Document:

f10q0912ex10v_continuityx.htm

Exhibit 10.5

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

 

JOINT MARKETING AGREEMENT

 

THIS JOINT MARKETING AGREEMENT ("Agreement') is entered into on August 14, 2012 (the "Effective Date").

 

BETWEEN

 

HUTCHON GLOBAL COMMUNICATIONS LIMITED, a Hong Kong corporation having its registered address at 22nd Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong (hereinafter "HGC"), on behalf of itself and its subsidiaries (Including the subsidiaries Incorporated under the laws of the United States of America);

 

AND

 

Continuityx Solutions, Inc, a company incorporated under the laws of Delaware and having its registered address at 610 State Route 116, Suite C, Metamora, IL 61548 (hereinafter "ContinuityX");

 

(Both HGC and ContinuityX shall be collectively referred to as the "Parties" and individually as "Party") 

 

WHEREAS:

 

	
(A)  

	
ContinuityX is a service provider in The United States of America (The USA). ContinuityX owns either directly or via its Affiliates, rack space, power, equipment as well as cable capacity into, and around Coresite's One Wilshire facility, as well as extending into Los Angeles, New York, etc and into the USA and in addition also maintains marketing, support, operations, and sales resources in The USA.

 

	
(B)  

	
HGC, either directly or via its Affiliates, owns equipment as well as Intra—Asian cable capacity and in addition also maintains marketing, support, operations, and sales resources throughout the Asia Pacific region.

 

	
(C)  

	
HGC and ContinuityX desire to coordinate their efforts and resources for the purpose of marketing, selling, and provisioning certain telecommunications services on The ContinuityX Facilities.

NOW THEREFORE, the Parties, in consideration of the mutual covenants and agreements hereinafter set forth, agree as follows:

 

DEFINITIONS —

 

"Affiliate" — of a Party shall mean that Party's holding company(ies) or subsidiary(ies) or any other subsidiary(ies) of its holding company.

 

"A-end" or "Ingress Port"— shall mean that end of the Services from where the ordered circuit is originated. For the avoidance of doubt, the "A-End" provider in this agreement may not necessarily be the same as the "Contracting Party.

 

"AT&T Datacentres" — shall mean the datacentre(s) as particularized in Annex 5 (which may be updated from time to time upon mutual agreement of the Parties)

 

"BCE Nexia Datacentres" — shall mean the datacentre(s) as particularized in Annex 5 (which may be updated from time to time upon mutual agreement of the Parties)

 

"B-end" or "Egress Port" — shall mean the portion of the Service commencing at the "A-End" network's demarcation point to the terminating end(s) of the ordered circuit(s).

 

"Blue City Services" or "Services" shall mean the services as more fully described in Annex 1.

 

  

1

  

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

"Business Day" — shall mean a day on which banks are open for general banking business in both Hong Kong and the USA.

 

"Contracting Party" — shall mean, with respect to a particular Customer Contract, the Party that enters into the Customer Contract with a Customer for the provision of Services and is responsible for subsequently billing the Customer. For the purpose of this agreement, HGC will exclusively be the Contracting Party.

 

"Circuit" — has the meaning set out in Article 1.1.

 

"Customer" — shall mean a customer which has purchased Services from a Contracting Party as contemplated in this Agreement.

 

"Customer Contract" — shall mean a contract for the sale of Services between a Contracting Party and a Customer,

 

"Effective Date" — shall mean the date this Joint Marketing Agreement stands signed by both parties.

 

"Hong Kong" — shall mean the Hong Kong Special Administrative Region of the People’s Republic of China,

 

"IPLC" — shall mean international private leased circuit.

 

"Los Angeles Datacentres" —shall mean the datacentre(s) as particularized in Annex 5 (which may be updated from time to time upon mutual agreement of the Parties)

 

"Nap of Americas Datacentres" — shall mean the datacentre(s) as particularized in Annex 5 (which may be updated from time to time upon mutual agreement of the Parties)

 

"NOC" — of either party shall mean their respective Network Operations Center.

 

"Participating Party" — shall mean, with respect to a particular Customer Contract, the Party to this Agreement which is not the Contracting Party.

 

"Revenue Share" — shall mean the distribution of billed revenue or Floor Price (as the case may be) from collected receivables, as shared between the two providers of the "A-End" and -End(s)". Unless clearly agreed to otherwise in particular cases, the revenue share will be governed in accordance with the provisions in Annex 2. 

 

"Service Date" — shall mean the date on which the Parties have implemented their respective facilities on the Circuit.

 

"Sidera Datacentres" — shall mean the datacentre(s) as particularized in Annex 5 (which updated from time to time upon mutual agreement of the Parties)

 

"Telx Datacentres" — shall mean the datacentre(s) as particularized in Annex 5 (which updated from time to time upon mutual agreement of the Parties)

 

"Term" — shall mean the term set out in Article 4.1 as the same may be extended pursuant 4.1

 

"The ContinultyX Facilities" — shall mean all the facilities owned by ContinuityX on which ContinuityX and HGC shall put at the disposal of this joint marketing initiative, as particularised in Annex 5 (which may be updated from time to time upon mutual agreement of the Parties).

 

 

2

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	
1. 

	
SCOPE

 

	
1.1

	
Services - HGC and ContinuityX agree to jointly utilize The ContinuityX Facilities from which the Parties will sell the Blue City Services to their respective end-users. HGC and ContinuityX shall each arrange and provide the following facilities to implement the Blue City Services:

 

	 	(i)	
ContinuityX will either directly or through its Affiliates and/or underlying carriers provide full and unfettered access to The ContinuityX Facilities and will provide and maintain such equipment, facilities, connectivity, operational and monitoring support at ContinuityX's NOC in Los Angeles as deemed necessary: (a) to enable the implementation and provisioning of the Blue City Services; and (b) to support the sales by the Parties of the Blue City Services.

 

	 	 	
ContinuityX shall further provide the HGC's NOC full and unfettered visibility into the ContinuityX Facilities via portal(s) made available by ContinuityX at its own cost.

 

	 	 	
For the purpose of consistency in network management and to be enable it to fulfill its responsibilities as the "Contracting Party", HGC will have overall management control over customer circuits and hence ContinuityX shall ensure that the ContinuityX's NOC and network management services shall be provided in accordance with HGC's Operational Guide and Requirement which set forth in Annex 6 and will respond commensurately to all HGC's instructions as deemed necessary.

 

	 	(ii)	
HGC will either directly or through its Affiliates and/or underlying carriers provide and maintain international access for The ContinuityX Facilities. Additionally, the ContinuityX Facilities will cross-connect to the HGC's equipment via the meet-me room, HGC-owned global Blue City virtual meet-me room and breakout service suite. The cost of such local cross-connection from HGC's equipment to the meet-me room will be the responsibility of HGC and the local cross-connection from the meet-me room to ContinuityX Facilities will be the responsibility of ContinuityX and any other related costs shall be mutually agreed by the Parties. HGC shall also provide and maintain such equipment, facilities, connectivity, operational and monitoring support at the HGC's POP in Hong Kong as deemed necessary: (a) to enable the implementation and provisioning of the Blue City Services; and (b) to support the sales delivered through the ContinuityX "A-End" or to the ContinuityX "B-End' as the case may be.

 

	 	(iii)	
HGC shall provide and maintain capacities on other cable circuits to be connected to The ContinuityX Facilities for the provision in rest of the world.

 

	 	(iv)	
ContinuityX may not sell any services from and outside The ContinuityX Facilities that directly or indirectly competes with the Blue City Services.

  

	
1.2

	
The Parties may expand the arrangements set forth in Article 1.1 to include extending The ContinultyX Facilities into and around datacenters in other cities.

 

	
1.3

	
Each Party agrees that the arrangements set forth in Article 1.1 shall be provided by the parties on a non-exclusive basis. Subject to Article 1.1 (iv), the Parties are free to conduct their business independently and provide or obtain the Services to or from alternative suppliers as the case may be.

 

	
1.4

	
The Parties may mutually agree in writing to expand the Services listed under Annex 1. 

 

	
2.

	
PROVISION OF SERVICES AND OPERATIONAL AND COMMERCIAL MATTERS

 

	
2.1

	
The Parties shall jointly promote the Blue City Services on The ContinuityX Facilities provided that HGC has overriding right to reject any order from customer lead(s) that is introduced to HGC by ContinuityX. For the customer(s) introduced to HGC by ContinuityX, HGC would do the credit check on the customers before HGC to accept the order from the customer(s). Within ten (10) days of the Effective Date, the Parties will agree to the terms of the Standard Customer Contract template for selling the Blue City Services on The ContinuityX Facilities.

 

	
2.2

	
Notwithstanding anything to the contrary in this Agreement, HGC shall be entitled to promote and sell the Blue City Services outside The ContinuityX Facilities, across its global network, including to its other Blue City initiatives. In all such cases, HGC shall be the Contracting Party for the end-to-end service.

 

  

3

  

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	2.3	The Parties shall coordinate the management of their respective facilities and capacity utilized in the provision of their respective components of the Blue City Services as provided for herein. If any additional services are required by a Customer outside the scope of Article 1, the Parties shall discuss in good-faith the cost-bearing responsibility and compensation in respect of such additional services.
	 	 
	2.4	Upon acceptance of a Customer order by HGC, the Contracting Party shall provide the order form and terms and conditions to the Participating Party to enable their portion of the provision of the Services.
	 	 
	2.5	A Contracting Party shall be the sole point of contact for its own Customer(s) with respect to implementation and provisioning as well as network management and customer service (including billing).
	 	 
	2.6	HGC and ContinuityX respectively agree to perform their respective obligations set out in Article 1.1 in respect of the Services in accordance with the Agreed SLA.
	 	 
	2.7	ContinuityX shall comply with the service level agreement ("Agreed SLA") for HGC which is set out in Annex 4. If there is any non-compliance of the Agreed SLA and HGC demands service credit, ContinuityX shall be responsible for the service credit payable to HGC pursuant to the calculation as set out in Annex 3.

 

	
3.

	
SERVICES PRICING AND REVENUE SHARE AND OUTPAYMENT

 

	3.1	The Contracting Party shall be free to sell the Blue City Services to all Customers or an end-to-end basis based on the pricing guidelines set forth in Annex 2. As consideration for the sale as well as its respective provision of "A-End" or "B-End" (as the case may be) facilities and resources pursuant to this Agreement and upon activation of the relevant service, the Participating Party in respect of a Customer Contract will share the revenue and bear the expenses and payment incurred for each sale of Services by the Contracting Party pursuant to this Agreement based on the principles listed in and the revenue share and outpayment table as set forth in Annex 2. For the Services sold over The ContinuityX Facilities, HGC and ConlinuityX will set a floor price ("Floor Price") which set forth in Annex 2, i.e. the lowest price that HGC can sell to a Customer, for the Blue City Services listed. For the avoidance of doubt, the Floor Price for the Services sold over the ContinuityX Facilities shall be arrived jointly. Both Parties by mutual agreement may adjust the Floor Price on a case-by-case basis. For each Customer Contract, the Contracting Party shall provide the Participating Party with information necessary for implementation of the Services and revenue sharing purposes (e.g. duration of Customer Contract, location for circuit termination, bandwidth required, and revenue shared with the Participating Party) no later than ten (10) days from the date of execution of the relevant Customer Contract
	 	 
	3.1A	The colocation facilities of Telx Datacentres, Nap of Americas Datacentres, Los Angeles Datacentres, AT&T Datacentres, Sidera Datacentres & BCE Nexia Datacentres, including but not limited to cabinets, power and cross-connect shall be made available by ContiuityX to HGC and HGC is allowed to resell the above mentioned colocation facilities under the Blue City brand. The price of cabinets, power and cross-connect from ContinuityX to HGC shall be according to the prices as set out in Clause 3 of Annex 2. The price shall be reviewed regularly and shall be in a competitive market price.
	 	 
	3.2	For each Customer Contract, the relevant Contracting Party will be responsible for filling and collecting the total amount charged to such Customer(s) including any applicable taxes e.g. value-added taxes, sales taxes, and duties or levies imposed by any government or governmental entity. For the avoidance of doubt, all amounts payable hereunder by one Party to the other Party pursuant to this Agreement are exclusive of all applicable value added tax, sales taxes and duties or levies or other taxes imposed by any authority, government or government agency.

 

 

4

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	3.3	A Participating Party in respect of a Customer Contract shall at the end of each calendar month issue a monthly invoice for the relevant Services provided during that month calculated pursuant to the revenue share principles and table set forth in Annex 2. The invoiced amounts shall be due and payable by the Contracting Party in respect of that Customer Contract in U.S. Dollars within thirty (30) days from the date of receipt or deemed receipt of the invoice. The Contracting Party shall be solely responsible for any uncollectible amounts from the Customer whether due to bad debt, or customer default or early termination of Services. if either Party in good faith disputes any invoiced amount or any amounts that may be due pursuant to this Agreement, it shall submit to the other Party within thirty (30) days following receipt of such disputed invoice or amount together with written documentation identifying the amounts which are in dispute. The Parties shall investigate the matter and upon mutual agreement a credit against future invoices or amounts due/payable will be issued by the other Party. The Parties agree to jointly develop an invoicing and revenue flow tracking system in order to comply with the obligations set forth herein.
	 	 
	3.4	Invoice dispatched by air mail shall be conclusively deemed to have been received by the addressee on the 10th Business Day from the date of posting thereof, provided that if a copy of the invoice has been hand-delivered to the addressee, the invoice shall be conclusively deemed to have been received by the addressee on the day of delivery.
	 	 
	3.5	In addition to the remedies provided in this Agreement, all amounts due hereunder to a Party hereunder that are not paid on the due date shall accrue interest from the day following the (date on which payment was due until paid in full. Interest shall be computed at a rate of 1% per month, beginning on the day following the date on which payment was due, and continuing until paid in full

 

	
4.

	TERM AND TERMINATION

 

	4.1	Subject to clause 4.2, this Agreement shall commence on the Effective Date and shall continue for a term of three (3) years from the Service Date ("Term"). Thereafter the Term of this Agreement may be extended, by mutual agreement of the Parties in writing, for additional periods of three (3) years each unless terminated by either Party by providing to the other party no less than six (6) months written notice of termination prior to the end of the Term or the then-current renewal term, as applicable.
	 	 
	4.2	This Agreement shall be terminated at any time upon mutual agreement of the Parties.
	 	 
	4.3	In addition to any other rights at law or in equity, either Party may terminate this Agreement immediately in the event that the other Party (i) becomes insolvent or bankrupt or ceases paying Its debts generally as they mature; or (ii) commits a breach of any of the terms of this Agreement and fails to remedy such breach within thirty (30) days after receipt of written notice thereof from the non-breaching party.
	 	 
	4.4	This Agreement may be terminated immediately, at the sole discretion of HGC, if: (i) fiber connecting the various locations outlined in Annex 5 including that connecting the locations to the Coresite meet-me rooms is no longer available; or (ii) collocation facilities in the locations outlined in Annex 5 are no longer available; or (iii) dual power in the locations outlined in Annex 5 is no longer available; or (iv) the equipment facility located in the datacenters listed in Annex 5 as HGC deems necessary to implement the Service becomes obsolete without any appropriate and timely replacement.
	 	 
	4.5	The expiration or termination, for any reason, of this Agreement shall be without prejudice to the rights of either Party against the other Which may have accrued on or prior to the date of such expiration or termination.
	 	 
	4.6	The expiration or termination of this Agreement shall not affect the validity and continuance of all Customer Contracts executed prior to such expiration or termination. ContinuityX and HGC both agree that each of them shall continue to provide the Services to the other in accordance with the terms of this Agreement to enable the other Party to duly perform all Customer Contracts which are at that time still in existence. In addition, both Parties agree that neither Party shall transfer a Customer onto its own proprietary facilities before the relevant Customer's Contract expires.

 

 

5

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	
5.

	

LIMITATION OF LIABILITY

 

	5.1	All conditions, warranties and representations implied by law in relation to the prevision of Services by either Party under this Agreement are excluded unless otherwise specified in this Agreement.
	 	 
	5.2	In no event shall either Party be liable to the other Party for consequential, special or indirect losses or damages howsoever arising and whether under contract, tort or otherwise (including, without limitation, third party claims, loss of profits, loss of customers, or damage to reputation or goodwill).
	 	 
	5.3	Without limiting Articles 5.1 and 5.2 above, neither Party shall be under any liability whatsoever (whether in tort or contract or otherwise) to the other for any costs, expense, loss, damage or compensation arising out of or in connection with any incorrect record, omission, transmission, communication, mixing or divulging of messages or any destruction of messages.
	 	 
	5.4 	Nothing under this Article shall limit or exclude either Party's liability which is not permitted to be limited or excluded under English law.

 

	
6.

	

ASSIGNMENT

 

	 	This Agreement is personal to the Parties hereto and may not be assigned or transferred by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld except that HGC or ContinuityX shall have the right to assign this Agreement without consent to an Affiliate by providing reasonable written notice to the other Party.

 

	
7.

	

FORCE MAJEURE

 

	 	
No failure or omission by either Party to comply with any of the terms and conditions of this Agreement shall give rise to any claim against such Party or be deemed a breath of this Agreement if such failure or omission arises from an act of God, an act of Government, or any other circumstance commonly known as force majeure.

 

	
8.

	

CONFIDENTIALITY

 

	8.1	For a period of two (2) years from the date of disclosure thereof, each Party shall maintain the confidentiality of the terms and conditions of this Agreement as well as all information or data of any nature ("Information") provided to it by the other Party hereto provided such Information contains a conspicuous marking identifying it as "Confidential" or "Proprietary". Each Party shall use the same efforts (but in no case less than reasonable efforts) to protect the information it receives hereunder as it accords to its own information. The above requirements shall not apply to information which is already in the possession of the receiving Party through no breach of an obligation of confidentiality to the disclosing Party or any third Party, is already publicly available through no breach of this Article 8, or has been independently developed by the receiving Party. This Agreement shall not prevent any disclosure of information pursuant to applicable law or regulation or court order, provided that prior to making such disclosure, the receiving Party shall use reasonable efforts to notify the disclosing Party of this required disclosure. All information provided by any Party to the other hereunder shall be used solely for the purpose for which it is supplied.
	 	 
	8.2	All information shall remain the property of the Party releasing it, and such information including all copies thereof, shall be returned to the other Party or destroyed, upon request and, in any event, upon termination of this Agreement.

 

 

6

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	8.3	Without the prior written consent of the other party hereto neither Party shall (i) refer to itself as an authorized representative of the other Party hereto in promotional, advertising, or other materials, (ii) use the other Party's logos, trade marks, service marks, or any variations thereof in any of its promotional, advertising, or other materials, or (iii) release any public announcements referring to the other Party or this Agreement without first having obtained such Party's prior written consent.
	 	 
	8.4	The Parties acknowledge and agree that, in the event of a breach or threatened breach by any party of any provision of this Article 8, the other Party will have no adequate remedy in money or damages and, accordingly, shall be entitled to seek an injunction against such breach from any court of law accepting jurisdiction.

 

	
8.5

	

This Article 8 will survive termination of this Agreement.

 

	
9. 

	

NOTICE

 

	 	

All notices, requests, or other communications hereunder shall be in writing, addressed to the parties as follows:

 

	           	
If to ContinuityX:

	
ContinuityX Solutions, Inc

	 	 	610 State Route 116, Suite C,
	 	 	
Metamora, IL 61548

	 	 	Attention: CEO — David Godwin
	 	 	
Facsimile: (309) 267 2801

	 	 	 
	 	
If to HGC :

	Hutchison Global Communications Limited
	 	 	
19th Floor, Hutchison Telecom Tower

	 	 	99 Cheung Fai Road, Tsing Yi, Hong Kong
	 	 	
Attention: Vice President International Business 

	 	 	Facsimile: (852) 2186 6898
	 	 	 
	 	 	
With a copy to:

	 	 	 
	 	 	
22th Floor, Hutchison House, 

	 	 	10 Harcourt Road, Central, 
	 	 	Hong Kong
	 	 	
Attention: Company Secretary 

	
 

 

	 	Facsimile:

 

	 	Notices mailed by registered or certified mail shall be conclusively deemed to have been received by the addressee on the 7th Business Day following the mailing thereof. Notices sent by telex or facsimile shall be conclusively deemed to have been received when the delivery confirmation is received, If either Party wishes to alter the address to which communications to it are sent, it may do so by providing the new address in writing to the other Party.

 

	
10.

	

COMPLIANCE WITH LAWS

	 	This Agreement and the continuance hereof by the Parties is contingent upon the obtaining and the continuance of such approvals, consents, governmental and regulatory authorizations, licenses and permits as may be required or deemed necessary by the Parties, and the Parties shall use commercially reasonable efforts to obtain and continue the same in full force and effect.
	 	 
	 	The Parties shall endeavor to exert commercially reasonable efforts, from time to time to Provide a level of Services in accordance with the relevant International Telecommunications Union ("ITU") recommendations or such other level of service as may be mutually agreed,

 

 

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PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	
11. 

	

MISCELLANEOUS

 

	11.1	The Parties shall work together to minimize the taxes imposed for the Services rendered under this Agreement and the taxes imposed on the respective Parties and/or its Affiliates for operating fiber optic systems around the world.
	 	 
	11.2	Any Article or any other provision of this Agreement which is or becomes illegal, invalid or unenforceable shall be severed herefrom and shall be ineffective to the extent of such illegality, invalidity or unenforceability and shall not affect or impair the remaining provisions hereof, which provisions shall be severed from any illegal, invalid or unenforceable Article or any other provision of this Agreement and shall otherwise remain in full force and effect.
	 	 
	11.3	No waiver by either Party to any provisions of this Agreement shall be binding unless made in writing, any such waiver shall relate only to such specific matter, non-compliance or reach to which it relates to and shall not apply to any subsequent matter, non-compliance or breach).
	 	 
	11.4	The relationship between the Parties shall not be that of partners, and nothing herein contained shall be deemed to constitute a partnership between them or a merger of their assets or their fiscal or other liabilities or undertakings. Neither Party shall have the right to bind the other Party, except as expressly provided for herein.
	 	 
	11.5	This Agreement shall be governed by the laws of England, without reference to its principles of conflict of laws. Any difference, controversy or claim arising out of or relating to this Agreement shall be resolved by the Parties by binding arbitration under the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules. The arbitration shall be heard by one arbitrator mutually agreed by the Parties in accordance with the UNCITRAL Rule in effect on the date of the arbitration. The place of arbitration shall be London and the arbitration proceedings shall be conducted in the English language. The award rendered by the arbitrator shall be final and enforceable in any court having jurisdiction thereto.
	 	 
	11.6	This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all such counterparts together shall constitute one and the same instrument.

 

	
11.7

	

This Agreement, including the following Annexes:

 

	 	Annex 1	
Services Description

	 
	 	Annex 2	Services Pricing and Revenue Sharing	 
	 	Annex 3	
Service Credit Calculation

	 
	 	Annex 4	Service Level Agreement (Agreed SLA)	 
	 	Annex 5	The ContinuityX Facilities	 
	 	Annex 6	
 Operational Guide and Requirement

	 

 

	 	represents the entire understanding between the Parties in relation to the matters herein and supersedes all previous agreements made between the Parties, whether oral or written. This Agreement may only be modified by a writing signed by both Parties.
	 	 
	11.8	Notwithstanding anything herein contained, this Agreement shall be enforceable and binding as against the successors-in-title and permitted assigns of the respective Parties herein.

 

 

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PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate; or caused this Agreement to be executed in duplicate by a duly authorized officer, as of the date first above written.

 

	
HUTCHISON GLOBAL COMMUNICATIONS LIMITED

	 	
Continues Solutions, Inc

	 
	 	 	 	 	 	 
	By:        	
/s/ Andrew Kwok

	 	By:        	
/s/ David P. Godwin

	 
	
Name:

	
ANDREW KWOK

	 	
Name:

	
DAVID P. GODWIN

	 
	
Title: 

	
PRESIDENT

	 	
Title: 

	
CEO

	 

 

  

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PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

ANNEX 1

 

SERVICES DESCRIPTION

 

	
1.

	

THE SERVICES

 

THE BLUE CITY SERVICE, consists of the following:-

    

	1.1	Cross Connection 

 

Cross connection service provides physical circuit connection between two parties' of circuits inside blue city's premise. The types of cross connection are copper, coaxial and fiber.

 

	1.2 	Virtual Meet-Me Room 

 

Virtual Meet-Me Room allows the circuit cross connection to be made between one blue city premise and another blue city premise.

  

	
1.3

	

Ingress / Egress Ports

 

Ingress / Egress Ports provide bandwidth demuxing and protocol conversion to all customer circuits connected to blue city premises. Customers don't need to have its own equipment to provide demuxing and conversion facilitating the cross connection with other parties. 

 

	1.4	Colocation and Remote Hands 

 

Colocation provides space and power equipped with telecom facility environment for customer's equipment and operation. Remote hands provides professional technical to operate and maintain customer's equipment under customers Instructions.

 

 

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PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

ANNEX 2

 

SERVICES PRICING AND REVENUE SHARING

 

 

	1.         	
The Floor Price on Ingress, Egress and co-location facilities 

	 	
(to be agreed upon mutual agreement of the Parties)

	 	 
	2.	
The Revenue Share

	 	
is decided on the basis of who is the "A-End" provider, and not on the basis of who is the “Contracting Party”.

	 	 
	2.1	
Ingress on ContinuityX, Egress on ContinuityX: When ContinultyX is both the "A-End" provider (the "Ingress Port") and "B-End" provider, ContinuityX and HGC is respectively entitled to XXX and XXX of billed and collected revenues from both Ingress Port and Egress Port, as long as the sale is at the Floor Price (as defined in 3.1) or higher. ContinuityX will be consulted in case that the Contracting Party intends to sell at under the Floor Price, and the revenue share will be adjusted accordingly on mutual agreement and on case-by-case basis.

	 	 
	 	
All outpayment (i) from Customer end to and at Ingress Port, (ii) for connection between Ingress Port and Egress Port and (iii) from Egress Port to Customer end shall be borne by ContinuityX.

	 	 
	 	
Ingress on ContinuityX, Egress on ContinuityX

Revenue share

 

	  	 	
Ingress ( billed and

collected revenue)

	
Egress ( billed and

collected revenue)

	
HGC

	 	
XXX

	
XXX

	
CominuityX

	 	

XXX

	
XXX

 

	            	

Outpayment

 

	
Customer end

to Ingress Port

	
Ingress Port

	
Connection between 2

Ports (via The

ContinuityX

Facilities)

	
Egress Port

	
Egress Port to

customer end

	
ContinuityX responsible

	
ContinuityX

responsible

	
ContinultyX responsible

 

	2.2       	

Ingress on ContinultyX, Egress on HGC: When ContinultyX is the "A-End" provider (the "Ingress Port") and HGC is the "B-End" provider (the "Egress Port"), ContinuityX and HGC is respectively entitled to XXX and XXX of billed and collected Ingress Port revenues as long as the Ingress Port sale is at the Floor Price (as defined in 3.1) or higher. XXX XXX XXX XXX XXX. ContinuityX will be consulted in case that the Contracting Party intends to sell the Ingress Port at under the Floor Price, and the revenue share will be adjusted accordingly on mutual agreement and on case-by-case basis.

	 	 
	 	
Outpayment from Customer end to and at Ingress Port and that for connection between Ingress Port and Egress Port shall be borne by ContinuityX, whereas the outpayment from Egress Port to Customer end shall be borne by HGC.

	 	 
	 	
Ingress on ContinuityX, Egress on HGC

	 	Revenue Share

 

	 	 	
Ingress ( billed and

collected revenue)

	
Egress ( billed and

collected revenue)

	
HGC

	 	
XXX

	
XXX

	
CominuityX

	 	

XXX

	
XXX

 

 

11

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	           	

Outpayment

 

	
Customer end

to Ingress Port

	
Ingress Port

	
Connection between 2

Ports (via The

ContinuityX

Facilities)

	
Egress Port

	
Egress Port to

customer end

	
ContinuityX responsible

	
ContinuityX

responsible

	
HGC responsible

  

	2.3       	

Ingress on HGC, Egress on ContinuityX: When ContinultyX is the "B-End" provider (the "Egress Port") and ContinultyX and HGC is respectively entitled to XXX and XXX of Egress Port Floor Price. XXX XXX XXX XXX XXX. ContinuityX will be consulted in case that the Contracting Party intends to sell the Egress Port at under the Floor Price, and the revenue share will be adjusted accordingly on mutual agreement and on case-by-case basis.

	 	 
	 	
Outpayment from Customer end to and at Ingress Port shall be borne by HGC, whereas the outpayment for connection between Ingress Port and Egress Port and outpayment from Egress Port to Customer end shall be borne by ContinultyX.

 

	            	
Ingress on ContinuityX, Egress on ContinuityX

	 	Revenue Share

 

	 	 	
Ingress (Floor Price)

	
Egress (Floor Price)

	
HGC

	 	
XXX

	
XXX

	
CominuityX

	 	

XXX

	
XXX

 

	           	

Outpayment

 

	
Customer end

to Ingress Port

	
Ingress Port

	
Connection between 2

Ports (via The

ContinuityX

Facilities)

	
Egress Port

	
Egress Port to

customer end

	
HGC responsible

	
ContinuityX

responsible

	
ContinuityX responsible

  

	2.4       	

In the event that there is any changes in the scope of the Blue City Services, the Revenue Share as set out above will be revised subject to mutual agreement of the Parties.

	 	 
	3.	
Co-location facilities

	 	
For Telx Datacentres; Nap of Americas Datacentres; Los Angeles Datacentres; AT&T Datacentres; Sidera Datacentres & BCE Nexia Datacentres, the charges from CantinuityX to HGC shall be as below:

 

	 	
Item

	
Non Recurring 

Charge

	
Monthly Recurring 

Charge

	
Revenue Share ratio (on billed revenue)

	 	 	 	 	 
	1.	
42U Cabinet

 

	
US$0

	
US$0

	XXX XXX XXX
	2.	
AC Power

120VAC, 20Amp circuit (A feed)

 

	
US$0

	
US$0

	XXX XXX XXX
	3.	
AC Power

120VAC, 20Amp circuit (B feed)

 

	
US$0

	
US$0

	XXX XXX XXX
	4.	
DC Power

-48V, 20Amp circuit

 

	
US$0

	
US$0

	XXX XXX XXX
	5.	
Cross-Connect within a datacenter (intro cross-connect)

 

	
US$0

	
US$0

	XXX XXX XXX
	6.	
Cross-Connect between two 

datacenters (inter cross-connect)

 

	
US$0

	
US$0

	XXX XXX XXX

 

 

12

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

  

ANNEX 3

 

SERVICE CREDIT CALCULATION

 

Service Outage Credit

 

A Service Outage Credit is calculated as a percentage (%) (as stated in table below) of the monthly port or circuit charge applicable to the relevant port or circuit.

 

	
SERVICE OUTAGE TIME (Monthly)

	
SERVICE OUTAGE CREDIT

	
>44 minutes - 4 hours

	
4%

	
>4 hours - 8 hours

	
6%

	
>8 hours - 12 hours

	
10%

	
>12 hours

	
20%

 

	1.       	

Service Outage Credit Condition

	 	 
	1.1       	
HGC shall be entitled to set off the Service Outage Credit granted during a particular month against the monthly circuit charge payable by it to ContinuityX for the next following month provided that HGC has duly paid in full all charges payable to ContinuityX up to such time.

	 	 
	1.2	
In the event of a deficiency with the service, HGC should contact ContinuityX. The granting of Service Outage Credit is contingent upon HGC having filed a trouble ticket with ContinuityX

 

	1.3      	
For the purpose of calculating Service Outage Credits, the following are not service deficiency and the Services will not be deemed to be unavailable if the unavailability or deficiency arises from or is caused wholly or in part by the following:

 

	
a.     

	
Maintenance: Any impact on service resulting from maintenance actions requested by or attributed to HGC, or from scheduled or routine ContinuityX maintenance or network enhancement operations. ContinultyX will notify HGC fourteen (14) working days in advance of a scheduled maintenance period. ContinuityX will endeavour to schedule maintenance at a time agreeable to HGC.

 

	
b.     

	
Failure or fault of applications, equipment or facilities located on HGC's premises, whether or not supplied by ContinultyX, and failure or fault of HGC's applications, equipment or facilities wherever located.

 

	
c.     

	
Acts or omissions of the HGC or its agents, subcontractors or employees or any user of the service authorized by the ContinuityX, or any use of the service authorized by the HGC.

 

	
d.      

	
Force Majeure or other reasons beyond ContinuityX's reasonable control.

 

	1.4       	
If there are multiple target objective failures resulting from a single incident or during one specific time frame, these multiple failures shall not be aggregated for the purpose of calculating the Service Availability or Service Outage Credit. Instead, only the single failure resulting from such single incident or during that one specific time frame which produces the maximum service outage credit will be taken into account for such purpose.

	 	 
	
1.5

	Unless otherwise defined in the order or contract applicable to the circuit in question, "Force Majeure" shall for the purpose of the Agreed SLA as set in Annex 4 mean events or circumstances that is beyond the reasonable control of the party sought to be held liable for performance (the "Responsible Party"), including, but not limited to, any: (i) delay in obtaining or failure to obtain or renew any permit or governmnet authorization required for the performance of the relevant order or contract or the Agreed SLA, so long as such delay is not caused by or due to any act or omission of the Responsible Party, (ii) act of God or of the public enerny, (iii) action, or failure to act, of any governmental authority, (iv) war or warlike operations, (v) civil war or commotion, mobilization, military call-up and acts of similar nature, (vi) revolution, rebellion, sabotage, insurrection or riot, (vii) draught, fire, flood, lightning, epidemic or quarantine restriction, (viii) strike or other labor action, (ix) freight embargo, (x) unworkable weather.

 

 

13

 

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

ANNEX 4

 

SERVICE LEVEL AGREEMENT ("AGREED SLA")

 

	1.        	
Problem Resolution and Coverage

	 	 
	
1.1

	ContinuityX shall work with HGC to correct service deficiencies.
	 	 
	1.2	ContinuityX's Mean Time to Restore (MTTR) goal is four (4) hours. ContinuityX shall use reasonable commercial efforts to resolve service problems with HGC within this time frame.
	 	 
	1.3	The overall service availability and service outage time are calculated on a calendar monthly basis. The service outage time will be re-set to zero on the first day of each calendar month.
	 	 
	2.	
Circuit Performance and Outages

	 	 
	2.1	
Target Objective

 

	2.1a.	For SDH, SONET or related service 
	 	Circuit Performance: Minimum performance is as follows:

 

	
CIRCUIT PERFORMANCE

	
VALUE

	
Bit Error Rate (BER)

	
10-8

	
Synchronization Loss

	
3

	
Error Free Seconds (EFS)

	
99.9%

Service avaliability: 99.9%

 

	2.1b.	For EoSDH, EoSONET or related service types  
	 	Circuit Performance: Minimum performance is as follows:
	 	 

	
CIRCUIT PERFORMANCE

	
VALUE

	

Packet Error Ratio

	

0.1%

Service availability: 99.9%

 

  

14

  

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

ANNEX 5

 

THE CONTINUITYX FACILITIES

 

The ContinuityX Facilities shall consist of ContinuityX's Equipment Facility, Co-location Facility and the Connection Faculty.

 

	1.	THE CONTINUITYX'S EQUIPMENT FACILITY ARE LOCATED IN THE FOLLOWING DATACENTERS. THE RACK SPACE, THE CROSS-CONNECT, THE POWER, ETC IN THE DATACENTERS ARE CLASSIFIED AS CONTINUITYX'S CO-LOCATION FACILITY

 

	
(i)

	
36 North East 2nd Street, Miami, FL, USA

	
(ii)

	
56 Marietta Street, Atlanta, GA, USA

	
(iii)

	
60 Hudson Street, New York, NY, USA

	
(iv)

	
100 Delawanna  Aveneue, Clifton, NJ, USA

	
(v)

	
111 Eighth Avenue, New York, NY, USA

	
(vi)

	
113 N. Myers Street, Charlotte, NC, USA

	
(vii)

	
120 East Van Buren Street, Phoenix, AZ, USA

	
(viii)

	
200 Paul Avenue, San Francisco, CA, USA

	
(ix)

	
300 Boulevard East, Weehawken, NJ, USA

	
(x)

	
350 East Cermak Road, Chicago, IL, USA

	
(xi)

	
600 South Federal Street, Chicago, IL, USA

	
(xii)

	
600 West7th Street, Los Angeles, CA, USA

	
(xiii)

	
1100 Space Park Drive, Santa Clara, CA, USA

	
(xiv)

	
2323 Bryan Street, Dallas, TX, USA

	
(xv)

	
2820 Northwestern Parkway, Santa Clara, USA

	
(xvi)

	
8435 Stemmons Freeways, Dallas, TX, USA

 

The datacenters (i) to (xvi) listed above are classified as Telx Datacentres.

 

	
(i)

	
36 North East 2°4 Street, Miami, FL, USA

 

The datacenter (i) listed above are classified as Nap of Americas Datacentres.

 

	
(i)

	
530 West 6"' Street, Los Angeles, CA, USA

	
(ii)

	
624 South Grand Avenue, Los Angeles, CA, USA

	
(iii)

	
650 South Grand Avenue, Los Angeles, CA, USA

	
(iv)

	
800 South Hope Street, Los Angeles, CA, USA

 

The datacenters (i) to (iv) listed above are classified as Los Angeles Datacentres.

 

	
(i)

	
3 Corporate Place, Piscataway, NJ, USA

	
(ii)

	
2500 Riva Road, Annapolis, MD, USA

	
(iii)

	
5732 Pacific Center Boulevard, San Diego, CA, USA 17300

	
(iv)

	
Washington 99, Lynnwood, WA, USA

	
(v)

	
21571 Beaumeade Circle, Ashburn, VA, USA

 

The datacenters (i) to (v) listed above are classified as AT&T Datacentres.

 

	
(i)

	
165 Halsey Street, Newark, NJ, USA

	
(ii)

	
401 North Broad Street, Philadelphia, PA, USA

 

The datacenters (i) to (ii) listed above are classified as Sidera Datacentres.

 

	
(i)

	
To be mutually agreed by the Parties

 

The datacenter (i) listed above are classified as BCE Nexia Datacentres.

 

	
2.

	
THE CONNECTION FACILITY 

The copper, coaxial and fiber facilities that connect ContinultyX's Equipment Facility

 

  

15

  

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

ANNEX 6

 

OPERATIONAL GUIDE AND REQUIREMENTS

 

Operation Guide and Requirements for Blue City Project

 

Below is the operation guide and requirements for HGC Blue City partners for fault handling. This document covers circuit level fault cases, colocation service, Network Management System and Ticket System requirement.

 

A) For Fault cases handling

 

A i) Customer reports fault case to HGC

 

	
●

	
HGO INOC receives fault case from customer.

 

	
●

	
HGC INOC will report to partner with partner circuit ID with fault symptoms by phone, email or web portal.

 

	

●

	

Partner should create ticket to HGC INOC immediately and send a acknowledge email to HGC INOC common email box

 

	

●

	

Partner should update all action logs with timestamp in the ticket system. HGC INOC can access this action log anytime through the partner provided portal.

 

	
●

	
The timeline is applied for office and non-business hours.

 

Within 15 min.

	
●

	
Partner should provide preliminary ticket update to HGC INOC by phone and record more details findings in ticket system portal.

 

After 30 min:

	
●

	
Partner should provide detailed ticket update to HGC INOC by phone. Partner should share any alarm detected at his managed network.

 

	
●

	
If the fault location is unknown, partner should perform troubleshooting with HGC INOC or HGC customer in order to isolate the problem and prove the network side.

 

Example:

For SDH or SONET or EoSDH related service: Partner provides loopback at B-end (last exchange ) toward A-End, HGC INOC or HGC customer try to detect this loopback at A-end or Partner to map this circuit at A-End to his tester in order to BERT this circuit and confirm the confirm the connectivity. If the BERT falls, the fault location will be between A-end and B-end (last exchange). Partner should fix this problem immediately. If the BERT OK, the problem will be located at last mile. Partner will need to dispatch engineer to customer office immediately (after customer reset customer modem or confirmed no power issue at customer side)

 

For IP related service: Partner should try to perform end to end ping test in order to confirm the connectivity. If the End to End ping fails, the fault location will be between A-end and B-end (last exchange). Partner should fix this problem immediately or Partner will need to dispatch engineer to customer office immediately (after customer reset customer modem or confirmed no power issue at customer side)

 

	
●

	
If the fault location is located and related to partner controlled portion, Partner should fix this problem within 1 hour.

Outage over 1 hour:

	
●

	
NOC of partner should  internal escalate this case to her higher management.

 

	●	Partner should update the progress of her troubleshooting action plan to HGC INOC every 30min by phone and update detailed Information in the customer portal for HGC INOC reference.

 

  

16

  

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

Outage Over 2 hour:

	●	HGC INOC and HGC INOC manager / Tie-2 support engineer will suggest to open a conference bridge with partner NOC manager for discuss the latest progress and latest action plan for fixing this prolonged fault case.

 

A ii) Customer reported fault case through Partner

 

	
●

	
Partner receives fault case from customer.

 

	●	
Partner will open ticket to this customer and start troubleshooting. In parallel, Partner will phone to HGC INOC and provides HGC circuit ID, fault symptom and details. Besides, HGC INOC and partner will exchange both side ticket ID.

 

	
●

	
The timeline is applied for office and non-business hours.

 

Within 15 min:

	
●

	
Partner should provide preliminary ticket update to HGC INOC by phone and record more details findings in ticket system portal.

 

After 30 min:

	
●

	
Partner should provide ticket detail update to HGC INOC by phone. Partner should share any alarm detected at her managed network.

 

	●	If the fault location is unknown, partner should perform some preliminary troubleshooting with HGC INOC or HGC customer in order to isolate the problem and prove the network side

 

Example:

For SDH or SONET or EoSDH or PDH over Ethernet related service: Partner provides loopback at B-­end ( last exchange ) toward A-End, HGC INOC or HGC customer try to detect this loopback at A-end or Partner to map this circuit at A-End to his tester in order to BERT this circuit and confirm the confirm the connectivity. If the BERT fails, the fault location will be between A-end and B-end (last exchange). Partner should fix this problem immediately. If the BERT OK, the problem will be located at last mile. Partner will need to dispatch engineer to customer office immediately (after customer reset customer modem or confirmed no power Issue at customer side)

 

For IP related service: Partner should try to perform end to end ping test in order to confirm the connectivity. If the End to End ping fails, the fault location will be between A-end and B-end (last exchange ). Partner should fix this problem immediately or Partner will need to dispatch engineer to customer office immediately (after customer reset customer modem or confirmed no power issue at customer side)

 

	
●

	
If the fault location is located and related to partner controlled portion, Partner should fix this problem within 1 hour.

 

Outage over 1 hour:

	
●

	
NOC of partner should escalate this case internally to her higher management.

 

	●	Partner should update the progress of his troubleshooting action plan to HGC INOC every 30min by phone and update detailed information in the customer portal for HGC INOC reference

 

Outage over 2 hour:

HGC INOC and HGC INOC manager / Tie-2 support engineer will suggest to open a conference bridge with partner NOC manager for discuss the latest progress and latest action plan for fixing this prolonged fault case.

 

B) Colocation service

 

	
HGC INOC receives Blue City related colocation remote hand service request from customer. HGC  INOC will report to partner for this request (HGC INOC will provide related Rack No, equipment / to HGC. Server reference no and service request action). Partner should create service request ticket INOC immediately.

 

	
Partner should update all action logs with timestamp in the ticket system. HGC INOC can access this action log anytime through the partner provided portal.

 

  

17

  

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

Within 30min:

For simple remote hand request:

Partner should complete simple remote hands within 30min after received HGC INOC request.

 

Partner should update HGC INOC for service request completion. HGC INOC will further confirm the request status with end customer. Partner should keep the ticket open until HGC INOC obtained the confirmation from customer.

If Partner can’t complete this service request with 1 hour, partner should internal escalate this situation to her NOC manager and notify HGC INOC the action plan for solve this problem.

B i) Simple remote hands service includes:

 

	
●

	
Pushing a button    

	
●

	
Power cycling (turning on and off) equipment

	
●

	
Switching a toggle  

	
●

	
Keying in instructions through keyboard

	
●

	
Setting a dip switch

	
●

	
Simple arrangement for the cables

	
●

	
Card re-seating       

	
●

	
Observing, describing or reporting on indicator

	
●

	
Securing cabling to connections

	
●

	
Lights or display information on the equipment

 

B ii) Advanced remote hands service includes

 

* Partner should provide a notebook and partner help to connect to console cable from notebook to customer equipment console port. Besides, this notebook should install with teamviewer, VNC or PC anywhere in order to let HGC customer can remotely connect for checking her equipment.

 

C) Network Management System

 

	
●

	
Partner should provide a Network Management System portal for HGC. 

HGC INOC can access this portal to check per circuit level status.

 

Allow checking real time current alarm on SDH/ SONET / IP equipment

 

Alarm history on SDH/ SONET / IP equipment

Performance monitoring (PM) in 15min/hourly and daily on SDH/ SONET circuits.

 

	
●

	
Partner should provide an IP traffic utilization graph portal for HGC. (eg. MRTG )

 

HGC INOC can access related circuit Traffic graph (hour, daily, weekly, monthly, and yearly or particular date) directly via this portal

 

	
●

	
Partner should extend and send his equipment alarm from her NMS to HGC central NMS for oversea partner in real time.

 

Partner shares her equipment alarm from her NMS to HGC via a secure connection.

 

The real time alarm message / trap can send from Provider's NMS to HGC centralized alarm system by using SNMP. Partner should provide corresponding MIB file to HGC in order to interrupt the related SNMP trap message.

 

	
●

	
Heartbeat

In order to ensure Partner SNMP is working normally. Partner SNMP server should generate a testing trap (heartbeat) to HGC centralized SNMP server in every 15 min. If no heartbeat receive in two times, HGC can indentify Partner SNMP server may be failed.

 

  

18

  

 

PURSUANT TO 17 C.F.R. § 240.24b-2, CONFIDENTIAL INFORMATION (INDICATED BY [x]) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION

 

	●	Partner customer portal server or SNMP server should be configured with redundancy and regular Data backup. In case of Primary server is out of order. Backup server should pick up all function Immediately.

 

D) Ticket System requirement

 

	
●

	
Partner should provide customer account for HGC in order to access Partner ticket system

 

	
●

	
HGC INOC can access this action log anytime through the partner provided portal.

 

	
●

	
Partner should record all action or event log or detected alarm (included troubleshooting, remote hand request) with timestamp in the ticket system.

 

	●	Partner ticket system for HGC should be configured with redundancy and regular Date backup, in case of Primary server is out of order. Backup server should pick up all function immediately,

 

	
●

	
Ticket system should keep for ticket last for 3 years,

 

	
●

	
Individual ticket content should be exported in doc or pdf format. 

 

	
●

	
Simple reporting and fault statistics analysis should be support.

 

19NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT  TO  RULE  144  OR
RULE  144A  UNDER  SAID  ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

	Principal
    Amount: $63,000.00	Issue
    Date: June 6, 2012
	Purchase Price: $63,000.00	

 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR
VALUE RECEIVED, NYXIO TECHNOLOGIES CORPORATION, a Nevada corporation (hereinafter called the “Borrower”),
hereby promises to pay to the order of ASHER ENTERPRISES, INC., a Delaware corporation, or registered assigns (the “Holder”)
the sum of $63,000.00 together with any interest as set forth herein, on March 8, 2013 (the “Maturity Date”), and
to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per
annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon
acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set
forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty
two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall
commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual
number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share
(the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America.
All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is
not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken
into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business
day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York
are authorized or required by law or executive order to remain closed.  Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which
this Note was originally issued (the “Purchase Agreement”).

    	 

    	 

    

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

 

The following terms shall apply to this Note:

 

ARTICLE I. CONVERSION RIGHTS

 

1.1 
Conversion Right.  The Holder shall have the right from time to time, and at any time during the period beginning on the date
which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii)
the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect
of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal
amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date,
or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or
reclassified at the conversion price  (the “Conversion Price”) determined as provided herein (a “Conversion”);
provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of
that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the
Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a
limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock.
For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined  in  accordance with
 Section  13(d) of the Securities  Exchange Act  of 1934,  as amended  (the “Exchange  Act”),  and  Regulations  13D-G
 thereunder,  except  as  otherwise provided in clause (1) of such proviso, provided, further, however, that
the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior
notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later
date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued
upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice
of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice
of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice)
to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term
“Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this
Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on
such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s
option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4)
at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

    	2

    	 

    

1.2 Conversion Price.

 

(a)
Calculation  of Conversion  Price.  The conversion  price  (the “Conversion Price”) shall equal the Variable
Conversion Price (as defined herein) (subject to equitable  adjustments  for  stock  splits,  stock  dividends  or  rights  offerings
 by the  Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price"
shall mean 61% multiplied by the Market Price (as defined herein) (representing a discount rate of 39%). “Market Price”
means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day
period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security
as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the “OTCBB”)
as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if
the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in
the “pink sheets” by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security
on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower
and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required
in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock
is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the Common
Stock is then being traded.

 

(b) Conversion
 Price  During Major  Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the
Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger
in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces
a tender offer to purchase

50% or more of the Borrower’s
Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred
to as the “Announcement Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing
through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which
would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise
be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth
in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect
to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section
1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the
case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender
offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

    	3

    	 

    

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

4(g) of the Purchase Agreement.
The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition,
if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares
 of  Common  Stock  into  which  the  Notes  shall  be  convertible  at  the then  current Conversion Price, the Borrower shall
at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized
and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has
irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and
(ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the
duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance
with the terms and conditions of this Note.

 

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

 

1.4 Method of Conversion.

 

(a)
Mechanics of Conversion.  Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other
reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject
to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

 

(b)
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid principal amount of this Note is so converted.  The Holder and the Borrower shall maintain records showing the
principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.  In the event of any
dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence
of manifest error.  Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer
this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue
and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any
applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The
Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph,
following

    	4

    	 

    

conversion of a portion of this Note, the unpaid
and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

 

(c) Payment
of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that
of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are
to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such
tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”)
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.

 

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

 

(f)
 Delivery of  Common  Stock by Electronic  Transfer.  In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Borrower is participating in the Depository  Trust Company  (“DTC”) Fast
Automated Securities  Transfer (“FAST”) program, upon request  of  the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with
DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

    	5

    	 

    

(g)
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon
conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3
above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each
day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the
fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower
by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note,
in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall
 be  convertible  into  Common Stock  in accordance  with  the  terms  of  this  Note.  The Borrower agrees that the right to
convert is a valuable right to the Holder.  The damages resulting from a failure, attempt to frustrate, interference with such
conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision
contained in this Section 1.4(g) are justified.

 

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

 

“NEITHER THE ISSUANCE
AND SALE OF  THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH  THESE SECURITIES  ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)  UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING  THE  FOREGOING, THE  SECURITIES MAY  BE

    	6

    	 

    

PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

The legend
set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend
if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule

144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold.  In the event that the Company does
not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section
3.2 of the Note.

 

1.6 Effect of Certain Events.

 

(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than

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

 

(b) Adjustment
Due to Merger, Consolidation, Etc.  If, at any time when this Note is issued and outstanding and prior to conversion of all
of the Notes, there shall be any merger,  consolidation,  exchange of shares,  recapitalization,  reorganization,  or other similar
event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares
of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of
all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon
the terms and conditions specified herein and in lieu of the shares  of  Common  Stock  immediately theretofore  issuable  upon
 conversion,  such  stock, securities or assets which the Holder would have been entitled to receive in such transaction had this
Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein),
and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note
to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of
the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in
relation to any securities or assets thereafter

    	7

    	 

    

deliverable upon the
conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to
the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice)
of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation  of,
 such  merger,  consolidation,  exchange of  shares,  recapitalization, reorganization or other similar event or sale of assets
(during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if
not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply
to successive consolidations, mergers, sales, transfers or share exchanges.

 

(c)
Adjustment Due to Distribution.  If the Borrower shall declare or make any distribution of its assets (or rights to acquire
its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any
dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock
of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.

 

(d)
Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or
sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration
or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances
in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares
of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be
reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.

 

The Borrower
shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights
or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase
Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such
warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”)
and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price
then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the
“price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i)
the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options,
plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options,
plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional
consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible
or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming
full conversion of

    	8

    	 

    

Convertible Securities,
if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon
the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

 

Additionally,
the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible
Securities, whether  or  not  immediately convertible  (other  than  where  the  same  are  issuable  upon  the exercise of Options),
and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price
then in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence,
the “price per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing
(i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount  of additional  consideration,  if any,  payable to  the Borrower upon  the conversion
or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment
to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.

 

(e) Purchase
Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights
to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of
any class of Common  Stock,  then  the Holder of this  Note will  be entitled  to  acquire,  upon  the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares
of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such
record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.

 

(f)
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.

 

1.7 Trading
Market Limitations.  Unless permitted by the applicable rules and regulations of the principal securities market on which
the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this
Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that
the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then
traded (the “Maximum Share Amount”), which shall be 4.99% of the total shares outstanding on the Closing Date (as
defined in the Purchase Agreement), subject to equitable adjustment from time to time

    	9

    	 

    

for stock splits, stock
dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof.
Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the
rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction
over the Borrower or any of its securities on the Borrower’s ability to issue shares of Common Stock in excess of the Maximum
Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3
of the Note.

 

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

 

1.9
Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on
the Issue Date and ending on the date which is thirty (30) days following the issue date, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment
Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”),
the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified
by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower
exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional
Prepayment Amount”) equal to 115%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y)
Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof.  If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment
Amount due to the Holder

    	10

    	 

    

of the Note within two (2) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the date which is thirty-one (31)
days following the issue date and ending on the date which is sixty (60) days following the issue date, the Borrower shall have
the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined
below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day
prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment
to the Holder of an amount in cash (the “Second Optional Prepayment Amount”) equal to 120%, multiplied by the sum
of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal
amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses
(w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers
an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within  two
 (2)  business days  following the  Optional  Prepayment  Date,  the  Borrower  shall forever forfeit its right to prepay the
Note pursuant to this Section 1.9.

 

Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61) days
following the issue date and ending on the date which is ninety (90) days following the issue date, the Borrower shall have the
right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice.  On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined
below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day
prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment
to the Holder of an amount in cash (the “Third Optional Prepayment Amount”) equal to 125%, multiplied by the sum of:
(w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount
of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w)
and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an
Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within  two  (2)
 business days  following the  Optional  Prepayment  Date,  the  Borrower  shall forever forfeit its right to prepay the Note
pursuant to this Section 1.9.

    	11

    	 

    

Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) day from
the issue date and ending one hundred  twenty (120) days following  the  issue  date,  the Borrower shall  have  the  right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note,
and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.
On the Optional Prepayment Date, the Borrower shall make payment of the Fourth Optional Prepayment Amount (as defined below) to
or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the
Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the “Fourth Optional Prepayment Amount”) equal to 130%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Fourth Optional Prepayment Amount due to the Holder of the Note within  two  (2)  business days  following
the  Optional  Prepayment  Date,  the  Borrower  shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one
(121) day from the issue date and ending one hundred fifty (150) days following the issue date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note
(principal and accrued interest), in full, in accordance with this Section 1.9.  Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to
the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the “Fifth Optional Prepayment Amount”) equal to 135%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.  If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Fifth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred fifty-one
(151) day from the issue date and ending one hundred eighty (180) days following the issue date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note
(principal and accrued interest), in full, in accordance with this

    	12

    	 

    

Section 1.9. Any Optional
Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Sixth
Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the
Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the
Note, the Borrower shall make payment to the Holder of an amount in cash (the “Sixth Optional Prepayment Amount”)
equal to 140%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any,
on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof.  If the Borrower delivers an Optional Prepayment Notice and fails to pay the Sixth Optional Prepayment Amount due
to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit
its right to prepay the Note pursuant to this Section 1.9.

 

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

 

  

ARTICLE II. CERTAIN COVENANTS

 

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

 

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

 

2.3
Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, create, incur, assume guarantee,  endorse, contingently agree  to purchase  or  otherwise become  liable  upon
 the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments
for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed
on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade
creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall
be used to repay this Note.

    	13

    	 

    

2.4
Sale of Assets.  So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary
course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

 

2.5
Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation,
including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits
or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the
date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

 

  

ARTICLE III. EVENTS OF DEFAULT

 

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

 

3.1 Failure
to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise.

 

3.2
Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder
in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or
in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion  of  or  otherwise  pursuant
 to  this  Note  as  and when  required  by this  Note,  the Borrower directs its transfer agent not to transfer or delays, impairs,
and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares
of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this
Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from
removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any
shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It
is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of
this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer
agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process
a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the
Holder.

 

3.3 Breach
of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any
collateral documents including but not

    	14

    	 

    

limited to the Purchase Agreement and such breach
continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

 

3.4 Breach
of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement),
shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have)
a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.

 

3.6 Judgments.
 Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower
or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of
twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7
Bankruptcy. Bankruptcy, insolvency, reorganization  or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.

 

3.8 Delisting
of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an equivalent
replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock
Exchange.

 

3.9
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

 

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

 

3.11
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as
a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

3.12 Maintenance
of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or in the future).

 

3.13Financial Statement
Restatement.The  restatement  of  any financial statements filed by the Borrower with the SEC for any date or period from
two years prior to the

    	15

    	 

    

Issue Date of this Note
and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial
statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.14Reverse Splits.The Borrower effectuates
a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

 

 

3.15
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. 

 

 

3.16 Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default
by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all
applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the
Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the
Holder under the terms of this Note  and  the  Other  Agreements  by reason  of  a  default  under  said  Other  Agreement  or
hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower,
and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided,
however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the
loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower
to the Holder.

 

Upon the occurrence
and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal
hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower
shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein).
 UPON THE OCCURRENCE AND DURING THE CONTINUATION OF  ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY
DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO:
(Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event
of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due
on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11,
3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default
Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure
to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately
due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to
the greater

    	16

    	 

    

of (i) 150% times the sum
of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal
amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if
any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the
amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the
“parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of
Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the
Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of
determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a
specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the
highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of
Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts
payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby
are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the
Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

 

If the Borrower fails
to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder
shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient
authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number
of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

 

ARTICLE IV. MISCELLANEOUS

 

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

 

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

    	17

    	 

    

address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:

 

If to the Borrower, to:

 

NYXIO TECHNOLOGIES CORPORATION

2156 NE Broadway

Portland, OR 97232

Attn: GIORGIO JOHNSON, President/Chief Executive
Officer facsimile:

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

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

facsimile: [enter fax number]

 

  

If to the Holder:

 

ASHER ENTERPRISES, INC.

1 Linden Pl., Suite 207

Great Neck, NY. 11021

Attn: Curt Kramer, President facsimile: 516-498-9894

With a copy by fax
only to (which copy shall not constitute notice): Naidich Wurman Birnbaum & Maday, LLP

80 Cuttermill Road, Suite
410

Great Neck, NY 11021

Attn: Bernard S. Feldman, Esq. facsimile: 516-466-3555

 

4.3 Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The
term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other
Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended
or supplemented.

 

4.4
Assignability. This Note  shall  be  binding  upon  the  Borrower  and its successors and assigns, and shall inure to be
the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor”
(as defined in Rule 501(a) of the 1933 Act).  Notwithstanding anything in this Note to the contrary, this Note may be pledged
as collateral in connection with a bona fide margin account or other lending arrangement.

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4.5 Cost of
Collection.If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of
collection, including reasonable attorneys’ fees.

 

4.6
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of
Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower
and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid
or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

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

 

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

 

4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common
Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior
notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders
who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation, reclassification or recapitalization) any share

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of any class or any other
securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote
in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed
liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days
prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever
is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other
event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent
known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder
substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

 

4.10 Remedies.
The  Borrower  acknowledges  that a  breach  by it  of  its obligations hereunder will cause irreparable harm to the Holder, by
vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy
at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach
by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized officer this June 6, 2012.

 

NYXIO TECHNOLOGIES CORPORATION

  

By: /s/ Giorgio Johnson

GIORGIO JOHNSON

President/Chief Executive Officer

    	20

    	 

    

EXHIBIT A

 

NOTICE OF CONVERSION The undersigned hereby elects to convert
$____________principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to
the conversion of the Note (“Common Stock”) as set forth below, of NYXIO TECHNOLOGIES CORPORATION, a Nevada
corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of June
6, 2012 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion,
except for transfer taxes, if any.

 

Box Checked as to applicable
instructions:

 

[ ]
The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the
undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

 

Name of DTC Prime Broker: Account Number:

 

[  ]
The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately
below or, if additional space is necessary, on an attachment hereto:

 

ASHER ENTERPRISES, INC.

1 Linden Pl., Suite 207

Great Neck, NY. 11021

Attention: Certificate Delivery

(516) 498-9890

 

Date of Conversion:

Applicable Conversion Price:$ Number of
Shares of Common Stock to be Issued

Pursuant to Conversion of the Notes: Amount of Principal Balance Due remaining

Under the Note after this conversion:

 

ASHER ENTERPRISES, INC.

 

By:

Name: Curt Kramer Title: President Date:

1 Linden Pl., Suite 207

Great Neck, NY. 11021

    	21

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