NEITHER
THE ISSUANCE
AND SALE
OF THE
SECURITIES REPRESENTED BY
THIS CERTIFICATE
NOR THE
SECURITIES INTO
WHICH THESE SECURITIES
ARE CONVERTIBLE
HAVE BEEN
REGISTERED UNDER
THE SECURITIES
ACT OF
1933, AS AMENDED,
OR APPLICABLE STATE
SECURITIES LAWS. THE
SECURITIES MAY
NOT BE OFFERED
FOR SALE,
SOLD, TRANSFERRED
OR ASSIGNED (I)
IN THE ABSENCE OF
(A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B)
AN OPINION OF COUNSEL (WHICH COUNSEL
SHALL BE SELECTED
BY THE HOLDER),
IN A GENERALLY
ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD
PURSUANT TO RULE
144 OR RULE
144A UNDER SAID
ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA
FIDE MARGIN
ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.


 


	Principal Amount: US$55,000	Issue Date: March 9, 2015 Purchase
	Price: US$55,000	 


 


 


CONVERTIBLE
PROMISSORY NOTE


 


FOR
VALUE RECEIVED, RICH
PHARMACEUTICALS, INC., a Nevada
corporation (hereinafter called
the “Borrower”),
hereby promises to
pay to the
order of
AUCTUS PRIVATE
EQUITY FUND,
LLC, a Delaware
limited liability company,
or registered
assigns (the
“Holder”) the
sum of
US $55,000 together
with any interest
as set
forth herein,
on December 9,
2015 (the
“Maturity Date”),
and to
pay interest on
the unpaid
principal balance hereof
at the
rate of
eight percent
(8%) (the
“Interest Rate”)
per annum
from the
date hereof (the “Issue
Date”) until
the same
becomes due
and payable,
whether at
maturity or upon acceleration or
by prepayment
or otherwise. This
Note may
not be
prepaid in whole
or in
part except as
otherwise explicitly set forth herein
with the written
consent of the
Holder which may
be withheld
for any reason
or for
no reason. Any
amount of principal
or interest
on this Note
which is not paid when due shall bear interest at the rate of twenty two percent
(22%) per annum
from the
due date
thereof until the
same is
paid (“Default
Interest”). Interest
shall commence
accruing on the date that
the Note is
fully paid and
shall be computed on the
basis of
a 365-day year and the
actual number of days elapsed.
All payments due hereunder
(to the extent not
converted into common
stock, $0.001
par value
per share (the
“Common Stock”) in
accordance with the terms
hereof) shall be made in lawful money of the United States of America.
All payments
shall be
made at
such address
as the
Holder shall
hereafter give
to the
Borrower by written
notice made in accordance
with the provisions of this
Note. Whenever
any amount expressed to be
due by the terms
of this Note is
due on any day which is not a
business day, the same
shall instead be due on the next succeeding
day which is a business day and,
in the case of any interest
payment date
which is
not the
date on which
this Note
is paid in
full, the
extension of
the due date thereof shall not be taken
into account for purposes of determining the amount of interest
due on such date.
As used in this
Note, the term
“business day” shall mean
any day
other than
a Saturday,
Sunday or a day on
which commercial banks
in the city
of New
York, New York are
authorized or required by
law or executive
order to remain closed.
Each capitalized term used
herein, and not otherwise
defined, shall have the
meaning ascribed thereto
in that certain Securities Purchase
Agreement dated the date hereof, pursuant
to which this Note was originally issued
(the “Purchase Agreement”).




    	 



    	 



    




This
Note is
free from
all taxes,
liens, claims and
encumbrances with
respect to
the issue
thereof and
shall not be
subject to preemptive
rights or other
similar rights of
shareholders of
the Borrower and will not impose personal liability
upon the holder thereof.


 


The following terms shall apply
to this Note:


 


ARTICLE
I. CONVERSION
RIGHTS


 


1.1               
Conversion
Right.
The Holder
shall have the
right from
time to time,
and at
any time during
the period
beginning on
the date
which is
one hundred
eighty (180)
days following
the date
of this
Note and
ending on
the later
of (i)
the Maturity Date
and (ii)
the date of payment of the Default
Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III,
each in
respect of
the remaining
outstanding principal
amount of
this Note
to convert all
or any part of the outstanding
and unpaid principal amount of
this Note into fully
paid and non-
assessable shares of Common Stock,
as such Common
Stock exists on the
Issue Date, or any shares
of capital stock or
other securities of
the Borrower into which
such Common Stock shall
hereafter be changed
or reclassified
at the Conversion Price
(as defined below) determined
as provided herein (a “Conversion”);
provided, however, that
in no event shall the Holder be entitled to convert any portion of this Note in excess
of that portion of this Note upon conversion of which the
sum of (1) the number of shares of
Common Stock beneficially owned by the Holder
and its affiliates (other than shares
of Common Stock which may be deemed beneficially
owned through the
ownership of the unconverted portion
of the Notes
or the unexercised
or unconverted
portion of
any other
security of
the Borrower
subject to a limitation
on conversion or
exercise analogous to the
limitations contained herein)
and (2) the number
of shares of
Common Stock issuable upon the conversion of the
portion of this Note with respect to which the
determination of this
proviso is being made,
would result in beneficial
ownership by the
Holder and its affiliates
of more than
4.99% of the outstanding shares of
Common Stock. For purposes of
the proviso to the
immediately preceding sentence, beneficial
ownership shall be determined in accordance
with Section 13(d) of the
Securities Exchange Act of
1934, as amended (the
“Exchange Act”), and Regulations 13D-G
thereunder, except as otherwise provided
in clause (1) of such
proviso, provided, further,
however, that the limitations
on conversion may be waived by the Holder
upon, at the election
of the Holder, not less than
61 days’ prior notice
to the Borrower, and
the provisions of the
conversion limitation shall continue
to apply until such 61st day (or such
later date, as determined by the Holder,
as may be specified in such notice
of waiver). The
number of shares of Common Stock to be
issued upon each conversion of
this Note shall be determined by dividing
the Conversion Amount (as
defined below) by the
applicable Conversion Price then
in effect
on the date
specified in the notice
of conversion,
in the
form attached
hereto as
Exhibit A (the
“Notice of
Conversion”), delivered
to the Borrower by
the Holder in accordance with Section 1.4 below;
provided that the Notice of Conversion
is submitted by facsimile or e-mail
(or by other means
resulting in, or reasonably expected
to result in, notice)
to the Borrower
before 6:00 p.m., New
York, New
York time on such
conversion date (the
“Conversion Date”).
The term “Conversion
Amount” means, with respect
to any conversion of this Note,
the sum of (1)
the principal amount of this Note
to be converted in such conversion plus
(2) at the
Holder’s option, accrued and unpaid
interest, if any,
on such principal amount at
the interest rates provided in this Note to the
Conversion Date, provided
however, that
the Borrower
shall have the
right to pay
any or all interest
in cash plus (3)
at the Holder’s option, Default
Interest, if any, on the
amounts referred to in the immediately preceding
clauses (1) and/or (2) plus (4)
at the Holder’s
option, any amounts owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof.




    	2



    	 



    




1.2               
Conversion Price.


 


(a)                
Calculation of
Conversion Price.
The conversion price
(the “Conversion
Price”) shall equal
the Base
Conversion Price
(as defined herein)
(subject to
equitable adjustments
for stock
splits, stock
dividends or
rights offerings by
the Borrower
relating to
the Borrower’s
securities or
the securities
of any
subsidiary of the Borrower, combinations,
recapitalization, reclassifications,
extraordinary distributions and similar
events). The
“Base Conversion Price”
shall mean 55%
multiplied by the Market
Price (as defined
herein) (representing a discount rate
of 45%). “Market Price”
means the average of
the lowest two (2)
Trading Prices
(as defined
below) for
the Common Stock
during the fifteen
(15) Trading
Day period ending
on the latest
complete Trading Day
prior to the
Conversion Date.
“Trading Price” means,
for any security as
of any
date, the closing bid price on the Over-the-Counter Bulletin
Board (the
“OTCBB”), OTCQB
or applicable
trading market
as reported
by a reliable
reporting service (“Reporting Service”) designated
by the Holder or, if
the OTCBB is not the principal trading
market for such
security, the
closing bid price
of such
security on the
principal securities exchange
or trading market where such security
is listed or traded or,
if no closing bid price of such
security is available
in any of
the foregoing manners,
the average
of the closing
bid prices of
any market makers for such security that
are listed in the “pink sheets”
by the National Quotation Bureau, Inc.
If the shares have not been delivered
within three (3) business days to the
Company, the Notice of Conversion
may be rescinded.
In the case that the Borrower’s
Common Stock is
not deliverable by
DWAC, an additional
10% discount will
apply. In the
case that the Borrower’s
Common Stock is “chilled” for deposit into the
DTC system and only
eligible for
clearing deposit, an
additional 15% discount
shall apply while
the “chill”
is in effect.
If the
Trading Price cannot
be calculated
for such security
on such date
in the manner
provided above, the
Trading Price
shall be
the fair
market value
as mutually
determined by
the Borrower and the holders of
a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine
the Conversion Price of such Notes. “Trading Day”
shall mean any day
on which the
Common Stock is
tradable for
any period on the OTCBB, OTCQB
or on the principal securities exchange or other securities market on which the Common Stock is then being traded.


 


(b)                
Conversion
Price
During Major Announcements.
Notwithstanding anything
contained in Section
1.2(a) to the
contrary, in
the event the
Borrower (i) makes
a public announcement
that it intends
to consolidate
or merge
with any other
corporation (other
than a
merger in
which the
Borrower is
the surviving or continuing
corporation and
its capital
stock is
unchanged) or sell or
transfer all or substantially all
of the assets
of the Borrower
or (ii) any
person, group or
entity (including the
Borrower) publicly announces
a tender offer to
purchase 50%
or more
of the
Borrower’s Common
Stock (or
any other
takeover scheme)
(the date
of the
announcement referred
to in clause
(i) or
(ii) is
hereinafter referred to
as the “Announcement Date”),
then the Conversion Price
shall, effective upon the Announcement
Date and continuing
through the Adjusted Conversion Price Termination Date
(as defined below), be equal to the
lower of (x) the Conversion
Price which would
have been applicable for
a Conversion occurring
on the Announcement
Date and (y)
the Conversion
Price that would
otherwise be in
effect. From and
after the Adjusted Conversion
Price Termination Date,
the Conversion Price
shall be determined
as set forth
in this Section 1.2(a). For purposes
hereof, “Adjusted Conversion
Price Termination Date”
shall mean, with respect to any proposed
transaction or tender offer
(or takeover scheme)
for which
a public announcement as
contemplated by
this Section 1.2(b)
has been made,
the date
upon which
the Borrower
(in the
case of
clause (i)
above) or
the person, group
or entity (in
the case
of clause
(ii) above)
consummates or
publicly announces the termination or
abandonment of the proposed transaction
or tender offer (or takeover scheme) which
caused this Section 1.2(b) to become operative.




    	3



    	 



    




1.3               
Authorized Shares.
The Borrower
covenants that during
the period
the conversion
right exists, the
Borrower will
reserve from
its authorized and
unissued Common
Stock a sufficient
number of
shares, free
from preemptive
rights, to
provide for
the issuance
of Common Stock upon the full conversion of this Note issued pursuant to the
Purchase Agreement. The Borrower
is required at
all times to
have authorized and
reserved five times
the number
of shares
that is actually
issuable upon
full conversion of
the Note
(based on the
Conversion Price of
the Notes in effect
from time to time) (the “Reserved
Amount”). The Reserved
Amount shall be increased from time to time in accordance with the Borrower’s
obligations pursuant to Section 3(d) of
the Purchase Agreement. The
Borrower represents
that upon issuance,
such shares will
be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any
securities or make any
change to its capital structure
which would change the
number of shares of Common Stock
into which the
Notes shall be
convertible at the then
current Conversion
Price, the
Borrower shall
at the
same time
make proper
provision so that
thereafter there shall be a sufficient number of shares of Common Stock authorized
and reserved, free from preemptive rights, for
conversion of the outstanding
Notes. The
Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable
upon conversion of
this Note, and (ii) agrees that
its issuance of this Note shall
constitute full authority to its officers
and agents who are
charged with the duty of executing
stock certificates to
execute and
issue the necessary certificates
for shares of Common Stock
in accordance with
the terms and conditions of this Note.


 


If,
at any
time the
Borrower does
not maintain the
Reserved Amount
it will be
considered an Event of Default under Section 3.2 of the Note.


 


1.4               
Method of Conversion.


 


(a)                
Mechanics
of
Conversion.
Subject to
Section 1.1,
this Note
may be
converted by the
Holder in whole
or in part
at any time
from time to
time after the
Issue Date, by
(A) submitting to
the Borrower
a Notice
of Conversion
(by facsimile,
e-mail or
other reasonable
means of communication
dispatched on
the Conversion
Date prior
to 5:00 p.m., New York,
New York time)
and (B) subject
to Section 1.4(b),
surrendering this Note at
the principal office
of the Borrower.




    	4



    	 



    




(b)                
Surrender
of Note
Upon Conversion.
Notwithstanding anything
to the
contrary set
forth herein,
upon conversion
of this
Note in
accordance with
the terms
hereof, the
Holder shall
not be
required to
physically surrender
this Note
to the Borrower
unless the entire unpaid
principal amount of
this Note is
so converted. The
Holder and the
Borrower shall maintain records showing the principal amount so converted and the
dates of such conversions or shall use such
other method, reasonably satisfactory
to the Holder and the Borrower, so as
not to require physical surrender of this
Note upon each such conversion. In the event of any dispute or discrepancy,
such records of the
Borrower shall,
prima facie, be
controlling and
determinative in the absence
of manifest error. Notwithstanding
the foregoing, if
any portion of
this Note is converted
as aforesaid, the
Holder may not transfer
this Note unless the Holder
first physically surrenders this
Note to the Borrower,
whereupon the Borrower will forthwith
issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon payment
by the Holder of any
applicable transfer taxes) may request,
representing in the aggregate the remaining
unpaid principal amount
of this Note. The
Holder and any
assignee, by acceptance of this
Note, acknowledge
and agree
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 represented by
this Note may be less than the amount stated on the face hereof.


 


(c)                
Payment
of Taxes.
The Borrower
shall not be
required to pay
any tax
which may
be payable
in respect
of any
transfer involved in
the issue
and delivery
of shares
of Common Stock or other securities
or property on conversion
of this Note
in a name
other than that
of the
Holder (or in
street name),
and the
Borrower shall
not be
required to
issue or deliver any
such shares
or other securities
or property
unless and
until the
person or
persons (other
than the Holder or
the custodian in whose
street name such
shares are to be
held for the
Holder’s account)
requesting the
issuance thereof
shall have
paid to
the Borrower
the amount of
any such tax or shall have
established to the satisfaction of the Borrower that such tax has been paid.


 


(d)                
Delivery of
Common Stock Upon
Conversion.
Upon receipt
by the
Borrower from
the Holder
of a
facsimile transmission
or e-mail
(or other
reasonable means
of communication)
of a
Notice of
Conversion meeting
the requirements
for conversion
as provided
in this Section 1.4, the Borrower
shall issue and deliver or
cause to be issued and
delivered to or upon the
order of the
Holder certificates for
the Common Stock issuable upon
such conversion within three
(3) business days after
such receipt (the “Deadline”)
(and, solely in the
case of conversion of the
entire unpaid principal amount hereof, surrender of
this Note) in accordance
with the terms hereof and the Purchase Agreement.


 


(e)                
Obligation
of Borrower
to Deliver
Common Stock.
Upon receipt by
the Borrower
of a
Notice of
Conversion, the Holder
shall be deemed
to be
the holder of
record of
the Common
Stock issuable
upon such conversion,
the outstanding
principal amount and
the amount
of accrued and
unpaid interest
on this Note
shall be
reduced to
reflect such conversion,
and, unless the Borrower defaults on
its obligations under this Article
I, all rights with respect to the portion
of this Note being
so converted shall forthwith terminate
except the right to receive the
Common Stock or other securities,
cash or other
assets, as herein provided, on such
conversion. If the Holder shall have given
a Notice of Conversion as provided herein,
the Borrower’s obligation
to issue and
deliver the certificates
for Common Stock shall be absolute and unconditional, irrespective of the absence
of any action by the Holder to
enforce the same,
any waiver or
consent with respect to any provision
thereof, the recovery of any
judgment against any person or any action
to enforce the same, any failure or delay
in the enforcement of any other obligation
of the Borrower to the
holder of record,
or any setoff,
counterclaim, recoupment,
limitation or
termination, or
any breach or
alleged breach by
the Holder
of any
obligation to the Borrower, and
irrespective of any other circumstance
which might otherwise limit such obligation
of the Borrower
to the Holder in connection with such conversion. The
Conversion Date specified in the
Notice of Conversion
shall be the Conversion
Date so long as
the Notice
of Conversion
is received by the
Borrower before
5:00 p.m., New
York, New
York time, on such date.




    	5



    	 



    




(f)                 
Delivery of
Common Stock
by Electronic
Transfer.
In lieu
of delivering
physical certificates
representing the
Common Stock
issuable upon
conversion, provided
the Borrower
is participating in
the Depository Trust
Company (“DTC”) Fast
Automated Securities
Transfer (“FAST”)
program, upon request of the Holder and
its compliance with the provisions contained
in Section 1.1 and in this Section 1.4, the
Borrower shall use its commercially reasonable
best efforts to cause its transfer agent
to electronically transmit the Common Stock issuable
upon conversion to the Holder by crediting
the account of Holder’s Prime Broker
with DTC through its
Deposit Withdrawal At Custodian (“DWAC”)
system.


 


(g)                
Failure
to Deliver
Common Stock Prior
to Delivery Deadline.
Without in any way limiting the
Holder’s right to pursue other
remedies, including actual damages
and/or equitable
relief, the
parties agree
that if
delivery of the
Common Stock issuable
upon conversion
of this
Note is not
delivered by
the Deadline (other
than a failure due to the
circumstances described in
Section 1.3 above,
which failure
shall be governed by
such Section) the
Borrower shall
pay to the
Holder $2,000 per day
in cash, for each
day beyond the
Deadline that the Borrower
fails to deliver such
Common Stock. Such
cash amount shall be paid
to Holder by the fifth day of the month following the month in which it has accrued
or, at the option of the
Holder (by written
notice to the Borrower
by the first
day of the month following the
month in which
it has
accrued), shall
be added to the
principal amount of this
Note, in which
event interest
shall accrue thereon
in accordance
with the
terms of this
Note and
such additional principal amount
shall be convertible into
Common Stock in
accordance with
the terms
of this Note.
The Borrower agrees
that the right to convert is a valuable
right to the Holder.
The damages
resulting from a failure, attempt to frustrate, interference with such conversion right are difficult
if not
impossible to qualify.
Accordingly the
parties acknowledge
that the liquidated damages provision
contained in this Section 1.4(g) are justified.


 


1.5               
Concerning
the
Shares.
The
shares
of Common
Stock issuable
upon conversion
of this Note
may not be
sold or transferred
unless (i) such
shares are sold
pursuant to an
effective registration
statement under
the Act
or (ii)
the Borrower
or its
transfer agent
shall have
been furnished with
an opinion
of counsel
(which opinion shall
be in
form, substance
and scope customary for opinions
of counsel in comparable
transactions) to the effect that the
shares to be sold or
transferred may be sold or transferred
pursuant to an exemption from
such registration or
(iii) such shares are
sold or transferred pursuant
to Rule 144 under
the Act (or
a successor rule) (“Rule 144”)
or (iv) such
shares are transferred to an
“affiliate” (as defined
in Rule 144) of
the Borrower who
agrees to sell or otherwise
transfer the shares only in accordance
with this Section 1.5 and who is an
Accredited Investor (as
defined in the Purchase
Agreement). Except as
otherwise provided
in the Purchase
Agreement (and
subject to
the removal
provisions set forth below), until such time as the shares of Common Stock
issuable upon conversion of this Note have been registered under
the Act or otherwise may be
sold pursuant to Rule 144 without any restriction
as to the number
of securities as
of a particular date
that can then be immediately
sold, each certificate for shares
of Common Stock
issuable upon conversion
of this Note
that has not been
so included in an
effective registration statement or
that has not been sold pursuant to
an effective registration statement or an
exemption that permits
removal of the
legend, shall bear a
legend substantially in the following form, as appropriate:




    	6



    	 



    




“NEITHER
THE ISSUANCE
AND SALE
OF THE
SECURITIES REPRESENTED
BY THIS
CERTIFICATE NOR
THE SECURITIES
INTO WHICH
THESE SECURITIES
ARE EXERCISABLE
HAVE BEEN
REGISTERED UNDER
THE SECURITIES
ACT OF
1933, AS
AMENDED, OR
APPLICABLE STATE
SECURITIES LAWS.
THE SECURITIES
MAY NOT BE
OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE
ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR
THE SECURITIES UNDER
THE SECURITIES ACT OF 1933,
AS AMENDED, OR (B)
AN OPINION OF COUNSEL (WHICH COUNSEL
SHALL BE SELECTED BY
THE HOLDER),
IN A
GENERALLY ACCEPTABLE
FORM, THAT
REGISTRATION IS NOT REQUIRED
UNDER SAID ACT
OR (II) UNLESS SOLD
PURSUANT TO RULE
144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING
THE FOREGOING,
THE SECURITIES
MAY BE PLEDGED
IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN
OR FINANCING
ARRANGEMENT SECURED
BY THE SECURITIES.”


 


The
legend set
forth above shall
be removed
and the
Borrower shall
issue to the
Holder a
new certificate therefore
free of any
transfer legend if
(i) the Borrower
or its transfer
agent shall
have received an
opinion of
counsel, in form,
substance and
scope customary
for opinions of
counsel in comparable transactions,
to the effect
that a public
sale or transfer
of such Common Stock may be
made without registration under the
Act, which opinion shall be reasonably
accepted by the Borrower so that the
sale or transfer
is effected or (ii) in the case
of the Common Stock issuable upon conversion
of this Note, such
security is registered for sale by the
Holder under an
effective registration statement
filed under the Act
or otherwise may
be sold pursuant to Rule 144 without
any restriction as to the
number of securities as
of a particular date that can
then be immediately sold. In the event
that the Borrower does
not accept the opinion of counsel provided
by the Buyer with respect to the transfer of Securities
pursuant to an exemption from registration,
such as Rule
144 or Regulation
S, at the
Deadline, it will
be considered an
Event of Default pursuant to Section 3.2 of the Note.




    	7



    	 



    




1.6               
Effect of Certain Events.


 


(a)                
Effect
of
Merger, Consolidation,
Etc.
 At the
option of
the Holder, the
sale, conveyance
or disposition
of all
or substantially
all of
the assets
of the
Borrower, the
effectuation by
the Borrower
of a
transaction or series
of related transactions
in which more
than 50% of
the voting power of the Borrower
is disposed of, or the consolidation, merger
or other business combination of
the Borrower with or into any
other Person (as defined
below) or Persons when
the Borrower is not the
survivor shall either:
(i) be deemed
to be an Event
of Default (as
defined in
Article III) pursuant to
which the
Borrower shall
be required
to pay to
the Holder
upon the consummation
of and
as a condition
to such
transaction an amount
equal to
the Default Amount (as defined
in Article III) or (ii) be
treated pursuant to Section 1.6(b)
hereof. “Person” shall mean
any individual, corporation, limited liability company, partnership, association,
trust or other entity or organization.


 


(b)                
Adjustment Due
to Merger,
Consolidation, Etc.
If, at
any time
when this
Note is
issued and
outstanding and
prior to conversion
of all
of the
Notes, there
shall be
any merger,
consolidation, exchange
of shares,
recapitalization, reorganization,
or other
similar event, as
a result of
which shares of
Common Stock of
the Borrower shall
be changed into the same or a
different number of shares of another
class or classes of stock or securities
of the Borrower
or another
entity, or in case
of any sale or
conveyance of all or
substantially all of
the assets of
the Borrower other than in connection
with a plan of
complete liquidation of the Borrower,
then the Holder
of this Note
shall thereafter have
the right to
receive upon conversion
of this Note, upon the basis and
upon the terms and conditions specified
herein and
in lieu of the shares of Common
Stock immediately theretofore issuable
upon conversion, such stock, securities
or assets
which the Holder
would have been entitled
to receive in such
transaction had this Note
been converted in
full immediately prior
to such
transaction (without regard to
any limitations on conversion
set forth herein),
and in any such case
appropriate provisions shall be made
with respect
to the rights and
interests of the
Holder of this
Note to the
end that the provisions hereof
(including, without limitation, provisions for
adjustment of the Conversion Price
and of the number of
shares issuable upon conversion of
the Note)
shall thereafter be applicable, as nearly as
may be practicable in relation to any
securities or assets thereafter deliverable
upon the conversion
hereof. The
Borrower shall not
affect any transaction
described in this Section 1.6(b)
unless (a) it first
gives, to the extent practicable,
thirty (30) days
prior written
notice (but
in any
event at
least fifteen
(15) days
prior written
notice) of
the record
date of the special meeting
of shareholders
to approve, or if there is no
such record date, the
consummation of, such merger, consolidation,
exchange of shares, recapitalization, reorganization
or other
similar event
or sale
of assets (during
which time the
Holder shall be
entitled to convert this Note)
and (b) the
resulting successor or acquiring
entity (if not the Borrower)
assumes by written
instrument the obligations of
this Section 1.6(b). The above
provisions shall similarly apply to successive
consolidations, mergers, sales, transfers
or share exchanges.




    	8



    	 



    




(c)                
Adjustment Due
to Distribution.
If the
Borrower shall declare
or make
any distribution of
its assets (or
rights to acquire
its assets) to
holders of Common
Stock as a
dividend, stock repurchase,
by way of
return of capital
or otherwise (including
any dividend or
distribution to the
Borrower’s shareholders in cash
or shares (or rights
to acquire shares)
of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”),
then the Holder of this Note shall be
entitled, upon any conversion of
this Note after
the date of
record for determining shareholders entitled
to such Distribution, to receive the amount of such assets which would have been payable
to the Holder with respect
to the shares of
Common Stock issuable upon such
conversion had such
Holder been the
holder of such
shares of Common
Stock on the
record date for the determination of
shareholders entitled to such Distribution.


 


(d)                
Notice
of
Adjustments.
Upon the
occurrence of
each adjustment
or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower,
at its
expense, shall promptly
compute such
adjustment or
readjustment and
prepare and
furnish to the
Holder a certificate
setting forth such
adjustment or readjustment and
showing in detail the
facts upon
which such
adjustment or
readjustment is based.
The Borrower
shall, upon the written
request at any time of the Holder, furnish
to such Holder a like certificate setting
forth (i)
such adjustment or
readjustment, (ii)
the Conversion
Price at
the time
in effect and
(iii) the
number of
shares of
Common Stock and
the amount, if
any, of other
securities or
property which at the time would be received upon conversion of the Note.


 


1.7               
Trading
Market Limitations.
Unless permitted
by the
applicable rules
and regulations
of the
principal securities
market on which
the Common
Stock is then
listed or
traded, in
no event shall
the Borrower
issue upon conversion
of or
otherwise pursuant to
this Note and the other Notes issued pursuant to the
Purchase Agreement more than the
maximum number of shares of
Common Stock that the Borrower can
issue pursuant to any rule of the principal
United States securities
market on which the
Common Stock is
then traded
(the “Maximum Share Amount”), which shall be 4.99% of the total
shares outstanding on the Closing Date (as defined in the
Purchase Agreement), subject to equitable
adjustment from time to time for stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the
Common Stock occurring after
the date hereof. Once
the Maximum Share Amount has been
issued, if the Borrower fails to eliminate
any prohibitions under applicable law or the
rules or regulations
of any stock exchange, interdealer quotation
system or other self-regulatory
organization with jurisdiction over the Borrower or any of its securities on the Borrower’s ability to issue shares of
Common Stock in excess of the Maximum Share
Amount, in lieu of any further right
to convert this Note, this will
be considered an
Event of Default under
Section 3.2 of the Note.




    	9



    	 



    




1.8               
Status as
Shareholder.
Upon submission
of a
Notice of
Conversion by
a Holder,
(i) the
shares covered
thereby (other
than the
shares, if
any, which cannot
be issued
because their
issuance would
exceed such
Holder’s allocated
portion of
the Reserved
Amount or Maximum
Share Amount) shall be
deemed converted
into shares of
Common Stock
and (ii) the
Holder’s rights as
a Holder of such
converted portion of
this Note shall
cease and terminate,
excepting only the
right to receive
certificates for such
shares of Common Stock
and to
any remedies provided
herein or
otherwise available
at law
or in
equity to such
Holder because
of a
failure by the Borrower
to comply with the terms
of this Note. Notwithstanding the foregoing,
if a Holder has
not received certificates for all shares
of Common Stock prior to the
tenth (10th) business day after the
expiration of the Deadline with respect
to a conversion of any portion of
this Note
for any reason, then
(unless the
Holder otherwise elects
to retain its
status as
a holder of Common Stock by so notifying the Borrower) the Holder shall regain
the rights of a Holder of this Note with
respect to such
unconverted portions of this Note
and the Borrower
shall, as soon as
practicable, return such unconverted
Note to the Holder
or, if the Note has not been
surrendered, adjust its records to reflect that such portion of this Note has
not been converted. In all cases, the Holder shall retain
all of its rights and remedies (including,
without limitation, (i) the right
to receive Conversion Default Payments
pursuant to Section 1.3 to the extent
required thereby for
such Conversion
Default and
any subsequent Conversion
Default and
(ii) the
right to
have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s
failure to convert this Note.


 


1.9               
Prepayment.
Notwithstanding anything
to the contrary contained
in this Note,
the Borrower
may prepay
the amounts
outstanding hereunder
pursuant to
the following
terms and conditions:


 


(a)                
At any
time during
the period
beginning on the
Issue Date
and ending on the date which is thirty
(30) days following the
Issue Date, the Borrower shall
have the right, exercisable on not less than three (3) Trading Days
prior written notice to the Holder of the Note
to prepay the
outstanding Note (principal
and accrued
interest), in full
by making
a payment
to the Holder of an
amount in cash equal to 125%, multiplied
by the sum of:
(w) the then outstanding principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal
amount of this Note plus (y) Default Interest.


 


(b)                
At any
time during the period beginning the day
which is thirty one (31)
days following
the Issue
Date and
ending on
the date
which is
sixty (60) days
following the
Issue Date,
the Borrower shall
have the right,
exercisable on not
less than three
(3) Trading Days
prior written
notice to the
Holder of
the Note
to prepay the
outstanding Note
(principal and accrued interest), in full by
making a payment to the Holder of an amount in cash equal to 130%, multiplied
by the sum of:
(w) the then
outstanding principal amount
of this Note plus (x)
accrued and unpaid interest on the unpaid principal amount of this Note plus
(y) Default Interest.


 


(c)                
At any
time during the
period beginning
the day
which is
sixty one (61)
days following
the Issue
Date and
ending on
the date
which is
ninety (90)
days following
the Issue
Date, the
Borrower shall
have the
right, exercisable
on not less
than three
(3) Trading Days
prior written notice
to the Holder
of the
Note to
prepay the outstanding Note
(principal and accrued interest), in full
by making a
payment to the Holder of an amount in cash equal to 135%,
multiplied by the sum
of: (w) the
then outstanding principal
amount of this
Note plus (x)
accrued and unpaid interest on the unpaid principal amount of this Note
plus (y) Default Interest.


 


(d)                
At any
time during
the period
beginning the day
which is
ninety one
(91) days
following the
Issue Date
and ending
on the
date which
is one
hundred twenty (120)
days following
the Issue
Date, the
Borrower shall
have the
right, exercisable on
not less
than three (3)
Trading Days prior written notice
to the Holder of the Note
to prepay the outstanding Note (principal
and accrued interest), in full
by making a payment
to the Holder of
an amount in cash equal to 140%,
multiplied by the sum of:
(w) the then outstanding principal amount
of this Note plus (x) accrued
and unpaid interest on the unpaid
principal amount of this Note plus (y)
Default Interest.




    	10



    	 



    




(e)                
At any
time during
the period
beginning the
day which
is one
hundred twenty
one (121)
days following
the Issue
Date and
ending on
the date
which is
one hundred
fifty (150)
days following
the Issue
Date, the
Borrower shall
have the
right, exercisable on not less
than three (3) Trading Days
prior written notice to the
Holder of the Note to prepay the
outstanding Note
(principal and
accrued interest), in
full by making
a payment to
the Holder of an amount in cash
equal to 145%, multiplied by the sum of: (w) the then outstanding principal amount of
this Note plus (x) accrued and
unpaid interest on the unpaid principal
amount of this Note plus (y) Default
Interest.


 


(f)                 
At any
time during
the period
beginning the
day which
is one
hundred fifty
one (151) days
following the
Issue Date
and ending
on the
date which
is one
hundred eighty (180)
days following the Issue Date,
the Borrower shall have the
right, exercisable on
not less than
three (3) Trading Days
prior written notice
to the Holder of
the Note to prepay the outstanding
Note (principal and accrued interest),
in full by making a payment
to the
Holder of an amount in cash
equal to 150%, multiplied by the
sum of: (w)
the then outstanding
principal amount of
this Note
plus (x) accrued and
unpaid interest
on the
unpaid principal amount of this Note
plus (y) Default Interest.


 


(g)                
After
the expiration
of one
hundred eighty
(180) days
following the date of the Note, the Borrower shall have no right of prepayment.


 


Any notice
of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to the Holder
of the
Note at
its registered
addresses and
shall state: (1)
that the
Borrower is
exercising its right
to prepay
the Note,
and (2)
the date
of prepayment
which shall
be not
more than
three (3) Trading
Days from
the date
of the
Optional Prepayment
Notice. On
the date
fixed for prepayment
(the “Optional Prepayment Date”),
the Borrower shall make
payment of the applicable
prepayment amount to or upon the order
of the Holder
as specified by the Holder in writing
to the
Borrower at
least one
(1) business day prior
to the
Optional Prepayment Date.
If the Borrower delivers
an Optional Prepayment Notice and fails
to pay the applicable prepayment amount
due to
the Holder
of the
Note within
two (2)
business days following
the Optional Prepayment
Date, the
Borrower shall
forever forfeit
its right
to prepay the Note
pursuant to
this Section 1.9.


 


ARTICLE
II. CERTAIN
COVENANTS


 


2.1               
Restriction on
Stock Repurchases.
So long as
the Borrower
shall have any
obligation under
this Note, the
Borrower shall
not without the
Holder’s written consent
redeem, repurchase
or otherwise
acquire (whether
for cash
or in
exchange for
property or other
securities or otherwise) in any one transaction or series of related transactions
any shares of capital stock of the Borrower or any
warrants, rights or options to purchase or acquire any such shares.


 


2.2               
Sale
of
Assets.
So long as
the Borrower
shall have any
obligation under this
Note, the
Borrower shall
not, without
the Holder’s
written consent,
sell, lease
or otherwise
dispose of
any significant
portion of
its assets
outside the
ordinary course
of business. Any consent to the
disposition of any assets may
be conditioned on a specified use of
the proceeds of
disposition.




    	11



    	 



    




2.3               
Advances
and
Loans.
So long
as the
Borrower shall have
any obligation
under this
Note, the
Borrower shall
not, without the
Holder’s written
consent, lend
money, give
credit or
make advances to
any person,
firm, joint
venture or
corporation, including,
without limitation, officers, directors,
employees, subsidiaries and
affiliates of the Borrower,
except loans, credits or
advances (a) in existence or committed
on the date hereof
and which the
Borrower has informed
Holder in writing prior
to the date hereof,
(b) made
in the ordinary course of business or
(c) not in excess of $100,000.


 


2.4               
Section 3(a)(9)
or 3(a)(10) Transaction.
So long as
this Note
is outstanding, the
Company shall not
enter into any
transaction or
arrangement structured in
accordance with, based
upon, or
related or pursuant
to, in whole
or in part,
either Section
3(a)(9) of
the Securities
Act (a
“3(a)(9) Transaction”)
or Section
3(a)(l0) of
the Securities
Act (a
“3(a)(l0) Transaction”).
In the
event that
the Borrower
does enter into,
or makes
any issuance of Common
Stock related to a 3(a)(9)
Transaction or a 3(a)(l0) Transaction
while this note
is outstanding, a liquidated
damages charge of 25% of
the outstanding principal balance
of this Note, but not less than Fifteen
Thousand Dollars $15,000, will be assessed
and will become immediately due and payable
to the Holder at its election in the form of cash payment or addition to the balance of this
Note.


 


ARTICLE
III. EVENTS
OF DEFAULT


 


If
any of
the following
events of
default (each,
an “Event
of Default”)
shall occur
and shall continue to occur without being cured for a period of five (5) days:


 


3.1               
Failure
to Pay
Principal or
Interest.
The Borrower
fails to pay
the principal hereof
or interest
thereon when
due on
this Note,
whether at
maturity, upon acceleration
or otherwise.


 


3.2               
Conversion
and
the Shares.
The Borrower
fails to
issue shares of
Common Stock to
the Holder
(or announces
or threatens in
writing that
it will not
honor its
obligation to
do so)
upon exercise
by the
Holder of
the conversion
rights of
the Holder
in accordance
with the
terms of
this Note,
fails to
transfer or
cause its
transfer agent
to transfer
(issue) (electronically
or in certificated form)
any certificate for shares of
Common Stock issued to the Holder
upon conversion
of or otherwise pursuant to this Note
as and
when required by this Note,
the Borrower
directs its transfer agent
not to transfer or
delays, impairs, and/or
hinders its transfer
agent in transferring (or
issuing) (electronically or in certificated form) any
certificate for shares of
Common Stock to be issued to the
Holder upon
conversion of
or otherwise pursuant
to this Note
as and
when required by
this Note, or
fails to remove
(or directs
its transfer agent not to
remove or impairs, delays,
and/or hinders its transfer agent
from removing) any
restrictive legend (or to
withdraw any stop transfer
instructions in respect
thereof) on any certificate
for any
shares of
Common Stock issued
to the
Holder upon
conversion of
or otherwise
pursuant to this
Note as and when required by this Note
(or makes any written announcement,
statement or threat that it does not intend to honor
the obligations described in this paragraph)
and any
such failure shall
continue uncured
(or any written
announcement, statement
or threat not to
honor its
obligations shall not
be rescinded
in writing) for
three (3) business
days after the
Holder shall
have delivered a Notice of
Conversion. It is an
obligation of the
Borrower to remain current
in its obligations to its transfer
agent. It shall be an
event of default of this Note,
if a conversion of
this Note
is delayed,
hindered or frustrated
due to a
balance owed
by the
Borrower to
its transfer agent.
If at the
option of the Holder,
the Holder
advances any
funds to the Borrower’s
transfer agent in
order to process a conversion,
such advanced funds
shall be paid
by the Borrower
to the Holder within forty eight
(48) hours of a demand from the Holder.


 


3.3               
Failure
to Deliver
Advance Fee.
The Borrower
fails to
deliver the
Advance Fee
(as defined
in the
Purchase Agreement)
to the
Holder within
three (3)
business days
of the
date such fee is due.




    	12



    	 



    




3.4               
Breach
of
Covenants.
The
Borrower
breaches any
material covenant
or other
material term
or condition contained
in this Note
and any
collateral documents including
but not limited
to the
Purchase Agreement
and such
breach continues
for a period
of ten
(10) days
after written
notice thereof to the Borrower from the Holder.


 


3.5               
Breach
of
Representations and
Warranties.
Any representation
or warranty
of the
Borrower made
herein or in
any agreement,
statement or certificate
given in
writing pursuant hereto
or in
connection herewith
(including, without limitation,
the Purchase
Agreement), shall
be false
or misleading
in any material respect
when made
and the
breach of
which has
(or with the passage of time will
have) a material adverse effect on the rights of the Holder with respect to this Note or
the Purchase Agreement.


 


3.6               
Receiver
or Trustee.
The Borrower
or any
subsidiary of
the Borrower
shall make
an assignment
for the
benefit of
creditors or
commence proceedings
for its
dissolution, or
apply for
or consent
to the
appointment of
a receiver or
trustee for
it or
for a substantial
part of
its property or business, or
such a receiver or
trustee shall otherwise be appointed
for the Company or for
a substantial part of its property or
business without its consent and shall not be
discharged within sixty (60) days after such appointment.


 


3.7               
Judgments. Except
with respect
to litigation
and claims disclosed
to the Buyer
in writing prior
to Closing,
any money judgment,
writ or
similar process shall
be entered
or filed
against the
Borrower or
any subsidiary of the
Borrower or
any of
its property or other assets
for more than
$50,000, and shall remain
unvacated, unbonded or
unstayed for
a period of
twenty (20) days
unless otherwise consented to by
the Holder, which consent
will not be
unreasonably withheld.


 


3.8               
Bankruptcy.
Bankruptcy,
insolvency,
reorganization
or liquidation proceedings
or other
proceedings, voluntary or
involuntary, for
relief under any
bankruptcy law or
any law for
the relief
of debtors
shall be
instituted by
or against the
Borrower or
any subsidiary of the
Borrower, or
the Borrower
admits in writing
its inability to pay its debts generally
as they mature,
or have filed against
it an involuntary petition
for bankruptcy relief, all
under federal or state laws as applicable.


 


3.9               
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the
Common Stock on
at least
one of
the OTCBB.
OTCQB, OTC
Markets or
an equivalent
replacement exchange,
the Nasdaq
National Market,
the Nasdaq
Small Cap
Market, the
New York Stock Exchange, or the NYSE MKT.




    	13



    	 



    




3.10           
Failure
to Comply
with the
Exchange Act.
The Borrower
shall fail
to comply with the reporting requirements
of the Exchange Act and such failure shall continue for a period
of five
(5) days
after the
extended filing date;
and/or the
Borrower shall
cease to be
subject to the reporting requirements of the Exchange Act.


 


3.11           
Liquidation.
Any dissolution,
liquidation, or
winding up
of Borrower
or any
substantial portion of its business.


 


3.12           
Cessation of
Operations.
Any cessation
of operations
by Borrower
or Borrower
admits it is
otherwise generally
unable to pay
its debts
as such
debts become
due, provided, however, that any disclosure
of the Borrower’s ability to continue as a “going concern” shall
not be an admission that the Borrower cannot pay its debts as they
become due.


 


3.13           
Maintenance
of
Assets.
The
failure
by Borrower
to maintain
any material intellectual
property rights, personal, real property or other assets which are necessary to
conduct its business (whether now or in the future).


 


3.14           
Financial Statement Restatement.
The restatement
of any
financial statements
filed by
the Borrower
with the SEC
for any date
or period from
two years
prior to the
Issue Date
of this
Note and
until this Note
is no
longer outstanding,
if the
result of
such restatement
would, by comparison
to the
unrestated financial
statement, have constituted
a material
adverse effect on
the rights
of the
Holder with
respect to
this Note or the
Purchase Agreement.


 


3.15           
Reverse Splits. The
Borrower effectuates
a reverse split
of its
Common Stock without twenty
(20) days prior written notice
to the Holder.


 


3.16           
Replacement of Transfer Agent.
In the event that the Borrower proposes to replace
its transfer
agent, the
Borrower fails
to provide,
prior to
the effective
date of such
replacement, a
fully executed
Irrevocable Transfer
Agent Instructions
in a form
as initially
delivered pursuant
to the
Purchase Agreement
(including but not
limited to the
provision to irrevocably
reserve shares
of Common
Stock in the
Reserved Amount)
signed by the
successor transfer agent to Borrower
and the Borrower.


 


3.17           
Cessation of
Trading.
Any cessation
of trading
of the
Common Stock on
at least
one of
the OTCBB,
OTCQB, OTC
Markets or
an equivalent
replacement exchange,
the Nasdaq
National Market,
the Nasdaq
Small Cap
Market, the
New York
Stock Exchange,
or the
NYSE MKT,
and such
cessation of
trading shall continue
for a
period of
five consecutive
(5) Trading Days.




    	14



    	 



    




3.18           
Cross-Default.
Notwithstanding
anything
to the
contrary contained
in this Note
or the
other related
or companion
documents, a breach
or default
by the
Borrower of
any covenant
or other
term or condition
contained in
any of the Other
Agreements, after
the passage of all applicable notice
and cure or grace periods, shall, at the option of the Holder,
be considered a default under this
Note and the
Other Agreements, in
which event the Holder
shall be entitled (but
in no event required) to apply
all rights and
remedies of the Holder under the
terms of this Note
and the Other Agreements
by reason of
a default under said Other Agreement
 or hereunder. “Other
Agreements” means, collectively,
all agreements and instruments between,
among or by:
(1) the Borrower,
and, or for
the benefit of,
(2) the Holder and
any affiliate of
the Holder, including, without limitation,
promissory notes; provided, however,
the term “Other Agreements”
shall not include the
agreements and instruments
defined as the
Documents. Each of the loan transactions
will be cross-defaulted with each other loan transaction and with all other existing
and future debt of Borrower to the Holder.


 


3.19           
Bid
Price.
 The
Company shall lose
the “bid”
price for
its Common Stock
and/or a market (including the OTCBB,
OTCQB or an equivalent replacement exchange).


 


Upon the occurrence and during the continuation
of any Event of Default specified in Section 3.1
(solely with
respect to
failure to pay
the principal
hereof or
interest thereon when
due at
the Maturity Date),
the Note
shall become
immediately due
and payable
and the
Borrower shall
pay to
the Holder,
in full satisfaction
of its
obligations hereunder,
an amount
equal to
the Default
Sum (as defined herein). UPON
THE OCCURRENCE
AND DURING
THE CONTINUATION OF ANY
EVENT OF DEFAULT
SPECIFIED IN SECTION
3.2, THE NOTE
SHALL BECOME
IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE
HOLDER, IN
FULL SATISFACTION
OF ITS OBLIGATIONS
HEREUNDER, AN
AMOUNT EQUAL TO: (Y) THE
DEFAULT SUM (AS DEFINED HEREIN);
MULTIPLIED BY (Z) TWO
(2). Upon
the occurrence
and during
the continuation
of any Event
of Default
specified in
Sections 3.1
(solely with respect
to failure
to pay the
principal hereof
or interest
thereon when due on this Note
upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16. 3.17,
3.18 and/or 3.19 exercisable through
the delivery of written notice to the
Borrower by such Holders (the “Default
Notice”), and upon the occurrence of
an Event of Default
specified the
remaining sections
of Article
III (other than
failure to pay
the principal
hereof or interest thereon at
the Maturity Date specified in
Section 3,1 hereof), the Note
shall become immediately
due and payable and
the Borrower shall pay to the
Holder, in full satisfaction of its obligations
hereunder, an amount equal to (i)
150% times the sum of (w)
the then outstanding principal amount of this Note plus (x) accrued
and unpaid interest on the unpaid principal amount of
this Note to the date of
payment (the “Mandatory Prepayment
Date”) plus (y) Default Interest,
if any,
on the
amounts referred
to in clauses
(w) and/or
(x) plus (z) any
amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g)
hereof (the then outstanding
principal amount
of this Note
to the
date of payment
plus the
amounts referred to
in clauses (x), (y) and (z) shall
collectively be known
as the “Default
Sum”) or (ii)
at the option of
the Holder, the
“parity value” of the Default
Sum to be prepaid, where parity value
means (a) the highest number
of shares of
Common Stock issuable upon conversion
of or otherwise
pursuant to such Default
Sum in accordance with Article
I, treating the
Trading Day immediately preceding
the Mandatory Prepayment Date
as the “Conversion Date”
for purposes of determining
the lowest applicable Conversion Price,
unless the Default Event arises as a result of a breach in respect of a specific
Conversion Date in
which case
such Conversion
Date shall be
the Conversion
Date), multiplied by (b) the
highest Closing Price for the Common Stock during the
period beginning on the date of first occurrence of the Event of Default and ending one day
prior to the Mandatory Prepayment Date (the
“Default Amount”) and all
other amounts payable hereunder shall
immediately become due and payable, all without demand,
presentment or notice, all of which hereby
are expressly waived, together
with all costs,
including, without limitation,
legal fees and
expenses, of
collection, and the
Holder shall be
entitled to exercise
all other rights and
remedies available at law or in equity.




    	15



    	 



    




If
the Borrower
fails to pay
the Default
Amount within five
(5) business
days of
written notice
that such
amount is due
and payable,
then the
Holder shall have
the right
at any
time, so long
as the Borrower remains in default
(and so long and to the extent that there are sufficient authorized shares),
to require the Borrower,
upon written notice,
to immediately issue, in lieu
of the Default Amount,
the number
of shares
of Common Stock of
the Borrower equal to
the Default
Amount divided by the Conversion Price then in effect.


 


ARTICLE
IV. MISCELLANEOUS


 


4.1               
Failure
or Indulgence
Not Waiver.
No failure
or delay
on the part
of the
Holder in
the exercise of
any power,
right or privilege
hereunder shall operate
as a waiver
thereof, nor shall any
single or partial
exercise of any
such power, right or
privilege preclude other or further
exercise thereof or of
any other
right, power or privileges.
All rights and
remedies existing
hereunder are
cumulative to,
and not
exclusive of,
any rights
or remedies
otherwise available.


 


4.2               
Notices.
All
notices, demands,
requests, consents, approvals,
and other
communications required
or permitted
hereunder shall
be in
writing and,
unless otherwise specified
herein, shall be
(i) personally
served, (ii) deposited
in the
mail, registered
or certified,
return receipt requested, postage
prepaid, (iii) delivered
by reputable air courier
service with charges
prepaid, or (iv) transmitted by hand
delivery, telegram, or facsimile, addressed
as set forth
below or
to such other
address as
such party shall have
specified most recently
by written notice.
Any notice or
other communication required
or permitted to be given
hereunder shall
be deemed effective (a)
upon hand delivery or delivery by
facsimile, with accurate
confirmation generated by
the transmitting facsimile
machine, at the
address or number
designated below (if delivered
on a business day during normal business hours where such notice is to be received), or the
first business
day following
such delivery (if
delivered other than
on a business day during
normal business hours where
such notice is to be received)
or (b) on the
second business day following the
date of mailing
by express courier service,
fully prepaid, addressed to such address,
or upon actual
receipt of such mailing,
whichever shall first occur.
The addresses
for such communications shall be:




    	16



    	 



    




If to
the Borrower, to:


 


Rich
Pharmaceuticals, Inc. 


9595
Wilshire Blvd., Suite 900 


Beverly
Hills, CA 90212 


Attention:
Ben Chang 


Facsimile:
(424) 230-7003


 


With a copy
by fax only
to (which copy shall not constitute notice):


 


Steven J. Davis,


A Professional Corporation


6118
Paseo Delicias


Rancho
Santa Fe, California 92067 


Attention: Steven J. Davis, Esq.


Facsimile:
(858) 367 - 8138


 


If to
the Holder:


 


Auctus Private Equity
Fund, LLC


101
Arch Street, 20th Floor 


Boston,
MA 02110


Attn:
Lou Posner



Facsimile:
(617) 532-6420


 


With a copy
by fax only
to (which copy shall not constitute notice):



 


Lucosky
Brookman LLP


101 Wood Avenue South,
5th Floor 


Woodbridge,
NJ 08830


Attn: Joseph M. Lucosky,
Esq. 


Facsimile:
(732) 395-4401


 


4.3               
Amendments.
This Note
and any
provision hereof
may only
be amended by
an instrument
in writing signed
by the
Borrower and
the Holder. The
term “Note”
and all
reference thereto, as used throughout
this instrument, shall mean this instrument
(and the other
Notes issued pursuant
to the Purchase
Agreement) as originally
executed, or if later
amended or supplemented, then as so amended
or supplemented.


 


4.4               
Assignability. This
Note shall be
binding upon the
Borrower and
its successors
and assigns,
and shall
inure to
be the
benefit of
the Holder
and its
successors and
assigns. Each
transferee of this
Note must be
an “accredited investor”
(as defined in
Rule 501(a) of
the 1933
Act). Notwithstanding anything
in this Note
to the contrary,
this Note may
be pledged as collateral in connection
with a bona fide margin account
or other lending
arrangement.


 


4.5               
Cost of
Collection.
If default
is made in the payment
of this Note, the
Borrower shall
pay the Holder
hereof reasonable
costs of
collection, including
reasonable attorneys’ fees.




    	17



    	 



    




4.6               
Governing
Law.
This Note
shall be
governed by
and construed
in accordance with the laws of the
State of Nevada without regard to principles of conflicts
of laws. Any action
brought by
either party
against the
other concerning
the transactions
contemplated by
this Note shall
be brought
only in the
state courts
of Massachusetts or
in the federal
courts located
in the Commonwealth of Massachusetts.
The parties to this Note hereby irrevocably
waive any objection
to jurisdiction and venue of any
action instituted hereunder and shall not assert
any defense based on lack
of jurisdiction or venue
or based upon forum non conveniens.
The Borrower
and Holder waive
trial by
jury. The
prevailing party shall be
entitled to recover
from the other
party its reasonable
attorney's fees
and costs. In the
event that any
provision of
this Note or
any other agreement
delivered in connection
herewith is invalid
or unenforceable
under any applicable statute or
rule of law,
then such provision shall be deemed inoperative
to the extent that
it may conflict
therewith and
shall be
deemed modified
to conform with
such statute or
rule of
law. Any such provision which
may prove invalid
or unenforceable
under any law shall not affect
the validity or enforceability
of any other provision of
any agreement. Each
party hereby irrevocably waives personal
service of process and consents to process being served in any suit, action
or proceeding in connection with this
Agreement or any other Transaction Document
by mailing
a copy thereof
via registered or certified
mail or overnight delivery
(with evidence of
delivery) to such
party at the
address in effect
for notices
to it under
this Agreement
and agrees that such
service shall constitute good and sufficient
service of process
and notice thereof.
Nothing contained herein
shall be deemed
to limit in
any way any
right to serve
process in any other manner permitted
by law.


 


4.7               
Certain Amounts. Whenever pursuant to this
Note the Borrower is required to pay an
amount in excess
of the
outstanding principal
amount (or
the portion
thereof required
to be
paid at
that time)
plus accrued
and unpaid
interest plus
Default Interest
on such
interest, the
Borrower and
the Holder
agree that
the actual
damages to
the Holder
from the
receipt of
cash payment
on this Note
may be difficult to
determine and
the amount
to be
so paid
by the Borrower represents
stipulated damages and not a penalty
and is intended to compensate the Holder
in part for loss
of the opportunity to convert this
Note and to
earn a return from
the sale of
shares of Common Stock
acquired upon conversion
of this
Note at
a price in excess
of the price
paid for such
shares pursuant to this Note.
The Borrower and
the Holder hereby agree that
such amount of stipulated
damages is not plainly disproportionate to the
possible loss to the
Holder from the receipt of
a cash payment without the
opportunity to convert this Note into
shares of Common Stock.


 


4.8               
Purchase
Agreement.
By its acceptance
of this
Note, each
party agrees
to be bound by
the applicable terms of the Purchase Agreement.




    	18



    	 



    




4.9               
Notice
of
Corporate Events.
Except as
otherwise provided
below, the
Holder of
this Note shall
have no rights
as a
Holder of
Common Stock unless
and only to
the extent that
it converts
this Note
into Common
Stock. The
Borrower shall
provide the
Holder with
prior notification
of any meeting
of the
Borrower’s shareholders (and
copies of
proxy materials and
other information sent to shareholders).
In the event of any
taking by the Borrower of
a record of its shareholders for
the purpose of determining shareholders who are entitled to receive
payment of any
dividend or other distribution,
any right to subscribe for, purchase
or otherwise acquire (including by way
of merger, consolidation, reclassification or recapitalization) any share of
any class or any other securities
or property, or to receive any other right, or for the purpose of
determining shareholders who
are entitled to vote in connection with
any proposed sale, lease or
conveyance of all or
substantially all of
the assets of
the Borrower or
any proposed liquidation, dissolution
or winding up of
the Borrower, the
Borrower shall mail a notice to the
Holder, at least twenty (20)
days prior to the record date
specified therein (or thirty (30) days
prior to the consummation of the transaction or
event, whichever is earlier), of the
date on which any such record is
to be taken
for the purpose
of such dividend,
distribution, right or other
event, and
a brief statement regarding the amount
and character of such dividend, distribution,
right or other event
to the extent
known at such
time. The Borrower
shall make a public announcement of
any event requiring notification
to the Holder hereunder
substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section
4.9.


 


4.10           
Usury.
If it
shall be
found that any
interest or other amount deemed
interest due
hereunder violates the applicable
law governing usury,
the applicable provision
shall automatically be
revised to equal
the maximum
rate of
interest or
other amount
deemed interest
permitted under
applicable law.
The Borrower
covenants (to
the extent that it may lawfully
do so) that it will not seek to
claim or take advantage of
any law that
would prohibit or forgive
the Borrower from paying all or a portion of the principal or interest
on this Note.


 


4.11           
Remedies.
The Borrower
acknowledges
that a breach
by it
of its
obligations hereunder
will cause
irreparable harm
to the
Holder, by
vitiating the
intent and purpose
of the
transaction contemplated hereby.
Accordingly, the Borrower acknowledges
that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in
the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder
shall be
entitled, in addition
to all other
available remedies
at law
or in equity,
and in
addition to the penalties assessable
herein, to an injunction or injunctions
restraining, preventing or
curing any breach
of this Note
and to enforce
specifically the terms and provisions
thereof, without
the necessity
of showing
economic loss and
without any bond or
other security
being required.
No provision of
this Note shall
alter or impair
the obligation of
the Borrower, which is
absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and
rate, and in the form, herein prescribed.


 


4.12           
Severability.
In the
event
that any provision
of this Note
is invalid or
unenforceable under
any applicable
statute or
rule of
law, then
such provision
shall be
deemed inoperative
to the
extent that it may conflict
therewith and
shall be
deemed modified
to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of
any other provision hereof.


 


[signature
page follows]




    	19



    	 



    




IN
WITNESS WHEREOF,
Borrower has
caused this Note
to be signed
in its name
by its
duly authorized officer
as of the date first above written.


 


 


RICH PHARMACEUTICALS, INC.


 


By: /s/ Ben Chang


Name: Ben Chang


Title: Chief Executive Officer




    	20



    	 



    




EXHIBIT
A


NOTICE
OF CONVERSION


 


The
undersigned hereby
elects to
convert $principal
amount of
the Note
(defined below)
together with
$of accrued
and unpaid
interest thereto,
totaling $  into
that number
of shares
of Common
Stock to be
issued pursuant to the
conversion of the
Note (“Common Stock”)
as set
forth below,
of Rich Pharmaceuticals,
Inc., a
Nevada corporation
(the “Borrower”),
according to
the conditions
of the
convertible note
of the
Borrower dated
as of
March 9,
2015 (the
“Note”), as
of the
date written
below. No
fee will be charged to the Holder for
any conversion, except for transfer taxes, if any.


 


Box Checked as to applicable instructions:


 


[ ]
The Borrower
shall electronically transmit
the Common
Stock issuable
pursuant to this Notice of Conversion
to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal
At Custodian system (“DWAC Transfer”).


 


Name
of DTC Prime Broker: Account Number:


 


[ ]
The undersigned
hereby requests that
the Borrower
issue a certificate 
or certificates
for the number
of shares of
Common Stock set
forth below (which
numbers are
based on
the Holder’s
calculation attached
hereto) in
the name(s)
specified immediately below or, if
additional space is
necessary, on
an attachment hereto:


 


Name:
[NAME]


Address: [ADDRESS]


 


Date
of Conversion: ____________________________


Applicable
Conversion Price: _____________________


Number
of Shares of Common Stock to be Issued


Pursuant
to Conversion of the Notes:______________________


Amount
of Principal Balance Due remaining


Under
the Note after this conversion:_______________________


Accrued
and unpaid interest remaining: ______________________


 


[HOLDER]


 





By:
______________________


Name:
[NAME]


Title: 
[TITLE] 


Date:
[DATE]






    	21