Document:

EX-10.1

WESTERN ALLIANCE BANCORPORATION

CHANGE IN CONTROL SEVERANCE PLAN

(And Summary Plan Description)

Article 1. Establishment and Term of the Plan

1.1 Establishment of the Plan. The Company has established the Western Alliance
Bancorporation Change in Control Severance Plan to provide Severance Benefits (as defined in the
Plan) to certain eligible Executives of the Company and its Affiliates in accordance with the terms
of the Plan. No individuals other than the Executives shall be eligible to receive Severance
Benefits. Severance Benefits for the Executives will be determined exclusively under the Plan.

The Plan, as set forth herein, is an employee welfare benefit plan within the meaning of ERISA
Section 3(1), and the Company intends that the Plan be administered in accordance with the
applicable requirements of ERISA. This Plan document, including the information provided in
Appendix A hereto, is also the summary plan description of the Plan.

1.2 Plan Term. The Plan will commence on the Effective Date and will continue in effect until
December 31, 2013 (the “Initial Expiration Date”); provided that, the Plan automatically will be
extended for an additional one (1) year period after the Initial Expiration Date and any subsequent
anniversary of the Initial Expiration Date unless, not less than one hundred eighty (180) days
before the Initial Expiration Date, or any subsequent anniversary of the Initial Expiration Date,
the Committee or the Company gives written notice to each Executive designated by the Board as
eligible to participate in the Plan that the Plan shall not be extended or further extended, in
which case the Plan shall terminate as of December 31 of the year in which such notice is given.

1.3 Administration. The Committee is the named fiduciary of the Plan. The Committee may
appoint, as it deems necessary or advisable, an individual or committee to act as its
representative in matters affecting the Plan. The Committee shall have authority to control and
manage the operation and administration of the Plan, and may adopt rules and regulations it deems
consistent with the terms of the Plan and necessary or advisable to administer the Plan properly
and efficiently. In administering the Plan and providing Severance Benefits, the Committee shall
have discretionary authority to construe and interpret the Plan’s terms and to make factual
determinations under it, including the authority to determine an individual’s eligibility for
Severance Benefits, the reason for Separation from Service, and the amount of Severance Benefits
payable. Any interpretation of the Plan made in good faith by the Committee, and any decision made
in good faith on any matter within the discretion of the Committee under the Plan, will be binding
on all persons, subject to review under Article 6. Notwithstanding anything in this Section 1.3 to
the contrary, following a Change in Control, the Committee shall administer the Plan in a manner
consistent with the administration of the Plan prior to such Change in Control.

Article 2. Definitions 

Wherever used in the Plan, the following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word is capitalized:

“Affiliate” means, with respect to the Company, any company or other trade or business that
directly or indirectly controls, is controlled by or is under common control with the Company
within the meaning of Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary.

“Annual Bonus” means the target incentive bonus amount set by the Committee under the Western
Alliance Bancorporation Annual Bonus Plan (or any similar or successor plan) for the applicable
Plan Year.

“Base Salary” means, at any time, the then regular annual base rate of pay that the Company is
paying the Executive as annual salary, as approved by the Board or a committee of the Board and
shown in the Company’s records. Base Salary does not include any incentive, non-cash, equity or
similar compensation or award, or Employee Benefit Plan contributions made by the Company or an
Affiliate (other than Employee Benefit Plan contributions made by the Company or an Affiliate
pursuant to an Executive’s salary reduction election under Code Section 401(k) or 125).

“Board” means the Board of Directors of the Company.

“Cause” means, as determined by the Committee in its sole discretion and solely with respect
to the Plan, the Executive’s (a) willful and continued failure to perform his or her material
duties with the Company or an Affiliate, or the commission of any activities constituting a
violation or breach under any Federal, state or local law or regulation applicable to the
activities of the Company or an Affiliate, (b) fraud, breach of fiduciary duty, dishonesty,
misappropriation or other action that causes damage to the property or business of the Company or
an Affiliate, (c) repeated absences from work such that the Executive is unable to perform his or
her employment or other duties in all material respects, (d) admission or conviction of, or plea of
nolo contendere to, any felony, or any other crime that, in the reasonable judgment of the Board or
Committee, adversely affects the Company’s or an Affiliate’s reputation or the Executive’s ability
to carry out the obligations of his or her employment, (e) loss of any license or registration that
is necessary for the Executive to perform his or her duties for the Company or an Affiliate, (f)
failure to cooperate with the Company or an Affiliate in any internal investigation or
administrative, regulatory or judicial proceeding or, (g) act or omission in violation or disregard
of the Company’s or an Affiliate’s policies, including but not limited to the Company’s or an
Affiliate’s harassment and discrimination policies and standards of conduct then in effect, in such
a manner as to cause loss, damage or injury to the property, reputation or employees of the Company
or an Affiliate.

In addition, the Executive’s employment will be deemed to have terminated for Cause if, within
six (6) months after the Executive’s employment has terminated, facts and circumstances are
discovered that would have justified a termination for Cause. For purposes of this Plan, no act or
failure to act on the Executive’s part shall be considered “willful” unless it is done, or omitted
to be done, by the Executive in bad faith or without reasonable belief that the action or omission
was in the best interests of the Company or an Affiliate. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good
faith and in the best interests of the Company.

“COBRA” means the continuation of heath care coverage requirements of Code Section 4980B as
added by the Consolidated Omnibus Budget Reconciliation Act of 1985 and the regulations thereunder,
as amended from time to time.

“Code” means the U.S. Internal Revenue Code of 1986 and the regulations thereunder, as amended
from time to time.

“Company” means Western Alliance Bancorporation, a Nevada corporation, and any successor
thereto as provided in Article 7 herein.

“Committee” means the Compensation Committee of the Board.

“Confidential Information” includes proprietary, confidential and trade secret information of
the Company and its Affiliates, including but not limited to records, notes, memoranda, data,
writings, research, personnel information, the database of customer accounts; customer, supplier
and distributor lists; customer profiles; information regarding sales and marketing activities and
strategies; trade secrets; data regarding technology, products and services; information regarding
pricing, pricing techniques and procurement; financial data and forecasts regarding the Company,
its Affiliates, and customers, suppliers and distributors of the Company and its Affiliates;
software programs and intellectual property, or any other information of whatever nature in the
possession or control of the Company or an Affiliate, that has not been published or disclosed to
the general public or the financial industry, provided that such term does not include knowledge,
skills, and information that is common to the trade or profession of the Executive.

“Change in Control” means (i) the dissolution or liquidation of the Company or a merger,
consolidation, or reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) the consummation of a sale of all or substantially all of
the assets of the Company to another person or entity, or (iii) the consummation of any transaction
(including without limitation a merger or reorganization in which the Company is the surviving
entity) which results in any person or entity (other than persons who are stockholders or
Affiliates immediately prior to the transaction) owning fifty (50%) or more of the combined voting
power of all classes of stock of the Company. Notwithstanding the foregoing, unless a majority of
the individuals who constitute the Board immediately prior to the Change in Control determine
otherwise, no Change in Control will be deemed to have occurred with respect to a particular
Executive if the Change in Control results from actions or events in which such Executive is a
participant in a capacity other than solely as an officer, employee or director of the Company.

“Effective Date” means September 19, 2012, the date the Plan became effective.

“Employee Benefit Plan” has the meaning given in ERISA Section 3(3).

“ERISA” means the Employee Retirement Income Security Act of 1974 and the regulations
thereunder, as amended from time to time.

“Exchange Act” means the Securities Exchange Act of 1934 and the regulations thereunder, as
amended from time to time.

“Executive” means an eligible employee of the Company or an Affiliate designated by the Board
by written resolution from time to time, as an Executive eligible to participate in the Plan. No
individuals other than those the Board has designated by written resolution before the time of
Separation from Service will be eligible to receive Severance Benefits.

“Good Reason” shall be deemed to exist if, and only if, on or after a Change in Control and
without the Executive’s express written consent, the Company or an Affiliate:

(a) reduces the Executive’s Target Total Direct Compensation for a Plan Year by ten
percent (10%) or more;

(b) materially diminishes the Executive’s authorities, duties or responsibilities, or
materially diminishes the authority, duties, or responsibilities of the supervisor to whom
the Executive is required to report, including a requirement that the Executive report to a
corporate officer or employee instead of reporting directly to the Board, Chief Executive
Officer, or President of the Company, whichever the Executive reported to immediately prior
to the Change in Control;

(c) relocates the Executive’s principal place of employment to a location that is more
than thirty (30) miles from the Executive’s principal place of employment immediately prior
to the Change in Control;

(d) materially diminishes the budget over which the Executive retains authority; or

(e) takes any other action or inaction that constitutes a material breach of any
agreement under which the Executive provides services to the Company or Affiliate.

The Executive may terminate the Executive’s employment at any time for Good Reason as of a
date at least thirty (30) days after the date the Executive delivers written notice of such
termination to the Committee, unless the condition constituting Good Reason is fully corrected
within thirty (30) days after the Executive gives the Committee written notice thereof. The
Executive must deliver to the Committee written notice of such termination, if any, within sixty
(60) days of the event constituting Good Reason, setting forth in reasonable detail the specific
conduct of the Company or Affiliate that constitutes Good Reason.

“Plan” means this Western Alliance Bancorporation Change in Control Severance Plan, including
the Appendices that are attached hereto and made a part hereof.

“Plan Year” means the 12-month period that begins each January 1 and ends on the next December
31.

“Release” has the meaning given to such term in Section 3.5 herein.

“Separation from Service” with respect to the Company, has the meaning of Code Section 409A.
For purposes of the Plan, and in accordance with Treasury Regulation §1.409A-1(h)(1)(ii) (or any
similar or successor provisions), a Separation from Service shall be deemed to occur, without
limitation, if the Company and the Executive reasonably anticipate that the level of bona fide
services the Executive will perform after a certain date (whether as an employee or as an
independent contractor) will permanently decrease to less than fifty percent (50%) of the average
level of bona fide services provided in the immediately preceding thirty-six (36) months. Subject
to the preceding sentence, the Committee shall determine whether the Executive has incurred a
Separation from Service for purposes of the Plan, which determination shall be final, binding and
conclusive. For purposes of the Plan, an Executive’s employment with the Company shall be deemed
to be terminated when the Executive has a Separation from Service, and all references in the Plan
to employment termination or termination of employment shall be deemed to refer to such a
Separation from Service from the Company.

“Severance Benefits” has the meaning given to such term in Section 3.1 herein.

“Stock Plan” means the Company’s 2005 Stock Incentive Plan, as amended, or any other similar
or successor plan that provides for award based on Company stock, adopted or maintained by the
Company or an Affiliate.

“Subsidiary” means any “subsidiary corporation” of the Company within the meaning of Code
Section 424(f).

“Target Total Direct Compensation” means, for any Plan Year, the sum of an Executive’s Base
Salary, Annual Bonus and annual stock or other long-term incentive award for that Plan Year, each
calculated at the target level specified by the Committee for that Plan Year.

Article 3. Change in Control Severance Benefits

3.1 Severance Benefits. Subject to the conditions and limitations of the Plan, if during the
twenty-four (24) month period following a Change in Control (i) an Executive is terminated by the
Company or Affiliate without Cause, or (ii) the Executive terminates his or her employment with the
Company or Affiliate for Good Reason, the Company shall pay or provide to the Executive, within
thirty (30) days following the date of such termination, subject to Section 3.5 of the Plan, the
“Severance Benefits” set forth below:

(a) The Company shall pay or provide the Executive’s “Accrued Benefits,” which include
accrued but unpaid Base Salary (based upon the annual rate in effect on the date of
Separation from Service) through the date of Separation from Service, payable in accordance
with the Company’s normal payroll practice; business expenses incurred but not paid prior to
the date of Separation from Service in accordance with the Employer’s expense reimbursement
policy; accrued but unused vacation through the date of Separation from Service; and other
benefits mandated under the terms of any of the Company’s Employee Benefit Plans or
programs.

(b) The Company shall make a lump sum cash severance payment to the Executive in an
amount equal to the sum of (i) two times the Executive’s Base Salary (using the greater of
the Executive’s Base Salary for the Plan Year in which the Change in Control occurs or the
Plan Year in which the Executive’s Separation from Service occurs), and (ii) two times the
Executive’s Annual Bonus (using the greater of the Annual Bonus for the Plan Year in which
the Change in Control occurs or the Plan Year in which the Executive’s Separation from
Service occurs).

(c) The Company shall pay to the Executive (i) any annual bonus that the Executive had
earned in the Plan Year prior to the Plan Year in which the Executive’s Separation from
Service occurred, but which was unpaid as of the Executive’s Separation from Service, and
(ii) a pro rata amount of the Annual Bonus for the Plan Year in which the Executive’s
Separation from Service occurs, based on the number of days elapsed in the Plan Year as of
the Executive’s Separation from Service, subject to Section 3.2 below.

(d) The Company shall pay or reimburse the Executive for the Company portion of the
cost of continuing coverage under the Company’s group health benefits plan (so-called “COBRA
premiums”) for the Executive and the Executive’s family (if the Executive qualifies for and
elects that coverage) for a period of up to twenty-four (24) months following the
Executive’s Separation from Service, if the Executive elects such continuing coverage, at
the same costs (e.g., employee contribution) and coverage levels and under the same general
terms and provisions of such plan as apply to active employees after the Executive’s
Separation from Service. The Company’s obligation to pay the COBRA premiums described in
the preceding sentence will cease on the date the Executive becomes eligible for similar
coverage under another group health plan that does not impose pre-existing condition
limitations on the Executive’s coverage. The continuation period required by this Section
shall be concurrent with the continued group health benefit plan coverage required by COBRA.
Nothing in this Section 3.1(d) shall be construed to extend the period over which COBRA
continuation coverage must be provided to the Executive or the Executive’s dependents beyond
that mandated by law.

(e) The Company shall continue the Executive’s coverage under the directors’ and
officers’ liability coverage maintained by the Company, as in effect from time to time, to
the same extent as other current or former senior executive officers of the Company for a
period of at least five years. The Company also shall indemnify and hold the Executive
harmless against expenses, including reasonable attorney’s fees judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of actions taken by the Executive within the scope of his or
her duties as an officer, employee, or director of the Company or any Affiliate. The Plan
shall not affect any indemnification or other rights and benefits afforded to the Executive
by the Company’s certificate of incorporation or by laws.

The Severance Benefits under the Plan will not be deemed compensation for purposes of any
other Employee Benefit Plan of the Company or an Affiliate.

3.2 Annual Bonus for the Plan Year in Which the Change in Control Occurs. For the Plan Year
in which the Change in Control occurs, regardless of whether the Executive has incurred a
Separation from Service in that Plan Year, the Company will pay the Executive:

(a) any annual bonus that the Executive had earned in the Plan Year prior to the Plan
Year in which the Change in Control occurred, but which was unpaid as of the effective date
of the Change in Control, and

(b) a pro rata amount of the Annual Bonus for the Plan Year in which the Change in
Control occurs, based on the number of days elapsed in the Plan Year as of the date of the
Change in Control; provided that, if the Executive’s Separation from Service occurs in the
same Plan Year as the Change in Control, the Company shall only pay to the Executive the
greater of the amount provided under this paragraph 3.2(b) or under clause (ii) of paragraph
3.1(c) above.

3.3 Termination for Cause or by the Executive Other Than for Good Reason. If the Executive’s
employment is terminated either (a) by the Company for Cause or (b) by the Executive other than for
Good Reason, the Company shall pay to the Executive the Executive’s Accrued Benefit through the
date of Separation from Service, payable in accordance with the Company’s normal payroll practice.

3.4 Notice of Termination. Any termination of the Executive’s employment by the Company for
Cause or by the Executive for Good Reason shall be communicated by a written notice to the other
party that (i) indicates the specific termination provision in the Plan relied upon, and (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated.

3.5 Release. Notwithstanding anything in the Plan to the contrary, as a condition to
receiving any Severance Benefits, the Executive (or, in the event of the Executive’s death or
incompetence, the Executive’s designated beneficiary, surviving spouse, estate, or legal
representative) shall execute a comprehensive release agreement and waiver of claims against the
Company in a form substantially the same as that attached hereto as Appendix B (the “Release”).
The Company shall deliver the Release to the Executive within ten (10) days of the Executive’s
Separation from Service. No Severance Benefits will be provided prior to the date that both (a)
the Executive has delivered an original, signed Release to the Company and (b) the revocability
period (if any) has elapsed; provided that (i) any Severance Benefits that otherwise would have
been provided before such date but for the fact that the Executive had not yet delivered an
original, signed Release (or the revocability period had not yet elapsed) shall be made as soon as
administratively practicable but not later than the sixtieth (60th) day following the
Executive’s Separation from Service; and (ii) if the Executive’s Separation from Service occurs
within the sixty (60) day period ending on December 31 of any calendar year, any cash Severance
Benefits shall not be paid until the Company’s first business day if the next calendar year. If
the Executive does not deliver an original, signed Release to the Company within forty-five (45)
days after receipt of the same from the Company, (x) the Executive’s rights shall be limited to
those made available to the Executive as if the Executive were terminated under Section 3.3 above,
and (y) the Company shall have no obligation otherwise to provide the Executive any Severance
Benefits, or any other monies on account of the Executive’s Separation from Service.

By accepting Severance Benefits, the Executive acknowledges and agrees that if the Executive
files a lawsuit or accepts recoveries, payments or benefits based on any claims that the Executive
has released under the Release, as a condition precedent for maintaining or participating in any
lawsuit or claim, or accepting any recoveries, payments or benefits, the Executive shall forfeit
immediately such Severance Benefits and reimburse the Company for any Severance Benefits already
provided.

3.6 State Unemployment Benefits. For purposes of state unemployment benefits, Severance
Benefits shall be deemed allocated over the two-year period following the Executive’s Separation
from Service, matching the two-times multiple described in Section 3.1(b), even if paid in a single
lump sum.

3.7 Golden Parachute Provisions; No Tax Gross-Up.

(a) Excess Parachute Payments. In the event that any amount or benefits made
or provided to the Executive under the Plan and any other plans, programs, or agreements of
the Company and its Affiliates (collectively, the “Covered Payments”), are determined to
constitute a parachute payment, as such term is defined in Code Section 280G(b)(2) and would
subject the Executive to an excise tax under Code Section 4999 (the “Excise Tax”), the
Covered Payments shall be reduced so that the maximum amount of the Covered Payments (after
reduction) shall be one dollar ($1.00) less than the amount that would cause the Covered
Payments to be subject to the Excise Tax; provided, however, that the Covered Payments shall
be reduced under this Section only to the extent that the after-tax value of amounts
received by the Executive after application of the above reduction would exceed the
after-tax value of the amounts received without application of such reduction. For this
purpose, the after-tax value of an amount shall be determined taking into account all
federal, state, and local income, employment and excise taxes applicable to such amount. In
making any determination as to whether the Covered Payments would be subject to an Excise
Tax, consideration shall be given to whether any portion of the Covered Payments could
reasonably be considered, based on the relevant facts and circumstances, including but not
limited to the provisions of Article 4, to be reasonable compensation for services rendered
(whether before or after the consummation of the applicable Change in Control).

(b) Procedure for Determinations. All determinations required to be made under
this Section 3.7 and the assumptions to be utilized in arriving at such determinations shall
be made by the independent public accountants then regularly retained by the Company (the
“Accounting Firm”), which shall provide detailed supporting calculations both to the Company
and the Executive within fifteen (15) business days of the receipt of notice from the
Company or the Executive that there have been Covered Payments, or such earlier time as the
Company requests. In the event that the Accounting Firm is serving as accountant or auditor
for the individual, entity or group effecting the Change in Control, the Company shall
appoint another nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). The Company shall pay all fees and expenses of the Accounting Firm.

(c) Internal Revenue Service Claims. In the event that upon any audit of the
Covered Payments by the Internal Revenue Service or by a state or local taxing authority, a
change is formally determined to be required in the amount of taxes paid by the Executive,
appropriate adjustments will be made under the Plan such that the net amount that is payable
to the Executive after taking into account the provisions of Code Section 4999 will reflect
the intent of the parties as expressed in this Section. The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service or other taxing authority
that, if successful, would require payment of an Excise Tax or an additional Excise Tax on
the Covered Payments (a “Claim”). Such notification shall be given as soon as practicable
but no later than ten (10) business days after the Executive is informed in writing of such
Claim and shall apprise the Company of the nature of such Claim and the date on which such
Claim is requested to be paid. The Executive shall not pay such Claim prior to the
expiration of the thirty (30)-day period following the date on which the Executive gives
such notice to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such Claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such Claim, the Executive
shall:

(i) give the Company any information reasonably requested by the Company
relating to such Claim,

(ii) take such action in connection with contesting such Claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such Claim by an attorney
reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest
such Claim, and

(iv) permit the Company to participate in any proceedings relating to such
Claim;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax,
additional Excise Tax, or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this paragraph (c), the Company, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such Claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or contest the Claim
in any permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial jurisdiction and in
one (1) or more appellate courts, as the Company shall determine, provided, however, that if
the Company directs the Executive to pay such Claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive on an interest-free basis or, if such an
advance is not permissible thereunder, pay the amount of such payment to the Executive as
additional compensation, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax, additional Excise Tax, or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance or
additional compensation; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such contested
amount. The Company shall reimburse any fees and expenses provided for under this Section
3.7 on or before the last day of the Executive’s taxable year following the taxable year in
which the fee or expense was incurred, and in accordance with the other requirements of Code
Section 409A and Treasury Regulation §1.409A-3(i)(1)(v) (or any similar or successor
provisions).

(d) Refund. If, after the receipt by the Executive of an amount advanced or
paid by the Company pursuant to paragraph (c), the Executive becomes entitled to receive any
refund with respect to such Claim, the Executive shall (subject to the Company’s complying
with the requirements of paragraph (c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the Company pursuant to
paragraph (c), a determination is made that the Executive shall not be entitled to any
refund with respect to such Claim and the Company does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of thirty (30) days
after such determination, then such advance shall be forgiven and shall not be required to
be repaid.

3.8 No Further Obligations. Except as provided in the Plan, the Stock Plan, or any other
Employee Benefit Plan, the Company shall have no obligation to the Executive following the
Executive’s Separation from Service for any reason, including any obligation for severance payments
or benefits. Except as provided in the Plan, the provision of Severance Benefits shall have no
effect upon the Executive’s rights under any Employee Benefit Plan, the Stock Plan, or any other
employee policy or practice of the Company applicable to the Executive’s termination for any
reason. If an Executive become entitled to severance benefits under any other Employee Benefit
Plan or due to a reduction in force or other severance event, Severance Benefits shall not be paid
or provided under this Plan to the extent such Severance Benefits duplicate the severance benefits
provided under any other Employee Benefit Plan or due to a reduction in force or other severance
event.

3.9 Deemed Resignations. Upon the Executive’s Separation from Service for any reason, the
Executive will be deemed to have resigned as of the date of the Executive’s Separation from Service
from all offices, directorships, and fiduciary positions with the Company, its Affiliates, and
Employee Benefit Plans.

Article 4. Trade Secrets, Confidential Information, and Protective Covenants

Notwithstanding anything in the Plan to the contrary, all Severance Benefits are expressly
conditioned on the Executive’s compliance with each of the provisions and protective covenants of
this Article 4. In consideration for the Executive’s eligibility for Severance Benefits under the
Plan, each Executive agrees to the restrictions provided for below, which will apply during and
after the Executive’s Separation from Service. The nature of the Executives’ employment with and
performance of services for the Company permits each Executive to have access to certain of its
trade secrets and confidential and proprietary information that is, and always shall remain, the
sole property of the Company. Any unauthorized disclosure or use of this information would be
wrongful and would cause the Company irreparable harm. For purposes of this Article 4, each
reference to the “Company” shall include the Company and its Affiliates.

4.1 Trade Secrets and Confidential Information. During the course of an Executive’s
employment the Executive has acquired, and will acquire, knowledge of the Company’s Trade Secrets
(as defined below) and other proprietary information relating to its business, business methods,
personnel, customers, and clients (collectively referenced as “Confidential Information”). For
purposes of the Plan, “Trade Secrets” are defined as information, including but not limited to, a
formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives
independent economic value, actual or potential, from not being generally known to the public or to
other persons who can obtain economic value from its disclosure or use and (2) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy. The Company’s Trade
Secrets include, but are not limited to, the following:

(a) the names, address, and contact information of the Company’s customers or clients
and prospective customers and clients, as well as any other personal or financial
information relating to any customer, client, or prospect, including, without limitation,
account numbers, balances, portfolios, maturity and/or expiration or renewal dates, loans,
policies, investment activities, purchasing practices, financial plans, insurance, annuity
policies and objectives;

(b) any information concerning the Company’s operations, including without limitation,
information related to its methods, services, pricing, costs, margins and mark-ups,
finances, practices, strategies, business plans, agreements, decision-making, systems,
technology, policies, procedures, marketing, sales, techniques, agent information and
processes;

(c) any other proprietary and/or confidential information relating to the Company’s
customers, clients, employees, products, services, sales, technologies, or business affairs.

Records of the Company also constitute Confidential Information. The Executive’s obligation
to maintain the confidentiality of the Company’s Records continues at all times during and after
the Executive’s employment. “Records” include, but are not limited to, original, duplicated,
computerized, memorized, handwritten or any other form of information, whether contained in
materials provided to the Executive by the Company, or by any institution acquired by the Company,
or compiled by the Executive or others in any form or manner including information in documents or
electronic devices, such as software, flowcharts, graphs, spreadsheets, resource manuals,
videotapes, calendars, day timers, planners, rolodexes, or telephone directories maintained in
personal computers, laptop computers, personal digital assistants or any other devices. Records do
not become any less confidential or proprietary to the Company because the Executive may commit
some of them to memory or because the Executive may otherwise maintain them outside of the
Company’s offices.

Each Executive agrees that Confidential Information of the Company is to be used by the
Executive solely and exclusively for the purpose of conducting business on behalf of the Company.
An Executive shall keep such Confidential Information confidential and not divulge, use or disclose
this information except for that purpose. If the Executive resigns or is terminated from
employment for any reason, the Executive shall immediately return to the Company all Records and
Confidential Information, including information maintained by the Executive in the Executive’s
office, personal electronic devices, and/or at home. Confidential Information also includes any
organizational information or staffing information learned by the Executive in connection with the
Executive’s employment by the Company, and the Executive shall not (i) share such information with
any recruiters or any other employers, either during or subsequent to the Executive’s employment
with the Company, or (ii) use or permit use of such as a means to recruit or solicit any Company
Employee (as defined below) away from the Company.

4.2 Protective Covenants. Plan provisions and/or an agreement not to disclose or use the
Company’s Confidential Information after the Executive’s Separation from Service would be
inadequate, standing alone, to protect the Company’s legitimate business interests because some
activities by a former employee who had held a position like that of an Executive would, by their
nature, compromise such Confidential Information as well as the goodwill and customer relationships
that the Company has paid the Executive to develop for the Company during the Executive’s
employment by the Company. Activities that violate the Company’s rights in this regard, whether or
not intentional, are often undetectable by the Company until it is too late to obtain any effective
remedy, and such activities will cause irreparable injury to the Company. To prevent this kind of
irreparable harm, in consideration for the Executive’s eligibility for Severance Benefits under the
Plan, each the Executive shall abide by the following Protective Covenants set forth below:

(a) No Conflicting Business Activities. During the Executive’s employment with
the Company and for a period of twelve (12) months following the Executive’s Separation from
Service for any reason, the Executive shall not provide services to a Competitor (as defined
below) in any role or position (as an employee, consultant, owner, or otherwise) that would
involve Conflicting Business Activities (as defined below); provided that, while an
Executive is a resident of the state of California and subject to the laws of the state of
California, the restriction in this paragraph (a) will apply only to Conflicting Business
Activities that result in unauthorized use or disclosure of the Company’s Confidential
Information or Trade Secrets;

(b) No Solicitation of Clients, Customers, or Prospective Clients or Customers.
During the Executive’s employment with the Company and for a period of twelve (12) months
following the Executive’s Separation from Service for any reason, the Executive shall not
(in person or through assistance to others) solicit, participate in, or promote the
solicitation of or communication with, any clients, customers, or prospective clients or
customer of the Company in association with or pursuit of a Competing Line of Business (as
defined below) if the Executive either had business-related contact with that client,
customer, or prospective client or customer or received Confidential Information about that
client, customer or prospective client or customer in the last two years of the Executive’s
employment at the Company; provided that, while the Executive is a resident of the state of
California and subject to the laws of the state of California, the restriction in this
paragraph (b) will apply only to solicitations or communications made with the assistance of
the Company’s Confidential Information or Trade Secrets;

(c) No Solicitation of the Company Employees. During the Executive’s
employment with the Company and for a period of twelve (12) months following the Executive’s
Separation from Service for any reason, the Executive will not (in person or through
assistance to others) participate in soliciting, recruiting, or communicating with a Company
Employee for the purpose of persuading or helping the Company Employee to end or reduce his
or her employment or other relationship with the Company if the Executive either worked with
that the Company Employee or received Confidential Information or Trade Secrets about that
Company Employee in the last two years of the Executive’s employment with the Company;

(d) No Solicitation of the Company Suppliers During the Executive’s employment
with the Company and for a period of twelve (12) months following the Executive’s Separation
from Service for any reason, the Executive will not (in person or through assistance to
others) participate in soliciting or communicating with a Company Supplier (as defined
below) for the purpose of persuading or helping the Company Supplier to end or modify to the
Company’s detriment an existing business relationship with the Company if the Executive
either worked with that Company Supplier or received Confidential Information or Trade
Secrets about that Company Supplier in the last two years of the Executive’s employment with
the Company; and

(e) Non-Disparagement. During the Executive’s employment with the Company and
following the Executive’s Separation from Service for any reason, the Executive will not,
directly or indirectly, make any statements, written or verbal, or cause or encourage others
to make any statements, written or verbal, that defame, disparage or in any way criticize
the personal or business reputation, practices, or conduct of the Company, its employees,
directors, or officers. This prohibition extends to statements, written or verbal, made to
anyone, including but not limited to the news media, investors, potential investors, any
board of directors, industry analysts, competitors, strategic partners, vendors, employees
(past and present), clients, and customers.

