hpilnote12_2716.htm - Generated by SEC Publisher for SEC Filing










 








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: $60,000.00                                                           Issue
Date: December 27, 2016









 


15% CONVERTIBLE NOTE


FOR VALUE RECEIVED, HPIL
HOLDING, a Nevada corporation (“Borrower” or “Company”), hereby
promises to pay to the order of KODIAK CAPITAL GROUP, LLC, a Delaware
limited liability company, or its registered assigns (the “Holder”), on December
27, 2017, (subject to extension as set forth below, the “Maturity Date”), the
sum of $60,000.00 as set forth herein, together with interest on the unpaid
principal balance hereof at the rate of fifteen (15%) per annum (the “Interest
Rate”) from the date of issuance hereof until this Note plus any and all amounts
due hereunder are paid in full, and any additional amounts set forth herein,
including without limitation any Additional Principal (as defined herein).
Interest shall be computed on the basis of a 365-day year and the actual number
of days elapsed. Any amount of principal or interest on this Note which is not
paid when due shall bear interest at the rate of twenty-four (24%) per annum
from the due date thereof until the same is paid (“Default Interest”).  All
payments due hereunder 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 entered
into by and between the Company and Holder dated on or about the date hereof,
pursuant to which this Note was originally issued (the “Purchase Agreement”). 
The Holder may, by written notice to the Borrower at least five (5) days before
the Maturity Date (as may have been previously extended), extend the Maturity
Date to up to one (1) year following the date of the original Maturity Date
hereunder.









 










 








 








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, in its sole and absolute discretion, at any
time and from time to time to convert all or any part of the outstanding amount
due under 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 (the “Conversion Price”)
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 9.9% 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 Regulation 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 (“Conversion Shares”) 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 11:59 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) accrued and unpaid interest, if
any, on such principal amount being converted at the interest rates provided in
this Note to the Conversion Date, 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)
any
Additional Principal for such Conversion, plus (5) at the
Holder’s option, any amounts owed to the Holder pursuant to Sections 1.2(c) and
1.4(g) hereof.









 










 








 








1.2.            
Conversion
Price. 


 


a)              
Calculation
of Conversion Price. The conversion price hereunder (the
“Conversion Price”) shall equal the lower of: (i) the closing sale price of the
Common Stock on the Principal Market on the Trading Day immediately preceding
the Closing Date, and (ii) 40% of the lowest sale price for the Common Stock on
the Principal Market during the thirty (30) consecutive Trading Days
immediately preceding the Conversion Date, provided, however, if the Company’s
share price at any time loses the bid (ex: 0.0001 on the ask with zero market
makers on the bid on level 2), then the Conversion Price may, in the Holder’s
sole and absolute discretion, be reduced to a fixed conversion price of 0.00001
(if lower than the conversion price otherwise), and provided, further, that
the Conversion Price shall be subject to Section 1.2(b) below.  If such Common
Stock is not traded on the OTCBB, OTCQB, NASDAQ, or NYSE, then such sale price
shall be the sale price of such security on the principal securities exchange
or trading market where such security is listed or traded or, if no sale 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 such sale price cannot
be calculated for such security on such date in the manner provided above, such
price shall be the fair market value as mutually determined by the Borrower and
the Holder. If the Borrower’s Common stock is chilled for deposit at DTC,
becomes chilled at any point while this Note remains outstanding or deposit or
other additional fees are payable due to a Yield Sign, Stop Sign or other
trading restrictions, or if the closing sale price at any time falls below 0.10
then such 40% figure specified in clause 1.2(a)(ii) above shall be reduced to 20%.
Additionally, the Borrower acknowledges that it will
take all reasonable steps necessary or appropriate, including providing a board
of directors resolution authorizing the issuance of common stock and an opinion
of counsel confirming the rights of Holder to sell shares of Common Stock issuable
or issued to Holder on conversion of this Note pursuant to Rule 144 as
promulgated by the SEC (“Rule 144"), as such Rule may be in effect from
time to time. If the Borrower does not promptly provide a board of directors’
resolution and an opinion from Company counsel, and so long as the requested
sale may be made pursuant to Rule 144, the Company agrees to accept an opinion
of counsel to the Holder which opinion will be issued at the Company’s expense
and the conversion dollar amount will be reduced by $750.00 to cover the cost
of such legal opinion.  “Trading Day” shall mean any day on which the
Common Stock is tradable for any period on the OTCQB, or on the principal
securities exchange or other securities market on which the Common Stock is
then being traded. Additionally, if the Company ceases to be a reporting
company pursuant to the 1934 Act or if the Note cannot be converted into free
trading shares after 181 days from the issuance date, an additional 15%
discount will be attributed to the Conversion Price.


