Exhibit 10.1
 
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND APPLICABLE STATE SECURITIES LAWS AND THIS SECURITY MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER SUCH LAWS OR AN
APPLICABLE EXEMPTION THEREFROM.  THE HOLDER OF THIS SECURITY AGREES FOR THE
BENEFIT OF BAZI INTERNATIONAL, INC. (THE “COMPANY”) AND ITS AGENTS THAT, ABSENT
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, THIS SECURITY MAY
BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY PURSUANT TO AN
EXEMPTION FROM REGISTRATION AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE
STATE AND OTHER SECURITIES LAWS, AS CONFIRMED TO THE COMPANY BY AN OPINION OF
COUNSEL TO THE HOLDER IF REQUESTED BY THE COMPANY, SUBJECT AT ALL TIMES TO
COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY JURISDICTION.
 
Senior Convertible Note
 
$[_______]                                                                                                                  Irvine,
California
     October [__], 2012
 
FOR VALUE RECEIVED, the undersigned, BAZI INTERNATIONAL, INC., a corporation
organized under the laws of Nevada (the “Company”), hereby promises to pay to
the order of [___________] (the “Payee”), at the address specified for Payee
below, or such other place as the Payee may designate to Company in writing from
time to time, the principal sum of $[_______] in lawful money of the United
States of America on February 15, 2013 (the “Maturity Date”), with interest
thereon at the rate of 9% per annum as provided herein.  All interest shall be
calculated on the basis of a 365-day year counting the actual days elapsed.
 
1. Payment Terms

 
(a) The Company promises to pay interest (“Interest”) on the outstanding
principal amount of this Note at the rate of nine percent (9%) per annum.  The
principal of this Note and any accrued and unpaid Interest shall be due on the
Maturity Date.
 
(b) The Company shall have the right to prepay this Note at any time, upon five
days’ notice to the Payee, subject to the Payee’s election to convert this Note
into Common Stock (as defined below) on the terms set forth herein prior to
prepayment.
 
(c) In consideration for making this Note, the Company shall pay to Payee a fee
equal to ten percent (10%) of the original principal amount of this Note on the
Maturity Date or in accordance with any prepayment of this Note (the “Lender
Fee”).
 
(d) In the event that any date referred to hereunder is a day on which banks in
the State of New York are required or authorized to be closed, then the payment
that would be due on such day shall instead be due and payable on the next day
which is not such a non-banking day, with additional Interest for such delay at
the rate then in effect hereunder.
 
2. Conversion of Notes
 
3. .  This Note shall be convertible into shares of common stock of the Company,
par value $0.001 per share (the “Common Stock”), on the terms and conditions set
forth in this Section 2.
 
(a) Optional Conversion Right.  Subject to the provisions of Section 2(c), at
any time or times during the period beginning on the date hereof and ending on
the Maturity Date, the Payee shall be entitled to convert any portion of the
outstanding and unpaid Conversion Amount (as defined below) into fully paid and
non-assessable shares of Common Stock in accordance with Section 2(c), at the
Conversion Rate (as defined below).  The Company shall not issue any fraction of
a share of Common Stock upon any conversion.  If the issuance would result in
the issuance of a fraction of a share of Common Stock, the Company shall round
such fraction of a share of Common Stock up to the nearest whole share.  The
Company shall pay any and all transfer, stamp and similar taxes that may be
payable with respect to the issuance and delivery of Common Stock upon
conversion of any Conversion Amount.

 
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(b) Conversion Rate. The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to Section 2(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the
“Conversion Rate”).  “Conversion Amount” means the portion of the unpaid
principal, Interest, and Lender Fee to be converted, redeemed or otherwise with
respect to which this determination is being made.  “Conversion Price” means, as
of any Conversion Date or other date of determination, $.01, subject to
adjustment as provided herein.
 
(c) Mechanics of Conversion.  To convert any Conversion Amount into shares of
Common Stock, the Payee (A) shall transmit by facsimile (or otherwise deliver),
for receipt on or prior to 11:59 a.m. on the Maturity Date, or if earlier,
within three days of receiving notice of an intent to prepay from the Company,
New York time, on such date, a copy of an executed notice of conversion in the
form attached hereto as Exhibit A (the “Conversion Notice”) to the Company and
(B) surrender this Note on the same day on which the Conversion Notice is
delivered to a nationally recognized overnight delivery service for delivery to
the Company (or an indemnification undertaking with respect to this Note in the
case of its loss, theft or destruction) (the date on which the Conversion Notice
and Note referred to in (A) and (B) are received being the “Conversion
Date”).  On or before the second (2nd) business day following the Conversion
Date, the Company shall transmit by facsimile an acknowledgment of confirmation
of receipt of such Conversion Notice to the Payee and the Company’s transfer
agent (the “Transfer Agent”).  On or before the tenth (10th) business day
following the date of receipt of a Conversion Notice and this Note (or
indemnification undertaking) (the “Share Delivery Date”), the Company shall
issue and deliver the number of shares of Common Stock to which the Payee shall
be entitled.  If this Note is physically surrendered for conversion (or
indemnification undertaking is delivered) and the outstanding principal,
Interest, and/or Lender Fee of this Note is greater than the principal portion
of the Conversion Amount being converted, then the Company shall as soon as
practicable and in no event later than ten (10) business days after receipt of
this Note (or indemnification undertaking) and at its own expense, issue and
deliver to the Payee (or its designee) (i) a new Note representing the
outstanding amount not converted, or (ii) if the Conversion Notice is received
within ten (10) days prior to the Maturity Date, pay the remaining balance due
on this Note after deducting the Conversion Amount as set forth in the
Conversion Notice.
 
(d) Company’s Failure to Timely Convert. If the Company shall fail, for any
reason or for no reason, to issue to the Payee within ten (10) business days
after the Company’s receipt of a Conversion Notice (whether via facsimile or
otherwise) and this Note (or indemnification undertaking), the number of shares
of Common Stock to which the Payee is entitled and register such shares of
Common Stock on the Company’s share register for such number of shares of Common
Stock upon Payee’s conversion of any Conversion Amount (a “Conversion Failure”),
then, in addition to all other remedies available to the Payee, the Payee, upon
written notice to the Company, may void its Conversion Notice with respect to,
and retain or have returned (as the case may be) any portion of this Note that
has not been converted pursuant to such Conversion Notice, provided that the
voiding of a Conversion Notice shall not affect the Company’s obligations to
make any payments which have accrued prior to the date of such notice pursuant
to the terms of this Note.
 
(e) Registration; Book-Entry.  The Company shall maintain a register (the
“Register”) for the recordation of the names and addresses of the holders of
each Note and the principal amount of the Notes held by such holders (the
“Registered Notes”).  The entries in the Register shall be conclusive and
binding for all purposes absent manifest error.  The Company and the holders of
the Notes shall treat each person whose name is recorded in the Register as the
owner of a Note for all purposes, including, without limitation, the right to
receive payments of principal and Interest hereunder, notwithstanding notice to
the contrary.  A Registered Note may be assigned or sold in whole or in part
only by registration of such assignment or sale on the Register.  Upon its
receipt of a request to assign or sell all or part of any Registered Note by a
holder and delivery for cancellation and reissuance of the Note, the Company
shall record the information contained therein in the Register and issue one or
more new Registered Notes in the same aggregate principal amount as the
principal amount of the surrendered Registered Note to the designated assignee
or transferee pursuant to Section 7.  The Company shall maintain records showing
the amounts converted and/or paid (as the case may be) and the dates of such
conversions and/or payments (as the case may be).

 
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(f) Pro Rata Conversion; Disputes.  In the event that the Company receives a
Conversion Notice from more than one holder of Notes for the same Conversion
Date and the Company can convert some, but not all, of such portions of the
Notes submitted for conversion, the Company shall convert from each holder of
Notes electing to have Notes converted on such date a pro rata amount of such
holder’s portion of its Notes submitted for conversion based on the principal
amount of Notes submitted for conversion on such date by such holder relative to
the aggregate principal amount of all Notes submitted for conversion on such
date.  In the event of a dispute as to the number of shares of Common Stock
issuable to the holder in connection with a conversion of this Note, the Company
shall issue to such holder the number of shares of Common Stock not in dispute
and resolve such dispute in accordance with the provisions of this Note.
 
(g) Adjustment of Conversion Price upon Subdivision or Combination of Common
Stock.  If the Company shall at any time or from time to time effect a
subdivision (by any stock split or otherwise) of the outstanding Common Stock
into a greater number of shares, the Conversion Price in effect immediately
before that subdivision shall be proportionately decreased.  Conversely, if the
Company shall at any time or from time to time combine (by reverse stock split
or otherwise) the outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately before the combination shall
be proportionately increased.  Any preceding adjustment under this paragraph
shall become effective at the close of business on the date the subdivision or
combination becomes effective.
 
(h) Adjustments for Mergers or Reorganizations, etc.  If at any time there shall
occur any reclassification, reorganization, recapitalization, consolidation,
sale of all or substantially all of the Company’s assets, property or business,
or any merger involving the Company, in each case in which the Common Stock is
converted into or exchanged for securities (including warrants or other
subscription or purchase rights), cash or other property, or pursuant to which
any such securities, cash or other property is to be received by or distributed
to the holders of Common Stock of the Company (other than a transaction covered
by Sections 2(g)) (each, a “Reorganization Event”), then, following any such
Reorganization Event, and without payment by the Payee of any additional
consideration thereof, the Payee shall receive upon the exercise hereof the kind
and amount of securities, cash or other property which the Payee would have been
entitled to receive if, immediately prior to such Reorganization Event, the
Payee had held the number of shares of Common Stock subject to this Note, giving
application to all adjustments called for during such period under this Note
with respect to the rights of the Payee.  The Company shall not effect any
Reorganization Event unless, prior to the consummation thereof, the successor or
surviving entity (if other than the Company) and, if an entity different from
the successor or surviving entity, the entity whose stock, securities, assets or
other property the holders of Common Stock are entitled to receive as a result
of such Reorganization Event, assumes by written instrument (A) the obligations
to deliver to the Payee such shares of stock, securities, assets or other
property as, in accordance with the foregoing provisions, the Payee may be
entitled to acquire and (B) the due and punctual observance and performance of
each and every covenant and condition contained in this Note to be performed and
observed by the Company and all the obligations and liabilities hereunder, in
order to provide for adjustments of shares of the Common Stock into which this
Note is convertible which shall be as nearly equivalent as practicable to the
adjustments provided for in Section 2.  The foregoing provisions shall similarly
apply to successive Reorganization Events and to the stock or securities of any
other corporation that are at the time receivable upon the exercise of this
Note.  If the per share consideration payable to the holder hereof for shares of
Common Stock in connection with any such transaction is in a form other than
cash or marketable securities, then the value of such consideration shall be
determined reasonably and in good faith by the board of directors of the
Company.  In all events, appropriate adjustment (as determined reasonably and in
good faith by the board of directors of the Company) shall be made in the
application of the provisions of this Note with respect to the rights and
interests of the Payee after the transaction, to the end that the provisions of
this Note shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon
exercise of this Note.  Notwithstanding any other provision to the contrary
herein, in no event shall any transaction or other event associated with the
Merger Agreement (as defined below) be construed to be a Reorganization Event.
 
(i) Other Adjustments; Deemed Purchase Price.  If at any time or from time to
time the Company shall take any action in respect of its Common Stock, other
than an action described in Section 2, then, unless such action will not have a
materially adverse effect upon the rights of Payee, the Conversion Price shall
be adjusted in such manner as may be equitable in the circumstances, such
adjustment to be determined by the Company’s board of directors in its sole and
absolute discretion.

 
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(j) Adjustment for Reclassification, Exchange and Substitution.  If at any time
or from time to time, the Common Stock issuable upon exercise of this Note is
changed into the same or a different number of shares of any class or classes of
stock, this Note will thereafter represent the right to acquire such number and
kind of securities as would have been issuable as a result of exercise of this
Note and the Conversion Price therefor shall be appropriately adjusted, such
adjustment to be determined by the Company’s board of directors in its sole and
absolute discretion, all subject to further adjustment in this Section 2.
 
(k) Certain Limitations.  The Company will take no action to increase the par
value of the Common Stock to an amount in excess of the Conversion Price,
including entering into any transaction which, by reason of any adjustment
hereunder, would cause the Conversion Price to be less than the par value per
share of Common Stock, and the Company will not enter into any agreements
inconsistent with the rights of the Payee hereunder.  The Payee’s right to
effect a conversion hereunder, shall at all times and in all ways be subject to
the (i) holders of Common Stock and Series A Convertible Preferred Stock, par
value $.001 (the “Preferred Stock”), voting on an as-converted basis, approving
an increase in the authorized shares of Common Stock, in accordance with that
certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of June
7, 2012, between the Company and certain other parties, including True Drinks,
Inc., a Delaware corporation, and (ii) the subsequent automatic conversion of
the Preferred Stock (the “Preferred Conversion”) such that sufficient shares of
Common Stock are authorized to carry out any conversion of the Note hereunder
and the other Registered Notes.
 
(l) Other Provisions Applicable to Adjustments.  The following provisions shall
be applicable to the making of adjustments of the Conversion Price provided for
in Section 2:
 
(i) When Adjustments to Be Made.  The adjustments required by Section 2 shall be
made whenever and as often as any specified event requiring an adjustment shall
occur, except that any that would otherwise be required may be postponed (except
in the case of a subdivision or combination of shares of the Common Stock, as
provided for in Section 2(g)) up to, but not beyond, the date of conversion if
such adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the shares of Common Stock into which this
Note is convertible immediately prior to the making of such adjustment.  Any
adjustment representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 2 and not
previously made, would result in a minimum adjustment or on the date of
exercise, whichever is earlier.
 
(ii) Fractional Interests.  In computing adjustments under this Section 2,
fractional interests in Common Stock shall be taken into account to the nearest
1/100th of a share.
 
(m) Additional Common Stock.  As additional consideration for making this Note,
subject to the prior occurrence of the Preferred Conversion, the Company shall
issue to the Payee [_____] shares of Common Stock, subject to adjustment
consistent with Section 2(g), within ten (10) business days of the earlier of
the following occurrences:  (i) the Maturity Date or (ii) the date on which the
Company receives a Conversion Notice and other documents referred to herein such
that the Company no longer owes any amounts of principal, Interest, or Lender
Fees hereunder.
 
3. Security.  This Note shall be unsecured.
 
4. Default.  It shall be an event of default (“Event of Default”), and the
entire unpaid principal of this Note, together with accrued Interest and any
Lender Fees, shall become immediately due and payable, at the election of Payee,
upon the occurrence of any of the following events:
 
(a) any failure on the part of the Company to make any payment under this Note
when due, and such failure continues for fifteen (15) days after receipt of
written notice of such failure from the Payee;
 
(b) the Company’s commencement (or taking any action for the purpose of
commencing) of any proceeding under any bankruptcy, or for the reorganization of
any party liable hereon, whether as maker, endorser, guarantor, surety or
otherwise, or for the readjustment of any of the debts of any of the foregoing
parties, under the Federal Bankruptcy Code, as amended, or any part thereof, or
under any other laws, whether state or Federal, for the relief of debtors, now
or hereafter existing, by any of the foregoing parties, or against any of the
foregoing parties, which shall not be discharged within forty-five (45) days of
their commencement;

 
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(c) a proceeding shall be commenced against the Company under any bankruptcy,
reorganization, arrangement, readjustment of debt, moratorium or similar law or
statute and relief is ordered against such party, or the proceeding is
controverted but is not dismissed within sixty (60) days after the commencement
thereof;
 
(d) the appointment of a receiver, trustee or custodian for all or substantially
all of the assets of the Company, which appointment remains in place for at
least one hundred twenty (120) days, the dissolution or liquidation of the
Company; or
 
(e) the admission by the Company of its inability to pay its debts as they
mature, or an assignment for the benefit of the creditors of the Company.
 
5. Waiver
 
(a) The Company and every endorser or guarantor, if any, of this Note regardless
of time, order, or place of signing, waive demand, presentment, protest, notice
of protest, notice of dishonor with respect to this Note and notices of every
kind and assent to any one or more extensions or postponements of the time of
payment or any other indulgences, to any substitutions and to any additions or
releases of any other parties or persons primarily or secondarily liable with
respect to this Note.
 
(b) The parties hereto agree that a waiver of rights under this Note shall not
be deemed to be made by a party hereto unless such waiver shall be in writing,
duly signed by the applicable party, and each such waiver, if any, shall apply
only with respect to the specific instance involved and shall in no way impair
the rights of the parties hereto in any other respect at any other time.
 
6. GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.  THE COMPANY AND THE PAYEE
HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF ALL STATE DISTRICT COURTS OF
ORANGE COUNTY SITTING IN THE STATE OF CALIFORNIA IN CONNECTION WITH ANY ACTION
OR PROCEEDING UNDER OR IN RESPECT OF THIS NOTE, AND WAIVE TRIAL BY JURY IN ANY
SUCH ACTION OR PROCEEDING.
 
7. Assignment of Note.  The Company may not assign or transfer this Note or any
of its obligations under this Note in any manner whatsoever without the prior
written consent of Payee.  The Note may be assigned at any time by the Payee.
 
8. Miscellaneous
 
(a) This Note may be altered only by prior written agreement signed by the party
against whom enforcement of any waiver, change, modification, or discharge is
sought.  This Note may not be modified by an oral agreement, even if supported
by new consideration.
 
(b) Subject to Section 7, the covenants, terms, and conditions contained in this
Note apply to and bind the heirs, successors, executors, administrators and
assigns of the parties.
 
(c) The Payee, by acceptance of this Note, acknowledges that this Note and any
shares of Common Stock which may be issued pursuant to any conversion hereunder
have not been registered under the Securities Act of 1933 (the “Securities Act”)
or applicable state securities laws.  The Payee, by acceptance of this Note and
any shares of Common Stock, represents that it is fully informed as to the
applicable limitations upon any distribution or resale of these securities under
the Securities Act or any applicable state securities laws and agrees not to
distribute or resell such securities if such distribution or resale would
constitute a violation of the Securities Act or any applicable state securities
laws or would cause the issuance by the Company of the Common Stock to be in
violation of the Securities Act or any applicable state securities laws.  Any
exercise hereof by the Payee shall constitute a representation by the Payee that
the Payee is an “accredited investor” as defined in Rule 501(a) promulgated
under the Securities Act, as amended by the Dodd-Frank Act and related
interpretations of the Securities and Exchange Commission, and that the Common
Stock is not being acquired with the view to, or for resale in connection with,
any distribution or public offering thereof in violation of the Securities Act
or applicable state securities laws.

 
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(d) The term “Payee” shall include the initial party to whom payment is
designated to be made and, in the event of an assignment of this Note, the
successor assignee or assignees, and, as to each successive additional
assignment, such successor assignee or assignees.
 
(e) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested (or by the most nearly comparable method if mailed from or to
a location outside of the United States of America) or by FedEx, Express Mail,
or similar internationally recognized overnight delivery or courier service, or
delivered in person or by facsimile, or similar telecommunications equipment,
against receipt therefore at the address of such party set forth in this Section
8(e) (or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 8(e)).
 
Payee:                    [________________]
[________________]
[________________]
[________________]

Company:              Bazi International, Inc.
18552 MacArthur Boulevard, Suite 325
Irvine, California 92612
Telephone: (949) 203-3500
Attention: Dan Kerker, CFO
 
Such addresses may be changed by notice given as provided in this
subsection.  Notices shall be effective upon the date of receipt; provided,
however, that a notice (other than a notice of a changed address) sent by
certified or registered U.S. mail, with postage prepaid, shall be presumed
received not later than three (3) business days following the date of sending.
 
(f) All agreements herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise, shall the amount paid or
agreed to be paid to the Payee for the use of the money advanced or to be
advanced hereunder exceed the maximum rate of interest allowed to be charged
under applicable law (the “Maximum Legal Rate”).  If, from any circumstances
whatsoever, the fulfillment of any provision of this Note or any other agreement
or instrument now or hereafter evidencing, securing or in any way relating to
the indebtedness evidenced hereby shall involve the payment of interest in
excess of the Maximum Legal Rate, then the obligation to pay interest or other
amounts hereunder shall be reduced to the Maximum Legal Rate; and if from any
circumstance whatsoever, the Payee shall ever receive interest, the amount of
which would exceed the amount collectible at the Maximum Legal Rate, such amount
as would be excessive interest shall be applied to any other indebtedness of the
Company to the Payee.  This provision shall control every other provision in any
and all other agreements and instruments existing or hereafter arising between
the Company and the Payee with respect to the indebtedness evidenced hereby.
 
(g) The Company represents and warrants that the issuance of this Note has been
duly authorized by all necessary corporate action and the execution, delivery
and repayment of this Note does not and will not violate any agreement to which
it is a party.
 
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Note as
of the date first set forth above.
 
BORROWER:
 
BAZI INTERNATIONAL, INC.
   
By:
   
Dan Kerker
 
CFO
   

 
ACKNOWLEDGED:
 
 
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Exhibit A
 
Notice of Conversion
 

 
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BAZI INTERNATIONAL, INC.
 
CONVERSION NOTICE
 
Reference is made to the Senior Convertible Note (the “Note”) issued to the
undersigned by Bazi International, Inc. (the “Company”).  In accordance with and
pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of
Common Stock, par value $0.001 per share (the “Common Stock”), of the Company,
as of the date specified below.
 

    Date of Conversion:               Aggregate Conversion Amount to be
converted:         Please confirm the following information:        
    Conversion Price:               Number of shares of Common Stock to be
issued:         Please issue the Common Stock into which the Note is being
converted in the following name and to the following address:           Issue
to:                                       Facsimile Number:          
    Authorization:                  By:                  Title:           Dated:
   

      
 
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ACKNOWLEDGMENT
 
The Company hereby acknowledges this Conversion Notice and hereby directs
____________________ to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated _________, from
the Company and acknowledged and agreed to by _________________________.
 
BAZI INTERNATIONAL, INC.
 

 
By:  ______________________________
        Name:
        Title: