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: $13,000.00Issue
Date: May 20, 2013 Purchase
Price: $13,000.00


 


 


CONVERTIBLE
PROMISSORY NOTE


 


FORVALUERECEIVED,NYXIOTECHNOLOGIESCORP.,aNevada
corporation (hereinafter called
the “Borrower”),
hereby promises to pay to the
order of CONTINENTAL EQUITIES,
LLC, a New York limited
liability Corporation,
or registered assigns (the
“Holder”) the sum of
Thirteen Thousand Dollars ($13,000.00)
together with any
interest as set forth herein, on May 31, 2014 the “Maturity Date”), and to
pay interest on the unpaid principal balance hereof at the rate of
ten percent (10%) (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. 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
hereof (
the “Issuance
Date”) 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 (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 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 there
under, 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, 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.
The conversion
price (the “Conversion
Price”) shall equal
the Variable
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 "Variable
Conversion Price" shall mean
57.5% multiplied by the
Market Price (as defined
herein) (representing a
discount rate of
42.5%). “Market Price”
means the average
of the lowest three
(3) Trading Prices
(as defined below)
for the Common Stock
during the
thirty (30)
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, or applicable trading market
(the “OTCBB”) as
reported by a reliable
reporting service (“Reporting Service”)
designated by the Holder (i.e.
Bloomberg) 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 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, or
on the principal securities
exchange or
other securities market
on which the Common Stock is then
being traded.


 


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 two 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 4(g) 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.




    	3



    	 



    

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
6:00 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.


 


(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,




    	4



    	 



    

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 6:00 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 (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 through willful
or deliberate acts
on the part
of the Borrower. 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




    	5



    	 



    

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:


 


“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 accepted by the
Company 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 Company
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.


 


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


 







    	6



    	 



    

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.


 


(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) Adjustment
Due to Dilutive Issuance.
 If, at any time when
any Notes are issued
and outstanding, the Borrower
issues or sells, or in
accordance with this Section
1.6(d) hereof is deemed
to have issued
or sold, any shares
of Common Stock for no
consideration or for







    	7



    	 



    

a
consideration per
share (before deduction
of reasonable
expenses or commissions
or underwriting
discounts or
allowances in
connection therewith)
less than the
Conversion Price
in effect
on the date
of such issuance
(or deemed
issuance) of
such shares
of Common Stock (a “Dilutive
Issuance”), then immediately
upon the Dilutive
Issuance, the Conversion
Price will
be reduced to the amount of
the consideration per share received
by the Borrower in such Dilutive
Issuance.


 


The
Borrower shall
be deemed to
have issued
or sold
shares of
Common Stock if
the Borrower
in any
manner issues
or grants
any warrants,
rights or options
(not including employee
stock option plans),
whether or not
immediately exercisable, to
subscribe for or to purchase
Common Stock or other securities convertible
into or exchangeable for Common
Stock (“Convertible
Securities”) (such
warrants, rights and
options to purchase
Common Stock or Convertible
Securities are hereinafter referred
to as “Options”) and
the price per
share for which Common Stock
is issuable upon the exercise of such
Options is less than the Conversion
Price then in effect, then the Conversion
Price shall be equal to such price
per share. For purposes
of the preceding sentence, the “price
per share for which Common Stock is issuable
upon the exercise of such Options”
is determined by dividing (i) the total
amount, if any,
received or receivable by
the Borrower
as consideration for the issuance
or granting of all
such Options, plus the minimum aggregate
amount of additional consideration,
if any, payable to the Borrower
upon the exercise of all such Options, plus, in the case
of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate amount
of additional consideration payable
upon the conversion or exchange thereof at
the time such Convertible Securities
first become convertible or exchangeable, by
(ii) the maximum total number of shares
of Common Stock issuable upon the exercise of all
such Options (assuming full conversion of Convertible
Securities, if applicable). No further
adjustment to the Conversion Price
will be made upon the actual issuance of
such Common Stock upon the exercise
of such Options or upon
the conversion or exchange
of Convertible Securities issuable
upon exercise of such
Options.


 


Additionally,
the Borrower
shall be deemed
to have issued
or sold shares
of Common Stock
if the Borrower
in any
manner issues
or sells
any Convertible
Securities, whether or
not immediately convertible
(other than where
the same are issuable
upon the exercise of Options),
and the price per share for which Common Stock is issuable
upon such conversion or exchange
is less than the
Conversion Price then in effect,
then the Conversion Price
shall be equal to such price
per share. For the purposes of the preceding
sentence, the “price per share
for which Common Stock is issuable
upon such conversion or exchange” is determined
by dividing (i) the total amount,
if any, received or
receivable by the Borrower as
consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate
amount of additional consideration, if any,
payable to the Borrower upon the conversion
or exchange thereof
at the time such Convertible Securities
first become convertible or exchangeable,
by (ii) the maximum total
number of shares of Common Stock issuable
upon the conversion
or exchange of
all such Convertible
Securities. No further
adjustment to the Conversion
Price will
be made upon the
actual issuance
of such Common
Stock upon conversion
or exchange of such Convertible Securities


 


(e)
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







    	8



    	 



    

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.


