OF THE SUBSCRIBER;

(E)                 IF THE SUBSCRIBER IS A CORPORATION OR OTHER ENTITY, THE
ENTERING INTO OF THIS SUBSCRIPTION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY DO NOT AND WILL NOT RESULT IN THE VIOLATION OF ANY OF THE TERMS AND
PROVISIONS OF ANY LAW APPLICABLE TO, OR THE CONSTATING DOCUMENTS OF, THE
SUBSCRIBER OR OF ANY AGREEMENT, WRITTEN OR ORAL, TO WHICH THE SUBSCRIBER MAY BE
A PARTY OR BY WHICH THE SUBSCRIBER IS OR MAY BE BOUND;

(F)                  THE SUBSCRIBER HAS DULY EXECUTED AND DELIVERED THIS
SUBSCRIPTION AGREEMENT AND UPON ACCEPTANCE THEREOF BY THE COMPANY IT WILL
CONSTITUTES A VALID AND BINDING AGREEMENT OF THE SUBSCRIBER ENFORCEABLE AGAINST
THE SUBSCRIBER IN ACCORDANCE WITH ITS TERMS;

(G)                 THE SUBSCRIBER IS ACQUIRING THE SECURITIES AS PRINCIPAL FOR
ITS OWN ACCOUNT FOR INVESTMENT PURPOSES ONLY AND NOT FOR THE ACCOUNT OF ANY
OTHER PERSON AND NOT FOR DISTRIBUTION, ASSIGNMENT OR RESALE TO OTHERS, AND NO
OTHER PERSON HAS A DIRECT OR INDIRECT BENEFICIAL INTEREST IN SUCH SECURITIES,
AND IT HAS NOT SUBDIVIDED ITS INTEREST IN THE SECURITIES WITH ANY OTHER PERSON;

 

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(H)                 THE SUBSCRIBER IS OUTSIDE THE UNITED STATES WHEN RECEIVING
AND EXECUTING THIS SUBSCRIPTION AGREEMENT AND IS ACQUIRING THE NOTE AS PRINCIPAL
FOR THE SUBSCRIBER’S OWN ACCOUNT FOR INVESTMENT PURPOSES ONLY, AND NOT WITH A
VIEW TO, OR FOR, RESALE, DISTRIBUTION OR FRACTIONALISATION THEREOF, IN WHOLE OR
IN PART, AND NO OTHER PERSON HAS A DIRECT OR INDIRECT BENEFICIAL INTEREST IN THE
SECURITIES;

(I)                   THE SUBSCRIBER IS AWARE THAT AN INVESTMENT IN THE COMPANY
IS SPECULATIVE AND INVOLVES CERTAIN RISKS, INCLUDING THE POSSIBLE LOSS OF THE
ENTIRE INVESTMENT AND IT HAS CAREFULLY READ AND CONSIDERED THE MATTERS SET FORTH
UNDER THE HEADING “RISK FACTORS” APPEARING IN THE COMPANY’S FORMS 10-K, 10-Q,
8-K AND ANY OTHER FILINGS FILED WITH THE SEC;

(J)                  THE SUBSCRIBER HAS MADE AN INDEPENDENT EXAMINATION AND
INVESTIGATION OF AN INVESTMENT IN THE SECURITIES AND THE COMPANY AND HAS
DEPENDED ON THE ADVICE OF ITS LEGAL AND FINANCIAL ADVISORS AND AGREES THAT THE
COMPANY WILL NOT BE RESPONSIBLE IN ANY WAY WHATSOEVER FOR THE SUBSCRIBER’S
DECISION TO INVEST IN THE SECURITIES AND THE COMPANY;

(K)                 THE SUBSCRIBER (I) HAS ADEQUATE NET WORTH AND MEANS OF
PROVIDING FOR ITS CURRENT FINANCIAL NEEDS AND POSSIBLE PERSONAL CONTINGENCIES,
(II) HAS NO NEED FOR LIQUIDITY IN THIS INVESTMENT, AND (III) IS ABLE TO BEAR THE
ECONOMIC RISKS OF AN INVESTMENT IN THE SECURITIES FOR AN INDEFINITE PERIOD OF
TIME;

(L)                   THE SUBSCRIBER UNDERSTANDS AND AGREES THAT THE COMPANY AND
OTHERS WILL RELY UPON THE TRUTH AND ACCURACY OF THE ACKNOWLEDGEMENTS,
REPRESENTATIONS AND AGREEMENTS CONTAINED IN THIS SUBSCRIPTION AGREEMENT AND
AGREES THAT IF ANY OF SUCH ACKNOWLEDGEMENTS, REPRESENTATIONS AND AGREEMENTS ARE
NO LONGER ACCURATE OR HAVE BEEN BREACHED, THE SUBSCRIBER SHALL PROMPTLY NOTIFY
THE COMPANY;

(M)               THE SUBSCRIBER HAS THE LEGAL CAPACITY AND COMPETENCE TO ENTER
INTO AND EXECUTE THIS SUBSCRIPTION AGREEMENT AND TO TAKE ALL ACTIONS REQUIRED
PURSUANT HERETO;

(N)                 THE SUBSCRIBER HAS DULY EXECUTED AND DELIVERED THIS
SUBSCRIPTION AGREEMENT AND IT CONSTITUTES A VALID AND BINDING AGREEMENT OF THE
SUBSCRIBER ENFORCEABLE AGAINST THE SUBSCRIBER IN ACCORDANCE WITH ITS TERMS;

(O)                 THE SUBSCRIBER IS NOT AN UNDERWRITER OF, OR DEALER IN, THE
COMPANY’S SHARES, NOR IS THE SUBSCRIBER PARTICIPATING, PURSUANT TO A CONTRACTUAL
AGREEMENT OR OTHERWISE, IN THE DISTRIBUTION OF ANY OF THE SHARES;

(P)                 THE SUBSCRIBER IS NOT AN UNDERWRITER OF, OR DEALER IN, THE
COMPANY’S SHARES, NOR IS THE SUBSCRIBER PARTICIPATING, PURSUANT TO A CONTRACTUAL
AGREEMENT OR OTHERWISE, IN THE DISTRIBUTION OF ANY OF THE SECURITIES;

(Q)                 THE SUBSCRIBER UNDERSTANDS AND AGREES THAT OFFERS AND SALES
OF ANY OF THE SECURITIES PRIOR TO THE EXPIRATION OF RESTRICTED PERIOD AFTER THE
DATE OF ORIGINAL ISSUANCE OF THE SECURITIES (THE SIX MONTH PERIOD HEREINAFTER
REFERRED TO AS THE “DISTRIBUTION COMPLIANCE PERIOD”) SHALL ONLY BE MADE IN
COMPLIANCE WITH THE SAFE HARBOR PROVISIONS SET FORTH IN REGULATION S, PURSUANT
TO THE REGISTRATION PROVISIONS OF THE 1933 ACT OR AN EXEMPTION THEREFROM, AND
THAT ALL OFFERS AND SALES AFTER THE DISTRIBUTION COMPLIANCE PERIOD SHALL BE MADE
ONLY IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE 1933 ACT OR AN
EXEMPTION THEREFROM AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS;

(R)                  THE SUBSCRIBER AGREES NOT TO ENGAGE IN ANY HEDGING
TRANSACTIONS INVOLVING ANY OF THE SECURITIES UNLESS SUCH TRANSACTIONS ARE IN
COMPLIANCE WITH THE PROVISIONS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS;

 

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(S)                  THE SUBSCRIBER (I) IS ABLE TO FEND FOR ITSELF IN THE
SUBSCRIPTION; (II) HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS
MATTERS AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF ITS INVESTMENT IN
THE SECURITIES AND THE COMPANY; AND (III) HAS THE ABILITY TO BEAR THE ECONOMIC
RISKS OF ITS PROSPECTIVE INVESTMENT AND CAN AFFORD THE COMPLETE LOSS OF SUCH
INVESTMENT;

(T)                  THE SUBSCRIBER WILL INDEMNIFY THE COMPANY AGAINST, AND WILL
HOLD THE COMPANY AND, WHERE APPLICABLE, ITS RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ADVISORS AND SHAREHOLDERS HARMLESS FROM, ANY AND ALL LOSS,
LIABILITY, CLAIM, DAMAGE AND EXPENSE WHATSOEVER (INCLUDING, BUT NOT LIMITED TO,
ANY AND ALL FEES, COSTS AND EXPENSES WHATSOEVER REASONABLY INCURRED IN
INVESTIGATING, PREPARING OR DEFENDING AGAINST ANY CLAIM, LAWSUIT, ADMINISTRATIVE
PROCEEDING OR INVESTIGATION WHETHER COMMENCED OR THREATENED) ARISING OUT OF OR
BASED UPON ANY REPRESENTATION OR WARRANTY OF THE SUBSCRIBER CONTAINED HEREIN OR
IN ANY DOCUMENT FURNISHED BY THE SUBSCRIBER TO THE COMPANY IN CONNECTION
HEREWITH BEING UNTRUE IN ANY MATERIAL RESPECT OR ANY BREACH OR FAILURE BY THE
SUBSCRIBER TO COMPLY WITH ANY COVENANT OR AGREEMENT MADE BY THE SUBSCRIBER TO
THE COMPANY IN CONNECTION THEREWITH;

(U)                 THE SUBSCRIBER IS NOT AWARE OF ANY ADVERTISEMENT OF ANY OF
THE SECURITIES AND IS NOT ACQUIRING THE SECURITIES AS A RESULT OF ANY FORM OF
GENERAL SOLICITATION OR GENERAL ADVERTISING INCLUDING ADVERTISEMENTS, ARTICLES,
NOTICES OR OTHER COMMUNICATIONS PUBLISHED IN ANY NEWSPAPER, MAGAZINE OR SIMILAR
MEDIA OR BROADCAST OVER RADIO OR TELEVISION, OR ANY SEMINAR OR MEETING WHOSE
ATTENDEES HAVE BEEN INVITED BY GENERAL SOLICITATION OR GENERAL ADVERTISING; AND

(V)                 NO PERSON HAS MADE TO THE SUBSCRIBER ANY WRITTEN OR ORAL
REPRESENTATIONS:

(I)                   THAT ANY PERSON WILL RESELL OR REPURCHASE ANY OF THE
SECURITIES,

(II)                 THAT ANY PERSON WILL REFUND THE PURCHASE PRICE OF ANY OF
THE SECURITIES,

(III)                AS TO THE FUTURE PRICE OR VALUE OF ANY OF THE SECURITIES,
OR

(IV)               THAT ANY OF THE SECURITIES WILL BE LISTED AND POSTED FOR
TRADING ON ANY STOCK EXCHANGE OR AUTOMATED DEALER QUOTATION SYSTEM OR THAT
APPLICATION HAS BEEN MADE TO LIST AND POST ANY OF THE SECURITIES OF THE COMPANY
ON ANY STOCK EXCHANGE OR AUTOMATED DEALER QUOTATION SYSTEM, EXCEPT THAT
CURRENTLY THE COMPANY’S COMMON SHARES ARE QUOTED ON THE OVER-THE-COUNTER MARKET
OPERATED BY THE OVER-THE-COUNTER BULLETIN BOARD OPERATED BY FINRA.

6.2                                        IN THIS SUBSCRIPTION AGREEMENT, THE
TERM “U.S. PERSON” SHALL HAVE THE MEANING ASCRIBED THERETO IN REGULATION S.

7.                                           ACKNOWLEDGEMENT AND WAIVER

7.1                                        THE SUBSCRIBER HAS ACKNOWLEDGED THAT
THE DECISION TO PURCHASE THE SECURITIES WAS SOLELY MADE ON THE BASIS OF
INFORMATION AVAILABLE TO THE SUBSCRIBER ON THE EDGAR DATABASE MAINTAINED BY THE
SEC AT WWW.SEC.GOV.   THE SUBSCRIBER HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHTS OF WITHDRAWAL, RESCISSION OR COMPENSATION FOR
DAMAGES TO WHICH THE SUBSCRIBER MIGHT BE ENTITLED IN CONNECTION WITH THE
DISTRIBUTION OF THE SECURITIES.

8.                                           LEGENDING OF SUBJECT SECURITIES

8.1                                        THE SUBSCRIBER HEREBY ACKNOWLEDGES
THAT THAT UPON THE ISSUANCE THEREOF, AND UNTIL SUCH TIME AS THE SAME IS NO
LONGER REQUIRED UNDER THE APPLICABLE SECURITIES LAWS AND REGULATIONS, THE
CERTIFICATES REPRESENTING ANY OF THE SECURITIES WILL BEAR A LEGEND IN
SUBSTANTIALLY THE FOLLOWING FORM: 

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                “THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO
PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). 

                ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE
RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES
LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED
STATES (AS DEFINED HEREIN) OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS
DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933
ACT. “UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE
1933 ACT.”

8.2                                        THE SUBSCRIBER HEREBY ACKNOWLEDGES
AND AGREES TO THE COMPANY MAKING A NOTATION ON ITS RECORDS OR GIVING
INSTRUCTIONS TO THE REGISTRAR AND TRANSFER AGENT OF THE COMPANY IN ORDER TO
IMPLEMENT THE RESTRICTIONS ON TRANSFER SET FORTH AND DESCRIBED IN THIS
SUBSCRIPTION AGREEMENT.

9.                                           COSTS 

9.1                                        THE SUBSCRIBER ACKNOWLEDGES AND
AGREES THAT ALL COSTS AND EXPENSES INCURRED BY THE SUBSCRIBER (INCLUDING ANY
FEES AND DISBURSEMENTS OF ANY SPECIAL COUNSEL RETAINED BY THE SUBSCRIBER)
RELATING TO THE PURCHASE OF THE NOTE OR TO THE CONVERSION OF THE NOTE OR THE
CONVERSION SHARES SHALL BE BORNE BY THE SUBSCRIBER.

10.                                        GOVERNING LAW

10.1                                    THIS SUBSCRIPTION AGREEMENT IS GOVERNED
BY THE LAWS OF THE STATE OF NEVADA AND THE FEDERAL LAWS APPLICABLE THERETO. THE
SUBSCRIBER, IN ITS PERSONAL OR CORPORATE CAPACITY AND, IF APPLICABLE, ON BEHALF
OF EACH BENEFICIAL PURCHASER FOR WHOM IT IS ACTING, IRREVOCABLY ATTORNS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEVADA.

11.                                        SURVIVAL 

11.1                                    THIS SUBSCRIPTION AGREEMENT, INCLUDING
WITHOUT LIMITATION THE REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED
HEREIN, SHALL SURVIVE AND CONTINUE IN FULL FORCE AND EFFECT AND BE BINDING UPON
THE PARTIES HERETO NOTWITHSTANDING THE COMPLETION OF THE PURCHASE OF THE NOTE BY
THE SUBSCRIBER PURSUANT HERETO.

12.                                        ASSIGNMENT 

12.1                                    THIS SUBSCRIPTION AGREEMENT IS
ASSIGNABLE.

13.                                        SEVERABILITY 

13.1                                    THE INVALIDITY OR UNENFORCEABILITY OF
ANY PARTICULAR PROVISION OF THIS SUBSCRIPTION AGREEMENT SHALL NOT AFFECT OR
LIMIT THE VALIDITY OR ENFORCEABILITY OF THE REMAINING PROVISIONS OF THIS
SUBSCRIPTION AGREEMENT.

14.                                        ENTIRE AGREEMENT

14.1                                    EXCEPT AS EXPRESSLY PROVIDED IN THIS
SUBSCRIPTION AGREEMENT AND IN THE AGREEMENTS, INSTRUMENTS AND OTHER DOCUMENTS
CONTEMPLATED OR PROVIDED FOR HEREIN, THIS SUBSCRIPTION AGREEMENT CONTAINS THE
ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SALE OF THE SECURITIES
AND THERE ARE NO OTHER TERMS, CONDITIONS, REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESSED, IMPLIED, ORAL OR WRITTEN, BY STATUTE OR COMMON LAW, BY THE COMPANY OR
BY ANYONE ELSE. THIS SUBSCRIPTION MAY ONLY BE AMENDED BY INSTRUMENT IN WRITING
SIGNED BY THE PARTIES HERETO.

 

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15.                                        NOTICES 

15.1                                    ALL NOTICES AND OTHER COMMUNICATIONS
HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN IF
MAILED OR TRANSMITTED BY ANY STANDARD FORM OF TELECOMMUNICATION.  NOTICES TO THE
SUBSCRIBER SHALL BE DIRECTED TO THE ADDRESS ON THE SIGNATURE PAGE OF THIS
SUBSCRIPTION AGREEMENT AND NOTICES TO THE COMPANY SHALL BE DIRECTED TO IT AT
TORON INC., 1000 DE LA GAUCHETIERE STREET WEST – 24TH FLOOR, MONTREAL, QUEBEC,
ATTENTION: PRESIDENT.

16.                                        COUNTERPARTS AND ELECTRONIC MEANS

16.1                                    THIS SUBSCRIPTION AGREEMENT MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH, WHEN SO EXECUTED AND
DELIVERED, SHALL CONSTITUTE AN ORIGINAL AND ALL OF WHICH TOGETHER SHALL
CONSTITUTE ONE INSTRUMENT.  DELIVERY OF AN EXECUTED COPY OF THIS SUBSCRIPTION
AGREEMENT BY ELECTRONIC FACSIMILE TRANSMISSION OR OTHER MEANS OF ELECTRONIC
COMMUNICATION CAPABLE OF PRODUCING A PRINTED COPY WILL BE DEEMED TO BE EXECUTION
AND DELIVERY OF THIS SUBSCRIPTION AGREEMENT AS OF THE DATE HEREINAFTER SET
FORTH.

17.                                        REGISTRATION INSTRUCTIONS

 

17.1                                    THE SUBSCRIBER HEREBY DIRECTS THE
COMPANY TO CAUSE ANY NOTE ISSUED PURSUANT TO THIS SUBSCRIPTION AGREEMENT TO BE
REGISTERED ON THE BOOKS OF THE COMPANY AS DIRECTED ON THE SIGNATURE PAGE OF THIS
AGREEMENT.

IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement
as of the date of acceptance by the Company.

