Document:

World Moto, Inc. - Exhibit 10.4 - Filed by newsfilecorp.com

SECURITY AGREEMENT 

      
     THIS SECURITY AGREEMENT (this “Agreement”)
is made as of March 5, 2015 (“Effective Date”) is made by World
Moto, Inc., a Nevada corporation (the “Company”), in favor of Redwood
Management, LLC , in its capacity as collateral agent (in such capacity, the
“Collateral Agent”) for the “Purchaser” (as defined below) party to the
Securities Purchase Agreement, dated as of March 5, 2015 (as amended, restated
or otherwise modified from time to time, the “Purchase Agreement”). 

RECITAL

            A.              
The Company and Redwood Management, LLC (“Purchaser”) are parties to the
Purchase Agreement, pursuant to which the Company shall be required to sell, and
the Purchaser shall purchase or have the right to purchase, the “Debentures” (as
defined therein) issued pursuant thereto (as such Debentures may be amended,
restated, replaced or otherwise modified from time to time in accordance with
the terms thereof, collectively, the “Debentures”).

            B.              
The parties have agreed that the Company’s obligations under the Debentures will
be secured by the Company’s grant to the Collateral Agent, for itself and for
the benefit of the Purchaser, of a security interest in and to certain
Collateral (as defined below), pursuant to the terms and conditions of this
Agreement. 

            NOW,
THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows: 

AGREEMENT

           
1.          
SECURITY. 

                          1.1       
Grant of Security Interest. As security for the prompt and
punctual payment and performance of all Indebtedness (as defined below) of the
Company to the Purchaser when and as due under the Debentures, the Company
hereby grants to the Collateral Agent, for the benefit of the Purchaser, a
security interest in the Collateral (as defined below). For purposes of this
Agreement, “Indebtedness” means all obligations and liabilities of the
Company to the Purchaser under (i) the Debentures, and (ii) this Agreement.
Notwithstanding anything to the contrary herein, until the Indebtedness has been
fully satisfied (including the Debentures no longer being outstanding), the
Company may not grant a security interest in the Collateral that is senior to or
pari passu to the Debentures. 

                          1.2       
Collateral Defined. As used in this Agreement, the term
“Collateral” means, collectively, wherever located, whether now owned or
hereafter acquired or now existing or hereafter acquired or created, all right,
title and interest of the Company in and to all of its assets, including,
without limitation: (i) accounts, chattel paper, deposit accounts, documents,
general intangibles (including, but not limited to intellectual property,
payment intangibles, software, licenses, franchises and customer information),
goods (including, but not limited to equipment, fixtures and inventory),
instruments, investment property, letter-of-credit rights, money, other personal
property, software, any commercial tort claims; (ii) to the extent not referred
to in clause (i) of this sentence, all (A) supporting obligations and incidental
property rights incident to, arising or accruing pursuant to or otherwise
relating to any of the things referred to in clause (i) of this sentence,
whether arising or accruing from any action taken by the Company or the
Collateral Agent or otherwise, (B) proceeds of any of the items referred to in
clauses (i) and (ii)(A) of this sentence and (C) books and records relating to
any of the items referred to in clauses (i) and (ii)(A) and (B) of this
sentence. 

                          1.3       
Collateral Agent Rights. The Collateral Agent is hereby authorized to
file one or more UCC-1 Financing Statements with the Secretary of State of the
State of Nevada evidencing and providing notice of the security interest granted
pursuant to this Agreement in the Collateral.

                          1.4       
Release of Collateral. Upon the full and final discharge of all
of the Indebtedness, the Collateral Agent will execute and deliver such
documents as may be reasonably necessary and requested by the Company to release
the Collateral from the security interest granted to the Collateral Agent in
this Agreement. 

                          1.5       
Termination. When all the Indebtedness has been paid in full and
discharged, this Agreement and the security interest granted to the Collateral
Agent hereunder will terminate and a UCC-3 Termination Statement shall be filed
by Collateral Agent to indicate the termination of the security interest created
hereby. 