b)              
If
at any time the Conversion Price as determined hereunder for any Conversion would
be less than the par value of the Common Stock, then the Conversion Price
hereunder shall equal such par value for such Conversion and the Conversion
Amount for such Conversion shall be increased to include Additional Principal,
where “Additional Principal” means such additional amount to be added to the
Conversion Amount to the extent necessary to cause the number of Conversion
Shares issuable upon such Conversion to equal the same number of Conversion
Shares as would have been issued had the Conversion Price not been subject to
the minimum price set forth in this Section 1.2(b).


c)              
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 (as defined below) the Borrower shall pay to
the Holder $1,000.00 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, 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 this Note is a valuable right to the
Holder. The damages resulting from a failure, attempt to frustrate, or interference
with such conversion right are difficult if not impossible to quantify.
Accordingly the parties acknowledge that the liquidated damages provision
contained in this Section are justified.







 










 








 










1.3.            
Authorized
Shares.
The Borrower covenants that the Borrower will at all times while this Note is
outstanding 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. The Borrower is required at
all times to have authorized and reserved five (5) times the number of shares
that is actually issuable upon full conversion of this Note (based on the
Conversion Price of the Notes in effect from time to time)(the “Reserved
Amount”).  Initially, the Company will instruct the Transfer Agent to reserve twenty
million (20,000,000) shares of common stock in the name of the Holder for
issuance upon conversion hereof.  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 this Note 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 this Note in full. 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 and from time to time after the Issue Date, by 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 11:59 p.m.,
New York, New York time).


b)              
Book
Entry 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 duly
and properly executed 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 11:59
p.m., New York, New York time, on such date.







 










 








 










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 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
Agent Commission (“DWAC”) system.


g)              
Failure
to Deliver Common Stock Prior to 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, the
Borrower shall pay to the Holder $1,000.00 per day in cash, for each day beyond
the Deadline that the Borrower fails to deliver such Common Stock to the
Holder. 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,
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, or 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.


h)              
The Borrower acknowledges that it will take all reasonable steps
necessary or appropriate, including providing an opinion of counsel confirming
the rights of Holder to sell shares of Common Stock issued to Holder on
conversion of the Note pursuant to Rule 144 as promulgated by the SEC (“Rule
144"), as such Rule may be in effect from time to time. If the Borrower
does not promptly provide an opinion from Borrower counsel, and so long as the
requested sale may be made pursuant to Rule 144, the Borrower agrees to accept
an opinion of counsel to the Holder which opinion will be issued at the
Borrower’s expense.


1.5.            
Restricted
Securities.
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).  Any legend
set forth on any stock certificate evidencing any Conversion Shares 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   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 acceptable to the  Company, or (ii) in the case of
the Common Stock issued or 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.







 










 








 










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, for clarification, the
Holder shall be entitled to convert this Note) and (b) the resulting successor
or acquiring entity 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.









 










 








 








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.  Such assets shall be held in escrow by the Company
pending any such conversion


d)              
Purchase
Rights.
If, at any time when any Notes are issued and outstanding, the Borrower issues
any convertible securities or rights to purchase stock, warrants, securities or
other property (the “Purchase Rights”) pro rata to the record holders of any
class of Common Stock, then the Holder of this Note will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such Holder could have acquired if such Holder had held
the number of shares of Common Stock acquirable upon complete conversion of
this Note (without regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.


e)              
Stock
Dividends and Stock Splits.  If the Company, at any time while this Note is
outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock or
any securities convertible into or exercisable for Common Stock; (B) subdivides
outstanding shares of Common Stock into a larger number of shares; (C) combines
(including by way of a reverse stock split) outstanding shares of Common Stock
into a smaller number of shares; or (D) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of
the Company, then the Conversion Price (and each sale or bid price used in
determining the Conversion Price) shall be multiplied by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding immediately
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event.  Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re‐classification.


f)               
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.            
Revocation. If any
Conversion Shares are not received by the Deadline, the Holder may revoke the
applicable Conversion pursuant to which such Conversion Shares were issuable. 
This Note shall remain convertible after the Maturity Date hereof until this
Note is repaid or converted in full.