As used in this Section 4.2, “Competitor” means an individual, corporation, other business
entity or separately operated business unit of an entity that engages in a Competing Line of
Business. “Competing Line of Business” means a business that involves a product or service offered
by anyone other than the Company that would replace or compete with any product or service offered
or to be offered by the Company with which the Executive had involvement or substantial knowledge
while employed by the Company (unless the Company and its subsidiaries are no longer engaged in or
planning to engage in that line of business). “Conflicting Business Activities” means job duties
or other business-related activities in the states of Arizona, California or Nevada, or management
or supervision of such job duties or business-related activities, if such job duties or
business-related activities are the same as or similar to the job duties or business-related
activities in which the Executive participated or as to which the Executive received Confidential
Information or Trade Secrets in the last two years of the Executive’s employment with the Company.
“Company Employee” means an individual employed by or retained as a consultant or contractor to the
Company. “Company Supplier” means an individual, corporation, other business entity or separately
operated business unit of an entity that regularly provides goods or services to the Company.

This Section 4.2 is not intended to limit the Company’s right to prevent misappropriation of
its Confidential Information, Records, or Trade Secrets beyond the twelve month period.

4.3 Enforcement. The payment or provision of Severance Benefits is subject to and contingent
upon the Executive’s adherence to the covenants of this Article 4. The Executives agree to the
covenants of this Article 4 to avoid any future dispute between an Executive and the Company
regarding specific restrictions on an Executive’s post-employment conduct that will be reasonable,
necessary and enforceable to protect the Company’s Confidential Information and other legitimate
business interests. The Protective Covenants are ancillary to the other terms of this Plan and the
Executive’s employment relationship with the Company. The Plan and these covenants benefit both
the Executive and the Company because, among other things, they provide finality and predictability
for both the Executive and the Company regarding enforceable boundaries on the Executive’s future
conduct. Accordingly, the Executive agrees that the Plan and the restrictions in it should be
enforced under common law rules favoring the enforcement of such agreements. For these reasons, an
Executive may not pursue any legal action to set aside or avoid application of the Protective
Covenants.

4.4 Notice of Post-Employment Activities. If an Executive accepts a position with a
Competitor at any time within twelve months following the Executive’s Separation from Service, the
Executive will promptly give written notice to the Company’s senior Human Resources employee, with
a copy to the Company’s General Counsel, and will provide the Company with the information it needs
about the Executive’s new position to determine whether such position would likely lead to a
violation of this Article 4 (except that the Executive need not provide any information that would
include the Competitor’s trade secrets).

4.5 Remedies; Extension. In the event of a breach or threatened breach of any of the
provisions or covenants contained in this Article 4, in addition to any other penalties or
restrictions that may apply under any agreement, state law, or otherwise, the Executive shall
forfeit and repay to the Company any and all Severance Benefits. The Company shall have the right
to recapture and receive repayment of any such Severance Benefits. The forfeiture provisions of
this Section 4.5 will continue to apply, in accordance with their terms, after the provisions of
any agreement between the Company and the Executive have lapsed. If an Executive violates or
threatens to violate any provisions or covenants of this Article 4, the Company or its successors
in interest shall be entitled, in addition to any other remedies that they may have, including
money damages, to a temporary restraining order, temporary injunction, and/or permanent injunction
to be issued by a court of competent jurisdiction restraining the Executive from committing or
continuing any violation of this Article 4. If an Executive is found to have violated any
restrictions in the Protective Covenants or breached any provision set forth in this Article 4, the
time period for such provisions and covenant will be extended by one day for each day that the
Executive is found to have violated them, up to a maximum extension equal to the time period
originally prescribed for the provision or covenant.

4.6 Severability; Authority for Revision. The provisions of this Article 4 shall be
separately construed. If any provision contained in this Article 4 is determined to be void,
illegal or unenforceable by a court of competent jurisdiction, in whole or in part, then the other
provisions of this Article will remain in full force and effect as if the provision so determined
had not been contained herein. If the restrictions provided in this Article 4 are deemed
unenforceable as written, the parties expressly authorize the court to revise, delete, or add to
such restrictions to the extent necessary to enforce the intent of the parties and to protect the
Company’s goodwill, Confidential Information, and other business interests. If the invalid or
unenforceable provision cannot be modified, that provision shall be severed from the Plan and all
other provisions of this Article 4 shall remain valid and enforceable.

Article 5. Code Section 409A 

5.1 Exemption or Compliance. The Plan and Severance Benefits paid under it are
intended to be exempt from or otherwise comply with Code Section 409A, including the exceptions for
short-term deferrals, separation pay arrangements, reimbursements, payments upon a change in
control event, and in-kind distributions, and shall be administered, construed and interpreted in
accordance with such intent. Any Severance Benefits that fail to qualify for the exemptions under
Code Section 409A shall be paid or provided in accordance with the requirements of Code Section
409A.

5.2 Payments and Reimbursements. Each payment under the Plan or any Company benefit
plan is intended to be treated as one of a series of separate payments for purposes of Code Section
409A. To the extent any reimbursements or in-kind benefit payments under the Plan are subject to
Code Section 409A, such reimbursements and in-kind benefit payments will be made in accordance with
Treasury Regulation §1.409A-3(i)(1)(iv) (or any similar or successor provisions).

5.3 Specified Employees. Notwithstanding anything in the Plan to the contrary, to the
extent the Executive is considered a “specified employee” (as defined in Code Section 409A) and
would be entitled to a payment during the six-month period beginning on the Executive’s Separation
from Service that is not otherwise excluded under Code Section 409A under the exception for
short-term deferrals, separation pay arrangements, reimbursements, in-kind distributions, or any
otherwise applicable exemption, the payment will not be made to the Executive until the earlier of
the six-month anniversary of the Executive’s Separation from Service or the Executive’s death and
will be accumulated and paid on the first day of the seventh month following the Separation from
Service.

5.4 Amendment. The Company may amend the Plan to the minimum extent necessary to
satisfy the applicable provisions of Code Section 409A.

5.5 No Guarantee. The Company cannot guarantee that the Severance Benefits provided
under the Plan will satisfy all applicable provisions of Code Section 409A.

Article 6. Claims Procedures

6.1 Claims Procedures. The Company will provide Severance Benefits without the necessity of a
formal written claim by the Executive. However, if any person believes he or she is being denied
any rights or benefits under the Plan, such person (or the person’s duly authorized representative)
may file a claim in writing with the Committee within one year following the applicable Executive’s
Separation from Service. If any such claim is wholly or partially denied, the Committee will
notify the claimant of its decision in writing. The notification will set forth, in a manner
calculated to be understood by the claimant, the following: (a) the specific reason or reasons for
the adverse determination, (b) reference to the specific Plan provisions on which the determination
is based, (c) a description of any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material or information is necessary, and (d) a
description of the Plan’s review procedures and the time limits applicable to such procedures,
including a statement of the claimant’s right to bring a civil action under ERISA Section 502(a)
following an adverse benefit determination on review. Such notification will be given within
ninety (90) days after the Committee receives the claim, or within one hundred eighty (180) days,
if the Committee determines that special circumstances require an extension of time for processing
the claim. If the Committee determines that an extension of time for processing is required,
written notice of the extension will be furnished to the claimant prior to the end of the initial
90-day period. The extension notice will indicate the special circumstances requiring an extension
of time and the date by which the Committee expects to render a benefit determination.

6.2 Review Procedures. Within sixty (60) days after the receipt of notification of
an adverse benefit determination, a claimant (or the claimant’s duly authorized representative) may
file a written request with the Committee for a review of the claimant’s adverse benefit
determination and submit written comments, documents, records, and other information relating to
the claim for benefits. A request for review will be deemed filed as of the date of receipt of
such written request by the Committee. A claimant will be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other information relevant
to the claimant’s claim for benefits. The Committee shall take into account all comments,
documents, records, and other information submitted by the claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial benefit
determination. The Committee will notify the claimant of its decision on review in writing. Such
notification will be written in a manner calculated to be understood by the claimant and will
contain the following: (a) the specific reason or reasons for the adverse determination, (b)
reference to the specific Plan provisions on which the benefit determination is based, (c) a
statement that the claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information relevant to the claimant’s
claim for benefits, and (d) a statement of the claimant’s right to bring a civil action under ERISA
Section 502(a). The decision on review will be made within sixty (60) days after the request for
review is received by the Committee, or within one hundred twenty (120) days if the Committee
determines that special circumstances require an extension of time for processing the claim. If
the Committee determines that an extension of time for processing is required, written notice of
the extension will be furnished to the claimant prior to the termination of the initial 60-day
period. The extension notice will indicate the special circumstances requiring an extension of
time and the date by which the Plan expects to render the determination on review. The Committee’s
decision on review will be final and binding on the claimant.

6.3 Legal Actions. The claims and review procedures described in this Article 6 must be
utilized before a legal action may be brought against the Company or the Plan. Any legal action
must be filed within one year of receiving final notice of a denied claim.

Article 7. Successors 

7.1 Successors to the Company. The Company shall require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation, acquisition of property or stock,
liquidation, or otherwise) of more than fifty percent (50%) of the stock or assets of the Company
by agreement, to expressly assume and agree to maintain the Plan in the same manner and to the same
extent that the Company would be required to perform if no such succession had taken place, subject
to Section 9.1 herein. Regardless of whether such agreement is executed, the Plan will be binding
upon any successor in accordance with the operation of law and such successor shall be deemed the
“Company” for purposes of the Plan.

7.2 Assignment by the Executive. The Plan will inure to the benefit of and be enforceable by
the Executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If the Executive dies while any Severance Benefits still
would be owed to the Executive hereunder had the Executive continued to live, the Company will
continue to provide such Severance Benefits, unless otherwise provided herein, in accordance with
the terms of the Plan to the Executive’s surviving spouse. If there is no surviving spouse, the
Company shall pay any remaining Severance Benefits to the legal representative of the Executive’s
estate, or if none is appointed within ninety (90) days of the date of death, to the Executive’s
heirs at law under the laws of the state in which the Executive is domiciled at the date of death,

7.3 Payment of Benefits in Case of Incompetency. If an Executive entitled to Severance
Benefits becomes physically or mentally incapable of receiving or acknowledging such Severance
Benefits, the Company upon receipt of satisfactory evidence of such legal incapacity may, in its
sole discretion, cause such Severance Benefits to be paid or provided to the Executive’s estate or
legal representative.

Article 8. Miscellaneous

8.1 Employment Status. The Plan is not a contract of employment, and eligibility under the
Plan does not give the Executive the right to be rehired or retained in the employ of the Company
on a full-time, part-time or any other basis, or to receive any benefit under any other plan of the
Company. Eligibility under the Plan does not give the Executive any right, claim, or legal
entitlement to any Severance Benefits, unless that right or claim has specifically accrued under
the terms of the Plan.

8.2 Effect of Receiving Severance Benefits. An Executive’s receipt of Severance Benefits does
not constitute any sort of extension or perpetuation of employment beyond the Executive’s actual
date of Separation from Service.

8.3 Ethical Standards. By accepting Severance Benefits, the Executive acknowledges and agrees
that the Executive has been given an adequate opportunity to advise the Company’s human resources,
legal, or other relevant management division, and has so advised such division in writing, of any
facts of which the Executive is aware that constitute or might constitute a violation of any
ethical, legal, or contractual standards or obligations of the Company or any Affiliate, including,
but not limited to federal securities laws. The Executive further acknowledges and agrees that the
Executive is not aware of any existing or threatened claims, charges, or lawsuits that the
Executive has not disclosed to the Company.

8.4 Interests Not Transferable. The interests of persons entitled to Severance Benefits are
not subject to their debts or other obligations and, except as may be required by the tax
withholding provisions of the Code or any state’s income tax act, or pursuant to an agreement
between the Executive and the Company, may not be voluntarily sold, transferred, alienated,
assigned, or encumbered.

8.5 Entire Plan. The Plan contains the entire understanding of the Company and the Executive
with respect to the subject matter herein. The Severance Benefits shall be in lieu of and reduced
by any severance, notice, termination pay or the like that may be payable under any plan or
practice of the Company, or that may be payable by any Federal, state, local, or foreign law,
statute, regulation, ordinance, or the like (including the WARN Act or any similar state or foreign
law). Any Severance Benefits will be offset against any severance, notice or termination pay
required to be paid by the Company or its Affiliates pursuant to federal, state or local law or
ordinance.

8.6 Conflicting Plans. The Plan supersedes any other generally applicable severance-related
plan or policy of the Company in effect on the date the Company adopts the Plan. Payments or
benefits provided to an Executive under any Employee Benefit Plan are governed solely by the terms
of that plan. Any obligations or duties of an Executive pursuant to any separate non-competition
or other agreement with the Company will be governed solely by the terms of that agreement, and
will not be affected by the terms of the Plan, except to the extent that agreement expressly
provides otherwise. Severance Benefits are not taken into account for purposes of contributions or
benefits under any other Employee Benefit Plans, except as expressly provided therein . Further,
the period of coverage under any Employee Benefit Plan is not extended due to the provision of
Severance Benefits, except as provided in Section 3.1(d).

8.7 Notices. All notices, requests, demands, and other communications hereunder shall be
sufficient if in writing and shall be deemed to have been duly given if delivered by hand, or if
sent by registered or certified mail or nationally-recognized overnight carrier to the Executive at
the last address the Executive has filed in writing with the Company or, in the case of the
Company, at its principal offices, with attention to the “Compensation Committee of the Board of
Directors of Western Alliance Bancorporation” with a copy to the attention of the Company’s General
Counsel.

8.8 Tax Withholding. The Company shall withhold from any Severance Benefits all Federal,
state, city, or other taxes as legally required to be withheld, as well as any other amounts
authorized or required by policy, including, but not limited to, withholding for garnishments and
judgments or other court orders.

8.9 Severability. In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the
Plan must be construed and enforced as if the illegal or invalid provision had not been included.
Further, the captions of the Plan are not part of the provisions herein and will have no force or
effect.

8.10 Gender and Number. Except where otherwise indicated by the context, any masculine term
used herein includes the feminine, the plural includes the singular and the singular includes the
plural.

8.11 Applicable Law. To the extent not preempted by the laws of the United States, the laws
of the State of Arizona will be the controlling law in all matters relating to the Plan without
giving effect to principles of conflicts of laws. The jurisdiction and venue for any disputes
arising under, or any action brought to enforce, or otherwise relating to, the Plan will be
exclusively in the courts in State of Arizona, Maricopa County, including the Federal Courts
located therein (should Federal jurisdiction exist).

8.12 Action by Company. Any action required of or permitted to be taken by the Company under
the Plan must be by written resolution of the Board, by written resolution of a duly authorized
committee of the Board, by a person or persons authorized by resolutions of the Board, or a by duly
authorized committee.

8.13 Plan Funding. The Company will provide all Severance Benefits due and owing directly out
of its general assets. To the extent that an Executive acquires a right to receive Severance
Benefits, such right shall be no greater than the right of an unsecured general creditor of the
Company. Nothing herein contained may require or be deemed to require, or prohibit or be deemed to
prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other assets, in
trust or otherwise, to provide for any Severance Benefits.

8.14 Contravening Law or Order. Notwithstanding anything in the Plan to the contrary, the
Company shall have no obligation to provide any Severance Benefits to the Executive hereunder to
the extent, but only to the extent, that such provision is prohibited by the terms of any law or
final order of a Federal, state, or local court or regulatory agency of competent jurisdiction,
provided that such an order shall not affect, impair, or invalidate any provision of the Plan not
expressly subject to such order.

8.15 Compensation Recovery Policy. Severance Benefit under the Plan may be subject to any
Compensation Recovery Policy established by the Company and amended from time to time.

8.16. Full Settlement; No Mitigation. The Company’s obligation to pay or provide Severance
Benefits under the Plan and otherwise to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company or
an Affiliate may have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Plan, and such amounts shall not be
reduced whether or not the Executive obtains other employment.

8.17 Indemnification. Each person who is or has been a member of the Committee, and any
individual or individuals to whom the Company has delegated authority under Section 1.3 herein,
shall be indemnified and held harmless by the Company from and against any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by him or her in connection with or as a
result of any claim, action, suit or proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action taken, or failure to act, under the Plan. Each such
person also will be indemnified and held harmless by the Company from and against any and all
amounts paid by him or her in a settlement approved by the Company, or paid by him or her in
satisfaction of any judgment, of or in a claim, action, suit or proceeding against him or her and
described in the previous sentence, so long as he or she gives the Company an opportunity, at its
own expense, to handle and defend the claim, action, suit or proceeding before he or she undertakes
to handle and defend it. The foregoing right of indemnification will not be exclusive of any other
rights of indemnification to which a person may be entitled under the Company’s Articles of
Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify him or her or hold him or her harmless.

8.18. No Limitations on Company. Nothing in the Plan shall affect or limit in any way the
right or power of the Company to make adjustments, reclassifications, reorganizations, or changes
of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell
or transfer all or any part of its business or assets.

Article 9. Amendment and Termination

9.1 Amendment and Termination. The Company reserves the right, on a case-by-case basis or on
a general basis, to amend the Plan at any time and to thereby alter, reduce or eliminate any
benefit under the Plan, in whole or in part, at any time, provided that:

(a) No amendment or termination of the Plan that has the effect of (i) removing an Executive
from the list of Executives the Board has designated by written resolution as eligible to
participate in the Plan, (ii) eliminating or reducing the amount of Severance Benefits payable (if
any) to any Executive, or (iii) adversely affecting the benefits or rights of an Executive under
the Plan, may be, without the express written consent of such Executive, retroactive or effective
until the date that is twenty-four (24) months after the later of (A) the date the Committee adopts
such amendment or termination or (B) the date the Committee or the Company provides written notice
of such amendment or termination to the affected Executive(s), (with the later of such dates
referred to herein as the “Amendment Effective Date”); provided that any such amendment or
termination shall not eliminate or reduce any benefit with respect to any Change in Control that
occurs on or before the Amendment Effective Date; and

(b) If a Change in Control occurs before the Amendment Effective Date, then the effective date
of an amendment described in Section 9.1(a) or termination of the Plan shall be postponed as to the
affected Executive(s) until the date that is twenty-four (24) months after the Change in Control
occurs.

(c) By way of illustration of the protective provisions of this Section 9.1 and for the
avoidance of doubt, if the Company removed Executive A from the list of Executives eligible to
participate in the Plan (and gave Executive A notice of such removal) on January 1, 2014, a Change
in Control occurred on December 1, 2014, and the Company (or its successor) terminated Executive A
without Cause on March 1, 2015, Executive A would be entitled to Severance Benefits under the Plan
under the terms and conditions of the Plan in effect immediately prior to January 1, 2014.

9.2 Notice of Amendment or Termination. The Committee or the Company will notify the
Executives, including, but not limited to, Executives receiving Severance Benefits, of any material
amendment or termination of the Plan within a reasonable time.

Appendix A

Additional Information for Summary Plan Description

This Appendix A, together with the Plan document, constitutes the summary plan description of the
Plan. References in this Appendix A to “you” or “your” are references to the Executive. Any term
capitalized but not defined in this Appendix A will have the meaning set forth in the Plan.

Your Rights Under ERISA

As a participant in the Plan, you are entitled to certain rights and protections under ERISA.
ERISA provides that all Plan participants shall be entitled to:

	 	•	 	Receive information about the Plan and benefits offered under the Plan.

	 	•	 	Examine, without charge, at the Plan Administrator’s office and at other specified
locations, all documents governing the Plan, and a copy of the latest annual report filed
by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room
of the Employee Benefit Security Administration.

	 	•	 	Obtain, upon written request to the Plan Administrator, copies of documents governing
the operation of the Plan, and copies of the latest annual report and updated summary plan
description. The Plan Administrator may make a reasonable charge for the copies.

Prudent Action by Plan Fiduciaries

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are
responsible for the operation of the Plan. The people who operate your Plan, called fiduciaries of
the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including the Company, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from exercising your rights under ERISA.

Enforce Your Rights

If your claim for a benefit is denied in whole or in part, you have a right to know why this was
done, to obtain copies of documents relating to the decision without charge, and to appeal any
denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you
request a copy of Plan documents or the latest annual report from the Plan and do not receive them
within 30 days, you may file suit in a Federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the control of the Plan
Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part,
you may file suit in a state or Federal court. If you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a
Federal court. The court will decide who should pay court costs and legal fees. If you are
successful, the court may order the person you have sued to pay these costs and fees. If you lose,
the court may order you to pay these costs and fees, for example, if it finds your claim is
frivolous.

Assistance With Your Questions

If you have any questions about the Plan, you should contact the Plan Administrator. If you have
any questions about this statement or about your rights under ERISA, or if you need assistance in
obtaining documents from the Plan Administrator, you should contact the nearest office of the
Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.
You also may obtain certain publications about your rights and responsibilities under ERISA by
calling the publications hotline of the Employee Benefits Security Administration.

General Plan Information

	 	 	 
	Plan Sponsor
	 	Western Alliance Bancorporation

One E. Washington Street, Suite 1400

Phoenix, AZ 85004

	 
	 	 

	Plan Name
	 	Western Alliance Bancorporation Change in

Control Severance Plan

	 
	 	

	Type of Plan
	 	Welfare benefit plan

	 
	 	

	Source of Funds
	 	The Company will pay all benefits due and

owing under the Plan directly out of its

general assets. To the extent that an

Executive acquires a right to receive

benefits under the Plan, such right shall be

no greater than the right of an unsecured

general creditor of the Company.

	 
	 	

	Plan Number
	 	503

	 
	 	

	Company’s Employer

Identification Number
	 	88-0365922

	 	 	 

	Plan Administrator
	 	Western Alliance Bancorporation

One E. Washington Street, Suite 1400

Phoenix, AZ 85004

Attn: Merrill Wall

(602) 389-3500

	 
	 	

	Agent for Service

of Legal Process
	 	Plan Administrator

	 	 	 

	Plan Year
	 	Calendar Year

(January 1 – December 31)

	 
	 	

	Successors
	 	The Company shall require any successor

(whether direct or indirect, by purchase,

merger, reorganization, consolidation,

acquisition of property or stock,

liquidation, or otherwise) of all or a

significant portion of the stock or assets of

the Company by agreement, to expressly assume

and agree to maintain the Plan in the same

manner and to the same extent that the

Company would be required to perform if no

such succession had taken place. Regardless

of whether such agreement is executed, the

Plan will be binding upon any successor in

accordance with the operation of law and such

successor shall be deemed the “Company” for

purposes of the Plan.

	 
	 	 

	Controlling Law
	 	Arizona, to the extent not preempted by

Federal law

	 
	 	 

Appendix B

General Release and Waiver of Claims

	1.	 	Eligibility for Severance Benefits. On or about       , I was informed that I was
eligible to participate in the Western Alliance Bancorporation Change in Control Severance
Plan (“Plan”), and receive certain severance pay and benefits that would not otherwise be due
to me, which I agree are specific and sufficient consideration in exchange for execution of
this Release. Capitalized terms used but not defined herein have the meanings assigned to them
in the Plan. 

	2.	 	General Release. In consideration of my receipt of these benefits, I agree, on behalf
of myself and my heirs, legal representatives, successors and assigns, to completely release
and forever discharge Western Alliance Bancorporation and its successors in interest (“WAL”),
any related holding, parent, sister, affiliate or subsidiary corporations of WAL, employee
benefit plans of the forgoing., as defined by the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001 et seq., as amended (“ERISA”), excluding any employee benefit plan
subject to the antialienation provisions of ERISA, the sponsors, administrators, trustees,
trusts, fiduciaries, and service providers of the forgoing, and each of their owners,
directors, officers, employees, agents, attorneys, stockholders, insurers, divisions,
policies, successors and assigns (collectively, “the Releasees”), from any and all loss,
liability, claims, demands, causes of action or suits of any type, whether in law and/or in
equity, and whether known or unknown, that I may now have against any Releasee, related
directly or indirectly to, in any way connected with or arising out of my employment with WAL
and/or any Releasee, the termination of my employment, and any actions taken by any of the
Releasees up to the effective date of this Release. This includes but is not limited to all
wrongful discharge, discrimination (including, without limitation, age discrimination),
contract, tort, statutory and constitutional claims; any claims under Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act
(ADEA), the Older Worker Benefit Protection Act, the Employee Retirement Income Security Act,
the Americans with Disabilities Act, and any other federal, state or local employment laws and
regulations; and any and all claims for compensation, bonuses, severance pay, attorneys’ fees
and costs.

	3.	 	Excluded Claims. I understand that this Release does not cover workers’ compensation
matters, unemployment compensation claims, the right to challenge the validity of the ADEA
waiver or any other claims determined by law to be non-waivable, nor does it cover claims that
are based on any conduct of the Releasees occurring in the future, after the date this Release
takes effect. This release will govern the relief to which I am entitled as to all other
claims.

	4.	 	Covenant Not to Sue. I understand and agree that to the fullest extent the law
permits, I will be precluded from filing or pursuing any legal claim of any kind against any
of the Releasees at any time in the future, in any federal, state or municipal court,
administrative agency or other tribunal, arising out of any of the matters covered by
Paragraph 2 above. I agree not to file or pursue any such legal claim nor will I encourage or
knowingly permit another to file any claim, charge, action or complaint concerning any such
legal claim. I agree to withdraw any such pending legal claim. This Release may be plead as
a full and complete defense and may be used as the basis for an injunction against any action,
suit or proceeding which may be prosecuted, instituted or attempted by me.

	5.	 	Time to Consider and Revoke Agreement. I represent, acknowledge and agree that
Releasees have advised me: (1) to consult with an attorney before signing this Release (and I
have done so to the extent I desired); (2) that I may take up to forty-five (45) days from my
Separation from Service (as defined in the Plan) to decide whether to sign this Release; (3)
that by signing on any date prior to the expiration of the forty-five (45) day period, I have
voluntarily elected to forego waiting forty-five (45) days to sign the Release; and (4) that I
have a full 7 days following the execution of this Release to revoke this Release, in which
case I will not receive the severance benefits to be paid to me in exchange for my Release. I
have been and hereby am advised in writing that this Release shall not become effective or
enforceable until the revocation period has expired. I acknowledge and agree that such
revocation must be received via hand delivery, facsimile, or overnight express delivery to the
attention of [INSERT NAME], [INSERT ADDRESS], [INSERT FAX #]. I also recognize and agree that
this Release will also be deemed revoked if I do not sign and return it within forty-five (45)
days of the date I receive it.

	6.	 	Eligibility Information. I have been informed that this Plan is available to
designated executive officers of WAL and its affiliates (“Executives”), who are not party to
an employment contract or agreement and are not covered by any other severance or separation
pay plan or arrangement, and who during the twenty-four (24) month period following a Change
in Control (i) are terminated by the Company or Affiliate without Cause, or (ii) terminate his
or her employment with the Company or Affiliate for Good Reason. I understand that an
Executive who does not resign for Good Reason or whose employment has been involuntarily
terminated for Cause is not eligible for the Severance Benefits under the Plan. Additional
information required by the Older Worker Benefit Protection Act will be provided as “Appendix
A” to this Release at the time of termination of employment.

	7.	 	Additional Warranties. I expressly warrant, represent, acknowledge and agree that (1)
I have read and fully understand this Release; (2) I have had the opportunity to consult with
legal counsel of my own choosing and have the terms of this Release fully explained to me; (3)
I am not executing this Release in reliance on any promises, representations or inducements
other than those contained herein and in the accompanying Plan materials; and (4) I am
executing this Release voluntarily, free of any duress or coercion.

	8.	 	Confidentiality. Except as required by law, I agree that all matters relating to this
Agreement and the Plan shall remain confidential. Accordingly, I agree not to discuss,
disclose or reveal to any other persons, entities or organizations, whether within or outside
of Releasees’ organizations, the terms and conditions of this Release or the Plan.

Executive’s Acceptance of Release

Before signing my name to this release, I state that: I have read it; I understand it and
know that I am giving up important rights; I am aware of my right to consult with an attorney
before signing it; and I have signed it knowingly and voluntarily.

Date Executive’s Signature

Executive’s Name – (Please
print)

WESTERN ALLIANCE BANCORPORATION

CHANGE IN CONTROL SEVERANCE PLAN

ACKNOWLEDGMENT AND ACCEPTANCE OF

THE TERMS AND CONDITIONS OF THE PLAN

Western Alliance Bancorporation (the “Company”) has established the Western Alliance Bancorporation
Change in Control Severance Plan (the “Plan”). The Plan provides severance payments and benefits
to certain eligible executives in the event of termination by the Company without “Cause” or
termination by the executive for “Good Reason” following a “Change in Control” of the Company. You
are eligible to participate in the Plan.

By the signatures below of the Executive named herein and the representative of the Company, the
Company and the Executive acknowledge that the Board has designated the Executive as eligible to
participate in the Plan, and the Executive hereby acknowledges and accepts such participation,
subject to the terms and conditions of the Plan, and agrees to the terms of the Plan, which is
attached hereto and made a part hereof.

	 	 	 
	Name of Executive: «FirstName» «LastName»

	 

	Date of Eligibility and Participation:

	 	«Date—2»
	
 
	 	 

At Will Employment. Nothing in this Acknowledgement and Acceptance or in the Plan confers
upon the Executive any right to continue in employment for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company or of the Executive,
which rights are hereby expressly reserved by each, terminate the Executive’s employment at any
time for any reason.

Protective Covenants. In consideration for the Executive’s eligibility for Severance
Benefits under the Plan, the Executive agrees to the provisions and protective covenants provided
for in Article 4 of the Plan, which will apply during and after the Executive’s Separation from
Service.

Amendment and Termination of Plan. The Company reserves the right, on a case-by-case basis
or on a general basis, to amend the Plan at any time and to thereby alter, reduce or eliminate any
benefit under the Plan, in whole or in part, at any time, provided that no amendment or termination
of the Plan that has the effect of (i) removing an Executive from the list of Executives the Board
has designated by written resolution as eligible to participate in the Plan, (ii) eliminating or
reducing the amount of Severance Benefits payable (if any) to any Executive, or (iii) adversely
affecting the benefits or rights of an Executive under the Plan, may be, without the express
written consent of such Executive, retroactive or effective until the date that is twenty-four (24)
months after the later of (A) the date the Committee adopts such amendment or termination or (B)
the date the Committee or the Company provides written notice of such amendment or termination to
the affected Executive(s), (with the later of such dates referred to herein as the “Amendment
Effective Date”); provided that any such amendment or termination shall not eliminate or reduce any
benefit with respect to any Change in Control that occurs on or before the Amendment Effective
Date.

[Signature Page(s) Follow(s)]

	 	 	 
	EXECUTIVE:	 	WESTERN ALLIANCE BANCORPORATION
	 	 	By:

	 	 	 

	[Signature]
	 	Title:

	 	 	 

Attachment:

Western Alliance Bancorporation Change in Control Severance Planpmbs_ex41.htm

PuraMed BioScience, Inc.

 

Convertible Promissory Note

 

	Issuance Date: September 7, 2012	U.S. $172,500.00

 

This Convertible Promissory Note (“Note”) is issued pursuant to that certain Securities Purchase Agreement dated September 7, 2012, as the same may be amended from time to time (the “Agreement”), by and between TONAQUINT, INC., a Utah corporation, or its registered assigns (the “Holder”), and PURAMED BIOSCIENCE, INC., a Minnesota corporation (the “Company”).

 

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of Holder, the initial principal sum of $172,500.00 (the “OriginalPrincipal Amount”), and any additional advances and other amounts that may accrue under the terms of this Note as set forth herein when due, whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount due on such Installment Date (each as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any Outstanding Balance (as defined below) at the applicable interest rate as set forth herein until the same becomes due and payable, whether upon any Installment Date, the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 28 of the Agreement.  For purposes hereof, the term “Outstanding Balance” means the Original Principal Amount, as reduced or increased, as the case may be, pursuant to the terms hereof for redemption, conversion or otherwise, plus any accrued but unpaid Interest, collection and enforcements costs, and any other fees or charges(including without limitation Late Charges (as defined below)) incurred under this Note or under the Agreement.

 

1. PAYMENTS OF PRINCIPAL; PREPAYMENT. On each Installment Date (which includes the Maturity Date), the Company shall pay to the Holder an amount equal to the Installment Amount due on such Installment Date in accordance with Section 8. Additionally, so long as no Event of Default (as defined below) shall have occurred, the Company may, in its sole and absolute discretion and upon giving the Holder not less than five (5) Trading Days written notice (a “Prepayment Notice”), pay in cash all or any portion of the Outstanding Balance at any time prior to the Maturity Date; provided that in the event the Company elects to prepay all or any portion of the Outstanding Balance, it shall pay to the Holder 125% of the portion of the Outstanding Balance the Company elects to prepay (the “Prepayment Premium”).

 

2. INTEREST; INTEREST RATE. The Company acknowledges that the Original Principal Amount of this Note exceeds the Purchase Price (as defined in the Agreement) and that such excess is made up of (a) an original issue discountof $15,000 and (b) the Transaction Expenses (as defined in the Agreement), both of which shall be fully earned and charged to the Company as of the date set forth above as the Issuance Date (the “Issuance Date”) and paid to the Holder as part of the Original Principal Amount as set forth in this Note. Interest on the Outstanding Balance shall accrue from the Issuance Date at the rate of eight percent (8%) per annum, provided that upon the occurrence of an Event of Default, Interest shall accrue on the Outstanding Balance at the rate of eighteen percent (18%) per annum, as set forth in Section 4.2(d) hereof. All Interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note.  Notwithstanding any provision to the contrary herein, in no event shall the applicable interest rate at any time exceed the maximum interest rate allowed under applicable law. All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares, as provided for herein, and delivered to Holder at the address furnished to the Company for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid Interest, and thereafter to (d) principal.

 

  

1

  

 

3. CONVERSION OF NOTE. At the option of the Holder, this Note is convertible into validly issued, fully paid and non-assessable shares of Common Stock, on the terms and conditions set forth in this Section 3.

 

3.1. Conversion Right.

 

(a) Subject to the provisions of Section 3.4, at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the Outstanding Balance into validly issued, fully paid and non-assessable shares of Common Stock (the “Section 3 Conversion Shares”) in accordance with Section 3.3, calculated using the Conversion Rate (as defined below).

 

(b) The Company shall not issue any fraction of a share of Common Stock upon any conversion. All shares issuable upon each conversion of this Note shall be aggregated for purposes of determining whether such conversion would result in the issuance of a fractional share.  If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Section 3 Conversion Shares.

 

3.2. Conversion Rate. The number of Section 3 Conversion Shares issuable upon conversion of any portion of the Outstanding Balance pursuant to Section 3.1(a) shall be determined by dividing (x) the applicable Conversion Amount by (y) the Conversion Price (such formula is referred to herein as the “Conversion Rate”).

 

(a) “Conversion Amount” means the portion of the Outstanding Balance to be converted.

 

(b) “Conversion Price” means, as of any Conversion Date or other date of determination, $0.15, subject to adjustment as provided herein.

 

3.3. Mechanics of Conversion.

 

(a) Conversion Prior to Maturity Date. To convert any Conversion Amount into shares of Common Stock on any date, the Holder shall deliver (whether via email, facsimile or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date (a “Conversion Date”), a copy of an executed notice of conversion substantially in the form attached hereto as Exhibit A (the “Conversion Notice”) to the Company. If required by Section 3.3(c), within three (3) Trading Days following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 15.2). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or email an acknowledgment of confirmation, in the form attached hereto as Exhibit B, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the close of business on the third (3rd) Trading Day following the date of receipt of a Conversion Notice (the “Delivery Date”), the Company shall, provided that all DWAC Eligible Conditions are then satisfied, credit the aggregate number of Section 3 Conversion Shares to which the Holder shall be entitled to the account specified on the Conversion Notice via the DWAC system; if all DWAC Eligible Conditions are not then satisfied, and the Holder elects in writing to accept certificated shares (which election shall not constitute a waiver of any Event of Default or any right or remedy of the Holder hereunder), the Company shall instead issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of Section 3 Conversion Shares to which the Holder shall be entitled; provided, however, that, in addition to any other rights or remedies that Holder may have under this Note, such number of certificated shares shall be increased by 5% for each conversion so elected by the Holder that occurs more than six (6) months after the Issuance Date if, as of such time, the Section 3 Conversion Shares can be issued without restrictive legend.If this Note is physically surrendered for conversion pursuant to Section 3.3(c) and the Outstanding Balance of this Note is greater than the principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 15.4)) representing the Outstanding Balance not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. In the event of a partial conversion of this Note pursuant hereto, the principal amount converted shall be deducted from the Installment Amount(s) relating to the Installment Date(s) as set forth in the applicable Conversion Notice.

 

  

2

  

 

(b) Company’s Failure to Timely Deliver. Failure for any reason whatsoever to issue any portion of the Section 3 Conversion Shares to Holder by the applicable Delivery Date in the manner required under this Note shall be a “Conversion Failure”. Upon the occurrence of a Conversion Failure, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such third (3rd) Trading Day that the issuance of such shares of Common Stock is not timely effected an amount equal to the greater of (A) $2,000.00 per day and (B) 2% of the product of (i) the sum of the number of Section 3 Conversion Shares not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (ii) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating Section 3.3(a); and (2) the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued or are owed to the Holder prior to the date of such notice pursuant to this Section 3.3(b) or otherwise. Notwithstanding the foregoing, a Conversion Failure shall not exist to the extent Section 3 Conversion Shares are not issued by the Company in order to comply with the limitations set forth in Section 3.4 hereof. Upon the occurrence of a Conversion Failure (unless Holder elects to void the Conversion Notice), in addition to such failure being considered an Event of Default hereunder, for purposes of Section 7.1, the Company shall also be deemed to have issued the Section 3 Conversion Shares to Holder on the applicable date and pursuant to the terms set forth in this Section 3, with Holder entitled to all the rights and privileges associated with such deemed issued shares (the “Deemed Conversion Issuance”).

 

(c) Registration; Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the name and address of the holders of all or any portion of the Note and the principal amount of the Note held by such holder (the “Registered Note”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holder shall treat each Person whose name is recorded in the Register as the owner of the Note for all purposes (including, without limitation, the right to receive payments of principal and Interest hereunder) notwithstanding notice to the contrary. The Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign, transfer or sell all or part of the Registered Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 15. Notwithstanding anything to the contrary in this Section 3.3(c), the Holder may assign this Note or any portion thereof to its Affiliate without delivering a request to assign or sell this Note to the Company and the recordation of such assignment or sale in the Register (a “Related Party Assignment”); provided, that (A) the Company may continue to deal solely with such assigning or selling Holder unless and until such Holder has delivered a request to assign or sell the Note or portion thereof to the Company for recordation in the Register; (B) the failure of such assigning or selling Holder to deliver a request to assign or sell such Note or portion thereof to the Company shall not affect the legality, validity, or binding effect of such assignment or sale; and (C) such assigning or selling Holder shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register (the “Related Party Register”) comparable to the Register on behalf of the Company, and any such assignment or sale shall be effective upon recordation of such assignment or sale in the Related Party Register.  Notwithstanding anything to the contrary set forth in this Section 3, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the entire Outstanding Balance of this Note is being converted (in which event this Note shall be delivered to the Company as contemplated by Section 3.3(a)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Outstanding Balance and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

 

  

3

  

 

3.4. Limitations on Conversions.

 

(a) Notwithstanding anything to the contrary contained in this Note (except as set forth below in this subsection), this Note shall not be convertible by the Holder hereof, and the Company shall not effect any conversion of this Note or otherwise issue any shares of Common Stock pursuant to Section3 or Section 8 hereof, to the extent (but only to the extent) that the Holder together with any of its Affiliates would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the Common Stock outstanding.  Notwithstanding the forgoing, (i) if any of the DWAC Eligible Conditions are not then satisfied, the term “4.99%” shall be replaced in the preceding sentence with “9.99%”at such time as the Market Capitalization of the Common Stock is less than three million dollars ($3,000,000.00), but (ii) if all of the DWAC Eligible Conditions are then satisfied, the term “4.99%” shall be replaced in the preceding sentence with “9.99%”only at such time as the Market Capitalization of the Common Stock is less than one million dollars ($1,500,000.00).For the avoidance of any doubt, notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%” pursuant to the preceding sentence, such change to “9.99%” shall be permanent.  For purposes of this Agreement, the term “Market Capitalization of the Common Stock” shall mean the product equal to (i) the average VWAP of the Common Stock for the immediately preceding thirty (30) Trading Days, multiplied by (ii) the aggregate number of outstanding shares of Common Stock as reported on the Company’s most recently filed Form 10-Q or Form 10-K.

 

(b) To the extent the limitation set forth in subsection (a) immediately above applies, the determination of whether this Note shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its Affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by the Holder and its Affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability to convert this Note, or to issue shares of Common Stock, pursuant to this Section 3.4 shall have any effect on the applicability of the provisions of this Section 3.4 with respect to any subsequent determination of convertibility. For purposes of this Section 3.4, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(e) of the 1934 Act (as defined in the Agreement) and the rules and regulations promulgated thereunder. The provisions of this Section 3.4 shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 3.4 to correct this Section 3.4 (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this Section 3.4 shall apply to a successor Holder of this Note. The holders of Common Stock shall be third party beneficiaries of this Section 3.4 and the Company may not waive this Section 3.4 without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation, pursuant to this Note.

 

  

4

  

 

4. RIGHTS UPON EVENT OF DEFAULT.

 

4.1. Event of Default. Each of the following events shall constitute an “Event of Default”:

 

(a) Failure to Pay. The Company shall fail to make any payment when due and payable under the terms of this Note including, without limitation, any payment of costs, fees, interest, principal (including, without limitation, the Company’s failure to deliver any Installment Amount when due or to pay any redemption payments or amounts hereunder), or other amount due hereunder or under any other Transaction Document (as defined in the Agreement).

 

(b) Failure to Deliver Shares. The Company (or its Transfer Agent) (i) fails to issue Section 3 Conversion Shares by the Delivery Date; (ii) fails to issue Pre-Installment Conversion Shares or Post-Installment Conversion Shares within the time periods required by Section 8; (iii) announces (or threatens in writing) that it will not honor its obligation to issue shares to Holder upon exercise by the Holder of the conversion rights of the Holder in accordance with Section 3 and/or Section8 of this Note; (iv) fails to transfer or cause its Transfer Agent to transfer (issue) (electronically or in certificated form, as applicable) any Section 3 Conversion Shares, Post-Installment Conversion Shares or Pre-Installment Conversion Shares, as applicable, issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note; (v) 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 Section 3 Conversion Shares, Post-Installment Conversion Shares or Pre-Installment Conversion Shares, as applicable, to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note; or (vi) as applicable, 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 Section 3 Conversion Shares, Post-Installment Conversion Shares or Pre-Installment Conversion Shares as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor any such obligations).

 

  

5

  

 

(c) Judgment.  A final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) calendar days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty (30) calendar days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) calendar days of the issuance of such judgment.

 

(d) Breach of Obligations; Covenants. The Company or its Subsidiaries, if any, shall fail to observe or perform any other covenant, obligation, condition or agreement contained in this Note or any of the other Transaction Documents, including without limitation (i) all reporting covenants and covenants to timely file all required quarterly and annual reports and any other filings required pursuant to Rule 144, and (ii) strict compliance with all provisions of Sections 3, 8, 10 and 12 of this Note.

 

(e) Breach of Representations and Warranties. Any representation, warranty, certificate, or other statement (financial or otherwise) made or furnished by or on behalf of the Company to the Holder in writing included in this Note or in connection with any of the Transaction Documents, or as an inducement to the Holder to enter into this Note or any of the other Transaction Documents, shall be false, incorrect, incomplete or misleading in any material respect when made or furnished or becomes false thereafter.

 

(f) Receiver or Trustee. The Company shall make an assignment for the benefit of creditors, or apply for, or consent to, or otherwise be subject to, the appointment of a receiver, trustee, liquidator, assignee, custodian, sequestrator, or other similar official for a substantial part of its property or business.

 

(g) Failure to Pay Debts. If any of the Company’s assets are assigned to its creditors, or upon the occurrence of any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries in an amount equal to $100,000 or more.

 

(h) 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 Company.

 

(i) Delisting of Common Stock. The suspension from trading or the failure of the Common Stock to be trading on an Eligible Market for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period.

 

  

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(j) Liquidation. Any dissolution, liquidation, or winding up of the Company or any substantial portion of its business.

 

(k) Cessation of Operations. Any cessation of operations by the Company or the Company admits it is otherwise generally unable to pay its debts as such debts become due; provided, however, that any disclosure of the Company’s ability to continue as a “going concern” shall not be an admission that the Company cannot pay its debts as they become due.

 

(l) Maintenance of Assets. The failure by the Company 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 Company with the SEC for any date or period from two years prior to the 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 Company with respect to this Note or the Agreement.

 

(n) Reverse Split. The Company effectuates a reverse split of its Common Stock without twenty (20) Trading Days prior written notice to the Holder.

 

(o) Replacement of Transfer Agent. In the event that the Company proposes to replace its Transfer Agent, the Company fails to provide, prior to the effective date of such replacement, a fully executed Transfer Agent Letter (as defined by the Agreement) in a form as required to be initially delivered pursuant to the 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 and delivered to the Company and the Holder.

 

(p) Governmental Action. If any governmental or regulatory authority takes or institutes any action against the Company, a Subsidiary, or an executive officer or director of the Company, that will materially affect the Company’s financial condition, operations or ability to pay or perform the Company’s obligations under this Note.

 

(q) Share Reserve. The Company’s failure to maintain the Share Reserve (as defined in the Agreement).

 

(r) Certification of Equity Conditions. A false or inaccurate certification (including, without limitation, a false or inaccurate deemed certification) by the Company that the Equity Conditions are satisfied, that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred.

 

  

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(s) DWAC Eligibility. The failure of any of the DWAC Eligible Conditions to be satisfied at any time during which the Company has obligations under this Note.

 

(t) Cross Default. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, a breach or default by the Company of any covenant or other term or condition contained in (i) any of the other Transaction Documents, or (ii) any Other Agreements (defined below); shall, at the option of the Holder, be considered a default under this Note, 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. The Company hereby agrees to notify the Holder in writing within three (3) Trading Days after any such default; provided, however, any filing of an 8-K that identifies any such default shall not be deemed notice under this Section4.1(t). “Other Agreements” means, collectively, (1) all existing and future agreements and instruments between, among or bythe Company (or a Subsidiary), on the one hand, and the Holder (or an Affiliate of Holder), on the other hand, and (2) any financing agreement or a material agreement that affects the Company’s ongoing business operations. For the avoidance of doubt, all existing and future loan transactions between the Company and the Holder and its Affiliates will be cross-defaulted with each other loan transaction and with all other existing and future debt of the Company to the Holder.

 

Each subsection of this Section 4.1 shall be interpreted and applied independently, and no such subsection shall be deemed to limit or qualify any other subsection in any manner whatsoever.

 

4.2. Notice of an Event of Default; Redemption Right.

 

(a) Upon the occurrence of an Event of Default, the Company shall within one (1) Trading Day deliver written notice thereof via facsimile and overnight courier (with next day delivery specified) (an “Event of Default Notice”) to the Holder.

 

(b) At any time and from time to time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (regardless of whether such Event of Default has been cured) all or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of the Outstanding Balance the Holder is electing to redeem (the “Default Redemption Amount”).Redemptions required by this Section 4.2(b) shall be made in accordance with the provisions of Section 10. Notwithstanding anything to the contrary in this Section 4, but subject to Section 3.4, until the Default Redemption Amount (together with Late Charges thereon) is paid in full pursuant to and in accordance with the terms set forth in Section 10, the Outstanding Balance(together with any Late Charges thereon),may be converted, in whole or in part from time to time, by the Holder into Common Stock pursuant to the other terms of this Note. In the event of a partial redemption of this Note pursuant hereto, the applicable Default Redemption Amount shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Event of Default Redemption Notice. Notwithstanding the foregoing, this Section4.2(b) shall not apply to an Event of Default arising under Section 4.1(h) (Bankruptcy).

 

  

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(c) Upon the occurrence of an Event of Default occurring under Section 4.1(h) due to the institution by or against the Company of any bankruptcy proceeding for relief under any bankruptcy law or any law for the relief of debtors, (i) the Outstanding Balance shall automatically increase to an amount equal to the Outstanding Balance immediately prior to such Event of Default multiplied by the Redemption Premium, and (ii) all amounts owed under this Note shall accelerate and be immediately due and payable, all without the need for any further notice to or action by any party hereunder.

 

(d) Upon the occurrence of any Event of Default, this Note shall thereafter accrue interest at the rate of 1.5% per month (or 18% per annum), compounding daily, whether before or after judgment; provided, however, that notwithstanding any provision to the contrary herein, in no event shall the applicable interest rate at any time exceed the maximum interest rate allowed under applicable law.

 

(e) Notwithstanding anything herein, if shares of Common Stock are delivered to Holder in certificated form rather than electronic form, the Outstanding Balance shall automatically increase by an amount equal to the decline in Value (as defined below), if any, of such shares between the time such shares were required to be delivered to the Holder hereunder, and the date such shares are deposited in Holder’s brokerage account without any restrictive legend and such shares are freely tradable under Rule 144 or without the need for registration under any applicable federal or state securities laws. The Company agrees to use it best efforts to cause such shares to become freely tradable. “Value”, as used in this subsection, shall mean the five (5) Trading Day trailing average VWAP for the applicable shares.

 

  

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5. RIGHTS UPON FUNDAMENTAL TRANSACTION.

 

5.1. Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5.1 pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder, in its sole discretion, prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of this Note, having similar conversion rights as this Note and having similar ranking to this Note, and being satisfactory to the Holder in its sole discretion, (ii) the Successor Entity is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market, and (iii) the Company has received the prior written consent to such Fundamental Transaction from Holder. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property (except such items still issuable under Section 6, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of this Note prior to such Fundamental Transaction), such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.

 

5.2. Notice of a Fundamental Transaction; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a Fundamental Transaction, but not prior to the public announcement of such Fundamental Transaction, the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder (a “Fundamental Transaction Notice”). At any time during the period beginning after the Holder’s receipt of a Fundamental Transaction Notice or the Holder becoming aware of a Fundamental Transaction if a Fundamental Transaction Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (i) consummation of such Fundamental Transaction and (ii) the date of receipt of such Fundamental Transaction Notice, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Fundamental Transaction Redemption Notice”) to the Company, which Fundamental Transaction Redemption Notice shall indicate the portion of the Outstanding Balance the Holder is electing to redeem (the “Fundamental Transaction Redemption Amount”). The Fundamental Transaction Redemption Amount shall be redeemed by the Company in cash pursuant to and in accordance with Section 10 and shall have priority to payments to stockholders in connection with such Fundamental Transaction. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3.4, until the Fundamental Transaction Redemption Amount (together with any Late Charges thereon) is paid in full, the Outstanding Balance (together with any Late Charges thereon), may be converted, in whole or in part from time to time, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant hereto, the Fundamental Transaction Redemption Amount shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Fundamental Transaction Redemption Notice.

 

  

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6. DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

 

6.1. Distribution of Assets. Without the prior written consent of Holder, the Company agrees not to declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction).

 

6.2. Purchase Rights. In addition to any adjustments pursuant to Section 7 below, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) 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 (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage).

 

6.3. Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) using a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.

 

  

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7. RIGHTS UPON ISSUANCE OF SECURITIES.

 

7.1. Adjustment of Conversion Price upon Issuance of Common Stock. Except with respect to Excluded Securities, if and whenever on or after the Issuance Date the Company issues or sells Common Stock, Options, Convertible Securities, or upon any conversion or Deemed Issuance, or in accordance with subsections (a) through (f) below is deemed to have issued or sold, any shares of Common Stock (including without limitation the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue, conversion, or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.  For the avoidance of doubt, if the New Issuance Price is greater than the Applicable Price, there shall be no adjustment to the Conversion Price. For purposes of determining the adjusted Conversion Price under this Section 7.1, the following shall be applicable:

 

(a) Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 7.1(a), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

  

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(b) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities, and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 7.1(b), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7.1, except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

(c) Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 7.1(c), if the terms of any Option or Convertible Security that was outstanding as of the Issuance Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7.1 shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

  

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(d) Calculation of Consideration Received. If any Option or Convertible Security is issued or deemed issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising one integrated transaction, (x) such Option or Convertible Security (as applicable) will be deemed to have been issued for consideration equal to the Black Scholes Consideration Value thereof and (y) the other securities issued or sold or deemed to have been issued or sold in such integrated transaction shall be deemed to have been issued for consideration equal to the difference of (I) the aggregate consideration received by the Company minus (II) the Black Scholes Consideration Value of each such Option or Convertible Security (as applicable). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) Trading Days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(e) Deemed Warrant Issuance. If Company fails to deliver warrant shares as required by a warrant issued to Holder pursuant to the Transaction Documents, in addition to such failure to act being considered an Event of Default hereunder, for purposes of this Section 7.1, the Company shall also be deemed to have issued the warrant shares to Holder on the applicable date set forth in the applicable warrant and pursuant to the terms set forth therein (the “Deemed Warrant Issuance”).

 

  

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(f) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

7.2. Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 5 or Section 7.1, if the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision of Section 5 or Section 7.1, if the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 7.2 shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7.2 occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

 

7.3. Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 7.3 will increase the Conversion Price as otherwise determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.

 

8. COMPANY INSTALLMENT CONVERSION OR REDEMPTION. Beginning six (6) months from the Issuance Date (the “Initial Installment Date”), and on each applicable Installment Date thereafter, the Company shall pay to the Holder of this Note the applicable Installment Amount due on such date by converting such Installment Amount in accordance with this Section 8 (a “Company Conversion”); provided, however, the Company may, at its option as described below, pay all or any part of such Installment Amount by redeeming such Installment Amount in cash (a “Company Redemption”) or by any combination of a Company Conversion and a Company Redemption so long as the entire amount of such Installment Amount due shall be converted and/or redeemed by the Company on the applicable Installment Date, subject to the provisions of this Section 8; provided further that the Company shall not be entitled to effect a Company Conversion with respect to any portion of such Installment Amount and shall be required to pay the entire amount of such Installment Amount in cash pursuant to a Company Redemption if on the applicable Installment Notice Due Date or on the applicable Installment Date (as the case may be) there is an Equity Conditions Failure, and such failure is not waived by Holder as permitted herein.

 

  

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8.1. General. On or prior to the date which is the twenty-third (23rd) Trading Day prior to each Installment Date (each, an “Installment Notice Due Date”), the Company shall deliver written notice to the Holder substantially in the form attached hereto as Exhibit C-1(each, a “Company Installment Notice”),and such Company Installment Notice shall (i) either (A) confirm that the applicable Installment Amount of this Note shall be converted in whole pursuant to a Company Conversion, or (B) (1) state that the Company elects to redeem, or is required to redeem in accordance with the provisions of this Note, in whole or in part, the applicable Installment Amount pursuant to a Company Redemption and (2) specify the portion of the applicable Installment Amount which the Company elects, or is required to redeem, pursuant to a Company Redemption (such amount to be redeemed in cash, the “Company Redemption Amount”) and the portion of the applicable Installment Amount, if any, with respect to which the Company will, and is permitted to, effect a Company Conversion (such amount of the applicable Installment Amount so specified to be so converted pursuant to this Section 8 is referred to herein as the “Company Conversion Amount”), which amounts when added together, must equal the entire applicable Installment Amount and (ii) if the applicable Installment Amount is to be paid, in whole or in part, pursuant to a Company Conversion, certify that there is not an Equity Conditions Failure as of the Installment Notice Due Date. Each Company Installment Notice shall be irrevocable and may not be revoked by the Company. If the Company does not timely deliver a Company Installment Notice on an applicable Installment Notice Due Date that complies with this Section 8, then the Company shall be deemed to have delivered on such Installment Notice Due Date an irrevocable Company Installment Notice confirming a Company Conversion of the entire Installment Amount payable as required hereunder and shall be deemed to have certified that there is not an Equity Conditions Failure as of the applicable Installment Notice Due Date. The applicable Company Conversion Amount (whether set forth in the applicable Company Installment Notice or by operation of this Section 8) shall be converted in accordance with Section 8.2 and the applicable Company Redemption Amount shall be redeemed in accordance with Section 8.3.

 

8.2. Mechanics of Company Conversion. Subject to Section 3.4, if the Company delivers a Company Installment Notice and elects, or is deemed to have delivered a Company Installment Notice and deemed to have elected, in whole or in part, a Company Conversion in accordance with Section 8.1, then this Section 8.2 shall apply.  Notwithstanding the foregoing, if an Equity Conditions Failure has occurred as of the applicable Installment Notice Due Date, then the Company shall identify each such Equity Conditions Failure in the Company Installment Notice and request a waiver thereof from Holder pursuant to Section 8.5 hereof; if such waiver is obtained, then the remainder of this Section 8.2 shall apply, but if such waiver is not obtained,then the remainder of this Section 8.2 shall not apply and Company must deliver cash to the Holder in an amount equal to the Installment Amount (or such lessor amount authorized by the Holder in writing) pursuant to Section 8.3 hereof.

 

(a) Provided that there is no Equity Conditions Failure as of the applicable Installment Notice Due Date (or any such failure is waived in whole or in part as permitted herein) and a Company Conversion is not otherwise prohibited under any other provision of this Note, no later than two (2) Trading Days after each applicable Installment Notice Due Date, the Company shall deliver to the Holder’s account the Pre-Installment Conversion Shares, and as to which the Holder shall be the owner thereof as of the applicable Installment Notice Due Date.

 

  

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(b) No later than two (2) Trading Days after each Installment Date, the Company shall deliver to the Holder’s account a number of shares of Common Stock equal to the amount, if any, by which the Post-Installment Conversion Shares exceed the Pre-Installment Conversion Shares previously delivered to Holder. So long as no Event of Default has occurred regarding payment, conversion or redemption under this Note (each a “Payment Default”), if the Pre-Installment Conversion Shares on the applicable Installment Date exceed the Post-Installment Conversion Shares, then the excess will be applied towards the next Pre-Installment Conversion Shares to be issued by the Company (unless the Outstanding Balance has been reduced to zero, in which case Holder will return such excess shares to the Company).  If a Payment Default has occurred and the Pre-Installment Conversion Shares for the applicable Installment Date exceed the Post-Installment Conversion Shares, then Holder shall not be required to return to the Company any of the excess shares or apply such excess shares to any future issuance or conversion of shares hereunder.  The Company agrees to deliver to the Holder such calculations required under this Section 8.2(b) substantially in the form attached hereto as Exhibit C-2.

 

(c) If an Event of Default occurs during any applicable Company Conversion Measuring Period (defined below), then Holder may elect to either (i) return any Pre-Installment Conversion Shares delivered in connection with the applicable Installment Date, or (ii) retain such Pre-Installment Conversion Shares but only reduce the Company Conversion Amount used to calculate the Pre-Installment Conversion Shares (and thereby only reduce the Outstanding Balance) by the product of (A) the Company Conversion Amount applicable to such Installment Date multiplied by (B) the Conversion Share Ratio (as defined in Section 28.9). “Company Conversion Measuring Period” means the period beginning on the applicable Installment Notice Due Date and ending on the applicable Installment Date.

 

(d) If there is an Equity Conditions Failure as of the applicable Installment Date that is not waived as permitted herein or a Company Conversion is not otherwise permitted under any other provision of this Note, then, at the option of the Holder designated in writing to the Company, the Holder may require the Company to do any one or more of the following:

 

(i) the Company must redeem all or any part designated by the Holder of the Company Conversion Amount for which shares have not yet been delivered to Holder (such designated amount is referred to as the “Designated Redemption Amount”) and the Company shall pay to the Holder within three (3) Trading Days of such Installment Date, by wire transfer of immediately available funds, an amount in cash equal to the Redemption Premium multiplied by the Designated Redemption Amount(the “Designated Redemption Price”) (if the Company fails to pay the Designated Redemption Price by the third (3rd) Trading Day following suchwritten notice to the Company, then such failure to pay shall be an Event of Default under Section 4.1(a) hereof), or

 

(ii) the Company Conversion shall be null and void with respect to the Company Conversion Amount for which shares have not yet been delivered to Holder, and the Holder shall be entitled to all the rights of a holder of this Note with respect to such remaining Company Conversion Amount; provided, however, the Conversion Price for such remaining Company Conversion Amount shall thereafter be adjusted to equal the lesser of (Y) the Default Conversion Price as in effect on the date on which the Holder voided the Company Conversion and (Z) the Default Conversion Price that would be in effect on the date on which the Holder delivers a subsequent Conversion Notice relating thereto as if such date was an Installment Date.

 

  

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(e) Notwithstanding anything to the contrary in this Section 8.2, but subject to Section 3.4, until the Company delivers Common Stock representing the Company Conversion Amount to the Holder, the Company Conversion Amount may be converted by the Holder into Common Stock pursuant to Section 3. In the event that the Holder elects to convert the Company Conversion Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Company Conversion Amount so converted shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice.

 

(f) All Common Stock to be delivered to the Holder under this Section 8.2shall be transferred via the DWAC system.  Failure to do so shall constitute an Event of Default under Section 4.1(b) hereof.

 

8.3. Mechanics of Company Redemption. If the Company elects, or is required to elect, a Company Redemption, in whole or in part, in accordance with Section 8.1 or Section 8.2, then the Company Redemption Amount, if any, which is to be paid to the Holder on the applicable Installment Date shall be redeemed by the Company on such Installment Date in an amount of cash, and the Company shall pay to the Holder on such Installment Date, by wire transfer of immediately available funds an amount, equal to the applicable Company Redemption Amount. If the Company fails to pay the applicable Company Redemption Amount on the applicable Installment Date, then, at the option of the Holder designated in writing to the Company (any such designation shall be a “Conversion Notice” for purposes of this Note), the Holder may require the Company to convert all or any part of the Company Redemption Amount at the Default Conversion Price (determined as of the date of such designation as if such date were an Installment Date). Conversions required by this Section 8.3 shall be made in accordance with the provisions of Section 3.3. Notwithstanding anything to the contrary in this Section 8.3, but subject to Section 3.4 and the Holder’s right to require the Company to convert all or any part of the Company Redemption Amount at the Default Conversion Price as set forth above, until the Company Redemption Amount (together with any Late Charges thereon) is paid in full, the Company Redemption Amount (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event the Holder elects to convert all or any portion of the Company Redemption Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Company Redemption Amount so converted shall be deducted from the Installment Amounts relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice.

 

8.4. Deemed Issuance. If Company fails to deliver shares as required by this Section 8, in addition to such failure to act being considered an Event of Default hereunder, for purposes of Section 7.1, the Company shall also be deemed to have issued the Pre-Installment Conversion Shares or the Post-Installment Conversion Shares, as applicable, to Holder on the applicable date and pursuant to the terms set forth in this Section 8, with Holder entitled to all the rights and privileges associated with such deemed issued shares (the “Deemed Installment Issuance”).

 

8.5. Waiver of Equity Conditions Failure. Notwithstanding anything in the Note to the Contrary, the Holder may waive in writing any Equity Conditions Failure, except for the Non-Waivable Equity Conditions (defined below).  For purposes of this Section 8, “Non-Waivable Equity Conditions” refer to (A) the Equity Condition set forth in Section 28.20(iv) (indicating that Holder may not own more than the Maximum Percentage set forth in Section 3.4 of the Note), and (B) the Equity Condition set forth in Section 28.20(v) (Common Stock may be issued without violating the rules of the Eligible Market). Any such waiver shall only be made for the purposes of permitting a Company Conversion to occur under this Section 8 and shall not be deemed a waiver of the underlying default or a continuing waiver of a future Equity Conditions Failure. Any such waiver shall not excuse the Company from the performance of any of its current or future obligations under the Note.

 

  

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8.6. Preparation of Company Installment Notice. Because of the complexity of the calculations contemplated under this Note, the Holder may, at its sole discretion, prepare the Company Installment Notice for the benefit of the Company, including the calculation of Pre-Installment Conversion Shares, Post-Installment Conversion Shares, and all calculations required under Section 8.2(b) hereof, etc.; provided, however, that no error or mistake in the preparation of such information may be deemed a waiver of the Holder’s right to enforce the terms of this Note, even if such error or mistake arises from the Holder’s own calculation. Nothing in this Section shall be deemed an obligation of the Holder to prepare any such information, or a waiver of any of its rights and remedies under this Note.

 

8.7. Transfer Fees. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Pre-Installment Conversion Shares and Post-Installment Conversion Shares.

 

9. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation (as defined in the Agreement), bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as this Note is outstanding, take all action necessary to maintain the Share Reserve (as defined in the Agreement).

 

10. HOLDER’S REDEMPTIONS. If the Holder has submitted to Company an Event of Default Redemption Notice in accordance with Section 4.2(b), then the Company shall pay to Holder in cash within ten (10) Trading Days after the Company’s receipt of such Event of Default Redemption Notice an amount equal to the Default Redemption Amount multiplied by the Redemption Premium (the “Event of Default Redemption Price”); provided, however, that the Redemption Premium may only be applied in computing the Event of Default Redemption Price with respect to the first two Events of Default under this Note, and not to any subsequent Events of Default. If the Holder has submitted to Company a Fundamental Transaction Redemption Notice in accordance with Section 5.2, then the Company shall pay to Holder in cash prior to the consummation of such Fundamental Transaction if such notice is received prior to the consummation of such Fundamental Transaction and within ten (10) Trading Days after the Company’s receipt of such notice otherwise, an amount equal to the Fundamental Transaction Redemption Amount multiplied by the Redemption Premium (the “Fundamental Transaction Redemption Price”). Notwithstanding anything in this Note to the contrary, such failure of the Company to pay the Redemption Price under this Section 10 shall not be considered a separate Event of Default hereunder.In the event that the Company does not pay the applicable Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption, to cancel the Event of Default Redemption Notice or the Fundamental Transaction Redemption Notice, as applicable, by written notice to the Company (the “Redemption Cancellation Notice”).Upon the Company’s receipt of a Redemption Cancellation Notice, (y) the Outstanding Balance of this Note as of the date of the Redemption Notice shall be increased by an amount equal to (1) the applicable Event of Default Redemption Price, orFundamental Transaction Redemption Price(as the case may be), minus (2) the principal portion of the Outstanding Balance submitted for redemption; and (z) the Conversion Price of this Note shall be automatically adjusted with respect to each conversion under this Note effected thereafter by the Holder to the lowest of (A) 80% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date of the Redemption Cancellation Notice, (B) the Market Price as of the date of the Redemption Cancellation Notice, (C) the then current Market Price, and (D) the then current Conversion Price. The Holder’s delivery of a Redemption Cancellation Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such Redemption Cancellation Notice.

 

  

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11. VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in this Note.

 

12. COVENANTS. Until this Note has been converted, redeemed or otherwise satisfied in accordance with its terms, and until all of the Company’s obligations under the other Transaction Documents (including without limitation the exercise of any unexpired warrants, if any), the Company will comply with the following:

 

12.1. Other Transaction Documents. The Company will comply with all covenants and obligations set forth in all of the other Transaction Documents.

 

12.2. Cash Dividend. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, pay cash dividends or distributions on any equity securities of the Company or of its Subsidiaries.

 

12.3. Restricted Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness, whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.

 

12.4. Restriction on Redemption. Until this Note has been converted, redeemed or otherwise satisfied in accordance with its terms, the Company shall not, directly or indirectly, redeem or repurchase its capital stock without the prior express written consent of the Holder.

 

12.5. Change in Nature of Business. The Company shall not directly or indirectly engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company on the Issuance Date or any business substantially related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose if such modification may have a material adverse effect on any rights of, or benefits to, the Holder under any of the Transaction Documents.

 

12.6. Maintenance of Properties, Etc.  The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its assets in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

 

12.7. Maintenance of Insurance.  The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to their respective assets and businesses, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.

 

  

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12.8. Transactions with Affiliates.  The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof.

 

12.9. Company Statements. The Company shall furnish to the Holder so long as the Holder owns Common Stock, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Holder to sell such securities pursuant to Rule 144 without registration.

 

13. AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change or amendment to this Note.

 

14. TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company.

 

15. REISSUANCE OF THIS NOTE.

 

15.1. Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 15.4), registered as the Holder may request, representing the Outstanding Balance being transferred by the Holder and, if less than the entire Outstanding Balance is being transferred, a new Note (in accordance with Section 15.4) to the Holder representing the Outstanding Balance not being transferred.

 

15.2. Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 15.4) representing the Outstanding Balance.

 

15.3. Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 15.4 and in principal amounts of at least $1,000) representing in the aggregate the Outstanding Balance of this Note, and each such new Note will represent such portion of such Outstanding Balance as is designated by the Holder at the time of such surrender.

 

  

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15.4. Issuance of New Notes. Subject to Section 10, whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Outstanding Balance (or in the case of a new Note being issued pursuant to Section 15.1 or Section 15.3, the portion of the Outstanding Balance designated by the Holder which, when added to the outstanding balance represented by the other new Notes issued in connection with such issuance, does not exceed the Outstanding Balance under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges and other increases to the Outstanding Balance as permitted hereunder from the Issuance Date.

 

16. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies, including without limitation the Redemption Premium, Prepayment Premium, and all other charges, fees, and collection costs provided for in this Note, shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note (including, without limitation, compliance with Section 7).

 

17. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the Purchase Price paid for this Note was less than the Original Principal Amount.

 

18. CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Issuance Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.

 

  

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19. 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 privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

20. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Conversion Price, Default Conversion Price, Pre-Installment Conversion Price, Conversion Rate, the Closing Bid Price, the Closing Sale Price, VWAP or fair market value (as the case may be) or the arithmetic calculation of Conversion Shares or the applicable Redemption Price (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Trading Days after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute (including, without limitation, as to whether any issuance or sale or deemed issuance or sale was an issuance or sale or deemed issuance or sale of Excluded Securities). If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading Days of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Trading Days, submit via facsimile (a) the disputed determination of the Conversion Price, Default Conversion Price, Pre-Installment Conversion Price, Conversion Rate, the Closing Bid Price, the Closing Sale Price, VWAP or fair market value (as the case may be) to an independent, reputable investment bank selected by the Holder or (b) the disputed arithmetic calculation of the Conversion Shares or any Redemption Price (as the case may be) to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case may be) and notify the Company and the Holder of the results no later than ten (10) Trading Days from the time it receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s determination or calculation with respect to the disputes set forth in this Section 20 (as the case may be) shall be binding upon all parties absent demonstrable error.

 

21. NOTICES; PAYMENTS.

 

21.1. Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the subsection of the Agreement titled “Notices.“  The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) Trading Days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to all holders of shares of Common Stock, or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

 

21.2. Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in The Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).

 

  

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21.3. Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of the Holder, shall initially be as set forth in the subsection of the Agreement titled “Notices”), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Trading Day, the same shall instead be due on the next succeeding day which is a Trading Day. Any amount due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).

 

22. CANCELLATION. After repayment or conversion of the entire Outstanding Balance, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

23. WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Agreement.

 

24. GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Salt Lake City for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company or any of its Subsidiaries in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

  

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25. SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with one or more valid provisions, the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

26. FEES AND CHARGES.The parties acknowledge and agree that upon Company’s failure to comply with the provisions of this Note, the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates, the Holder’s increased risk, and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any fees, charges, and interest due under this Note, including without limitation the Prepayment Premium and the Redemption Premium, are intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not a penalty, and shall not be deemed in any way to limit any other right or remedy Holder may have hereunder, at law or in equity.

 

27. UNCONDITIONAL OBLIGATION. Subject to the terms of the Agreement, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the coin or currency or where contemplated herein in shares of its Common Stock, as applicable, as herein prescribed.  This Note is the direct obligation of the Companyand not subject to offsets, counterclaims, defenses, credits or deductions.

 

28. CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:

 

28.1. “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

28.2. “Agreement” means that certain Securities Purchase Agreement, dated as of September 7, 2012, as may be amended from time to time, by and between the Company and the Holder, pursuant to which the Company issued this Note.

 

28.3. “Approved Stock Plan” means any stock option plan which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer or director for services provided to the Company.

 

28.4. “Black Scholes Consideration Value” means the value of the applicable Option or Convertible Security (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option or Convertible Security (as the case may be) as of the date of issuance of such Option or Convertible Security (as the case may be), and (iii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option or Convertible Security (as the case may be).

 

  

25

  

 

28.5. “Bloomberg” means Bloomberg, L.P.

 

28.6. “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in “OTC Pink” by Pink OTC Markets Inc. (formerly Pink Sheets LLC), and any successor thereto. If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 20. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

28.7. “Common Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

28.8. “Contingent Obligation” means as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

28.9. “Conversion Share Ratio” means as to any applicable Installment Date, the quotient of (i) the number of Pre-Installment Conversion Shares delivered in connection with such Installment Date divided by (ii) the number of Post-Installment Conversion Shares applicable to such Installment Date.

 

28.10. “Conversion Shares” means shares of Common Stock issuable by the Company upon any conversion of this Note, including without limitation, Section 3 Conversion Shares, Pre-Installment Conversion Shares, and Post-Installment Conversion Shares.

 

28.11. “Convertible Securities” means any stock, preferred stock, stock appreciation rights, phantom stock, equity related rights, equity linked rights, or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.

 

  

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28.12. “Current Subsidiary” means any Person in which the Company on the Issuance Date, directly or indirectly, (i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Current Subsidiaries.”

 

28.13. “Deemed Issuance” means (i) a Deemed Conversion Issuance as defined in Section 3.3(b) hereof, (ii) a Deemed Installment Issuance as defined in Section8.4 hereof, and (iii) a Deemed Warrant Issuance as defined in Section 7.1(e) hereof.

 

28.14. “Default Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the Market Price as of the specified Installment Notice Due Date or the Installment Date, as applicable. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any applicable Measuring Period.

 

28.15. “DTC” means the Depository Trust Company.

 

28.16. “DTC/FAST Program” means the DTC’s Fast Automated Securities Transfer Program.

 

28.17. “DWAC” means Deposit Withdrawal at Custodian as defined by the DTC.

 

28.18. “DWAC Eligible Conditions” means that (i) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including without limitation transfer through DTC’s DWAC system, (ii) the Company has been approved (without revocation) by the DTC’s underwriting department, and (iii) the Transfer Agent is approved as an agent in the DTC/FAST Program.

 

28.19. “Eligible Market” means The New York Stock Exchange, NYSE Amex, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board, the OTCQX or the OTCQB, or the Principal Market. In no event shall quotations provided on OTC Pink by Pink OTC Markets Inc., or its successor, be considered an Eligible Market.

 

28.20. “Equity Conditions” means: (i) with respect to the applicable date of determination, all of the Conversion Shares are freely tradable under Rule 144 or without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of this Note); (ii) on each day during the period beginning one month prior to the applicable date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”), the Common Stock (including all of the Conversion Shares) is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) Trading Days and occurring prior to the applicable date of determination due to business announcements by the Company); (iii) on each day during the Equity Conditions Measuring Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth in Section 3 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 3.4 hereof (the Holder acknowledges that the Company shall be entitled to assume that this condition has been met for all purposes hereunder absent written notice from the Holder); (v) any shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact that would reasonably be expected to cause any of the Conversion Shares to not be freely tradable without the need for registration under any applicable state securities laws (in each case, disregarding any limitation on conversion of this Note); (viii) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in material compliance with each, and shall not have breached any, term, provision, covenant, representation or warranty of any Transaction Document; (ix) without limiting clause (viii) above, on each day during the Equity Conditions Measuring Period, there shall not have occurred an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default; (x) all DWAC EligibleConditions shall be satisfied as of each applicable Installment Notice Due Date and Installment Date; (xi) on each Installment Notice Due Date and each Installment Date, the average and median daily dollar volume of the Common Stock on its Principal Market for the previous twenty-three (23) Trading Days shall be greater than $10,000.00; and (xii) the ten (10) day average VWAP of the Common Stock is greater than $0.10.

 

  

27

  

 

28.21. “Equity Conditions Failure” means, with respect to a particular date of determination, that on any day during the period commencing twenty three (23) Trading Days immediately prior to such date of determination and ending on such date of determination, the Equity Conditions have not been satisfied (or waived in writing by the Holder). If an Equity Conditions Failure is the result of an Event of Default, then the Equity Conditions Failure shall be deemed permanent and may not be cured by the Company.

 

28.22. “Excluded Securities” means any shares of Common Stock, options, or convertible securities issued or issuable (i) in connection with any Approved Stock Plan; provided that the option term, exercise price or similar provisions of any issuances pursuant to such Approved Stock Plan are not amended, modified or changed on or after the Issuance Date; and (ii) in connection with mergers, acquisitions, strategic licensing arrangements, strategic business partnerships or joint ventures, in each case with non-affiliated third parties and otherwise on an arm’s-length basis, the purpose of which is not to raise additional capital; provided, that such third parties are not granted any registration rights.  Notwithstanding the foregoing, any Common Stock issued or issuable to raise capital for the Company or its Subsidiaries, directly or indirectly, in connection with any transaction contemplated by clause (ii) above, including, without limitation, securities issued in one or more related transactions or that result in similar economic consequences, shall not be deemed to be Excluded Securities.

 

28.23. “Fundamental Transaction” means that (i) (1) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) the Company or any of its Significant Subsidiaries shall, directly or indirectly, in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify the Common Stock, other than an increase in the number of authorized shares of the Company’s Common Stock,or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company.

 

  

28

  

 

28.24. “GAAP” means United States generally accepted accounting principles, consistently applied.

 

28.25. “Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation, “capital leases” in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.

 

28.26. “Installment Amount” means the greater of (i) $28,750.00, plus the sum of any accrued and unpaid Interest as of the applicable Installment Date and accrued and unpaid Late Charges, if any, under this Note as of the applicable Installment Date, and any other amounts accruing or owing to Holder under this Note as of such Installment Date, and (ii) the then Outstanding Balance divided by the number of Installment Dates remaining prior to the Maturity Date. In the event the Holder shall sell or otherwise transfer any portion of this Note, the transferee shall be allocated a pro rata portion (based on the portion of the Note transferred compared with the Outstanding Balance of the Note as of the transfer date) of each unpaid Installment Amount hereunder.

 

28.27. “Installment Date” means the Initial Installment Date and the same day on each of the following calendar months following the Initial Installment Date, regardless of any Event of Default; provided, however, that if the Outstanding Balance is not paid on the Maturity Date, then in addition to any remedies available under the Transaction Documents, the Installment Dates will continue on the same day of each calendar month until the Outstanding Balance is paid in full, thus requiring the Company to continue to provide Company Installment Notices to the Holder pursuant to Section 8 hereof.

 

  

29

  

 

28.28. “Market Price” means 60% of the three (3) lowest VWAPs of the shares of Common Stock during the twenty (20) consecutive Trading Day period immediately preceding the date of such determination (the “Measuring Period”).All such determinations are to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during such Measuring Period.

 

28.29. “Maturity Date” shall mean the date that is twelve (12) months after the Issuance Date.

 

28.30. “New Subsidiary” means, as of any date of determination, any Person in which the Company after the Issuance Date, directly or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “New Subsidiaries.”

 

28.31. “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

28.32. “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

28.33. “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

28.34. “Post-Installment Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the Market Price for the applicable Installment Date. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any applicable Measuring Period.

 

28.35. “Post-Installment Conversion Shares” means that number of shares of Common Stock that would be required to be delivered pursuant to Section 8 on an applicable Installment Date without taking into account the delivery of any Pre-Installment Conversion Shares. The Post-Installment Conversion Shares are equal to the quotient of (i) the Company Conversion Amount divided by (ii) the Post-Installment Conversion Price as of the applicable Installment Date.

 

28.36. “Pre-Installment Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the Market Price for the applicable Installment Notice Due Date. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any applicable Measuring Period.

 

28.37. “Pre-Installment Conversion Shares” means the number of shares of Common Stock to be delivered pursuant to Section 8.1. The Pre-Installment Conversion Shares are equal to the quotient of (i) the Company Conversion Amount divided by (ii) the Pre-Installment Conversion Price as of the applicable Installment Notice Due Date.

 

  

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28.38. “Principal Market” means the OTCQB.

 

28.39. “Redemption Notices” means, collectively, Event of Default Redemption Notices,and Fundamental Transaction Redemption Notices,and each of the foregoing, individually, a “Redemption Notice.”

 

28.40. “Redemption Premium” means 125%.

 

28.41. “Redemption Prices” means, collectively, Event of Default Redemption Prices, or the Fundamental Transaction Redemption Prices, and each of the foregoing, individually, a “Redemption Price.”

 

28.42. “SEC” means the United States Securities and Exchange Commission or the successor thereto.

 

28.43. “Significant Subsidiaries” means, as of any date of determination, collectively, all Subsidiaries that would constitute a “significant subsidiary” under Rule 1-02 of Regulation S-X promulgated by the SEC, and each of the foregoing, individually, a “Significant Subsidiary.”

 

28.44. “Subsidiaries” means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing, individually, a “Subsidiary.”

 

28.45. “Successor Entity” means the Person, which may be the Company, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person's Parent Entity.

 

28.46.  “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder.

 

28.47. “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

  

31

  

 

28.48. “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink OTC Markets Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 20. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

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

 

30. MAXIMUM PAYMENTS. Nothing contained in this Note shall, or shall be deemed to, establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges under this Note exceeds the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

 

 

[Remainder of page intentionally left blank]

 

  

32

  

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.

 

	 	THE COMPANY:	 
	 	 	 
	 	PuraMed BioScience, Inc.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

	

Tonaquint, Inc.

	 
	 	 	 
	
By: 

	 	 
	 	John M. Fife, President	 

 

 

[Signature page to Convertible Promissory Note]

 

  

33

  

 

EXHIBIT A

Tonaquint, Inc.

303 East Wacker Drive, Suite 1200

Chicago, Illinois 60601

 

PuraMed BioScience, Inc.                                                                                              Date:___________________

Attn: Russ Mitchell

1326 Schofield Avenue

Schofield, Wisconsin 54476

CONVERSION NOTICE

 

The above-captioned Holder hereby gives notice to PuraMed BioScience, Inc., a Minnesota corporation (the “Company”), pursuant to that certain Convertible Promissory Note made by the Company in favor of the Holder on September 7, 2012 (the “Note”), that the Holder elects to convert the portion of the Note balance set forth below into fully paid and non-assessable shares of Common Stock of the Company as of the date of conversion specified below.  Said conversion shall be based on the Conversion Price set forth below.  In the event of a conflict between this Conversion Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of Conversion Notice to conform to the Note.

	
  

	
A.

	
Date of conversion:

	
____________

	
  

	
B.

	
Conversion #:

	
____________

	
  

	
C.

	
Conversion Amount:

	
____________

	
  

	
D.

	
Conversion Price:  _______________

	
  

	
E.

	
Section 3 Conversion Shares:  _______________ (C divided by D)

	
  

	
F.

	
Remaining Outstanding Balance of Note:  ____________*

$_________________ of the Conversion Amount converted hereunder shall be deducted from the Installment Amount(s) relating to the following Installment Date(s): __________________________________________.

*Subject to adjustments for corrections, defaults, and other adjustments permitted by the Transaction Documents.

Please transfer the Section 3 Conversion Shares electronically (via DWAC) to the following account:

 

	Broker: 	 	Address:      	 	 
	DTC#:	 	 	 	 
	Account #:	 	 	 	 
	Account Name:	 	 	 	 

 

To the extent the Section 3 Conversion Shares are not able to be delivered to the Holder electronically via the DWAC system, the Holder hereby

_______ elects, or

_______ does not elect

  

34

  

 

to receive certificates representing such Section 3 Conversion Shares.  If the Holder so elects, such certificates should be transmitted by the Company to the Holdervia reputable overnight courier after receipt of this Conversion Notice (by facsimile transmission or otherwise) to:

_____________________________________

_____________________________________

_____________________________________

Any such election shall not constitute a waiver of any Event of Default (as defined in the Note) or any right or remedy of the Holder under the Note or under any other Transaction Document.

Sincerely,

 

	

Holder:  Tonaquint, Inc.

	 
	 	 	 
	
By: 

	 	 
	 	John M. Fife, President	 

 

  

35

  

 

EXHIBIT B

 

ACKNOWLEDGMENT

The Company hereby acknowledges this Conversion Notice and hereby directs _______________ to issue the above indicated number of shares of Common Stock in accordance with the Irrevocable Instructions to Transfer Agent datedSeptember 7, 2012 from the Company and acknowledged and agreed to by ___________________.

 

	
PuraMed BioScience, Inc.

 

 

	 
	
By: 

	 	 
	
Name: 

	 	 
	
Title: 

	 	 

  

36

  

EXHIBIT C-1

PURAMED BIOSCIENCE, INC.

1326 SCHOFIELD AVENUE, SCHOFIELD, WISCONSIN 54476

 

Tonaquint, Inc.                                                                                                                Date:___________________

Attn: John Fife

303 E. Wacker Dr., Suite 1200

Chicago, IL 60657

 

COMPANY INSTALLMENT NOTICE

 

The above-captioned Company hereby gives notice to Tonaquint, Inc., a Utah corporation (the “Holder”), pursuant to that certain Convertible Promissory Note made by the Company in favor of the Holder on September 7, 2012 (the “Note”), of certain Company elections and certifications related to payment of the Installment Amount of $_________________ due on ___________, 201_ (the “Installment Date”). In the event of a conflict between this Installment Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of Installment Notice to conform to the Note.  Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.

 

PRE-INSTALLMENT ELECTIONS AND CERTIFICATIONS

AS OF THE INSTALLMENT NOTICE DUE DATE

 

	
A.  

	
COMPANY ELECTIONS

 

The Company elects to pay the Installment Amount as follows (check one):

 

	
______(i)

	
Redeeming the Installment Amount in cash in accordance with Section 8 of the Note (“Company Redemption”) (if selected, no other sections of this Notice need to be completed)

 

	
______(ii)

	
Converting the Installment Amount in accordance with Section 8 of the Note (“Company Conversion”) (if selected, complete Section B(1) and Section (C) of this Notice)

 

	
______(iii)

	
Combination of Company Redemption and Company Conversion (if selected, complete Section B(2) and Section (C) of this Notice)

 

	
B.  

	
COMPANY CONVERSION (if applicable)

 

	
1.  

	
Company Conversion:

 

	
  

	
A.

	
Installment Notice Due Date:

	
____________, 201_

	
  

	
B.

	
Company Conversion Amount:

	
_____________

	
  

	
C.

	
Pre-Installment Conversion Price:  _______________ (lower of (i) Conversion Price in effect and (ii) Market Price as of Installment Notice Due Date)

	
  

	
D.

	
Pre-Installment Conversion Shares:  _______________ (B divided by C)

	
  

	
E.

	
Excess shares to be applied from previous installment (if any): _____________

	
  

	
F.

	
Installment shares to be delivered: ________________ (D minus E )

	
  

	
G.

	
Remaining Note balance:  ____________*

 

  

37

  

 

	
2.  

	
Combination of Company Redemption and Company Conversion (if elected above):

 

	
  

	
A.

	
Installment Notice Due Date:

	
____________, 201_

	
  

	
B.

	
Installment Amount:

	
____________

	
  

	
C.

	
Company Redemption Amount: _____________

	
  

	
D.

	
Company Conversion Amount: _____________ (B minus C)

	
  

	
E.

	
Pre-Installment Conversion Price:  _______________ (lower of (i) Conversion Price in effect and (ii) Market Price as of Installment Notice Due Date)

	
  

	
F.

	
Pre-Installment Conversion Shares:  _______________ (D divided by E)

	
  

	
G.

	
Excess shares to be applied from previous installment (if any): _____________

	
  

	
H.

	
Installment shares to be delivered: ________________ (F minus G)

	
  

	
I.

	
Remaining Note balance:  ____________*

*Subject to adjustments for corrections, defaults, and other adjustments permitted by the Transaction Documents.

	
C.  

	
EQUITY CONDITIONS CERTIFICATION (if applicable)

 

	
1.  

	
Market Capitalization of the Common Stock:________________

 

(Check One)

 

	
2.  

	
_________The Company herby certifies that no Equity Conditions Failure exists as of the Installment Notice Due Date.

 

	
3.  

	
_________The Company hereby gives notice that an Equity Conditions Failure has occurred and requests a waiver from the Holder with respect thereto.  The Equity Conditions Failure is as follows:

 

 

Sincerely,

 

	

Company:  PuraMed BioScience, Inc.

	 
	 	 
	 	 
	
By: 

	 	 
	
Name: 

	 	 
	
Title: 

	 	 

 

  

38

  

 

EXHIBIT C-2

PURAMED BIOSCIENCE, INC.

1326 SCHOFIELD AVENUE, SCHOFIELD, WISCONSIN 54476

 

Tonaquint, Inc.                                                                                           Date:__________________

Attn: John Fife

303 E. Wacker Dr., Suite 1200

Chicago, IL 60657

COMPANY INSTALLMENT NOTICE

 

The above-captioned Company hereby gives notice to Tonaquint, Inc., a Utah corporation (the “Holder”), pursuant to that certain Convertible Promissory Note made by the Company in favor of the Holder on September 7, 2012 (the “Note”), of Post-Installment Conversion Shares and Equity Conditions Certifications related to _____________, 201_ (the “Installment Date”). In the event of a conflict between this Installment Notice and the Note, the Note shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of Installment Notice to conform to the Note.  Capitalized terms used in this notice without definition shall have the meanings given to them in the Note.

 

POST-INSTALLMENT CONVERSION SHARES AND CERTIFICATIONS

AS OF THE INSTALLMENT DATE

	
1.  

	
POST-INSTALLMENT CONVERSION SHARES

 

	
A.  

	
Installment Notice Due Date:       ____________, 201_

 

	
B.  

	
Company Conversion Amount:    _____________

 

	
C.  

	
Post-Installment Conversion Price:  _______________ (lower of (i) Conversion Price in effect and (ii) Market Price as of Installment Date)

 

	
D.  

	
Post-Installment Conversion Shares:  _______________ (B divided by C)

 

	
E.  

	
Pre-Installment Conversion Shares delivered: ________________

 

	
F.  

	
Post-Installment Conversion Shares to be delivered: ________________ (only applicable if D minus E is greater than zero)

 

	
G.  

	
Pre-Installment Conversion Shares to be applied to next installment or returned:_________________ (only applicable if D minus E is less than zero and no Payment Default has occurred)

 

	
H.  

	
Pre-Installment Conversion Shares to be retained by the Holder because of a Payment Default: _________________ (only applicable if D minus E is less than zero and a Payment Default has occurred)

 

  

39

  

 

	
2.  

	
EQUITY CONDITIONS CERTIFICATION

 

	
A.  

	
Market Capitalization of the Common Stock:________________

 

(Check One)

 

	
B.  

	
_________The Company herby certifies that no Equity Conditions Failure exists as of the applicable Installment Date.

 

	
C.  

	
_________The Company hereby gives notice that an Equity Conditions Failure has occurred and requests a waiver from the Holder with respect thereto.  The Equity Conditions Failure is as follows:

 

 

 

Sincerely,

 

	

Company:  PuraMed BioScience, Inc.

	 
	 	 
	 	 
	
By: 

	 	 
	
Name: 

	 	 
	
Title: 

	 	 

 

 

 

40

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