 

                                                                                                               
 

                                                                                                               
Name of Subscriber – XXXXXXX  

                                                                                                               
 

                                                                                                               
___________________________________________

                                                                                                               
(Signature and, if applicable, Office)

                                                                                                               
 

                                                                                               
 

                                                                                                               
(City, State or Province, Postal Code of Subscriber)

                                                                                                               
 

                                                                                                               
___________________________________________ 

                                                                                                               
(Country of Subscriber)

                                                                                                               
 

 

                                                                               
                                ____________________________________ 

                                                                                                               
(Fax and/or E-mail Address of Subscriber)

 

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Registration Information (if different from above)

___________________________________________

                                                                           
       (Name of Subscriber – Please type or print)

                                                                                                               
 

                                                                                                               
___________________________________________

                                                                                                               
(Signature and, if applicable, Office)

                                                                                                               
 

                                                                                                               
___________________________________________ 

                                                                                                               
(Address of Subscriber)

                                                                                                               
 

                                                                                                               
___________________________________________ 

                                                                                                               
(City, State or Province, Postal Code of Subscriber)

                                                                                                               
 

                                                                                                               
___________________________________________ 

                                                                                                               
(Country of Subscriber)

                                                                                                               
 

 

                                                                                                               
___________________________________________

                                                                                                               
(Fax and/or E-mail Address of Subscriber)

 

 

A C C E P T A N C E

The above-mentioned Subscription Agreement in respect of the Note is hereby
accepted by Toron Inc.

DATED at
                                                                            ,
the ____ day of ______________, 20__.

TORON INC.

Per:        
                                                                               
 

                Authorized Signatory

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EXHIBIT “A”

Form of Convertible Note

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES INTO WHICH THIS SECURITY IS
CONVERTIBLE HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT
A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").

NONE OF THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S.
STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THIS
SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.  "UNITED STATES" AND "U.S.
PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

Dated:  XXXXXX

 

                                                                                                                                                                            
U.S. $XXXX.XXX

CONVERTIBLE NOTE

FOR VALUE RECEIVED, TORON INC. (the “Company”) promises to pay to XXXXXXX or its
registered assigns  (the “Holder”), the principal sum of XXXXXXXXXX Dollars
($XXXX.XXX) in lawful currency of the United States (the “Principal Amount”) on
XXXXXXX  or such earlier date as the Note may be permitted to be repaid as
provided hereunder (the “Maturity Date”), with XX% annual interest, to the
Holder on the earlier of (i) the Conversion Date (as hereafter defined) and (ii)
the Maturity Date (except that, if any such date is not a Business Day, then
such payment shall be due on the next succeeding Business Day) in cash.  The
Company may prepay any portion of the Principal Amount without the prior written
consent of the Holder.

This Note is subject to the following additional provisions:

1.                                           OTHER AGREEMENTS.

1.1                                        THIS NOTE HAS BEEN ISSUED PURSUANT TO
A SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND THE HOLDER DATED XXXXXXXXXX
(THE “SUBSCRIPTION AGREEMENT”) PURSUANT TO WHICH THE HOLDER PURCHASED THIS NOTE,
AND THIS NOTE IS SUBJECT IN ALL RESPECTS TO THE TERMS OF THE SUBSCRIPTION
AGREEMENT AND INCORPORATES THE TERMS OF THE SUBSCRIPTION AGREEMENT TO THE EXTENT
THAT THEY DO NOT CONFLICT WITH THE TERMS OF THIS NOTE.  THIS NOTE MAY BE
TRANSFERRED OR ASSIGNED.

2.                                           EVENTS OF DEFAULT.

2.1                                        “EVENT OF DEFAULT”, WHEREVER USED
HEREIN, MEANS ANY ONE OF THE FOLLOWING EVENTS (WHATEVER THE REASON AND WHETHER
IT SHALL BE VOLUNTARY OR INVOLUNTARY OR EFFECTED BY OPERATION OF LAW OR PURSUANT
TO ANY JUDGMENT, DECREE OR ORDER OF ANY COURT, OR ANY ORDER, RULE OR REGULATION
OF ANY ADMINISTRATIVE OR GOVERNMENTAL BODY):

 

--------------------------------------------------------------------------------

 

(A)                 ANY DEFAULT IN THE PAYMENT OF THE PRINCIPAL AMOUNT OF THIS
NOTE, FREE OF ANY CLAIM OF SUBORDINATION, AS AND WHEN THE SAME SHALL BECOME DUE
AND PAYABLE (WHETHER ON A CONVERSION DATE OR THE MATURITY DATE OR BY
ACCELERATION OR OTHERWISE);

(B)                 THE COMPANY SHALL FAIL TO OBSERVE OR PERFORM ANY OTHER
COVENANT OR AGREEMENT CONTAINED IN THIS NOTE OR THE SUBSCRIPTION AGREEMENT WHICH
FAILURE IS NOT CURED, IF POSSIBLE TO CURE, WITHIN 30 CALENDAR DAYS AFTER NOTICE
OF SUCH DEFAULT IS SENT BY THE HOLDER TO THE COMPANY; OR

(C)                 THE COMPANY OR ANY OF ITS SUBSIDIARIES (EACH A “SUBSIDIARY”)
SHALL COMMENCE, OR THERE SHALL BE COMMENCED AGAINST THE COMPANY OR ANY
SUBSIDIARY A CASE UNDER ANY APPLICABLE BANKRUPTCY OR INSOLVENCY LAWS AS NOW OR
HEREAFTER IN EFFECT OR ANY SUCCESSOR THERETO, OR THE COMPANY OR ANY SUBSIDIARY
COMMENCES ANY OTHER PROCEEDING UNDER ANY REORGANIZATION, ARRANGEMENT, ADJUSTMENT
OF DEBT, RELIEF OF DEBTORS, DISSOLUTION, INSOLVENCY OR LIQUIDATION OR SIMILAR
LAW OF ANY JURISDICTION WHETHER NOW OR HEREAFTER IN EFFECT RELATING TO THE
COMPANY OR ANY SUBSIDIARY OR THERE IS COMMENCED AGAINST THE COMPANY OR ANY
SUBSIDIARY ANY SUCH BANKRUPTCY, INSOLVENCY OR OTHER PROCEEDING WHICH REMAINS
UNDISMISSED FOR A PERIOD OF 60 DAYS; OR THE COMPANY OR ANY SUBSIDIARY IS
ADJUDICATED INSOLVENT OR BANKRUPT; OR ANY ORDER OF RELIEF OR OTHER ORDER
APPROVING ANY SUCH CASE OR PROCEEDING IS ENTERED; OR THE COMPANY OR ANY
SUBSIDIARY SUFFERS ANY APPOINTMENT OF ANY CUSTODIAN OR THE LIKE FOR IT OR ANY
SUBSTANTIAL PART OF ITS PROPERTY WHICH CONTINUES UNDISCHARGED OR UNSTAYED FOR A
PERIOD OF 60 DAYS; OR THE COMPANY OR ANY SUBSIDIARY MAKES A GENERAL ASSIGNMENT
FOR THE BENEFIT OF CREDITORS; OR THE COMPANY SHALL FAIL TO PAY, OR SHALL STATE
THAT IT IS UNABLE TO PAY, OR SHALL BE UNABLE TO PAY, ITS DEBTS GENERALLY AS THEY
BECOME DUE; OR THE COMPANY OR ANY SUBSIDIARY SHALL CALL A MEETING OF ITS
CREDITORS WITH A VIEW TO ARRANGING A COMPOSITION, ADJUSTMENT OR RESTRUCTURING OF
ITS DEBTS; OR THE COMPANY OR ANY SUBSIDIARY SHALL BY ANY ACT OR FAILURE TO ACT
EXPRESSLY INDICATE ITS CONSENT TO, APPROVAL OF OR ACQUIESCENCE IN ANY OF THE
FOREGOING; OR ANY CORPORATE OR OTHER ACTION IS TAKEN BY THE COMPANY OR ANY
SUBSIDIARY FOR THE PURPOSE OF EFFECTING ANY OF THE FOREGOING.