 


(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
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
3.3 of the Note.


 


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)







    	9



    	 



    

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, at
any time
during the period
beginning on
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, in
accordance with
this Section
1.9. 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 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 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 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 1.9.


 


Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during
the period beginning
on the date
which is
sixty-one (61)
days following
the issue date
and ending on
the date
which is eight-nine (89) 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, in
accordance with this Section 1.9. Any
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 Optional
Prepayment Date,
the Borrower
shall make payment
of the Second
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 “Second Optional
Prepayment Amount”) 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 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 Second
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
1.9.




    	10



    	 



    

Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during
the period
beginning on the
date which
is ninety (90)
days following
the issue date
and, 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, in accordance
with this Section 1.9. Any
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 Optional Prepayment
Date, the Borrower
shall make payment
of the Third
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 “Third Optional Prepayment
Amount”) 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 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 Third 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
1.9. 


 


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


 


1.10DTC
Status. The
Company’s Common
Stock are
currently eligible for
DTC book-entry delivery,
settlement and
depository services
and accordingly
are not subject
to a deposit
transfer restriction
(“Deposit Chill”).
In the event,
the Company’s Common
Stock becomes subject to a Deposit Chill, the Variable
Conversion Rate shall be amended
to 35% multiplied by the Market
Price (as defined herein)
(representing a
discount rate of 65%). 


 


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




    	11



    	 



    

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. So
long as the
Borrower shall
have any
obligation under
this Note,
the Borrower
shall not, without
the Holder’s
written consent,
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, (b) indebtedness
to trade creditors or financial
institutions incurred in the ordinary
course of business or (c) borrowings,
the proceeds of which shall
be used to repay this Note.


 


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 (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. 


 


ARTICLE
III.
 EVENTS OF
DEFAULT


 


If
any
of the following events of default
(each, an “Event of Default”) shall occur:


 


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




    	12



    	 



    

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 
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.


 


3.4 
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, 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,reorganizationorliquidation
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 “OTCQB”
tier of the
OTC Markets,
Inc. quotation
system, OTCBB
or an
equivalent replacement
exchange, the Nasdaq
National Market, 
the Nasdaq SmallCap Market, the
New York Stock Exchange,
or the American Stock Exchange.


 


3.9 
Failure to
Comply with the
Exchange Act.
The Borrower
shall fail
to comply 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.







    	13



    	 



    

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 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


 




    	14



    	 



    

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 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.


 


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




    	15



    	 



    

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:


 


If
to the Borrower, to:


 


Nyxio
Technologies Corp. 2156
NE Broadway


Portland,
Oregon 97232 Attn: Giorgio
Johnson, CEO


 


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


Attn:
Joe Laxague


3273
East Warm Springs
Rd. Las
Vegas, NV 89120
facsimile: (702) 944-7100


 


If
to the Holder:


 


Continental
Equities, LLC
331 W. 57th Street,
Suite 206 New
York, NY 10019


Attn:
Alan
Masley


 


With
a copy by
fax only to (which copy
shall not constitute notice): Sommer
& Schneider,
LLP


Attn:
Joel Schneider


1205
Franklin Avenue, Suite 110
Garden City, New
York 11530




    	16



    	 



    

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 New
York 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 New
York or in
the federal courts
located in the state and
county of Nassau. 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




    	17



    	 



    

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.


 


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.


 


 


IN
WITNESS
WHEREOF, Borrower
has caused this
Note to be
signed in
its name
by its
duly authorized officer
this May 24th, 2013.


 


NYXIO
TECHNOLOGIES CORP.


 


 


By: /s/ Giorgio Johnson


Giorgio Johnson


Chief
Executive Officer




    	18



    	 



    

EXHIBIT
A NOTICE
OF CONVERSION


 


The
undersigned hereby
elects to
convert $principal
amount of the
Note (defined
below) 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
NYXIO TECHNOLOGIES
CORP., a Nevada corporation (the
“Borrower”) according to the conditions
of the convertible note of the Borrower
dated as of May 20, 2013 (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 Agent
Commission 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:


 


Continental
Equities, LLC
331 W. 57th Street,
Suite 206 New
York, NY 10019 Attention:
Certificate Delivery (212) 292-7455


 


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:______________


 


Continental
Equities, LLC


 


By:
_________________


 Name: _______________


Title:
 President


Date:
 _______________


 331
W. 57th Street, Suite 206
New York, NY 10019



    	19