EXHIBIT
10.16





 


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: $43,000.00 	Issue
    Date: November 19, 2014
	Purchase
Price: $43,000.00	




 


CONVERTIBLE
PROMISSORY NOTE


 


FOR
VALUE RECEIVED, PROGREEN PROPERTIES, INC., a Delaware corporation (hereinafter called the “Borrower”),
hereby promises to pay to the order of KBM WORLDWIDE, INC., a New York corporation, or registered assigns (the “Holder”)
the sum of $43,000.00 together with any interest as set forth herein, on November 19, 2015 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”)
per annum from the date 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 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”). All payments due hereunder (to the extent not converted into
common stock, $0.0001 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:


 


1.     CONVERSION RIGHTS


 


		a.	Conversion
                                         Right. The Holder shall have the right from time to time, and at any time during
                                         the period beginning on the date which is one hundred eighty (180) days following the
                                         date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date
                                         of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a)
                                         or Article III, each in respect of the remaining outstanding principal amount of this
                                         Note to convert all or any part of the outstanding and unpaid principal amount of this
                                         Note into fully paid and non- assessable shares of Common Stock, as such Common Stock
                                         exists on the Issue Date, or any shares of capital stock or other securities of the Borrower
                                         into which such Common Stock shall hereafter be changed or reclassified at the conversion
                                         price (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
                                         thereunder, except as otherwise provided in clause (1) of such proviso, provided,
                                         further, however, that the limitations on conversion may be waived by the
                                         Holder upon, at the election of the Holder, not less than 61 days’ prior notice
                                         to the Borrower, and the provisions of the conversion limitation shall continue to apply
                                         until such 61st day (or such later date, as determined by the Holder, as may be specified
                                         in such notice of waiver). The number of shares of Common Stock to be issued upon each
                                         conversion of this Note shall be determined by dividing the Conversion Amount (as defined
                                         below) by the applicable Conversion Price then in effect on the date specified in the
                                         notice of conversion, in the form attached hereto as Exhibit A (the “Notice of
                                         Conversion”), delivered to the Borrower by the Holder in accordance with Section
                                         1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail
                                         (or by other means resulting in, or reasonably expected to result in, notice) to the
                                         Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion
                                         Date”). The term “Conversion Amount” means, with respect to any conversion
                                         of this Note, the sum of (1) the principal amount of this Note to be converted in such
                                         conversion plus (2) at the Holder’s option, accrued and unpaid interest,
                                         if any, on such principal amount at the interest rates provided in this Note to the Conversion
                                         Date, 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.



 






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		b.	Conversion
                                         Price.



 


i.          Calculation
of 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 61% multiplied by the Market
Price (as defined herein) (representing a discount rate of 39%). “Market Price” means the average of the lowest three
(3) Trading Prices (as defined below) for the Common Stock during the ten (10) 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 OTCQB, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by
a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC 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”. 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 OTC, or on the
principal securities exchange or other securities market on which the Common Stock is then being traded.


 






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


 


		c.	Authorized
                                         Shares. The Borrower covenants that during the period the conversion right exists,
                                         the Borrower will reserve from its authorized and unissued Common Stock a sufficient
                                         number of shares, free from preemptive rights, to provide for the issuance of Common
                                         Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement.
                                         The Borrower is required at all times to have authorized and reserved five times the
                                         number of shares that is actually issuable upon full conversion of the Note (based on
                                         the Conversion Price of the Notes in effect from time to time)(the “Reserved Amount”).
                                         The Reserved Amount shall be increased from time to time in accordance with the Borrower’s
                                         obligations hereunder. 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.



 






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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.


 


		d.	Method
                                         of Conversion.



 


i.          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.


 


ii.         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.


 






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iii.          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.


 


iv.          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.


 


v.           Obligation
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to
be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of
accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its
obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate
except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion.
If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person
or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the
Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be
the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.


 






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vi.          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.


 


vii.         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. 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.


 


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



 






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“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 Holder 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.


 






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		f.	Effect
                                         of Certain Events.



 


i.          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.


 


ii.          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.


 






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iii.          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.


 


iv.          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 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.


 






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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. Issuances
of common stock by the Borrower pursuant to the Subscription Agreement, dated July 22, 2009, between the Company and EIG Venture
Capital, Ltd. shall not constitute Dilutive Issuances pursuant to this Section 1.6(d).


 


v.          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.


 


vi.          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.


 






    	- 11 -



    	 



    

 


		g.	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.