2.2                          IF ANY EVENT OF DEFAULT OCCURS, THE FULL PRINCIPAL
AMOUNT, TOGETHER WITH INTEREST AND OTHER AMOUNTS OWING IN RESPECT THEREOF TO THE
DATE OF ACCELERATION SHALL BECOME, AT THE HOLDER’S ELECTION, IMMEDIATELY DUE AND
PAYABLE IN CASH.  UPON PAYMENT OF THE FULL PRINCIPAL AMOUNT, TOGETHER WITH
INTEREST AND OTHER AMOUNTS OWING IN RESPECT THEREOF, IN ACCORDANCE HEREWITH,
THIS NOTE SHALL PROMPTLY BE SURRENDERED TO OR AS DIRECTED BY THE COMPANY.  THE
HOLDER NEED NOT PROVIDE AND THE COMPANY HEREBY WAIVES ANY PRESENTMENT, DEMAND,
PROTEST OR OTHER NOTICE OF ANY KIND, AND THE HOLDER 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
DECLARATION MAY BE RESCINDED AND ANNULLED BY THE HOLDER AT ANY TIME PRIOR TO
PAYMENT HEREUNDER AND THE HOLDER SHALL HAVE ALL RIGHTS AS A NOTE HOLDER UNTIL
SUCH TIME, IF ANY, AS THE FULL PAYMENT UNDER THIS SECTION SHALL HAVE BEEN
RECEIVED BY IT.  NO SUCH RESCISSION OR ANNULMENT SHALL AFFECT ANY SUBSEQUENT
EVENT OF DEFAULT OR IMPAIR ANY RIGHT CONSEQUENT THEREON.

3.                                           CONVERSION. 

3.1                                        AT ANY TIME AFTER THE FINANCING DATE
UNTIL THIS NOTE IS NO LONGER OUTSTANDING, THIS NOTE MAY BE CONVERTED INTO
CONVERSION SHARES AT ANY TIME AND FROM TIME-TO-TIME, IN WHOLE OR IN PART, AT THE
OPTION OF THE HOLDER.  THE HOLDER SHALL EFFECT CONVERSIONS BY DELIVERING TO THE
COMPANY THE FORM OF NOTICE OF CONVERSION ATTACHED HERETO AS ANNEX A (A “NOTICE
OF CONVERSION”), SPECIFYING THEREIN THE AMOUNT OF PRINCIPAL TO BE CONVERTED AND
THE DATE ON WHICH SUCH CONVERSION IS TO BE EFFECTED (A “CONVERSION DATE”);
PROVIDED THAT THE DATE UPON WHICH ANY SUCH CONVERSION MAY BE EFFECTED MAY NOT BE
LESS THAN 5 CALENDAR DAYS FOLLOWING THE DATE OF DELIVERY OF THE NOTICE OF
CONVERSION.  IF NO CONVERSION DATE IS SPECIFIED IN A NOTICE OF CONVERSION, THE
CONVERSION DATE SHALL BE THE DATE THAT IS 5  CALENDAR DAYS AFTER SUCH NOTICE OF
CONVERSION IS DELIVERED TO THE COMPANY.  TO EFFECT CONVERSIONS HEREUNDER, THE
HOLDER SHALL NOT BE REQUIRED TO PHYSICALLY SURRENDER THE NOTE TO THE COMPANY
UNLESS THE ENTIRE PRINCIPAL AMOUNT OF THIS NOTE HAS BEEN SO CONVERTED. 
CONVERSIONS HEREUNDER SHALL HAVE THE EFFECT OF LOWERING THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS NOTE IN AN AMOUNT EQUAL TO THE APPLICABLE CONVERSION. 
THE HOLDER AND THE COMPANY SHALL MAINTAIN RECORDS SHOWING THE PRINCIPAL AMOUNT
CONVERTED AND THE DATE OF SUCH CONVERSIONS.  THE COMPANY SHALL DELIVER ANY
OBJECTION TO ANY NOTICE OF CONVERSION WITHIN 10 BUSINESS DAYS OF RECEIPT OF SUCH
NOTICE.  THE HOLDER, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGES AND AGREES THAT,
BY REASON OF THE PROVISIONS OF THIS PARAGRAPH,

--------------------------------------------------------------------------------

 

FOLLOWING CONVERSION OF A PORTION OF THIS NOTE, THE UNPAID AND UNCONVERTED
PRINCIPAL AMOUNT OF THIS NOTE MAY BE LESS THAN THE AMOUNT STATED ON THE FACE
HEREOF.

3.2                                        THE NUMBER OF CONVERSION SHARES
ISSUABLE UPON A CONVERSION OF ANY OUTSTANDING PRINCIPAL UNDER THE NOTE SHALL BE
DETERMINED BY THE QUOTIENT OBTAINED BY DIVIDING (X) BY (Y) WHERE (X) IS EQUAL TO
THE AMOUNT OF OUTSTANDING PRINCIPAL TO BE CONVERTED AND (Y) IS THE CONVERSION
PRICE (AS HEREINAFTER DEFINED).

