AUGUST 5, 2014

 

112359 FACTOR FUND, LLC

411 Hackensack Avenue
Hackensack, NY 07601

 

RE:     Convertible Debentures numbered BTZO – 59FF 101 through 108

 

To whom it may concern:

 

112359 FACTOR FUND, LLC (“Investor”) holds those certain convertible debentures
numbered BTZO – 59FF 101, BTZO – 59FF 102, BTZO – 59FF 103, BTZO – 59FF 104,
BTZO – 59FF 105, BTZO – 59FF 106, BTZO – 59FF 107, and BTZO – 59FF 108 (the
“Debentures”) issued by BITZIO, INC. (“Company”), and any Company securities
issuable thereunder (the “Securities”). This letter agreement (“Agreement”),
effective as of the date hereof (the “Effective Date”), shall confirm that, for
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Investor and Company, intending to be legally bound, hereby agree
as follows:

 

1.  Section 1(b) of the Debentures shall be amended in their entirety as
follows:

 

“(b)  Certain Conversion Restrictions.  A Holder may not convert this Debenture
to the extent such conversion would result in the Holder, together with any
affiliate thereof, beneficially owning (as determined in accordance with Section
13(d) of the Exchange Act and the rules promulgated thereunder) in excess of
9.99% of the then issued and outstanding shares of Common Stock, including
shares issuable upon conversion of this Debenture held by such Holder after
application of this Section.  Since the Holder will not be obligated to report
to the Obligor the number of shares of Common Stock it may hold at the time of a
conversion hereunder, unless the conversion at issue would result in the
issuance of shares of Common Stock in excess of 9.99% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Holder or an affiliate thereof, the Holder shall have
the authority and obligation to determine whether the restriction contained in
this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of the principal amount of this
Debenture is convertible shall be the responsibility and obligation of the
Holder.  If the Holder has delivered a Conversion Notice for a principal amount
of this Debenture that, without regard to any other shares that the Holder or
its affiliates may beneficially own, would result in the issuance in excess of
the permitted amount hereunder, the Obligor shall notify the Holder of this fact
and shall honor the conversion for the maximum principal amount permitted to be
converted on such Conversion Date in accordance with the periods described in
Section 1(a)(i) and, at the option of the Holder, either retain any principal
amount tendered for conversion in excess of the permitted amount hereunder for
future conversions or return such excess principal amount to the Holder. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 65 days prior notice to the Obligor.
Other Holders shall be unaffected by any such waiver.”

 

2.  Section 1(c)(i) of the Debentures shall be amended in its entirety as
follows:

 

“(i)  The “Conversion Price” in effect on any Conversion Date shall be equal to
100% of the average of the five (5) lowest closing market prices for the Common
Stock for the sixty (60) Trading Days preceding conversion. All market and
trading prices shall be the prices as posted on the OTCQB or on the principal US
National Stock Exchange or other electronic stock trading platform upon which
the Company may at that time be listed.”

 

3.  Section 1(d)(ii) of the Debentures shall be amended in its entirety as
follows:

 

“(ii) [Intentionally Omitted].”

 

4.  Section 1(f) of the Debentures shall be amended to include a new Section
1(f)(viii) as follows:

 

“(viii)  The Interest Rate shall automatically increase to TWENTY PERCENT (20%)
(“Default Interest Rate”) in the event that any Default Event occurs hereunder,
including, without limitation, any failure by the Company to pay the full
principal balance due hereunder on or before the Maturity Date; provided,
however, that the Default Interest Rate shall only be applicable from and after
the date upon which and such Default Event hereunder occurs and shall only apply
from that date with respect to the unpaid portion of the principal balance
hereunder.”

 

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Please confirm your agreement with the foregoing by executing this Agreement
where indicated below and returning it to the Company.

 

  Sincerely,   BITZIO, INC.         By: /s/ Hubert Blanchette   Print: Hubert
Blanchette   Title: Chief Executive Officer

 

ACKNOWLEDGED AND ACCEPTED BY       112359 FACTOR FUND, LLC       By: /s/ Mary
Carroll   Print: Mary Carroll   Title: Manager  

 

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