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 25, 2014
	Purchase Price: $43,000.00	










 


CONVERTIBLE
PROMISSORY NOTE


 


FORVALUE  RECEIVED,  RICHPHARMACEUTICALS,  INC.,  aNevada
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 August 28,
2015 (the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest
Rate”) per annum from the date hereof
(the “Issue Date”) until
the same becomes due and
payable, whether at maturity or upon acceleration
or by prepayment or otherwise. This Note may
not be prepaid in whole or in part
except as otherwise explicitly set forth
herein. Any amount of principal or interest
on this Note which is not paid
when due shall bear interest
at the rate of twenty two
percent (22%) per annum from the
due date thereof until the same
is paid (“Default Interest”).
Interest shall commence accruing on the date
that the Note is fully paid and
shall be computed on the basis
of a 365-day year and the actual number of days elapsed.
All payments due
hereunder (to the extent
not converted into common stock,
$0.001 par value per share (the
“Common Stock”) in accordance
with the terms hereof) shall
be made in lawful money of the United States
of America. All payments shall be made at
such address as the Holder shall
hereafter give to the Borrower by written
notice made in accordance with
the provisions of this Note. Whenever any amount
expressed to be due by the terms of
this Note is due on any day which is
not a business day, the same shall
instead be due on the next succeeding day
which is a business day and, in
the case of
any interest payment date which
is not the date on




    	 



    	 



    

 


 


which
this Note
is paid
in full,
the extension
of the
due date
thereof shall
not be taken
into account
for purposes of
determining the
amount of
interest due
on such
date. As
used in this
Note, the
term “business day”
shall mean any
day other than
a Saturday, Sunday
or a day on which
commercial banks in the city of New York, New
York are authorized or required by law or
executive order
to remain
closed. Each capitalized
term used herein,
and not otherwise defined,
shall have the meaning
ascribed thereto
in that
certain Securities
Purchase Agreement dated
the date hereof, pursuant to
which this Note was
originally issued (the “Purchase
Agreement”).


 


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


 


The
following terms shall apply
to this Note:


 


ARTICLE
I. CONVERSION
RIGHTS


 


1.1 
 Conversion Right.
The Holder
shall have
the right from
time to time,
and at
any time during
the period beginning
on the date
which is one
hundred eighty
(180) days
following the date
of this Note
and ending
on the later
of: (i)
the Maturity Date
and (ii)
the date of payment
of the Default Amount (as defined
in Article III) pursuant to Section
1.6(a) or Article III, each in
respect of the remaining
outstanding principal amount
of this Note to convert
all or any part of the outstanding and
unpaid principal amount of this
Note into fully paid
and non- assessable shares of
Common Stock, as such
Common Stock exists on
the Issue Date, or any shares
of capital
stock or
other securities
of the Borrower
into which
such Common
Stock shall
hereafter be changed or reclassified
at the conversion price (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




    	2



    	 



    

 


 


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.


 


		1.2	Conversion
                                         Price.



 


(a)   
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
58% multiplied
by the Market
Price (as
defined herein)
(representing a discount rate
of 42%). “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
Over-the-Counter Bulletin
Board, 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.




    	3



    	 



    

 


 


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


 


1.3 
 Authorized Shares.
The Borrower
covenants that
during the period
the conversion
right exists,
the Borrower
will reserve
from its authorized
and unissued
Common Stock
a sufficient
number of
shares, free
from preemptive
rights, to
provide for
the issuance
of Common Stock upon the
full conversion of this Note
issued pursuant to the Purchase
Agreement. The Borrower
is required at
all times to have authorized
and reserved
five times the number of
shares that is actually issuable
upon full conversion of the Note
(based on the Conversion
Price of the Notes in effect
from time to time)(the “Reserved
Amount”). The Reserved Amount
shall be increased from time
to time in accordance with the Borrower’s
obligations 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.




    	4



    	 



    

 





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


 


		1.4	Method
                                         of
                                         Conversion.



 


(a)   
Mechanics of
Conversion. Subject
to Section
1.1, this
Note may
be converted
by the Holder
in whole
or in part
at any time
from time
to time after
the Issue
Date, by


(A) 
submitting to
the Borrower
a Notice
of Conversion
(by facsimile,
e-mail or
other reasonable
means of communication
dispatched on the
Conversion Date
prior to
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




    	5



    	 



    

 


 


in
this Section
1.4, the Borrower
shall issue and
deliver or cause
to be
issued and
delivered to
or upon the
order of
the Holder certificates
for the Common
Stock issuable
upon such
conversion within
three (3)
business days
after such
receipt (the
“Deadline”) (and,
solely in the case of conversion
of the entire unpaid principal
amount hereof, surrender of this Note)
in accordance with the terms
hereof and the Purchase Agreement.


 


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




    	6



    	 



    

 


 


fifth
day
of the
month following the
month in which
it has
accrued or,
at the option
of the Holder
(by written
notice to
the Borrower
by the
first day
of the month
following the
month in which
it has
accrued), shall
be added to
the principal amount
of this Note, in
which event
interest shall accrue
thereon in accordance with
the terms of
this Note and
such additional principal amount
shall be convertible
into Common Stock
in accordance with
the terms
of this  Note.
 The Borrower
agrees that the right
to convert is a valuable
right to the Holder.
The damages resulting from
a failure, attempt to frustrate,
interference with such conversion
right are difficult if not impossible
to qualify. Accordingly the parties
acknowledge that the liquidated
damages provision contained in
this Section 1.4(g)
are justified.


 


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


 


“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




    	7



    	 



    

 


 


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.


 


		1.6	Effect
                                         of
                                         Certain Events.



 


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


 


(b)  
Adjustment
Due
to Merger,
Consolidation, Etc.
If, at
any time
when this
Note is
issued and
outstanding and
prior to
conversion of
all of
the Notes, there
shall be any
merger, consolidation,
exchange of shares,
recapitalization, reorganization,
or other 
similar event, as
a result of which shares of Common Stock
of the Borrower shall be changed
into the same or a different
number of shares of another
class or classes of stock or securities
of the Borrower or another entity,
or in case of any sale
or conveyance of all or substantially
all of the assets
of the Borrower other than
in connection with a plan
of complete liquidation of the
Borrower, then
the Holder of
this Note
shall thereafter
have the
right to
receive upon
conversion of this Note,
upon the basis and
upon the terms
and conditions specified
herein and
in lieu
of the shares
of Common Stock immediately theretofore
issuable upon conversion, such stock,
securities or assets
which the
Holder would
have been
entitled to
receive in
such transaction
had




    	8



    	 



    

 


 


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 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 or
the issuance of
shares to
employees or
consultants for
compensation or the issuance of shares
in consideration for patents
or other intellectual




    	9



    	 



    

 


 


property),
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 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




    	10



    	 



    

 


 


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




    	11



    	 



    

 


 


of
Common Stock
by so
notifying the Borrower)
the Holder
shall regain
the rights
of a Holder
of this Note
with respect
to such
unconverted portions
of this Note
and the Borrower
shall, as
soon as
practicable, return
such unconverted
Note to the Holder
or, if the Note has
not been surrendered,
adjust its
records to
reflect that
such portion
of this Note
has not been
converted. In all
cases, the Holder shall retain
all of its rights and
remedies (including, without
limitation, (i) the right
to receive Conversion Default
Payments pursuant to Section
1.3 to the extent required thereby for
such Conversion Default
and any
subsequent Conversion
Default and
(ii) the right
to have the
Conversion Price
with respect
to subsequent
conversions determined
in accordance
with Section 1.3)
for the Borrower’s failure
to convert this Note.


 


1.9             
Prepayment. Notwithstanding
anything to
the contrary contained
in this Note,
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 one hundred twenty (120)
    days following
    the Issue Date.	140%




    	12



    	 



    

 





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


 





ARTICLE
II. 
CERTAIN COVENANTS


 


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


 


2.2 
Restriction on
Stock Repurchases.
So long as
the Borrower
shall have
any obligation
under this Note,
the Borrower
shall not
without the
Holder’s written
consent redeem, repurchase
or otherwise
acquire (whether
for cash
or in exchange
for property or
other securities
or otherwise) in any one
transaction or series
of related transactions any
shares of capital
stock of the Borrower or
any warrants, rights
or options to purchase or
acquire any such shares.


 


2.3 
Borrowings. So
long as the
Borrower shall
have any
obligation under
this Note,
the Borrower
shall not, without
the Holder’s
written consent,
(a) create,
incur, assume
guarantee, endorse, contingently
agree to purchase or otherwise
become liable upon the obligation
of any other
person, firm, partnership, joint venture
or corporation, except by
the endorsement of negotiable
instruments for deposit
or collection, or
(b) suffer
to exist any liability for borrowed
money, except any borrowings that does
not render the Borrower a "Shell"
company as defined in Rule
12b-2 under the Securities Exchange
Act of 1934.


 


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.




    	13



    	 



    

 


 


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 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.




    	14



    	 



    

 


 


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, reorganization
or  liquidation
proceedings or
other proceedings,
voluntary or
involuntary, for
relief under any
bankruptcy law or
any law for
the relief
of debtors shall
be instituted by
or against the Borrower
or any subsidiary of
the Borrower.


 


3.8 
Delisting of
Common Stock. The
Borrower shall fail
to maintain the listing of
the Common Stock
on at
least one
of the OTCBB,
OTC Markets
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.


 


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,




    	15



    	 



    

 


 


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




    	16



    	 



    

 


 


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.




    	17



    	 



    

 





ARTICLE
IV.
MISCELLANEOUS


 


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


 


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


 


If
to the Borrower, to:


RICH
PHARMACEUTICALS, INC.


9595 Wilshire
Boulevard -
Suite 900 Beverly
Hills, CA 90212


Attn:
BEN CHANG, Chief Executive Officer
facsimile:


 


With
a copy by
fax only to (which
copy shall not constitute notice):
[enter name of law
firm]


Attn:
[attorney name]
[enter address line 1] [enter
city, state, zip]


facsimile:
[enter fax number]


 


If
to the Holder:


KBM
WORLDWIDE, INC.




    	18



    	 



    

 





80 Cuttermill
Road – Suite 410 Great
Neck, NY 11021


Attn:
Seth Kramer, President


e-mail:
info@kbmworldwide.com


 





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


 


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




    	19



    	 



    

 





validity
or enforceability
of any
other provision
of any
agreement. Each
party hereby irrevocably
waives personal service
of process
and consents
to process
being served
in any
suit, action
or proceeding
in connection
with this
Agreement or
any other
Transaction Document
by mailing
a copy thereof via registered or
certified mail or overnight
delivery (with evidence of delivery)
to such
party at the address
in effect
for notices
to it under
this Agreement
and agrees
that such service shall
constitute good and sufficient
service of process and notice
thereof. Nothing
contained herein
shall be deemed
to limit in
any way
any right
to serve process
in any other manner permitted by
law.


 


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


 


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


 


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




    	20



    	 



    

 





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 November
25, 2014.


 


RICH
PHARMACEUTICALS, INC.


 


By:
/s/ Ben Chang


BEN
CHANG


Chief
Executive Officer




    	21



    	 



    

 





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 RICH
PHARMACEUTICALS, INC.,
a Nevada
corporation (the
“Borrower”) according
to the
conditions of
the convertible
note of
the Borrower dated
as of
November 25, 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:



    	22