 


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



 






    	- 12 -



    	 



    

 


	 	i.	Prepayment. Notwithstanding anything to the contrary contained in
this Note, at any time during the periods set forth on the table immediately following this paragraph (the “Prepayment Periods”),
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 Holder, 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 percentage (“Prepayment Percentage”)
as set forth in the table immediately following this paragraph opposite the applicable Prepayment Period, 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.




 


 


	Prepayment Period	 	Prepayment Percentage	 
	1.     The period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date.	 	 	110	%
	2.     The period beginning  on the date which is thirty-one (31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date	 	 	120	%
	3.     The period beginning  on the date which is sixty-one (61) days following the Issue Date and ending on the date which is ninety (90) days following the Issue Date	 	 	125	%
	4.     The period beginning on the date that is ninety-one (91) day from the Issue Date and ending one hundred twenty (120) days following the Issue Date	 	 	130	%
	5.     The period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date	 	 	135	%



 






    	- 13 -



    	 



    

 


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


 


2.     CERTAIN COVENANTS


 


		a.	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.



 


		b.	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.



 


		c.	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, firms financing real estate operations of the Borrower in the normal
                                         course of Borrower’s business, or financial institutions incurred in the ordinary
                                         course of business or (c) borrowings, the proceeds of which shall be used to repay this
                                         Note.



 


		d.	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.



 






    	- 14 -



    	 



    

 


		e.	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. This section 2.5
                                         shall not apply to transactions by the Borrower's subsidiaries or affiliated entities
                                         involved in real estate transactions where the Borrower has an interest, or transactions
                                         between the Borrower and such Subsidiaries or affiliated entities.



 


3.     EVENTS OF DEFAULT


 


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


 


		a.	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.



 


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



 






    	- 15 -



    	 



    

 


		c.	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.



 


		d.	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.



 


		e.	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.



 


		f.	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.



 


		g.	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.



 


		h.	Delisting
                                         of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock
                                         on at least one of the OTC (which specifically includes the Pink Sheets electronic quotation
                                         system) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq
                                         SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.



 


		i.	Failure
                                         to Comply with the Exchange Act. The Borrower shall fail to file quarterly or annual
                                         reports pursuant to the filing requirements of the Exchange Act; and/or the Borrower
                                         shall cease to be subject to the reporting requirements of the Exchange Act.



 






    	- 16 -



    	 



    

 


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




 


	 	k.	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 financial
statement or other disclosure in or relating to the Borrower’s SEC filings referencing 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..




 


	 	l.	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).




 


	 	m.	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 leads to a trading suspension.




 


	 	n.	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.






    	- 17 -



    	 



    

 


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 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.


 






    	- 18 -



    	 



    

 


4.     MISCELLANEOUS


 


		a.	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.



 


		b.	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:


PROGREEN
PROPERTIES, INC.


380
North Old Woodward Avenue - Suite 300


Birmingham,
MI 48009


Attn:
JAN TELANDER, Chief Executive Officer


facsimile:


 


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


 


Michael
Paige PLLC


Attn:
Michael Paige


1120
20th Street, NW


Washington,
DC 20036


facsimile:
(202) 457-1678


 


If
to the Holder:


KBM
WORLDWIDE, INC.


80
Cuttermill Road – Suite 410


Great
Neck, NY 11021


Attn:
Seth Kramer, President


e-mail:
info@kbmworldwide.com


 






    	- 19 -



    	 



    

 


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


Naidich
Wurman Birnbaum & Maday, LLP


Att:
Judah A. Eisner, Esq.


Attn:
Bernard S. Feldman, Esq.


facsimile:
516-466-3555


e-mail:
dyork@nwbmlaw.com


 


		c.	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.



 


		d.	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.



 


		e.	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.



 


		f.	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.



 






    	- 20 -



    	 



    

 


		g.	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.



 


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



 


		i.	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.



 






    	- 21 -



    	 



    

 


		j.	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 November 19, 2014.


 





	 	PROGREEN PROPERTIES, INC.
	 	 	 
	 	By:	/s/ Jan Telander
	 	 	JAN TELANDER
	 		Chief Executive Officer




 




    	- 22 -



    	 



    


 


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 PROGREEN PROPERTIES, INC., a Delaware corporation (the “Borrower”) according to the conditions of the convertible
note of the Borrower dated as of November 19, 2014 (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:




 


KBM
WORLDWIDE, INC.


80
Cuttermill Road – Suite 410


Great
Neck, NY 11021


Attention:
Certificate Delivery


e-mail:
info@kbmworldwide.com


 


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: ______________


 





KBM WORLDWIDE, INC.




 





	 	By:	 	 
	 	Name:	Seth Kramer	 
	 	Title: 	President	 
	 	Date: 	November 17, 2014