1.8.            
Prepayment.
Notwithstanding anything to the contrary contained in this Note, subject to the
terms of this Section, at any time during the period beginning on the Issue
Date and ending on the date which is six (6) months following the Issue Date
(“Prepayment Termination Date”), Borrower shall have the right, exercisable on
not less than five (5) Trading Days prior written notice to the Holder of this
Note, to prepay the outstanding balance on this Note (principal and accrued
interest), in full, in accordance with this Section. 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 ten (10) 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 Optional Prepayment Amount (as
defined below) 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 exercises its right to prepay the Note, the
Borrower shall make payment to the Holder of an amount in cash (the “Optional
Prepayment Amount”) equal to the Prepayment Factor (as defined below),
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 to the Optional Prepayment Date plus (y) Default Interest, if any, on the
amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof.  If the Borrower delivers an
Optional Prepayment Notice and fails to pay the Optional 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. After the Prepayment Termination Date, the
Borrower shall have no right to prepay this Note. For purposes hereof, the
“Prepayment Factor” shall equal one hundred and fifty percent (150%), provided
that such Prepayment factor shall equal one hundred and thirty percent (130%)
if the Optional Prepayment Date occurs on or before the date which is ninety (90)
days following the Issue Date hereof. 


 


ARTICLE II. CERTAIN
COVENANTS


2.1.            
Distributions
on Capital Stock.
So long as the Borrower shall have any obligation under this Note, the Borrower
shall not without the Holder’s written consent (a) pay, declare or set apart
for such payment, any dividend or other distribution (whether in cash, property
or other securities) on shares of capital stock other than dividends on shares
of Common Stock solely in the form of additional shares of Common Stock or (b)
directly or indirectly or through any subsidiary make any other payment or
distribution in respect of its capital stock except for distributions pursuant
to any shareholders’ rights plan which is approved by a majority of the
Borrower’s disinterested directors.


2.2.            
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.







 










 








 










2.3.            
Borrowings;
Liens. Notwithstanding section 4(m) of the Purchase
Agreement, so long as the Borrower shall have any obligation under this
Note, the Borrower shall not (i) create, incur, assume guarantee, endorse,
contingently agree to purchase or otherwise become liable upon the obligation
of any person, firm, partnership, joint venture or corporation, except by the
endorsement of negotiable instruments for deposit or collection, or suffer to
exist any liability for borrowed money, except (a) borrowings in existence or
committed on the date hereof and of which the Borrower has informed Holder in
writing prior to the date hereof, or (b) indebtedness to trade creditors or
financial institutions incurred in the ordinary course of business, or (ii)
enter into, create or incur any liens, claims or encumbrances of any kind, on
or with respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom, securing
any indebtedness occurring after the date hereof.


2.4.            
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.


2.5.            
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 in existence or committed on
the date hereof and which the Borrower has informed Holder in writing prior to
the date hereof.


2.6.            
Charter.  So long as
the Borrower shall have any obligations under this Note, the Borrower shall not
amend its charter documents, including without limitation its certificate of
incorporation and bylaws, in any manner that materially and adversely affects
any rights of the Holder.


ARTICLE III. EVENTS OF DEFAULT


Any
one or more of the following events which shall occur and/or be continuing
shall constitute an event of default (each, an “Event of Default”):


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 at any time following the execution hereof or)
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 five
(5) 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.            
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 seven (7)
days after written notice thereof to the Borrower from the Holder.


3.4.            
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.


3.5.            
Receiver
or Trustee.
The Borrower or any subsidiary of the Borrower shall make an assignment for the
benefit of creditors, 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.


3.6.            
Judgments. 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 $50,000.00, 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.


3.7.            
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.


3.8.            
Delisting
of Common Stock.
The Borrower shall fail to maintain the listing of the Common Stock on at least
one of the OTCBB, or OTCQB, or an equivalent replacement exchange, NASDAQ, the NYSE
or AMEX.


3.9.            
Failure
to Comply with the Exchange Act. The Borrower shall fail to comply in
any material respect with the reporting requirements of the Exchange Act;
and/or the Borrower shall cease to be subject to the reporting requirements of
the Exchange Act.









 










 








 








3.10.        
Liquidation.  Any
dissolution, liquidation, or winding up of Borrower or any substantial portion
of its business.


3.11.        
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.


3.12.        
Maintenance
of Assets.  The
failure by Borrower, during the term of this Note, 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).


3.13.        
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.


3.14.        
Reverse
Splits.
The Borrower effectuates a reverse split of its Common Stock without twenty
(20) days prior written notice to the Holder.


3.15.        
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.


3.16.        
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 related or
companion documents to this Note. 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. 


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 a Trading Market Prepayment Event
pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11,
3.12, 3.13, 3.14, and/or 3. 15 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 in the remaining sections of
Articles 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 the greater
of (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) 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. 







 










 








 










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.  The Holder may
still convert any amounts due hereunder, including without limitation the
Default Sum, until such time as this Note has been repaid in full.


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, email 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 or email, with accurate confirmation
generated by the transmitting facsimile machine or computer, at the address,
email or number designated in the Purchase Agreement (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.







 










 








 










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 costs of collection, including reasonable attorneys’ fees.


4.6.            
Governing
Law.
This Note shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction.  Any action brought by either party against
the other concerning the transactions
contemplated by this Agreement must be brought only in the civil or state
courts of Delaware or in the federal courts located in the State and county of Delaware.  Both
parties and the individual signing this Agreement on behalf of the Borrower
agree to submit to the jurisdiction of such courts.  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 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 unenforceability of any other
provision of this Note. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the
Borrower in any other jurisdiction to collect on the Borrower’s obligations to
Holder, to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other decision in favor of the Holder.  This
Note shall be deemed an unconditional obligation of Borrower for the payment of
money and, without limitation to any other remedies of Holder, may be enforced
against Borrower by summary proceeding pursuant to Delware Civil Procedure Law
and Rules Section 3213 or any similar rule or statute in the jurisdiction where
enforcement is sought.  For purposes of such rule or statute, any
other document or agreement to which Holder and Borrower are parties or which
Borrower delivered to Holder, which may be convenient or necessary to determine
Holder’s rights hereunder or Borrower’s obligations to Holder are deemed a part
of this Note, whether or not such other document or
agreement was delivered together herewith or was executed apart from this Note.







 










 








 










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.            
Disclosure. Upon receipt or
delivery by the Company of any notice in accordance with the terms of this
Note, unless the Company has in good faith determined that the matters relating
to such notice do not constitute material, non-public information relating to
the Company or any of its Subsidiaries, the Company shall within one (1)
Trading Day after any such receipt or delivery, publicly disclose such
material, non-public information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains material,
non-public information relating to the Company or any of its Subsidiaries, the
Company so shall indicate to such Holder contemporaneously with delivery of
such notice, and in the absence of any such indication, the Holder shall be
allowed to presume that all matters relating to such notice do not constitute
material, non-public information relating to the Company or its Subsidiaries.


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.        
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.







 










 








 










4.11.        
Usury.  This Note
shall be subject to the anti-usury limitations contained in the Purchase
Agreement.


 


 


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


 




COMPANY:


 


HPIL
HOLDING


By: /s/
Nitin Amersey


Director
and CFO


 


 





 


 


 


 


 


 


 


 


                                                                                            


 


 


 


 


 


 


 


 


 


 


 


 


 





 









 










 








 








                                                                     EXHIBIT A


 


                                                       NOTICE
OF CONVERSION


                                                                               


The
undersigned hereby elects to convert principal under the 15% Convertible Note
of HPIL HOLDING, a Nevada corporation (the Company”), into shares of
common stock (the “Common Stock”), of the Company according to the
conditions hereof, as of the date written below.  If shares of Common Stock are
to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith.  No fee will be charged to the holder for any
conversion, except for such transfer taxes, if any.


 


            By
the delivery of this Notice of Conversion the undersigned represents and
warrants to the Company that its ownership of the Common Stock does not exceed
the amounts specified under Section 1.1 of this Note, as determined in
accordance with Section 13(d) of the Exchange Act.


 


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


 


Conversion
calculations:                                                                                                                 


Date to Effect Conversion:                                                         


 


Conversion Price:                                                                       


 


Principal
Amount of Note to be Converted:                                


 


                                                            Interest
Accrued on Account


                                                            of
Conversion at Issue:                                                               


 


                                                            Additional
Principal on Account           of Conversion


                                                            Pursuant
to Section 1.2(b) of the Note:                                       


                                                                                                                                                      


Number
of shares of Common Stock to be issued:                       


                                                                                                                                                                                                                    


                                                                                                                                                      


Signature:                                                                                  


                                                                                          


Name:                                                                                       


                                                                                                                                                      


Address for Delivery of Common
Stock Certificates:       


                                                                                                 


                                                                                                 


 


                                                            Or 


 


                                                            DWAC
Instructions:


                                                            Broker
No:                                 


                                                            Account
No: