SECURITIESACTOR PURSUANTTOANAVAILABLEEXEMPTIONFROM,ORINATRANSACTIONNOTSUBJECTTO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIESACT AND
ISSUABLEUPON CONVERSIONOF THISSECURITYMAYBE
PLEDGEDINCONNECTIONWITHABONAFIDEMARGINACCOUNTOROTHERLOANSECUREDBYSUCHSECURITIES.
$147,000
8%CONVERTIBLENOTE
FORVALUERECEIVED,theCompanypromisestopaytoBellridgeCapital,LPitsregisteredassigns(the
"Holder"),orshall havepaid pursuanttotheterms
hereunder,theprincipalsumof$147,000("OriginalPrincipalAmount") onJanuary
5,2018(the "MaturityDate")or suchearlier dateasthis
Section1.
"AlternateConsideration"shallhavethemeaningsetforthinSection5(e).
proceeding under any bankruptcy,reorganization,arrangement,adjustment of debt,
relief
Subsidiarythereofsuffersanyappointmentofanycustodianorthelike
.
"Buy-In"shallhavethemeaningsetforthinSection4(c)(v).
Companyorthesuccessor entityofsuchtransaction,(c)
anagreementtowhichtheCompanyisapartyorbywhichitis bound,providingfor
anyoftheeventssetforthinclauses(a)through(d)above.
hereto.
"ConversionSchedule"meanstheConversionScheduleintheformofSchedule1attached
"ConversionShares"means,collectively,thesharesofCommonStockissuableuponconversionofthisNoteinaccordancewiththetermshereof.
"DWAC"meanstheDepositorWithdrawalatCustodiansystematTheDepositoryTrustCompany.
"EventofDefault"shallhavethemeaningsetforthinSection7(a)."FundamentalTransaction"shallhavethemeaningsetforthinSection5(e).
public announcementoftheissuanceoftheapplicable CommonStock Equivalent,if
the applicabledateofdetermination,
"PaymentDate"shallhavethemeaningsetforthinSection2(b).
"PermittedIndebtedness"means(a)IndebtednessoutstandingasoftheOriginalIssueDate,
(b)
"PurchaseAgreement"meanstheSecuritiesPurchaseAgreement,datedasofJune27,2017amongtheCompanyandtheoriginalHolders,
as amended, modifiedorsupplementedfromtimetotimeinaccordancewithitsterms.
"SecuritiesAct"meanstheSecuritiesActof1933,asamended,andtherulesandregulationspromulgated
thereunder.
"ShareDeliveryDate"shallhavethemeaningsetforthinSection4(c)(ii)."SuccessorEntity"shallhavethemeaningsetforthinSection5(e).
"TradingDay"meansadayonwhichtheprincipalTradingMarketisopenfortrading.
"TradingMarket",
theNewYorkStockExchange,
oranymarketoftheOTCMarkets,Inc.(oranysuccessorstoanyoftheforegoing).
whichthe Common Stockisthenlistedor quotedasreported byBloomberg L.P. (basedon
.(New YorkCitytime)),
Section2. Interest;Payments.
(a)
(b)
Payments.Interestpaymentsare dueandpayableonthe
MaturityDate,exceptasotherwiseset forthin thisNote. IfanyPaymentDate
isnotaBusinessDay,then
forthin thisNote. IfanyPaymentDate isnotaBusinessDay,then
theapplicablepaymentshallbedueonthenextsucceedingBusinessDay.EachMonthlyPaymentshallbeequaltoallaccruedbutunpaidinterest.
(c)PaymentinCash.AllpaymentsshallbemadeincashonanyPaymentDate.
(d)
120thdaythisNoteisin effect,thenforanamountequal
Section3. RegistrationofTransfersandExchanges.
(a)
(b)
(c)
RelianceonNoteRegister.PriortoduepresentmentfortransfertotheCompanyofthisNote,theCompanyandanyagentoftheCompany
maytreatthe Person inwhosenamethisNote
anysuchagentshallbeaffectedbynoticetothecontrary.
Section4. Conversion.
(a) VoluntaryConversion.AftertheOriginalIssueDateuntilthisNoteis no
eachconversion, thedateof eachconversion,and theConversion Price ineffectatthe
andanyassignee byacceptance of thisNote,acknowledgeandagree that,
(b)
(c)MechanicsofConversionorPrepayment.
(i)
ConversionSharesIssuableUponConversionofPrincipal
Amount.ThenumberofConversionSharesissuableuponaconversionhereundershallbe
determined
(ii)
underthisSection4(c).
(iii)
tothe Holderany originalNotedelivered totheCompany andtheHolder
shallpromptlyreturntotheCompanytheCommonStockcertificatesissuedtosuchHolderpursuanttotherescindedConversionNotice.
(iv)
shall paytotheHolder,incash, asliquidateddamagesandnot asapenalty,foreach$1,000
pursuant
(v)
(vi)
shallbe issuableuponconversionof thisNoteshall,uponissue,
bedulyauthorized,validlyissued,fullypaidandnonassessable.
(vii)
(viii)
anytransferinvolvedin theissuanceand
hasbeen paid.The CompanyshallpayallTransfer
(d)
Notemaybeconverted(inrelationtoothersecuritiesownedbytheHoldertogetherwith
anyAffiliates)and whichprincipal amountof thisNote is
verify or confirmtheaccuracy of such determination.In addition,a determination
asto
forth thenumberofshares of Common Stock outstanding.Upon thewritten or
oralrequestofaHolder,theCompanyshallwithintwoTradingDaysconfirmorallyandinwritingtotheHolderthenumberof
shares ofCommon Stock thenoutstanding.In anycase,the number
notlessthan61 days' priornotice tothe Company,may increasethe
immediatelyafter givingeffect
Section5. Certain Adjustments.
(a)
Documents),(ii)subdividesoutstanding shares ofCommon Stock intoalargernumber
ofshares, (iii) combines (includingby wayofareversestocksplit) outstanding
sharesofCommon Stockintoasmaller number
such event, andofwhich the denominator shallbe thenumberof
(b)
Subsequent Equity Sales. If, at anytime, for solongasthe
Iftheholderof Common Stock
issuanceshall be deemedto haveoccurred forless than the
ConversionPriceonsuchdate andsuchissuanceshallbedeemedtobeaDilutiveIssuance.
IfafteranyDilutiveIssuanceofCommonStockEquivalents,thepricepershareforwhichsharesofCommon
Stock maybe
(II) theOption Value.Ifany sharesofCommonStock or Common Stock Equivalents
areissued or sold or deemedtohavebeenissued or soldforcash,theamount of
suchconsideration
receivedbytheCompanywillbedeemedtobethenetamountreceivedbytheCompanytherefor.Ifanysharesof
CommonStockorCommonStockEquivalentsare issued orsold fora considerationother
theCompany willbethe VWAPof suchpublictraded securitieson the date
ofconsiderationtherefor will bedeemedtobethefairvalueof suchportionof
thenetassetsandbusinessofthenon-survivingentityasisattributabletosuchsharesofCommonStockorCommonStockEquivalents,asthecasemaybe.
NotwithstandinganythinginthisSection5(b),noadjustmentwillbemadeunderthisSection5(b)inrespectofanExemptIssuance.
(c)
(d)
thedateasofwhichtherecordholdersofsharesofCommonStock
(e)
Transaction(withoutregardto anylimitationonthe conversionof
(1)shareofCommonStockinsuchFundamentalTransaction,andtheCompanyshallapportiontheConversionPrice
among theAlternate Considerationin areasonablemanner reflecting
therelativevalueofanydifferentcomponentsoftheAlternateConsideration.IfholdersofCommonStockaregivenanychoiceastothesecurities,
cash orpropertytobe receivedina Fundamental Transaction,thenthe
Notwithstandinganythingtothecontrary,
intheeventofaFundamentalTransactionthatis(1)anallcashtransaction,(2)a"Rule13e-3transaction"asdefinedin
Notefrom the Holder bypaying to theHolder theproductof (a) thenumberof
attheoptionoftheholderofthisNote,deliver totheHolder
inexchangeforthisNoteasecurityofthe Successor Entityevidencedby a
(f)
(g)NoticetotheHolder.
(i)
(ii)
Section6. Negative Covenants. Aslong asany portionof this
Noteremainsoutstanding,unless
(a)
(b)
(C)
(d) enterintoanyagreementwithrespecttoanyoftheforegoing.Section7.
EventsofDefault.
(a)
"Event ofDefault" means, whereverused herein,
anyofthefollowingevents
(i)
any default in the payment of (A) the principal amount ofany
Note or
(ii)
afternoticeofsuchfailuresent bytheHolderorby any otherHolder totheCompanyand
(B)5TradingDaysaftertheCompanyhasbecomeawareofsuchfailure;
(iii)
(iv)
ifninety(90)days
fromthedatehereof,whiletheHolderownsanyRegistrableSecurities,the
RegistrationStatementis noteffective undertheSecurities Actregisteringthe
RegistrableSecurities;
(v)
theHolder oranyother Holderpursuanthereto or thereto
shallbeuntrueorincorrectinanymaterialrespectasofthedatewhenmadeordeemedmade;
(vi)
theCompanyoranySignificantSubsidiary(assuchtermisdefinedinRule1-02(w)ofRegulationS-X)shallbesubjecttoaBankruptcyEvent;
(vii)
the Companyorany Subsidiary shalldefault on anyofits
obligations under
whichitwouldotherwisebecomedueandpayableandsuchdefaultisnotcuredwithinthreeTradingDays;
(viii)
theCommonStockshallnotbeeligiblefor
listingorquotationfortradingonitsTradingMarketforaperiodlongerthan10TradingDays;
(ixi)theCompanyshallhaveconsummatedaChangeofControlTransactionor/Fundamental
TransactionwithouttheLead Investorsconsentwithoutpaying in fullall