3.3                                        NOT LATER THAN FIVE TRADING DAYS
AFTER ANY CONVERSION DATE, THE COMPANY WILL DELIVER TO THE HOLDER A CERTIFICATE
OR CERTIFICATES REPRESENTING THE CONVERSION SHARES (BEARING SUCH LEGENDS AS MAY
BE REQUIRED BY APPLICABLE LAW AND THOSE REQUIRED BY THE SUBSCRIPTION AGREEMENT)
REPRESENTING THE NUMBER OF CONVERSION SHARES BEING ACQUIRED UPON THE CONVERSION
OF NOTE.

3.4                                        THE CONVERSION PRICE (THE “CONVERSION
PRICE”) IN EFFECT ON ANY CONVERSION DATE SHALL BE SHALL MEAN XX% OF THE AVERAGE
CLOSING BID PRICES FOR THE TEN TRADING DAYS IMMEDIATELY PRECEDING THE CONVERSION
DATE.  THE TERM "CLOSING BID PRICE" SHALL MEAN, ON ANY PARTICULAR DATE (I) THE
CLOSING BID PRICE PER SHARE OF THE COMMON STOCK ON SUCH DATE ON THE OTC BULLETIN
BOARD, OR ANOTHER REGISTERED NATIONAL STOCK EXCHANGE ON WHICH THE COMMON STOCK
IS THEN LISTED, OR IF THERE IS NO SUCH PRICE ON SUCH DATE, THEN THE CLOSING BID
PRICE ON SUCH EXCHANGE OR QUOTATION SYSTEM ON THE DATE NEAREST PRECEDING SUCH
DATE, OR (II) IF THE COMMON STOCK IS NOT LISTED THEN ON THE OTC BULLETIN BOARD
OR ANY REGISTERED NATIONAL STOCK EXCHANGE, THE CLOSING BID PRICE FOR A SHARE OF
COMMON STOCK IN THE OVER‑THE‑COUNTER MARKET, AS REPORTED BY THE OTC BULLETIN
BOARD OR IN THE NATIONAL QUOTATION BUREAU INCORPORATED OR SIMILAR ORGANIZATION
OR AGENCY SUCCEEDING TO ITS FUNCTIONS OF REPORTING PRICES) AT THE CLOSE OF
BUSINESS ON SUCH DATE, OR (III) IF THE COMMON STOCK IS NOT THEN REPORTED BY THE
OTC BULLETIN BOARD OR THE NATIONAL QUOTATION BUREAU INCORPORATED (OR SIMILAR
ORGANIZATION OR AGENCY SUCCEEDING TO ITS FUNCTIONS OF REPORTING PRICES), THEN
THE AVERAGE OF THE "PINK SHEET" QUOTES FOR THE RELEVANT CONVERSION PERIOD, AS
DETERMINED IN GOOD FAITH BY THE HOLDER, OR (IV) IF THE COMMON STOCK IS NOT THEN
PUBLICLY TRADED THE FAIR MARKET VALUE OF A SHARE OF COMMON STOCK AS DETERMINED
BY THE HOLDER AND REASONABLY ACCEPTABLE TO THE COMPANY.

3.5                AT ANY TIME AFTER THE FINANCING DATE UNTIL THIS NOTE IS NO
LONGER OUTSTANDING, THIS NOTE MAY BE CONVERTED INTO CONVERSION SHARES AT ANY
TIME AND FROM TIME-TO-TIME, IN WHOLE OR IN PART, AT THE OPTION OF THE COMPANY. 
THE COMPANY SHALL EFFECT CONVERSIONS BY DELIVERING TO THE HOLDER WRITTEN NOTICE
OF CONVERSION SPECIFYING THEREIN THE AMOUNT OF PRINCIPAL TO BE CONVERTED AND THE
DATE ON WHICH SUCH CONVERSION IS TO BE EFFECTED (A “CONVERSION DATE”);  

3.6                                        LIMITATIONS ON CONVERSIONS BY
COMPANY.   UNLESS THE HOLDER OTHERWISE DIRECTS THE COMPANY, THE COMPANY SHALL
NOT EFFECT ANY CONVERSION OF THIS NOTE, AND THE HOLDER SHALL NOT HAVE THE RIGHT
TO CONVERT ANY PORTION OF THIS NOTE PURSUANT TO SECTION 3.1 HERETO, TO THE
EXTENT THAT AFTER GIVING EFFECT TO SUCH CONVERSION, THE HOLDER WOULD
BENEFICIALLY OWN,  FOR PURPOSES OF THE SECURITIES ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT") , IN EXCESS OF 9.99% (THE "MAXIMUM PERCENTAGE") OF THE NUMBER OF
COMMON SHARES OUTSTANDING IMMEDIATELY AFTER GIVING EFFECT TO SUCH CONVERSION. 
FOR PURPOSES OF THE FOREGOING SENTENCE, THE NUMBER OF COMMON SHARES BENEFICIALLY
OWNED BY THE HOLDER SHALL INCLUDE THE NUMBER OF COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE WITH RESPECT TO WHICH THE DETERMINATION OF SUCH SENTENCE
IS BEING MADE, BUT SHALL EXCLUDE THE NUMBER OF COMMON SHARES WHICH WOULD BE
ISSUABLE UPON (A) CONVERSION OF THE REMAINING, NONCONVERTED PORTION OF THIS NOTE
BENEFICIALLY OWNED BY THE HOLDER AND (B) EXERCISE OR CONVERSION OF THE
UNEXERCISED OR NONCONVERTED PORTION OF ANY OTHER SECURITIES OF THE COMPANY
(INCLUDING, WITHOUT LIMITATION, ANY OTHER NOTES OR WARRANTS) SUBJECT TO A
LIMITATION ON CONVERSION OR EXERCISE ANALOGOUS TO THE LIMITATION CONTAINED
HEREIN BENEFICIALLY OWNED BY THE HOLDER.  EXCEPT AS SET FORTH IN THE PRECEDING
SENTENCE, FOR PURPOSES OF THIS SECTION 3, BENEFICIAL OWNERSHIP PURSUANT TO THE
EXCHANGE ACT SHALL BE CALCULATED IN ACCORDANCE WITH SECTION 13(D) OF THE
EXCHANGE ACT, EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE.  FOR PURPOSES OF
THIS SECTION 3 IN DETERMINING THE NUMBER OF OUTSTANDING COMMON SHARES, THE
HOLDER MAY RELY ON THE NUMBER OF OUTSTANDING COMMON SHARES AS REFLECTED IN (X)
THE COMPANY'S MOST RECENT FORM 10-K, FORM 10-Q OR FORM 8-K, AS THE CASE MAY BE,
(Y) A MORE RECENT PUBLIC ANNOUNCEMENT BY THE COMPANY OR (Z) ANY OTHER NOTICE BY
THE COMPANY OR THE TRANSFER AGENT SETTING FORTH THE NUMBER OF COMMON SHARES
OUTSTANDING.  FOR ANY REASON AT ANY TIME, UPON THE WRITTEN OR ORAL REQUEST OF
THE HOLDER, THE COMPANY SHALL WITHIN TWO (2) BUSINESS DAYS CONFIRM ORALLY AND IN
WRITING TO THE HOLDER THE NUMBER OF COMMON SHARES THEN OUTSTANDING.  IN ANY
CASE, THE NUMBER OF OUTSTANDING COMMON SHARES SHALL BE DETERMINED AFTER GIVING
EFFECT TO THE CONVERSION OR EXERCISE OF SECURITIES OF THE COMPANY, INCLUDING
THIS NOTE, BY THE HOLDER OR ITS AFFILIATES SINCE THE DATE AS OF WHICH SUCH
NUMBER OF OUTSTANDING COMMON SHARES WAS REPORTED.  BY WRITTEN NOTICE TO THE
COMPANY, THE HOLDER MAY INCREASE OR DECREASE THE MAXIMUM PERCENTAGE TO ANY OTHER
PERCENTAGE SPECIFIED IN SUCH NOTICE; PROVIDED THAT (I) ANY SUCH INCREASE WILL
NOT BE EFFECTIVE UNTIL THE SIXTY-FIRST