            2.          
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Collateral Agent that the statements contained in
the following paragraphs of this Section 2 are all true and correct immediately
prior to the execution of the Debenture. 

                         
2.1        Title. The Company
owns all right, title and interest in and to the Collateral.

                          2.2       
Right to Grant Interest. The Company has the right to grant the
security interest under this Agreement to Collateral Agent in the Collateral.

                          2.3       
No Bankruptcy. Company is not subject to any bankruptcy case or
insolvency proceedings before any court in any jurisdiction. In the ninety (90)
days preceding the date of this Agreement, the Company has not received any
threat from any third party to subject the Company to any involuntary bankruptcy
or insolvency proceeding. 

            3.         
 COVENANTS OF THE COMPANY. So long as any of the
Company Indebtedness to the Purchaser has not been fully satisfied, the Company
covenants and agrees with the Collateral Agent that: 

                         
3.1       
Payment of Indebtedness. The Company will pay all Indebtedness
when due under the Debentures; 

                         
3.2       
Condition of Collateral. The Company will maintain the
Collateral in good condition and repair; 

                         
3.3       
Further Assurances. The Company will execute and deliver such
documents as the Collateral Agent deems necessary to create, perfect and
continue the security interests granted by this Agreement; 

                         
3.4       
Taxes. The Company will pay all taxes due and owing by the
Company at such time as they become due. 

                          3.5       
No Sale or Transfer. The Company will not to sell, offer to
sell, or otherwise transfer the Collateral, except in the ordinary course of
business; 

                         
3.6       
Books and Records. The Company will keep, in accordance with
accounting principles consistently applied, complete and accurate books and
records regarding all Collateral;

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                          3.7       
Inspection. The Company will permit the Collateral Agent and its
designees at all reasonable times to inspect the Collateral and Debtor’s books
and records relating to Collateral, and to audit and make copies or extracts
from such books and records 

           
4.         
 RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. 

                          4.1       
General Remedies. Subject to the security interests of the
holders of the Debentures set forth on Schedule 4.1 (the “Existing
Debentures”), in the event of an occurrence (and during the continuance) of
an Event of Default (as defined in the Debentures), in addition to exercising
any other rights or remedies the Purchaser may have under the Debentures, at law
or in equity, or pursuant to the provisions of the Uniform Commercial Code, the
Collateral Agent may, at its option, and without demand first made, exercise any
one or all of the following rights and remedies: (i) collect the Collateral and
its proceeds; (ii) take possession of the Collateral wherever it may be found,
using all reasonable means to do so, or require the Company to assemble the
Collateral and make it available to the Collateral Agent at a place designated
by the Collateral Agent that is reasonably convenient to the Company; (iii)
proceed with the foreclosure of the security interest in the Collateral granted
herein and the sale or endorsement and collection of the proceeds of the
Collateral in any manner permitted by law or provided for herein; (iv) sell,
lease or otherwise dispose of the Collateral at public or private sale, with or
without having the Collateral at the place of sale; (v) institute a suit or
other action against the Company for recovery on the Debenture or to obtain
possession or effect a sale of the Collateral; (vi) exercise any rights and
remedies of a Company under the Uniform Commercial Code; and/or (vii) offset,
against any payment due from the Company to the Collateral Agent, the whole or
any part of any Indebtedness of the Collateral Agent to the Company. 

                          4.2       
No Election of Remedies. The election by the Collateral Agent of
any right or remedy will not prevent any Purchaser from exercising any other
right or remedy against the Company. 

                          4.3       
Proceeds. If an Event of Default occurs (and is continuing), subject to
the rights of the Existing Debentures, all proceeds and payments with respect to
the Collateral will be retained by the Collateral Agent (or if received by the
Company will be held in trust and will be forthwith delivered by the Company to
the Collateral Agent in the original form received, endorsed in blank) and held
by the Collateral Agent as part of the Collateral or applied by the Collateral
Agent to the payment of the Indebtedness. 

