15% SENIOR SECURED CONVERTIBLE NOTE

 

THIS NOTE AND THE SECURITIES OBTAINABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.

 

15% SENIOR SECURED CONVERTIBLE NOTE

 

No. BEES -[   ] March __, 2013 U.S. $ _____________  

 

FOR VALUE RECEIVED, the undersigned, BeesFree, Inc., a Nevada corporation (the
“Company”), hereby unconditionally promises to pay ____________________ (the
“Holder”), on the Maturity Date (as defined in Section 1 hereof, unless
otherwise converted pursuant to Section 3 hereof) to the order of the Holder, in
lawful money of the United States of America and in immediately available funds,
the principal amount of _____________________ ($________) Dollars (the
“Principal Amount”). Interest shall accrue the rate of 15% per annum
(“Interest”) based on a 360 day year, shall compound quarterly and shall be
payable on the Maturity Date or converted pursuant to Section 3 hereof. The
Company shall be entitled to prepay this Note at any time prior to the Maturity
Date by providing holder no less than 30 days prior notice of such prepayment.
Holder may elect to convert all or a portion of the Principal Amount and accrued
Interest in accordance with the provisions of Section 3 hereof prior to
prepayment. Any prepayment made by Company will be applied first toward accrued
Interest and once the Interest is fully paid, towards the Principal Amount.

 

This Note is one of a series of 15% senior secured convertible notes of like
tenor and ranking made by the Company in favor of certain investors and issued,
from time to time (collectively, the “Notes”), pursuant to that certain
Securities Purchase Agreement by and between the Company and certain investors,
including the Holder, dated as of March __, 2013, including all attachments,
schedules and exhibits thereto (the “Securities Purchase Agreement”).
Capitalized terms used and not otherwise defied herein shall have the meanings
set forth in the Securities Purchase Agreement. Each of the Notes shall rank
equally without preference or priority of any kind over one another, and all
payments on account of Principal Amount and Interest with respect to any of the
Notes shall be applied ratably and proportionately on the outstanding Notes on
the basis of the Principal Amount of the outstanding indebtedness represented
thereby.

 

 

 

 

1.          Maturity; Acceleration. Unless otherwise converted in accordance
with the provisions of Section 3, this Note shall mature on __________ __, 2015
[THIS DATE TO BE 24 MONTHS FOLLOWING THE FIRST CLOSING DATE] (such date, the
“Maturity Date”). On the Maturity Date, unless, and to the extent, previously
converted in accordance with the provisions of Section 3 hereof, any and all
outstanding Principal Amount and accrued and unpaid Interest due and owing under
the Note shall be immediately paid by the Company.

 

2.          Seniority; Security Interest.  (a) The indebtedness evidenced by
this Note and the payment of the Principal Amount and Interest shall be Senior
(as hereinafter defined) to, and have priority in right of payment over, all
indebtedness of Company.  “Senior,” as used herein, shall be deemed to mean
that, in the event of any default in the payment of the obligations represented
by this Note (after giving effect to “cure” provisions, if any) or of any
liquidation, insolvency, bankruptcy, reorganization or similar proceedings
relating to the Company, all sums payable on this Note shall first be paid in
full, with Interest, if any, before any payment is made upon any other
indebtedness, now outstanding or hereinafter incurred.

 

(b) This Note is secured by a first lien and security interest in all of the
assets of the Company and its wholly-owned subsidiary, BeesFree USA, Inc.
(“Subsidiary”) pursuant to the terms of a certain Security Agreement dated as of
March __, 2013 (the “Security Agreement”), by the Company in favor of the
Holders. By its execution of the Securities Purchase Agreement, the Holder has
authorized the Requisite Holders (as defined herein) to appoint a collateral
agent to act on behalf of the Holder and other holders of the Notes (the
“Agent”), and in such capacity to enter into the Security Agreement, as the same
may be amended, modified, restated or supplemented from time to time, and to
exercise for the benefit of the Holder and other holders of the Notes all
rights, powers and remedies provided to it, under or pursuant to the Security
Agreement including, without limitation, those available upon an Event of
Default (as defined in Section 4 hereof).

 

3.          Conversion.

 

(a)          Conversion Price and Optional Conversion. The Holder shall have the
right, at its option, to convert all or a portion of the Principal Amount and
accrued Interest of this Note into shares of the Company’s Common Stock (the
“Conversion Shares”) at a conversion price equal to $1.50 per share (the
“Conversion Price”), subject to adjustment as set forth in Section 8). The
Holder shall exercise its right to convert this Note by delivering to the
Company a written notice setting forth its election to convert (a “Conversion
Notice”) in the form attached hereto as Exhibit A and surrendering this Note.
Upon receipt of the Conversion Notice and the surrender of this Note, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder, and in such name or names as the Holder
may designate, a certificate or certificates for the full number of Conversion
Shares so converted upon conversion of this Note. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
securities as of the date of delivery of the Conversion Notice, notwithstanding
that the certificate or certificates representing such securities shall not
actually have been delivered or that the stock transfer books of the Company
shall then be closed. In the event that the Principal Amount of this Note
exceeds the amount being converted, the Company shall, upon such conversion
execute and deliver to the Holder a new Note for the Principal Amount of this
Note surrendered which is not being converted.

 

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(b)          Delivery of Stock Certificates, etc. on Conversion. The Company
agrees that, upon receipt of the Conversion Notice as specified in Section 3(a)
above, the Conversion Shares issueable upon conversion of this Note shall be
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which delivery of the Conversion Notice
shall have occurred. As soon as practicable after the conversion of this Note in
full or in part, and in any event within five (5) business days thereafter
(“Conversion Share Delivery Date”), the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of duly
and validly issued, fully paid and non-assessable shares of Common Stock to
which such Holder shall be entitled on such conversion, together with any other
stock or other securities and property (including cash, where applicable) to
which such Holder is entitled upon such exercise pursuant to Section 3(a) or
otherwise. No fractional shares of Common Stock will be issued in connection
with any exercise hereof, but in lieu of such fractional shares, the Company
shall round the number of shares to be issued upon exercise up to the nearest
whole number of shares. The Company understands that a delay in the delivery of
the Conversion Shares after the Conversion Share Delivery Date could result in
economic loss to the Holder. As compensation to the Holder for such loss, the
Company agrees to pay (as liquidated damages and not as a penalty) to the Holder
for late issuance of Conversion Shares upon conversion of this Note the
proportionate amount of $100 per business day after the Conversion Share
Delivery Date for each $10,000 of Conversion Price of Conversion Shares for
which this Note is converted which are not timely delivered. The Company shall
pay any payments incurred under this Section in immediately available funds upon
demand. Furthermore, in addition to any other remedies which may be available to
the Holder, in the event that the Company fails for any reason to effect
delivery of the Conversion Shares by the Conversion Share Delivery Date, the
Holder may revoke all or part of the relevant Note conversion by delivery of a
notice to such effect to the Company, whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to the
conversion of the relevant portion of this Note, except that the liquidated
damages described above shall be payable through the date notice of revocation
or rescission is given to the Company.

 

(c)          Buy-In. In addition to any other rights available to the Holder, if
the Company fails to deliver to a Holder the Conversion Shares as required
pursuant to this Note, and the Holder or a broker on the Holder’s behalf,
purchases (in an open market transaction or otherwise) shares of common stock to
deliver in satisfaction of a sale by such Holder of the Conversion Shares which
the Holder was entitled to receive from the Company (a “Buy-In”), then the
Company shall pay in cash to the Holder (in addition to any remedies available
to or elected by the Holder) the amount by which (A) the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (B) the aggregate Conversion Price of the Conversion Shares
required to have been delivered together with interest thereon at a rate of 15%
per annum, accruing until such amount and any accrued interest thereon is paid
in full (which amount shall be paid as liquidated damages and not as a penalty).
For example, if a Holder purchases shares of Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to $10,000 of
Conversion Price of Conversion Shares to have been received upon conversion of
this Note, the Company shall be required to pay the Holder $1,000, plus
interest. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.

 

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(d)          Rights as a Stockholder. Unless and until this Note is converted in
accordance with the terms hereof, Holder shall not be entitled to vote or
receive distributions or be deemed the holder of Conversion Shares or any other
securities of the Company which may at any time be issuable upon the conversion
of this Note for any purpose, nor shall anything contained herein be construed
to confer upon Holder, as such, any of the rights of a stockholder of the
Company or any right to vote as a stockholder of the Company or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of equity
securities of the Company, reclassification of equity securities of the Company,
consolidation, merger, transfer of assets or otherwise) or to receive notice of
meetings, or to receive distributions or subscription rights or otherwise unless
and until this Note is converted in accordance with the terms hereof.

 

(e)          Holder’s Exercise Limitations.  The Company shall not effect any
conversion of this Note, and a Holder shall not have the right to convert any
portion of this Note, pursuant to this Section 3 or otherwise, to the extent
that after giving effect to such issuance after conversion as set forth on the
applicable Conversion Notice, the Holder (together with the Holder’s affiliates,
and any other persons acting as a group together with the Holder or any of the
Holder’s affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below).  For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by the Holder
and its affiliates shall include the number of shares of Common Stock issuable
upon conversion of this Note with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which would be
issuable upon (i) conversion of the remaining, non-converted portion of this
Note beneficially owned by the Holder or any of its affiliates and (ii) exercise
or conversion of the unexercised or non-converted portion of any other
convertible securities of the Company subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its affiliates.  Except as set forth in the preceding sentence,
for purposes of this Section 3(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by the Holder that the Company is
not representing to the Holder that such calculation is in compliance with
Section 13(d) of the Exchange Act and the Holder is solely responsible for any
schedules required to be filed in accordance therewith.   To the extent that the
limitation contained in this Section 3(e) applies, the determination of whether
this Note is convertible (in relation to other securities owned by the Holder
together with any affiliates) and of which portion of this Note is convertible
shall be in the sole discretion of the Holder, and the submission of a
Conversion Notice shall be deemed to be the Holder’s determination of whether
this Note is convertible (in relation to other securities owned by the Holder
together with any affiliates) and of which portion of this Note is convertible,
in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such
determination.   In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 3(e), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding.  Upon the
written or oral request of a Holder, the Company shall within two business days
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding.  In any case, the number of outstanding shares of Common Stock
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 shares of Common Stock was
reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of this Note. The
Holder, upon not less than 61 days’ prior notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this Section 3(e),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon conversion of this Note
held by the Holder and the provisions of this Section 3(e) shall continue to
apply.  Any such increase or decrease will not be effective until the 61st day
after such notice is delivered to the Company. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 3(e) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of
this Note.

 

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4.          Events of Default. The term “Event of Default” shall mean any of the
events set forth in this Section 4:

 

(a)          the Company shall default in the payment of Principal Amount or
Interest under this Note within five (5) days following such time of becoming
due, whether by maturity or acceleration;

 

(b)          failure by the Company to perform or observe in any material
respect any covenant or agreement of the Company contained in this Note,  which
remains uncured for a period of fifteen (15) days from the date the Company is
notified of such default;

 

(c)          there shall be a dissolution, termination of existence, suspension
or discontinuance of the Company’s business for a continuous period of 20 days;

 

(d)          if the Company shall:

 

(i)          admit in writing its inability to pay its debts generally as they
become due;

 

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(ii)         file a petition in bankruptcy or a petition to take advantage of
any insolvency act;

 

(iii)        convey any material portion of the assets of the Company to a
trustee, mortgage or liquidating agent or make an assignment for the benefit of
creditors;

 

(iv)        consent to the appointment of a receiver, trustee, custodian or
similar official, for the Company or any material portion of the property or
assets of the Company;

 

(v)         on a petition in bankruptcy filed against it, be adjudicated a
bankrupt; or

 

(vi)        file a petition or answer seeking reorganization or arrangement
under the federal bankruptcy laws or any other applicable law or statute of the
United States of America or any State, district or territory thereof;

 

(e)          if a court of competent jurisdiction shall enter an order,
judgment, or decree appointing, without the consent of the Company, a receiver
of the whole or any substantial part of the Company’s assets, and such order,
judgment or decree shall not be vacated or set aside or stayed within 60 days
from the date of entry thereof; or

 

(f)          if, under the provisions of any other law for the relief or aid of
debtors, any court of competent jurisdiction shall assume custody or control of
the whole or any substantial part of the Company’s assets and such custody or
control shall not be terminated or stayed within 60 days from the date of
assumption of such custody or control.

 

If any Event of Default described in clause (d) of this Section 4 shall occur,
the Principal Amount of this Note, together with all accrued and unpaid
Interest, shall automatically be and become immediately due and payable, without
notice or demand.

If any Event of Default (other than any Event of Default described in clause (d)
of this Section 4) shall occur for any reason, whether voluntary or involuntary,
the Agent, acting on behalf of the Holder and other holders of the Notes, may,
upon written notice to the Company, declare all or any portion of the
outstanding Principal Amount, together with all accrued and unpaid Interest, to
be due and payable, whereupon the full unpaid Principal Amount hereof, together
with all accrued and unpaid Interest shall be so declared due and payable shall
be and become immediately due and payable if default is not cured by the Company
within 10 business days of receipt of written notice, without further notice,
demand, or presentment.

 

5.          Remedies. Subject to the terms of the Security Agreement, in case
any one or more of the Events of Default specified in Section 4 hereof shall
have occurred and be continuing, the Agent, acting on behalf of the Holder and
other holders of the Note, may proceed to protect and enforce the Holder’s
rights either by suit in equity and/or by action at law, whether for the
specific performance of any covenant or agreement contained in this Note or in
aid of the exercise of any power granted in this Note or may proceed to enforce
the payment of all sums due upon this Note or to enforce any other legal or
equitable right of the Holder.

 

6

 

 

 

6.          Affirmative Covenants. The Company covenants and agrees that, while
any amounts under this Note are outstanding, it shall:

 

(a)          Do all things necessary to preserve and keep in full force and
effect its corporate existence, including, without limitation, all licenses or
similar qualifications required by it to engage in its business in all
jurisdictions in which it is at the time so engaged; and continue to engage in
business of the same general type as conducted as of the date hereof; and
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder;

 

(b)          Pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property before the same shall become delinquent or in
default, which, if unpaid, might reasonably be expected to give rise to liens or
charges upon such properties or any part thereof, unless, in each case, the
validity or amount thereof is being contested in good faith by appropriate
proceedings and the Company has maintained adequate reserves with respect
thereto in accordance with GAAP;

 

(c)          Comply in all material respects with all federal, state and local
laws and regulations, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations and requirements applicable to it
of all governmental bodies, departments, commissions, boards, companies or
associations insuring the premises, courts, authorities, officials or officers
which are applicable to the Company or any of its properties, except where the
failure to so comply would not have a Material Adverse Effect (as defined in
this Section 6);

 

(d)          Keep proper records and books of account with respect to its
business activities, in which proper entries, reflecting all of their financial
transactions, are made in accordance with GAAP;

 

(e)          Keep all of its properties adequately insured at all times with
responsible insurance carriers against loss or damage by fire and other hazards,
and maintain adequate insurance at all times with responsible insurance carriers
against liability on account of damage or injury to persons and property.

 

For purposes hereof, “Material Adverse Effect” shall be an event, matter,
condition or circumstance which has or would reasonably be expected to have a
material adverse effect on the business, operations, economic performance,
assets, financial condition, material agreements or results of operations of the
Company and its subsidiaries, taken as a whole.

 

7.          Negative Covenants. The Company covenants and agrees that while any
amount of this Note is outstanding it will not directly or indirectly:

 

(a)          Declare or pay, directly and indirectly, any cash dividends with
respect to any shares of its capital stock (including without limitation any
preferred stock; provided, however, nothing in this Section 7 shall prohibit the
cumulative accrual of dividends on the Company’s issued and outstanding shares
of Series A and Series B Preferred Stock or prevent the redemption of the Series
A Preferred Stock in accordance with its terms and the payment of accrued
dividends thereon upon such redemption), without first obtaining the prior
written consent of the holders of more than fifty one percent (51%) of the
outstanding principal of the Notes (the “Requisite Holders”);

 

7

 

 

(b)          Sell, transfer, discount or otherwise dispose of any claim or debt
owing to it, including, without limitation, any notes, accounts receivable or
other rights to receive payment, except for reasonable consideration and in the
ordinary course of business;

 

(c)          Incur, guarantee, assume or otherwise become responsible for
(directly or indirectly) any indebtedness for borrowed money that is senior to,
or pari passu with, the Notes, without first obtaining the prior written consent
of the Requisite Holders; provided, however, that the foregoing shall not
prohibit the Company from incurring such indebtedness from sources other than
the Holders on a pari passu basis without the consent of the Requisite Holders
where the total amount of such indebtedness, inclusive of that held by the
Holders in the aggregate, does not exceed $2,520,000; or

 

(d)          Create, incur, assume or permit to exist any lien on any property
or assets now owned or hereafter acquired by it or its Subsidiary or on any
income or revenues or rights in respect of any thereof that is senior to the
Notes.

 

8.          Adjustments.

 

(a)          Stock Dividends and Splits. In case the Company shall at any time
(A) declare any dividend or distribution on its Common Stock or other securities
of the Company other than the Series A Preferred Stock or Series B Preferred
Stock, (B) split or subdivide the outstanding Common Stock, (C) combine the
outstanding Common Stock into a smaller number of shares, or (D) issue by
reclassification of its Common Stock any shares or other securities of the
Company, then in each such event the Conversion Price shall be adjusted
proportionately so that the Holders shall be entitled to receive the kind and
number of shares or other securities of the Company which such Holders would
have owned or have been entitled to receive after the happening of any of the
events described above had the Note been converted immediately prior to the
happening of such event (or any record date with respect thereto). Such
adjustment shall be made whenever any of the events listed above shall occur. An
adjustment made to the Conversion Price pursuant to this Section 8(a) shall
become effective immediately after the effective date of the event.

 

(b)          Additional Issuances of Common Stock. For so long as this Note is
outstanding, other than in the case of an “Excepted Issuance” (as defined
below), if the Company agrees to issue or issues shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock, for
a consideration at a price per share, or having a conversion, exchange or
exercise price per share less than the Conversion Price of the Notes immediately
in effect immediately prior to such sale or issuance, then immediately prior to
such sale or issuance the Conversion Price of the Notes shall be reduced to such
other lower price. For purposes of this adjustment, the issuance of any security
carrying the right to convert such security directly or indirectly into shares
of Common Stock or of any warrant, right or option to purchase Common Stock
shall result in an adjustment to the Conversion Price upon the issuance of the
above-described security and again upon the issuance of shares of Common Stock
upon exercise of such conversion or purchase rights if such issuance is at a
price lower than the then applicable Conversion Price. Common Stock issued or
issuable by the Company for no consideration or for consideration that cannot be
determined at the time of issue will be deemed issuable or to have been issued
for $.001 per share of Common Stock. A convertible instrument (including a right
to purchase equity of the Company) issued, subject to an original issue or
similar discount or which principal amount is directly or indirectly increased
after issuance will be deemed to have been issued for the actual cash amount
received by the Company in consideration of such convertible instrument. The
provisions of this Section 8(b) shall no longer apply ninety (90) days following
such date that all of Holder’s Registrable Securities (as defined in the
Securities Purchase Agreement) are either included for resale in an effective
registration statement or are eligible for resale without restriction pursuant
to Rule 144(b)(1)(i) of the Act, or a combination thereof.

 

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(c)          Mergers, Consolidations, Etc. In case of any merger of the Company
with or into any other corporation (other than a merger in which the Company is
the surviving or continuing corporation and which does not result in any
reclassification, conversion, or change of the outstanding shares of Common
Stock), then lawful provision shall be made so that Holders shall thereafter
have the right to convert the Notes into the kind and amount of shares of stock
and/or other securities or property receivable upon such merger by a Holder of
the number of shares of Common Stock into which such Notes might have been
converted immediately prior to such consolidation or merger. Such provision
shall also provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 8. The foregoing
provisions of this Section 8(c) shall similarly apply to successive mergers.

 

(d)          Sales or Conveyances. In case of any sale or conveyance to another
person or entity, other than a subsidiary of the Company, of the property of the
Company as an entirety, or substantially as an entirety or a material part of
the property of the Company, in connection with which shares or other securities
or cash or other property shall be issuable, distributable, payable, or
deliverable for outstanding shares of Common Stock, then, lawful provision shall
be made so that the Holders shall thereafter have the right to convert the Notes
into the kind and amount of shares of stock or other securities or property that
shall be issuable, distributable, payable, or deliverable upon such sale or
conveyance with respect to each share of Common Stock immediately prior to such
conveyance.

 

(e)          If the Common Stock shall be changed to the same or different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Section 8(a), or by a
reorganization, merger, consolidation, or sale of assets other than as provided
for in Section 8(c) hereof), then, and in each event, an appropriate revision to
the Conversion Price shall be made and provisions shall be made (by adjustments
of the Conversion Price or otherwise) so that the Holder shall have the right
thereafter to convert the Note into the kind and amount of shares of stock and
other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which the
Note might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.

 

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(f)          As used in this Section 8, “Exempted Issuance” means an issuance of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock other than in connection with (i) full or partial consideration in
connection with a strategic merger, acquisition, consolidation or purchase of
substantially all of the securities or assets of a corporation or other entity,
so long as such issuances are not for the purpose of raising capital and which
holders of such securities or debt are not at any time granted registration
rights, (ii) the Company’s issuance of securities in connection with strategic
license agreements and other partnering arrangements, so long as such issuances
are not for the purpose of raising capital, (iii) the Company’s issuance of
Common Stock or the issuances or grants of options to purchase Common Stock to
employees, directors, and consultants, (iv) securities upon the exercise or
exchange of or conversion of any securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, and (v) as a result of the exercise of the Warrants or
conversion of the Notes. For clarification purposes, Notes and Warrants that are
issued pursuant to the Securities Purchase Agreement at closings subsequent to
the closing in which this Note has been issued shall be deemed to be an Exempted
Issuance hereunder.

 

(g)          Calculations. All calculations under this Section 8 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 8, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.

 

(e)          Voluntary Adjustment By Company. The provisions of this Section 8
shall similarly apply to successive, stock dividends, stock spits or
combinations, reclassifications, exchanges, substitutions, dilutive Issuances or
other events.

 

9.          Amendments and Waivers. The terms of this Note may be amended and
the observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) with the written
consent of the Company and the Requisite Holders, except with respect to the
Maturity Date and the Conversion Price, which can only be amended with the
Holder’s consent.

 

10.         Notices.

 

(a)          Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance
with the notice provisions of the Securities Purchase Agreement.

 

(b)          Any party may give any notice, request, consent or other
communication under this Note using any other means (including personal
delivery, messenger service, telecopy, first class mail or electronic mail), but
no such notice, request, consent or other communication shall be deemed to have
been duly given unless and until it is actually received by the party for whom
it is intended. Any party may change the address to which notices, requests,
consents or other communications hereunder are to be delivered by giving the
other parties notice in the manner set forth in this Section 10.

 

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11.         Severability. The unenforceability or invalidity of any provision or
provisions of this Note as to any persons or circumstances shall not render that
provision or those provisions unenforceable or invalid as to any other
provisions or circumstances, and all provisions hereof, in all other respects,
shall remain valid and enforceable.

 

12.         Governing Law. This Note shall be governed by and construed under
the laws of the State of New York applicable to agreements made and to be
performed entirely within such jurisdiction.

 

13.         Waivers. The non-exercise by either party of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.

 

14.         Attorneys’ Fees; Costs. If any Event of Default occurs, the Company
promises to pay all costs of enforcement and collection, including but not
limited to, Holder’s attorneys’ fees, whether or not any action or proceeding is
brought to enforce the provisions hereof.

 

15.         Successor and Assigns. This Note shall be binding upon the Company
and its successors and permitted assigns and shall inure to the benefit of the
Holder and its successors and assigns. The Company may not assign or delegate
any of its duties or obligations under this Note without the written consent of
the Holder.

 

[Signature page to Follow]

 

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IN WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute this Note as of the date first written above.

 

  COMPANY:         BEESFREE, INC.         By:       Name:     Title

 

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Optional Conversion Notice

 

______________________, the registered holder of this 15% Senior Secured
Convertible Note, issued ________, 2013, hereby gives notice of the conversion
of __________ of the outstanding principal and accrued interest due under this
Note into Common Stock of BeesFree, Inc. at a conversion price equal to $1.50
per share.

 

Holder:

 

______________________________________________

(Print Name)

 

__________________________________________________

Signature

 

Date: ________________

 

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