--------------------------------------------------------------------------------

 

(61ST) DAY AFTER SUCH NOTICE IS DELIVERED TO THE COMPANY, AND (II) ANY SUCH
INCREASE OR DECREASE WILL APPLY ONLY TO THE HOLDER AND NOT TO ANY OTHER HOLDER
OF NOTES.

3.7                                        THE COMPANY COVENANTS THAT IT WILL AT
ALL TIMES RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED AND UNISSUED SHARES
OF COMMON STOCK SUCH NUMBER OF SHARES AS IS NECESSARY IN ORDER TO ENSURE THAT A
SUFFICIENT NUMBER ARE AVAILABLE FOR THE PURPOSE OF ISSUANCE OF CONVERSION SHARES
UPON CONVERSION OF THIS NOTE, FREE FROM PRE-EMPTIVE RIGHTS OR ANY OTHER ACTUAL
CONTINGENT PURCHASE RIGHTS OF PERSONS OTHER THAN THE HOLDER.  THE COMPANY
COVENANTS THAT ALL CONVERSION SHARES SHALL, UPON ISSUE, BE DULY AND VALIDLY
AUTHORIZED, ISSUED AND FULLY PAID AND NON-ASSESSABLE.

3.8                                        UPON A CONVERSION HEREUNDER THE
COMPANY SHALL NOT BE REQUIRED TO ISSUE STOCK CERTIFICATES REPRESENTING FRACTIONS
OF ANY CONVERSION SHARES, AND THE NUMBER OF CONVERSION SHARES SHALL BE ROUNDED
UP OR DOWN TO THE NEAREST WHOLE NUMBER.

3.9                                        IF THE COMPANY, AT ANY TIME WHILE
THIS NOTE IS OUTSTANDING: (A) PAYS A STOCK DIVIDEND OR OTHERWISE MAKES A
DISTRIBUTION OR DISTRIBUTIONS IN SHARES OF ITS COMMON STOCK OR ANY OTHER EQUITY
OR EQUITY EQUIVALENT SECURITIES PAYABLE IN SHARES OF COMMON STOCK, (B)
SUBDIVIDES OUTSTANDING SHARES OF COMMON STOCK INTO A LARGER NUMBER OF SHARES,
(C) COMBINES (INCLUDING BY WAY OF REVERSE STOCK SPLIT) OUTSTANDING SHARES OF
COMMON STOCK INTO A SMALLER NUMBER OF SHARES, OR (D) ISSUES BY RECLASSIFICATION
OF SHARES OF THE COMMON STOCK ANY SHARES OF CAPITAL STOCK OF THE COMPANY, THEN
THE CONVERSION PRICE SHALL BE MULTIPLIED BY A FRACTION OF WHICH THE NUMERATOR
SHALL BE THE NUMBER OF SHARES OF COMMON STOCK (EXCLUDING TREASURY SHARES, IF
ANY) OUTSTANDING BEFORE SUCH EVENT AND OF WHICH THE DENOMINATOR SHALL BE THE
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AFTER SUCH EVENT.  ANY ADJUSTMENT
MADE PURSUANT TO THIS SECTION SHALL BECOME EFFECTIVE IMMEDIATELY AFTER THE
RECORD DATE FOR THE DETERMINATION OF STOCKHOLDERS ENTITLED TO RECEIVE SUCH
DIVIDEND OR DISTRIBUTION AND SHALL BECOME EFFECTIVE IMMEDIATELY AFTER THE
EFFECTIVE DATE IN THE CASE OF A SUBDIVISION, COMBINATION OR RE‑CLASSIFICATION.

4.                                           REPAYMENT 

4.1                                        REPAYMENT OF THIS NOTE, INCLUDING ALL
INTEREST, SHALL BE DUE ON THE MATURITY DATE, UNLESS EARLIER CONVERTED INTO
COMMON SHARES.

5.                                           INTEREST 

5.1                          Interest on the Principal Amount shall be
calculated at XX%, per annum, and be payable of XXXXXXXXXXX of each year that
the Note remains outstanding. 