                          4.4       
Sales of Collateral. Any item of Collateral may be sold for cash
or other value at public or private sale or other disposition and the proceeds
thereof collected by or for the Collateral Agent as provided in the Uniform
Commercial Code or under other applicable law. The Company agrees to promptly
execute and deliver, or promptly cause to be executed and delivered, such
instruments, documents, assignments, waivers, certificates and affidavits and
supply or cause to be supplied such further information and take such further
action as the Collateral Agent may reasonably require in connection with any
such sale or disposition. The Collateral Agent will have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Company, which right or equity is
hereby waived or released. The Company hereby waives any prior notice periods,
to the extent allowable by applicable law. 

                          4.5       
Application of Proceeds. The proceeds of all sales and
collections in respect of the Collateral, the application of which is not
otherwise specifically herein provided for, will be applied as follows: (i)
first, to the payment of the costs and expenses of such sale or sales and
collections and the actual attorneys’ fees and out-of-pocket expenses incurred
by the Collateral Agent relating to costs of collection; (ii) second, any surplus then remaining will be
applied to the payment of all unpaid principal under the Debenture; and (iii)
third, any surplus then remaining will be paid to the Company. 

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5.          
GENERAL PROVISIONS. 

                          5.1       
Appointment of Collateral Agent. Purchaser hereby (a) appoints the
Collateral Agent, as the collateral agent hereunder, and (b) authorizes the
Collateral Agent (and its officers, directors, employees and agents) to take
such action on such Purchaser’s behalf in accordance with the terms hereof. The
Collateral Agent shall not have, by reason hereof, a fiduciary relationship in
respect of any Purchaser. Neither the Collateral Agent nor any of its officers,
directors, employees or agents shall have any liability to any Purchaser for any
action taken or omitted to be taken in connection hereof except to the extent
caused by its own gross negligence or willful misconduct, and Purchaser agrees
to defend, protect, indemnify and hold harmless the Collateral Agent and all of
its officers, directors, employees and agents (collectively, the “Collateral
Agent Indemnitees”) from and against any losses, damages, liabilities,
obligations, penalties, actions, judgments, suits, fees, costs and expenses
(including, without limitation, reasonable attorneys’ fees, costs and expenses)
incurred by such Collateral Agent Indemnitee, whether direct, indirect or
consequential, arising from or in connection with the performance by such
Collateral Agent Indemnitee of the duties and obligations of Collateral Agent
pursuant hereto. The Collateral Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Purchaser,; provided, however, that the Collateral
Agent shall not be required to take any action which, in the reasonable opinion
of the Collateral Agent, exposes the Collateral Agent to liability or which is
contrary to this Agreement or applicable law. The Collateral Agent shall be
entitled to rely upon any written notices, statements, certificates, orders or
other documents or any telephone message believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person
(as defined in the Purchase Agreement), and with respect to all matters
pertaining to this Agreement and its duties hereunder or thereunder, upon advice
of counsel selected by it. 

                          5.2       
Resignation of Collateral Agent. The Collateral Agent may resign from the
performance of all its functions and duties hereunder at any time by giving at
least ten (10) business days’ prior written notice to the Company and the
Purchaser. Such resignation shall take effect upon the acceptance by a successor
Collateral Agent of appointment pursuant to clauses (b) and (c) below or as
otherwise provided below. The Purchaser may, by written consent, remove the
Collateral Agent from all its functions and duties hereunder. 

                          (a)       
Upon any such notice of resignation or removal, the Purchaser shall appoint a
successor collateral agent. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor agent, such successor collateral agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the collateral agent, and the Collateral Agent shall be discharged
from its duties and obligations under this Agreement. After the Collateral
Agent’s resignation or removal hereunder as the collateral agent, the provisions
of this Section 5(a) shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Collateral Agent under this
Agreement. 

                          (b)       
If a successor collateral agent shall not have been so appointed within ten (10)
business days of receipt of a written notice of resignation or removal, the
Collateral Agent shall then appoint a successor collateral agent who shall serve
as the Collateral Agent until such time, if any, as the Purchaser appoints a
successor collateral agent as provided above. 

                          (c)       
In the event that a successor Collateral Agent is appointed pursuant to the
provisions of this Section 5.2 that is not a Purchaser or an affiliate of any
Purchaser ( the Collateral Agent (or its
successor)notifies the Company that they or it wants to appoint such a successor
Collateral Agent pursuant to the terms of this Section 5.2), the Company
covenants and agrees to promptly take all actions reasonably requested by the
Purchaser or the Collateral Agent (or its successor), as applicable, from time
to time, to secure a successor Collateral Agent satisfactory to the requesting
part(y)(ies), in their sole discretion, including, without limitation, by paying
all reasonable and customary fees and expenses of such successor Collateral
Agent, by having the Company agree to indemnify any successor Collateral Agent
pursuant to reasonable and customary terms and by the Company executing a
collateral agency agreement or similar agreement and/or any amendment hereto
reasonably requested or required by the successor Collateral Agent. 

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                          5.3       
Survival of Warranties. The representations, warranties and covenants of
the Company and the Collateral Agent contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of any of the Collateral Agent or the Company, as the case may be.

                          5.4       
Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.

                          5.5       
Governing Law. This Agreement shall be governed by and construed under
the internal laws of the State of Nevada as applied to agreements among Nevada
residents entered into and to be performed entirely within Nevada, without
reference to principles of conflict of laws or choice of laws and, to the extent
applicable, by federal law.

                          5.6       
Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. 

                          5.7       
Headings. The headings and captions used in this Agreement are
used only for convenience and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference. 

                          5.8       
Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) at the time of personal delivery, if delivery is in
person; (ii) one (1) business day after deposit with an express overnight
courier for United States deliveries, or two (2) business days after such
deposit for deliveries outside of the United States, with proof of delivery from
the courier requested; or (iii) three (3) business days after deposit in the
United States mail by certified mail (return receipt requested) for United
States deliveries when addressed to the party to be notified at the address
indicated for such party on the signature page hereto, or, or at such other
address as any party or the Company may designate by giving ten (10) days’
advance written notice to all other parties. 

                          5.9       
Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms. 

5

                          5.10     
Further Assurances. From and after the date of this Agreement,
upon the request of the Collateral Agent or the Company, the Company and the
Collateral Agent shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.

                          5.9       
Waiver and Amendment. Any of the terms and provisions of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but only by a written instrument executed by such party. This Agreement may be
amended only by an agreement in writing executed by the parties. 

                          5.10      Delay
or Omission. No delay or omission to exercise any right, power or remedy
accruing to any party hereto shall impair any such right, power or remedy of
such party nor be construed to be a waiver of any such right, power or remedy
nor constitute any course of dealing or performance hereunder. 

[SIGNATURE PAGE IMMEDIATELY FOLLOWS] 

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            IN
WITNESS WHEREOF, the parties have caused this SECURITY AGREEMENT to be executed
and delivered as of the date first above written. 

	 	COMPANY: 
	 	  
	 	  
	 	WORLD MOTO, INC. 
	 	a Nevada corporation 
	 	  
	 	  
	 	  
	 	  
	 	By:  
      ____________________________________________
	 	         Name: 
	 	         Title:
  

Agreed and accepted by: 

COLLATERAL AGENT: 

REDWOOD MANAGEMENT, LLC 

By:
___________________________________
      
Name:
       Title: 

[SECURITY AGREEMENT] 

Agreed and accepted by: 

PURCHASER: 

REDWOOD MANAGEMENT, LLC 

By:
___________________________________
      
Name:
       Title: 

[SECURITY AGREEMENT] 

Schedule 4.1 

Existing Debentures 

Debentures, dated April 4, 2014, in the aggregate principal
amount of $543,479, issued to Dominion Capital LLC and Redwood Management, LLC.

Debentures, dated December 11, 2014, in the aggregate principal
amount of $543,479, issued to Dominion Capital LLC and Redwood Management, LLC.

2CONVERTIBLE NOTE

EXHIBIT 10.4

THE SHARES UNDERLYING THIS CONVERTIBLE NOTE AND THE CONVERTIBLE NOTE HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED IN ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS AS MAY BE APPLICABLE OR, AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM SUCH APPLICABLE LAWS EXIST.

CONVERTIBLE NOTE

		
	$300,000

	March 4, 2015

FOR VALUE RECEIVED, Aspen Group, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of Michael Mathews (together with his permitted successors and assigns, the “Holder”) at 224 W. 30th Street Suite 604, New York, NY 10001, or at such other office as the Holder designates in writing to the Company, the principal sum of Three Hundred Thousand and No/100 Dollars ($300,000.00), with unpaid interest thereon, on or before July 31, 2016 (the “Maturity Date”), if not paid or converted sooner. This Convertible Note replaces one issued to the Holder on July 21, 2014, which replaced on issued to the Holder on September 25, 2013, which replaced one issued to the Holder on December 18, 2012, which replaced one issued to the Holder on September 4, 2012, which replaced one issued to the Holder on March 13, 2012.

1.

General Provisions

(a)

Interest Rate.   Interest payable on this Note shall accrue at the rate of Nineteen/One Hundred Percent (0.19%) per annum.  Accrued interest will be payable on the Maturity Date, accelerated or otherwise, when the principal and remaining accrued but unpaid interest shall be due and payable. Interest shall accrue beginning March 13, 2012.  

(b)

Prepayment.  This Note may be paid prior to the Maturity Date, without penalty.  Such determination by the Company to prepay shall be made by the vote of a majority of the disinterested directors of the Company. Interest shall accrue through the actual payment date. 

2.

Conversion to Common Stock.   

(a)

Conversion Upon Election of Holder. The Holder shall be entitled upon (i) five days prior written notice to the Company (the “Conversion Notice”) and (ii) the satisfaction of the requirements set forth in Section 2(d), to convert any part of the outstanding balance of this Note into a number of fully paid and nonassessable shares of the Company’s common stock 

1

(the “Common Stock”).  Notwithstanding the preceding, following the Conversion Notice, the Company shall have the option to prepay that portion of the Note being converted by providing written notice to Holder within three business days following the Conversion Notice. Such determination by the Company to prepay shall be made by the vote of a majority of the disinterested directors of the Company. 

(b)

Conversion Price.  The outstanding balance to be converted pursuant to Section 2(a) shall be convertible into the number of shares of Common Stock, which results from dividing such outstanding balance to be converted by the Conversion Price. The “Conversion Price” shall initially be $1.00 per share of Common Stock.  The Conversion Price shall be subject to adjustment pursuant to Section 3 from time to time.  Following each adjustment, such adjusted Conversion Price shall remain in effect until a further adjustment hereunder.  

(c)

Fractional Shares.  No fractional share of Common Stock shall be issued upon conversion of this Note. In lieu of a fractional share, the Holder shall be paid the value based upon Fair Market Value. Fair Market Value shall mean: 

(i) if the Company’s Common Stock is traded on a national securities exchange, then the closing price of the Common Stock on the date notice of conversion is given; or 

(ii) if the Company’s Common Stock is not traded on a national securities exchange, then the last reported sales price of the Common Stock on the principal trading market on the date notice of conversion is given. 

Notwithstanding the foregoing, if there is no last reported sales price or, for the day in question, then Fair Market Value shall be determined as of the latest day prior to such day for which such last reported sales prices are available, unless such securities have not been traded any market in any of (i) through (ii) above for 30 or more days immediately prior to the day in question, in which case the Fair Market Value shall be determined in good faith by, and reflected in a formal resolution of, the board of directors of the Company.

(d)

Mechanics of Conversion. Before the Holder shall be entitled to convert this Note into shares of Common Stock in connection with a conversion pursuant to Section 2(a), the Holder shall surrender this Note (or, if the Holder alleges that this Note has been lost, stolen or destroyed, an affidavit of loss and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such original promissory note), at the office of the Company together with written notice that the Holder elects to convert all or any portion of this Note and, if applicable, any event on which such conversion is contingent.  The notice shall state the Holder’s name or the names of the nominees in which such Holder wishes the certificate or certificates for shares of Common Stock to be issued.  If required by the Company, this Note shall be endorsed or accompanied by an investment letter in customary form and a written instrument or instruments of transfer, in form reasonably satisfactory to the Company, duly executed by the Holder or his, her or its attorney duly authorized in writing. 

2

(e)

New Promissory Note.  In the event less than all of the remaining balance of this Note is converted, the Company shall promptly issue to the Holder a similar promissory note representing the outstanding balance of this Note.

3.

Adjustments.  

(a)

Adjustment Upon Common Stock Event.  At any time or from time to time after the date hereof (the “Original Issue Date”), upon the happening of a Common Stock Event (as hereinafter defined), the Conversion Price shall, simultaneously with the happening of such Common Stock Event, be adjusted by multiplying the Conversion Price in effect immediately prior to such Common Stock Event by a fraction, (i) the numerator of which shall be the number of shares of Common Stock issued and outstanding immediately prior to such Common Stock Event, and (ii) the denominator of which shall be the number of shares of Common Stock issued and outstanding immediately after such Common Stock Event, and the product so obtained shall thereafter be the Conversion Price.  The Conversion Price shall be readjusted in the same manner upon the happening of each subsequent Common Stock Event.  As used herein, the term “Common Stock Event” shall mean (i) the issue by the Company of additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (ii) a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock, or (iii) a combination of the outstanding shares of Common Stock into a smaller number of shares of Common Stock.

(b)

Adjustments for Other Dividends and Distributions.  If at any time or from time to time after the Original Issue Date the Company pays a dividend or makes another distribution to the holders of the Common Stock payable in securities of the Company, other than an event constituting a Common Stock Event, then in each such event provision shall be made so that the Holder shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable upon conversion thereof, the amount of securities of the Company which the Holder would have received had this Note been converted into Common Stock on the date of such event (or such record date, as applicable) and had they thereafter, during the period from the date of such event (or such record date, as applicable) to and including the conversion date, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 3 with respect to the rights of the Holder or with respect to such other securities by their terms.

(c)

Adjustment for Reclassification, Exchange and Substitution.  If at any time or from time to time after the Original Issue Date the Common Stock issuable upon the conversion of this Note is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than by a Common Stock Event or a stock dividend, reorganization, merger, or consolidation provided for elsewhere in this Section 3), then in any such event, but subject to Section 2, the Holder and the Company shall have the right thereafter to convert this Note into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares of Common Stock into which this Note could have been converted immediately prior to such recapitalization, reclassification or change, all subject 

3

to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

(d)

Reorganizations, Mergers and Consolidations.  If at any time or from time to time after the Original Issue Date there is a reorganization of the Company (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 3) or a merger or consolidation of the Company with or into another corporation (except a Liquidation Event), then, as a part of such reorganization, merger or consolidation, provision shall be made so that the Holder thereafter shall be entitled to receive, upon conversion of this Note, the number of shares of stock or other securities or property of the Company, or of such successor corporation resulting from such reorganization, merger or consolidation, to which a holder of Common Stock deliverable upon conversion would have been entitled on such reorganization, merger or consolidation.  In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3 with respect to the rights of the Holder after the reorganization, merger or consolidation to the end that the provisions of this Section 3 (including adjustment of the Conversion Price then in effect and number of shares issuable upon conversion of this Note) shall be applicable after that event and be as nearly equivalent to the provisions hereof as may be practicable.  This Section 3 shall similarly apply to successive reorganizations, mergers and consolidations.

4.

Event of Default. 

(a) 

For purposes of this Note, an “Event of Default” means:

 

(i)   the Company shall default in the payment of interest and/or principal on this Note within five business days after the Company’s receipt of notice of default from the Holder; 

 

(ii)   the Company shall fail to materially perform any covenant, term, provision, condition, agreement or obligation of the Company under this Note (other than for non-payment) and such failure shall continue uncured for a period of  20 business days after notice from the Holder of such failure (or if such breach is not capable of being cured with such 20 business day period but the Company commences to cure and diligently and continuously acts to cure such breach, such longer period as may be necessary to cure such breach); 

(iii)   an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (A) liquidation, reorganization or other relief in respect of the Company or any of their debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (B) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or for a substantial part of any of its assets, and, in any such case, such proceeding or petition shall continue undismissed 30 days or an order or decree approving or ordering any of the foregoing shall be entered; or

(iv)

the Company shall (A) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or 

4

foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (B) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in Section 4(a)(iii), (C)  apply for or consent to the appointment of a receiver, trustee, custodian, conservator or similar official for the Company or for a substantial part of its assets, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (E) make a general assignment for the benefit of creditors or (F) take any action for the purpose of effecting any of the foregoing.

 

(b) 

Upon the occurrence of an Event of Default, the Holder shall have the right (but not the obligation) to declare the unpaid principal balance of this Note, and all interest and fees accrued thereon, immediately due and payable in full. Failure to exercise such option shall not constitute a waiver of the right to exercise the same in the event of any subsequent Event of Default.

5.

Miscellaneous.

(a) 

Loss, Theft, Destruction or Mutilation of Note.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and, in the case of loss, theft or destruction, delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Note, the Company shall execute and deliver, in lieu of this Note, a new note executed in the same manner as this Note, in the same principal amount as the unpaid principal amount of this Note and dated the date to which interest shall have been paid on this Note or, if no interest shall have yet been so paid, dated the date of this Note.

(b) 

Waivers.  The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

 

(c) 

Usury.  In the event that any interest paid on this Note is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note, and any surplus thereafter shall immediately be refunded to the Company.

 

(d)

Waiver and Amendment.  Any provision of this Note may be amended, waived or modified only by an instrument in writing signed by the party against which enforcement of the same is sought.

 

(e)

Notices.  All notices, offers, acceptance and any other acts under this Note (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted next business day delivery, or by email delivery followed by overnight next business day delivery as follows:

5

(i)

If to the Holder, to:

Michael Mathews

224 W. 30th Street Suite 604

New York, NY 10001

Email:  michael.mathews@aspen.edu

(ii)

If to the Company, to:

Aspen Group, Inc.

224 W. 30th Street Suite 604

New York, NY 10001

Janet.Gill@aspen.edu 

Chief Financial Officer

or to such other address as any of them, by notice to the other may designate from time to time.  Time shall be counted to, or from, as the case may be, the date of delivery.

(f)

Attorneys’ Fees.  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).

 

(g)

Successors and Assigns.  Upon any endorsement, assignment, or other transfer of this Note by the Holder or by operation of law, the term “Holder,” as used herein, shall mean such endorsee, assignee, or other transferee or successor to the Holder, then becoming the holder of this Note.  This Note shall inure to the benefit of the Holder and its successors and assigns and shall be binding upon the undersigned and their successors and assigns.  The term “Company” as used herein, shall include the respective successors and assigns of the Company and any other obligor. 

 

(h)

Governing Law.  This Note shall be governed by, and construed in accordance with, the internal laws of the State of New York without reference to principles of conflicts of laws. Any action, proceeding or claim against it arising out of, or relating in any way to, this Note must only be brought and enforced in the courts of the State of New York or of the United States of America located in the County of New York, State of New York, and Company and Holder irrevocably submit to such jurisdiction for such purpose. Company and Holder hereby irrevocably waive any objection to such exclusive jurisdiction or inconvenient forum.

[Signature Page to Follow]

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IN WITNESS WHEREOF, the Company has caused this Note to be executed as of the date aforesaid.

			
	 
	Aspen Group, Inc.

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	By:

	 

	 
	 
	Janet Gill, Chief Financial Officer 

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