6.                                           NOTICES 

6.1                                        ANY AND ALL NOTICES OR OTHER
COMMUNICATIONS OR DELIVERIES TO BE PROVIDED BY THE HOLDER HEREUNDER, INCLUDING,
WITHOUT LIMITATION, ANY NOTICE OF CONVERSION, SHALL BE IN WRITING AND DELIVERED
PERSONALLY, BY FACSIMILE, SENT BY A NATIONALLY RECOGNIZED OVERNIGHT COURIER
SERVICE, ADDRESSED TO THE COMPANY, AT THE ADDRESS SET FORTH ABOVE, OR SUCH OTHER
ADDRESS OR FACSIMILE NUMBER AS THE COMPANY MAY SPECIFY FOR SUCH PURPOSES BY
NOTICE TO THE HOLDER DELIVERED IN ACCORDANCE WITH THIS SECTION.  ANY AND ALL
NOTICES OR OTHER COMMUNICATIONS OR DELIVERIES TO BE PROVIDED BY THE COMPANY
HEREUNDER SHALL BE IN WRITING AND DELIVERED PERSONALLY, BY FACSIMILE, SENT BY A
NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE ADDRESSED TO THE HOLDER AT THE
FACSIMILE TELEPHONE NUMBER OR ADDRESS OF SUCH HOLDER APPEARING ON THE BOOKS OF
THE COMPANY, OR IF NO SUCH FACSIMILE TELEPHONE NUMBER OR ADDRESS APPEARS, AT THE
ADDRESS OF THE HOLDER TO WHICH THIS NOTE WAS DELIVERED.  ANY NOTICE OR OTHER
COMMUNICATION OR DELIVERIES HEREUNDER SHALL BE DEEMED GIVEN AND EFFECTIVE ON THE
EARLIEST OF (I) THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS
DELIVERED VIA FACSIMILE AT THE FACSIMILE TELEPHONE NUMBER SPECIFIED IN THIS
SECTION PRIOR TO 5:30 P.M. (EASTERN STANDARD TIME), (II) THE DATE AFTER THE DATE
OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT
THE FACSIMILE TELEPHONE NUMBER SPECIFIED IN THIS SECTION LATER THAN 5:30 P.M.
(EASTERN STANDARD TIME) ON ANY DATE AND EARLIER THAN 11:59 P.M. (EASTERN
STANDARD TIME) ON SUCH DATE, (III) THE SECOND BUSINESS DAY FOLLOWING THE DATE OF
MAILING, IF SENT BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, OR (IV)
UPON ACTUAL RECEIPT BY THE PARTY TO WHOM SUCH NOTICE IS REQUIRED TO BE GIVEN.

 

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7.                                           DEFINITIONS.  

7.1                                        FOR THE PURPOSES HEREOF, IN ADDITION
TO THE TERMS DEFINED ELSEWHERE IN THIS NOTE: (I) CAPITALIZED TERMS NOT OTHERWISE
DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE SUBSCRIPTION
AGREEMENT, AND (II) THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

(A)                 “BUSINESS DAY” MEANS ANY DAY EXCEPT SATURDAY, SUNDAY AND ANY
DAY WHICH SHALL BE A FEDERAL LEGAL HOLIDAY IN THE UNITED STATES OR A DAY ON
WHICH BANKING INSTITUTIONS IN THE PROVINCE OF QUEBEC ARE AUTHORIZED OR REQUIRED
BY LAW OR OTHER GOVERNMENT ACTION TO CLOSE.

(B)                 “COMMON STOCK” MEANS THE COMMON STOCK, PAR VALUE $0.001 PER
SHARE, OF THE COMPANY AND STOCK OF ANY OTHER CLASS INTO WHICH SUCH SHARES MAY
HEREAFTER HAVE BEEN RECLASSIFIED OR CHANGED.

(C)                 “CONVERSION DATE” HAS THE MEANING SET FORTH IN SECTION 3.5
HEREOF.

(D)                 “CONVERSION PRICE” HAS THE MEANING SET FORTH IN SECTION 3.4
HEREOF.

(E)                 “CONVERSION SHARE” MEANS SHARES OF THE COMPANY’S COMMON
STOCK INTO WHICH PRINCIPAL AND INTEREST DUE PURSUANT TO THIS NOTE MAY BE
CONVERTED.

(F)                  “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED.

(G)                 “FINANCING DATE” MEANS THE DATE ON WHICH THE PRINCIPAL
AMOUNT IS DELIVERED TO THE COMPANY BY THE INVESTOR.

(H)                 “SECURITIES ACT” MEANS THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

(I)                   “TRADING DAY” MEANS A DAY ON WHICH THE SHARES OF COMMON
STOCK ARE TRADED ON A TRADING MARKET ON WHICH THE SHARES OF COMMON STOCK ARE
THEN LISTED OR QUOTED, PROVIDED, THAT IN THE EVENT THAT THE SHARES OF COMMON
STOCK ARE NOT LISTED OR QUOTED, THEN TRADING DAY SHALL MEAN A BUSINESS DAY.

8.                                           REPLACEMENT OF NOTE IF LOST OR
DESTROYED.

If this Note shall be mutilated, lost, stolen or destroyed, the Company shall
execute and deliver, in exchange and substitution for and upon cancellation of a
mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost,
stolen or destroyed but only upon receipt of evidence of such loss, theft or
destruction of such Note, and of the ownership hereof, and indemnity, if
requested, all reasonably satisfactory to the Company.

9.                                           GOVERNING LAW.

All questions concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and enforced in
accordance with the internal laws of the State of Nevada, without regard to the
principles of conflicts of law thereof.

10.                                        WAIVERS 

Any waiver by the Company or the Holder of a breach of any provision of this
Note shall not operate as or be construed to be a waiver of any other breach of
such provision or of any breach of any other provision of this Note.  The
failure of the Company or the Holder to insist upon strict adherence to any term
of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note.  Any waiver must be in writing.

 

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11.                                        USURY 

If any provision of this Note is invalid, illegal or unenforceable, the balance
of this Note shall remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to all other
Persons and circumstances.  If it shall be found that any interest or other
amount deemed interest due hereunder violates applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum permitted rate of interest.  The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of or interest on
this Note as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this
indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.

12.                                        NEXT BUSINESS DAY

Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.

IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly
executed by a duly authorized officer as of the date first above indicated.

 

TORON INC.  

 

By:  

title:

 

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ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the Convertible Note of
Toron Inc., a Nevada corporation (the “Company”), due on XXXXXXX , into shares
of the Company’s common stock (each a “Share”) as of the date written below. 
The undersigned will pay all transfer taxes, intangible or other taxes payable
with respect hereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith.  No fee will be
charged to the holder for any conversion.

The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
Shares.

Conversion calculations:

Date to Effect Conversion:

Principal Amount of Note to be Converted:

Accrued Interest to be Converted:

Number of  Shares to be issued:

Signature:

                 

Name:

                 

Address: