Document:

Ex. 10.8

 

NEITHER THE ISSUANCE NOR 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 (H) 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: $40,000.00

	
Issue Date: February 16, 2016

Purchase Price: $36,000.00

Original Issue Discount: $4,000.00

CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, BEMAX, INC., a Nevada corporation (hereinafter called the "Borrower"), hereby promises to pay to the order of CROWN BRIDGE PARTNERS, LLC, a New York limited liability company, or registered assigns (the "Holder") the principal sum of $40,000.00 (the "Principal Amount"), together with interest at the rate of eight percent (8%) per annum, at maturity or upon acceleration or otherwise, as set forth herein (the "Note"). The consideration to the Borrower for this Note is $36,000.00 (the "Consideration"). At the closing, the outstanding principal amount under this Note shall be $40,000.00, consisting of the Consideration plus the OLD (as defined herein). The maturity date shall be twelve (12) months from the Issue Date (the "Maturity Date"), and is the date upon which the principal sum, as well as any accrued and unpaid interest and other fees shall be due and payable. 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 by the Maturity Date, 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 the Borrower's common stock (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.

This Note carries an original issue discount of $4,000.00 (the "OlD"), to cover the Holder's legal fees, accounting fees, due diligence fees, monitoring, and/or other transactional costs incurred in connection with the purchase and sale of the Note, which is included in the principal balance of this Note. Thus, the purchase price of this Note shall be $36,000.00, computed as follows: the Principal Amount minus the ora

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 additional terms shall apply to this Note:

ARTICLE I. CONVERSION RIGHTS

1.1   Conversion Right. The Holder shall have the right, at any time, on or after one hundred and eighty (180) days following the Issue Date, to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest 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

	 

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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 (I) the principal amount of this Note to be converted in such conversion plus (2) at the Holder's option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus  (3) at the Holder's option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder's option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

1.2   Conversion Price.

(a) Calculation of Conversion Price. The Conversion Price shall be the Variable Conversion Price (as defined herein) (subject, in each case, to 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 that occur on or after the Issue Date)(also subject to adjustment as further described herein). The "Variable Conversion Price" shall mean 52% multiplied by the Market Price (as defined herein)(representing a discount rate of 48%). "Market Price" means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. "Trading Prices" means, for any security as of any date, the lowest traded price on the Over-the-Counter Pink Marketplace, OTCQB, or applicable trading market (the "OTCQB") as reported by a reliable reporting service ("Reporting Service") designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. If the Trading Prices cannot be calculated for such security on such date in the manner provided above, the Trading Prices 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 Prices are 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

	 

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period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. If at any time while this Note is outstanding, the lowest Trading Prices on the OTCQB or other applicable principal trading market for the Common Stock is equal to or lower than $0.005, then an additional discount of ten percent (10%) shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 58% assuming no other adjustments are triggered hereunder). In the event that shares of the Borrower's Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional three percent (3%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 51% assuming no other adjustments are triggered hereunder).

Each time, while this Note is outstanding, the Borrower enters into a Section 3(a)(9) transaction (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, in which any 3' party has the right to convert monies owed to that 3rd party (or receive shares pursuant to a settlement or otherwise) at a discount to market greater than the Variable Conversion Price in effect at that time (prior to all other applicable adjustments in the Note), then the Variable Conversion Price shall be automatically adjusted to such greater discount percentage (prior to all applicable adjustments in this Note) until this Note is no longer outstanding. Each time, while this Note is outstanding, the Borrower enters into a Section 3(a)(9) transaction (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) transaction, in which any 3rd party has a look back period greater than the look back period in effect under the Note at that time (currently a ten (10) Trading Day look back period as described in this Section 1.2(a) applies), then the Holder's look back period shall automatically be adjusted to such greater number of days until this Note is no longer outstanding. The Borrower shall give written notice to the Holder, with the adjusted Variable Conversion Price and/or adjusted look back period (each adjustment that is applicable due to the triggering event), within one (1) business day of an event that requires any adjustment described in the two immediately preceding sentences.

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. The Borrower is required at all times to have authorized and reserved ten times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the "Reserved Amount"). The Reserved Amount shall be increased from time to time in accordance with the Borrower's obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that

	 

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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 on or after one hundred and eighty (180) days following the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

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

(c)   Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver

	 

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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.

(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.

	 

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(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 $4,000 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. Except as otherwise provided (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

	 

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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 (H) 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."

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 Borrower 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 Borrower does not accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

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

	 

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1.7   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.

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.

ARTICLE III. EVENTS OF DEFAULT

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

	 

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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, and such breach continues for a period of five (5) days.

3.2   Conversion and the Shares. The Borrower fails to reserve a sufficient amount of shares of common stock as required under the terms of this Note (including Section 1.3 of this Note)(and such breach continues for a period of five (5) days), 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) 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) 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 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 two (2) 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 five (5) business days of a demand from the Holder, either in cash or as an addition to the balance of the Note, and such choice of payment method is at the discretion of the Borrower.

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 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, 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.

	 

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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 ten (10) 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 or quotation of the Common Stock on the OTCQB or an equivalent replacement exchange, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT.

3.9   Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act (including but not limited to becoming delinquent in its filings), 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   Financial Statement Restatement. The Borrower restates any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the imrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.

	 

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3.13   Replacement of Transfer Agent. In the event that the Borrower replaces its transfer agent, and the Borrower fails to provide prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions (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.

3.14   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 financial instrument, including but not limited to all convertible promissory notes, currently issued, or hereafter issued, by the Borrower, to the Holder or any other 3rd party (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, in which event the Holder shall be entitled to apply all rights and remedies of the Holder under the terms of this Note by reason of a default under said Other Agreement or hereunder.

3.15   Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower's filing of a Form 8-K pursuant to Regulation FD on that same date.

3.16   No bid. At any time while this Note is outstanding, the lowest Trading Prices on the OTCQB or other applicable principal trading market for the Common Stock is equal to or less than $0.0001.

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 or upon acceleration), 3.3, 3.4, 3.5, 3.6, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, and/or 3.16 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

12

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 150% multiplied by the then outstanding entire balance of the Note (including principal and accrued and unpaid interest) plus  Default Interest, if any, plus any amounts owed to the Holder pursuant to Sections 1.4(g) hereof (collectively, in the aggregate of all of the above, the "Default Sum"), 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, subject to issuance in tranches due to the beneficial ownership limitations contained in this Note.

ARTICLE W. 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, facsimile, or electronic mail 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, upon electronic mail 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

	 

13

express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Borrower, to:

 BEMAX, INC.

625 Silver Oak Drive

  Dallas, GA 30132

e-mail: Admin,Bemaxinc.com

If to the Holder:

CROWN BRIDGE PARTNERS, LLC  

1173a 2nd Avenue, Suite 126

  New York, NY 10065

e-mail: Info0CrownBridgeCapital.corn

with a copy to:

Laura Anthony, Esq.

Legal & Compliance, LLC

330 Clematis Street, Suite 217

West Palm Beach, FL 33401

e-mail: LAnthonv(d),LegalandCompliance.com

4.3   Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

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

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

	 

14

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 and/or federal courts of New York. 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   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

	 

15

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.

4.9   Prepayment. Notwithstanding anything to the contrary contained in this Note, the Borrower may prepay any amount outstanding under this Note, during the initial 90 day period after the issuance of this Note, by making a payment to the Holder of an amount in cash equal to 130% multiplied the amount that the Borrower is prepaying. Further, the Borrower may prepay any amount outstanding under this Note, from the 91st day through the 180th day after the issuance of this Note, by making a payment to the Holder of an amount in cash equal to 150% multiplied the amount that the Borrower is prepaying. The Borrower may not prepay any amount outstanding under this Note after the 180th day after the issuance of this Note.

4.10   Section 3(a)(10) Transactions. If at any time while this Note is outstanding, the Borrower enters into a transaction structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a "3(a)(10) Transaction"), then a liquidated damages charge of 25% of the outstanding principal balance of this Note at that time, will be assessed and will become immediately due and payable to the Holder, either in the form of cash payment or as an addition to the balance of the Note, as determined by mutual agreement of the Borrower and Holder.

4.11   Reverse Split Penalty. If at any time while this Note is outstanding, the Borrower effectuates a reverse split with respect to the Common Stock, then a liquidated damages charge of 25% of the outstanding principal balance of this Note at that time, will be assessed and will become immediately due and payable to the Holder, either in the form of cash payment or as an addition to the balance of the Note, as determined by mutual agreement of the Borrower and Holder.

4.12   Right of First Refusal. If at any time while this Note is outstanding, the Borrower has a bona fide offer of capital or financing from any 3rd party, that the Borrower intends to act upon, then the Borrower must first offer such opportunity to the Holder to provide such capital or financing to the Borrower on the same terms as each respective 3rd party's terms. Should the Holder be unwilling or unable to provide such capital or financing to the Borrower within 3 trading days from Holder's receipt of written notice of the offer (the "Offer Notice") from the Borrower, then the Borrower may obtain such capital or fmancing from that respective 3rd party upon the exact same terms and conditions offered by the Borrower to the Holder, which transaction must be completed within 30 days after the date of the Offer Notice. If the Borrower does not receive the capital or financing from the respective 3rd party within 30 days after the date of the respective Offer Notice, then the Borrower must again offer the capital or financing opportunity to the Holder as described above, and the process detailed above shall

	 

16

be repeated. The Offer Notice must be sent via electronic mail to

lnfo(i-P,CrownBridgeCapital.com.

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this February 16, 2016,

BEMAX,

By:

Name: Taiwo Aima

Title: Chief Executive Officer

	 

17

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 BEMAX, INC., a Nevada corporation (the "Borrower") according to the conditions of the convertible note of the Borrower dated as of February 16, 2016 (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:

CROWN BRIDGE PARTNERS, LLC 

1173a 2nd Avenue, Suite 126

New York, NY 10065

e-mail: Info@CrownBridgeCapital.com

Date of Conversion:

Applicable Conversion Price: $

Number of Shares of Common Stock to be Issued

                                Pursuant to Conversion of the Notes:

                                 Amount of Principal Balance Due remaining

                                Under the Note after this conversion:

CROWN BRIDGE PARTNERS, LLC

By: 

Name: 

Title: 

Date:

  

 

18ESCROW
DEPOSIT AGREEMENT

 

This
ESCROW DEPOSIT AGREEMENT (this “Agreement”) dated as of this [___] day of [_____] 2016, by and among
SQN AIF V GP, LLC, a Delaware limited liability Company (the “General Partner”), having an address at
100 Arboretum Drive, Suite 105, Newington, New Hampshire 03801, SQN ASSET INCOME FUND V, L.P., a Delaware limited
partnership (the “Partnership”), having an address at 100 Arboretum Drive, Suite 105, Newington, New Hampshire
03801, SQN SECURITIES, LLC, a Delaware limited liability Company (the “Selling Agent”), having
an address at 100 Arboretum Drive, Suite 105, Newington, New Hampshire 03801 and SIGNATURE BANK, a New York State
chartered bank (the “Escrow Agent”), having an office at 300 Park Avenue, New York, New York 10022.

 

W
I T N E S S E T H:

 

WHEREAS,
the Partnership will offer and sell up to 25,000,000 of its limited partnership interests (the “Units”) to
investors meeting certain suitability standards at $10 per Unit (the “Offering”);

 

WHEREAS,
each person who subscribes for the purchase of Units (a “Subscriber”) will be required to pay his, hers or
its subscription in full at the time of subscription by check or wire (the “Subscription Proceeds”);

 

WHEREAS,
the Selling Agent has executed an agreement (the “Selling Agent Agreement”) with the Partnership and the General
Partner under which the Selling Agent will solicit subscriptions in certain states on a “best efforts” basis for Subscription
Proceeds of up to $250,000,000;

 

WHEREAS,
under the terms of the Selling Agent Agreement, the Subscription Proceeds are required to be held in an escrow account (the “Escrow
Account”) subject to the receipt and acceptance by the General Partner of subscriptions for 120,000 Units or $1,200,000,
excluding any subscriptions, if any, by the General Partner and its affiliates and Pennsylvania residents (the “Minimum
Amount”);

 

WHEREAS,
unless the Minimum Amount is sold by [ INSERT DATE THAT IS  
 ONE YEAR FROM THE DATE OF COMMENCEMENT], 2017 (the “Termination Date”), the Offering shall terminate and all funds shall be returned to the subscribers
in the Offering; and

 

WHEREAS,
no subscriptions to the Partnership will be accepted after receipt and acceptance of subscriptions for 25,000,000 Units or $250,000,000
or the termination of the Offering, whichever is the first to occur;

 

WHEREAS,
to facilitate compliance with the terms of the Selling Agent Agreement and Rule 15c2-4 adopted under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), the Partnership, the General Partner and the Selling Agent desire
to have the Subscription Proceeds deposited with the Escrow Agent until the Minimum Amount has been obtained and the Escrow Agent
agrees to hold the Subscription Proceeds under the terms and conditions set forth in this Agreement;

 

    	 	1	 

    	 

    

 

WHEREAS,
the Partnership, General Partner, and Selling Agent, represent and warrant to the Escrow Agent that they will comply with all
of their respective obligations under applicable state and federal securities laws and regulations with respect to the sale of
Units; and

 

WHEREAS,
the Partnership, General Partner and Selling Agent represent and warrant to the Escrow Agent that they have not stated to any
individual or entity that the Escrow Agent’s duties will include anything other than those duties stated in this Agreement;
and

 

WHEREAS,
the Partnership, General Partner and Selling Agent represent and warrant to the Escrow Agent that a copy of each document that
has been delivered to Subscribers and third parties that include Escrow Agent’s name and duties is attached hereto as Schedule
I.

 

NOW,
THEREFORE, IT IS AGREED as follows:

 

1.Delivery
of Escrow Funds; Investment of Subscription Proceeds .

 

(a)Pending receipt
of the Minimum Offering Amount, and subject to Section 10, the Selling Agent and the General Partner shall deposit the Subscription
Proceeds of each Subscriber to whom they sell Units with the Escrow Agent in accordance with the following (i) and (ii) and
shall also deliver to the Escrow Agent a copy of the Subscription Agreement; (i) each Subscription Agreement and related subscription
payment shall be forwarded by the Selling Agent to the General Partner no later than noon of the next day after receipt from the
Selling Agent’s customer by any member or associate of the Selling Agent of such payment, unless (ii) such Subscription
Agreement and payment are first forwarded to another of the Selling Agent’s offices for internal supervisory review (which
shall take place within the aforementioned time period), in which event such other office shall complete its review and forward
such Subscription Agreement and payment to the General Partner no later than noon of the next business day after its receipt thereof.
Each such subscription payment received by the Partnership and accepted by the General Partner will be transmitted, as soon as
practicable, but in any event by no later than noon of the second business day following the Selling Agent’s receipt thereof,
to the Escrow Agent for deposit in the Escrow Account pending the date upon which investors are admitted as Limited Partners of
the Partnership and will be thereafter distributed to a segregated subscription account of the Partnership by Escrow Agent upon
written direction in accordance with Section 2(c) . A “Subscription Agreement” is the execution and subscription
instrument signed by the Subscriber to evidence such Subscriber’s agreement to purchase Units.

 

(b)Pending
receipt of the Minimum Amount, and subject to Section 10, the Selling Agent and the General Partner shall instruct Subscribers
to deliver to Escrow Agent checks made payable to the order of “Signature Bank, as Escrow Agent for SQN Asset Investment
Fund V, L.P. or wire transfer to Signature Bank, 300 Park Avenue, New York, New York 10022, ABA No. 026013576 for credit
to “SQN Asset Investment Fund V, L.P, Signature Bank, as Escrow Agent for” Account No. [_______________________], in
each case, with the name and address of the individual or entity making payment. In the event any Subscriber’s address is
not provided to Escrow Agent by the Subscriber, then the General Partner and/or the Selling Agent agree to promptly provide Escrow
Agent with such information in writing. The checks or wire transfers shall be deposited into an interest-bearing account at Signature
Bank entitled “SQN Asset Investment Fund V, L.P Signature Bank, as Escrow Agent”. Verification of the Subscription
Proceeds by the Escrow Agent will be available via direct, online access, telecopier, or other electronic media as soon as practicable
after receipt. For the purposes of this Agreement, a “Business Day” is any day other than a Saturday, Sunday
or any day on which commercial banks in New York, New York are authorized or required to close. The collected funds deposited
into the Escrow Account are referred to as the “Escrow Funds.”

 

(c)The
Escrow Agent shall have no duty or responsibility to enforce the collection or demand payment of any funds deposited into the
Escrow Account. If, for any reason, any check deposited into the Escrow Account shall be returned unpaid to the Escrow Agent,
the sole duty of the Escrow Agent shall be to return the check to the Subscriber and advise the General Partner and Selling Agent
promptly thereof.

 

    	 	2	 

    	 

    

 

(d)Subject
to Section 10, the Escrow Agent shall deposit all Subscription Proceeds into Signature Bank’s Monogram Insured Money
Market Deposit Account For Business. Interest accrued on Subscription Proceeds held in the Escrow Account shall not be an asset
of the Partnership, but shall be added to the Subscription Proceeds and disbursed in accordance with the terms of this Agreement.
Such amounts of interest are referred to in this Agreement as “Interest Proceeds.”

 

2.Release
of Escrow Funds. The Escrow Funds shall be paid by the Escrow Agent in accordance with the following:

 

(a)In
the event that the General Partner advises the Escrow Agent in writing that the Offering has been terminated (the “Termination
Notice”), the Escrow Agent shall promptly distribute to each Subscriber the Subscription Proceeds received from such
Subscriber plus their pro rata portion of the Interest Proceeds calculated pursuant to Section 7.

 

(b)If
by 3:00 P.M. Eastern time on the Termination Date, the Escrow Agent has not received written instructions from the General Partner
regarding the disbursement of the Escrow Funds and the total amount of the Escrow Funds is less than the Minimum Amount, then
the Escrow Agent shall promptly distribute to each Subscriber the Subscription Proceeds received from such Subscriber plus their
pro rata portion of the Interest Proceeds calculated pursuant to Section 7.

 

(c)Provided
that the Escrow Agent does not receive the Termination Notice in accordance with Section 2(a) and the Minimum Amount has been
deposited into the Escrow Account on or prior to the Termination Date, the Escrow Agent shall, upon receipt of written instructions,
in the form of Exhibit A, attached hereto and made a part hereof, or in a form and substance satisfactory to the Escrow
Agent, received from the General Partner, pay the Escrow Funds to a segregated subscription account of the Partnership
in accordance with such written instructions. Such notice shall state the date on which the initial closing date and release of
the deposited Subscription Proceeds and all related Interest Proceeds shall occur. The Escrow Agent shall make such distributions
to the General Partner on the initial closing date provided that such notice is received by 3:00 p.m. ET on a Business Day for
the Escrow Agent to process such instructions that Business Day.

 

(d)If
a subscription for Units is rejected by the General Partner or duly cancelled by a Subscriber after the Subscription Proceeds
relating to the subscription have been deposited in the Escrow Account, the General Partner shall notify the Escrow Agent of the
rejection or cancellation, and the Escrow Agent shall promptly distribute to the Subscriber a refund check made payable to such
Subscriber in an amount equal to the deposited Subscription Proceeds received from such Subscriber plus any Interest Proceeds
calculated pursuant to Section 7.

 

(e)The
Escrow Agent shall not be required to pay any uncollected funds or any funds that are not available for withdrawal. Should any
party to this Agreement be a non-U.S. entity, the Escrow Agent may require up to an additional five (5) Business Days to open
the Escrow Account.

 

(f)The
Escrow Funds returned to each Subscriber shall be free and clear of any and all claims of the Escrow Agent.

 

    	 	3	 

    	 

    

 

3.Acceptance
by Escrow Agent; Duties and Liability of Escrow Agent. The Escrow Agent hereby accepts and agrees to perform its obligations
hereunder, provided that:

 

(a)The
Escrow Agent may act in reliance upon any signature believed by it to be genuine, and may assume that any person who has been
designated by Selling Agent, the General Partner or the Partnership to give any written instructions, notice or receipt, or make
any statements in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent shall have no duty
to make inquiry as to the genuineness, accuracy or validity of any statements or instructions or any signatures on statements
or instructions. The names and true signatures of each individual authorized to act singly on behalf of the General Partner, Partnership
and Selling Agent are stated in Schedule II, which is attached hereto and made a part hereof. The General Partner, Partnership
and Selling Agent may each remove or add one or more of its authorized signers stated on Schedule II by notifying the Escrow
Agent of such change in accordance with this Agreement, which notice shall include the true signature for any new authorized signatories.

 

(b)The
Escrow Agent may act relative hereto in reliance upon advice of counsel in reference to any matter connected herewith. The Escrow
Agent shall not be liable for any mistake of fact or error of judgment or law, or for any acts or omissions of any kind, unless
caused by its willful misconduct or gross negligence.

 

(c)The
Escrow Agent, in its capacity as escrow agent under this Agreement, shall not have any liability for any loss sustained as a result
of any investment made by the Escrow Agent in accordance with this Agreement, in accordance with applicable laws, rules and regulations,
pursuant to the direction of the General Partner or as a result of any liquidation of any investment prior to its maturity. Any
such investment of Escrow Account shall be made in compliance with Rule 15c2-4 of the Exchange Act.

 

(d)The
Selling Agent, Partnership and the General Partner agree to indemnify and hold the Escrow Agent harmless from and against any
and all claims, losses, costs, liabilities, damages, suits, demands, judgments or expenses (including but not limited to reasonable
attorney’s fees) claimed against or incurred by Escrow Agent arising out of or related, directly or indirectly, to this
Escrow Agreement unless caused by the Escrow Agent’s gross negligence or willful misconduct.

 

(e)
In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled
to (i) refrain from taking any action other than to keep safely the Escrow Funds until it shall be directed otherwise by a court
of competent jurisdiction, or (ii) deliver the Escrow Funds to a court of competent jurisdiction.

 

(f)The
Escrow Agent shall have no duty, responsibility or obligation to interpret or enforce the terms of any agreement other than Escrow
Agent’s obligations hereunder, and the Escrow Agent shall not be required to make a request that any monies be delivered
to the Escrow Account, it being agreed that the sole duties and responsibilities of the Escrow Agent shall be to the extent not
prohibited by applicable law (i) to accept checks or other instruments for the payment of money and wire transfers delivered to
the Escrow Agent for the Escrow Account and deposit said checks and wire transfers into the non-interest bearing Escrow Account,
and (ii) to disburse or refrain from disbursing the Escrow Funds as stated above, provided that the checks received by the Escrow
Agent have been collected and are available for withdrawal.

 

    	 	4	 

    	 

    

 

4.Escrow
Account Statements and Information. The Escrow Agent agrees to send to the General Partner and/or the Selling Agent
a copy of the Escrow Account periodic statement, upon request in accordance with the Escrow Agent’s regular practices for
providing account statements to its non-escrow clients, and to also provide the Partnership and/or Selling Agent, or their designee,
upon request other deposit account information, including Escrow Account balances, by telephone or by computer communication,
to the extent practicable. The General Partner and Selling Agent agree to complete and sign all forms or agreements required by
the Escrow Agent for that purpose. The General Partner and Selling Agent each consents to the Escrow Agent’s release of
such Escrow Account information to any of the individuals designated by the General Partner or the Selling Agent, as applicable,
which designation has been signed in accordance with Section 3(a) by any of the persons in Schedule II. Further, the General
Partner and Selling Agent have an option to receive e-mail notification of incoming and outgoing wire transfers. If this e-mail
notification service is requested and subsequently approved by the Escrow Agent, the General Partner and/or Selling Agent agrees
to provide a valid e-mail address and other information necessary to set-up this service and sign all forms and agreements required
for such service. The General Partner and Selling Agent each consents to the Escrow Agent’s release of wire transfer information
to the designated e-mail address(es). The Escrow Agent’s liability for failure to comply with this section shall not exceed
the cost of providing such information.

 

5.Resignation
and Termination of the Escrow Agent. The Escrow Agent may resign at any time by giving thirty (30) days’ prior written
notice of such resignation to the Selling Agent and the General Partner. Upon providing such notice, the Escrow Agent shall have
no further obligation hereunder except to hold as depository the Escrow Funds that it receives until the end of such thirty (30)-day
period. In such event, the Escrow Agent shall not take any action, other than receiving and depositing Subscribers checks and
wire transfers in accordance with this Agreement, until the General Partner has designated a banking corporation, trust company,
attorney or other person as successor. Upon receipt of such written designation signed by the General Partner, the Escrow Agent
shall promptly deliver the Escrow Funds to such successor and shall thereafter have no further obligations hereunder. If such
instructions are not received within thirty (30) days following the effective date of such resignation, then the Escrow Agent
may deposit the Escrow Funds held by it pursuant to this Agreement with a clerk of a court of competent jurisdiction pending the
appointment of a successor. In either case provided for in this section, the Escrow Agent shall be relieved of all further obligations
and released from all liability thereafter arising with respect to the Escrow Funds.

 

6.Termination.
The General Partner may terminate the appointment of the Escrow Agent hereunder upon written notice specifying the date upon which
such termination shall take effect, which date shall be at least thirty (30) days from the date of such notice. In the event of
such termination, the General Partner shall, within thirty (30) days of such notice, appoint a successor escrow agent and the
Escrow Agent shall, upon receipt of written instructions signed by the General Partner, turn over to such successor escrow agent
all of the Escrow Funds; provided, however, that if the General Partner fails to appoint a successor escrow agent
within such thirty (30) day period, such termination notice shall be null and void and the Escrow Agent shall continue to be bound
by all of the provisions hereof. Upon receipt of the Escrow Funds, the successor escrow agent shall become the escrow agent hereunder
and shall be bound by all of the provisions hereof and Escrow Agent shall be relieved of all further obligations and released
from all liability thereafter arising with respect to the Escrow Funds and under this Agreement.

 

    	 	5	 

    	 

    

 

7.Calculation
and Payment of Interest.

 

(a)If
the Subscription Proceeds and any Interest Proceeds become distributable to the Subscribers pursuant to Section 2, the General
Partner shall compute the pro rata share of interest paid or earned on the applicable Subscription Proceeds, shall inform the
Escrow Agent of these amounts and the Escrow Agent shall distribute the Interest Proceeds pro rata to the Subscribers.

 

(b)The
General Partner agrees and represents to the Escrow Agent that any interest or other income earned on the Escrow Account shall
for the purposes of reporting such income to the appropriate taxing authorities be deemed to be earned by the General Partner,
unless the Escrow Funds are returned to the Subscribers in accordance with this Agreement. The General Partner represents that
it is a US person as that term is defined by the Internal Revenue Service. To the extent that the income is not earned by the
General Partner, then the General Partner shall assume the responsibility, if any, of reporting to the appropriate taxing authorities
that it has received that income as nominee for others. The General Partner agrees to provide the Escrow Agent with a certified
tax identification number by signing and returning a Form W-9 to the Escrow Agent upon execution of this Escrow Agreement. The
General Partner understands that, in the event the General Partner’s tax identification number is incorrect or is not certified
to the Escrow Agent, the Internal Revenue Code, as amended from time to time, may require withholding of a portion of any interest
or other income earned on the Escrow Funds. The General Partner agrees to assume any and all obligations imposed, now or hereafter,
by the applicable tax law and/or applicable taxing authorities, with respect to any interest or other income earned on the Escrow
Funds and to indemnify and hold the Escrow Agent harmless from any liability or obligation on account of taxes, assessments, additions
for late payment, interest, penalties, expenses and other governmental charges that may be assessed or asserted against the Escrow
Agent in connection with or relating to any payment made or other activities performed under the terms of this Agreement, including
without limitation any liability for the withholding or deduction of (or the failure to withhold or deduct) the same, and any
liability for the failure to obtain proper certifications or to report properly to governmental authorities in connection with
this Agreement, including costs and expenses (including reasonable legal fees and expenses) interest and penalties, in each such
case to the extent applicable to, or arising in respect of, the interest earned on the Escrow Account, unless such liability is
caused by the Escrow Agent’s gross negligence or willful misconduct or bad faith. The foregoing indemnification and agreement
to hold harmless shall survive the termination of this Agreement.

 

8.Compensation.
The Escrow Agent shall be entitled, for the duties to be performed by it hereunder, to a fee of $4,000.00, which fee shall be
paid by the General Partner upon the signing of this Agreement. In addition, the General Partner shall be obligated to reimburse
Escrow Agent for all fees, costs and expenses incurred or that become due in connection with this Agreement or the Escrow Account,
including reasonable attorneys’ fees. Neither the modification, cancellation, termination or rescission of this Agreement
nor the resignation or termination of the Escrow Agent shall affect the right of the Escrow Agent to retain the amount of any
fee which has been paid, or to be reimbursed or paid any amount which has been incurred or becomes due, prior to the effective
date of any such modification, cancellation, termination, resignation or rescission. To the extent the Escrow Agent has incurred
any such expenses, or any such fee becomes due, prior to any closing, the Escrow Agent shall advise the General Partner and the
General Partner shall direct all such amounts to be paid directly at any such closing. The Escrow Agent shall be entitled to a
fee of $1,000 in the event the Agreement is amended for any reason in accordance with Section 11(d).

 

    	 	6	 

    	 

    

 

9.Notices.
All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given if sent by hand-delivery, by facsimile (followed by first-class mail), by nationally recognized
overnight courier service or by prepaid registered or certified mail, return receipt requested, to the addresses set forth below:

  

If
to Selling Agent: 

 100
Arboretum Drive, Suite 105 

 Newington,
New Hampshire 03801 

Attention:
Legal Department

Fax:
(646) 774-4991

 

If
to the General Partner or the Partnership:

 100
Arboretum Drive, Suite 105 

 Newington,
New Hampshire 03801 

Attention:
Legal Department

Fax:
(646) 774-4991

 

If
to Escrow Agent: 

485
Madison Avenue, 11th Floor

New
York, New York 10022

Attention:
Chris Efstratiou

Fax:
(646) 822-1621 

 

If
any date that is a deadline under this Agreement for giving the Escrow Agent notice or instructions or for the Escrow Agent to
take action is not a Business Day, then such date shall be the Business Day immediately preceding that date.

 

The
Escrow Agent shall not be obligated to accept any notice, make any delivery, or take any other action under this Agreement unless
the notice or request or demand for delivery or other action is in writing and given or made by the party given the right or charged
with the obligation under this Agreement to give the notice or to make the request or demand. In no event shall the Escrow Agent
be obligated to accept any notice, request, or demand from anyone other than the General Partner.

 

    	 	7	 

    	 

    

 

10.Subscriptions
of Pennsylvania Residents.

 

(a)The
Escrow Agent shall deposit Subscription Proceeds from Pennsylvania residents into a separate escrow account having account #_______________,
titled “SQN Asset Investment Fund V, L.P, Signature Bank, as Escrow Agent for” to be held in escrow pursuant to this
Agreement for up to 120 days after the respective Subscription Proceeds of each investor are received, except as provided in (b)
below. Funds shall be released from that account in accordance with Section 2 (and Subscription Proceeds from Pennsylvania residents
may be deposited in a separate Partnership account in accordance with Section 10) only if the aggregate of all Subscription Proceeds
received and accepted by the General Partner, including those from Pennsylvania residents, total $10,000,000 or more. The Selling
Agent and the General Partner will specifically identify subscriptions of Pennsylvania residents to the Escrow Agent and will
not commingle those subscriptions with subscriptions of residents of other states.

 

(b)If
the total Subscription Proceeds, including Subscription Proceeds received from Pennsylvania residents, of at least $10,000,000
have not been received at the end of the first 120 day escrow period, the Partnership must notify the Pennsylvania Subscribers
in writing by certified mail or any other means whereby a receipt of delivery is obtained within 10 calendar days after the end
of the escrow period that they have a right to have their Subscription Proceeds returned to them, together with any interest earned
thereon and without deduction for any fees. If a Subscriber requests the return of the Subscriber’s Subscription Proceeds
within 10 calendar days after receipt of notification, the General Partner must promptly notify the Escrow Agent in writing to
return that Subscriber’s Subscription Proceeds within 15 calendar days after the General Partner’s receipt of the
Subscriber’s request. If the Subscriber does not timely request the return of the Subscriber’s Subscription Proceeds,
then the Subscriber’s Subscription Proceeds shall continue to be held in the escrow account for an additional 120 day period
under the terms and conditions of this Agreement, and this Section 10 shall again apply to the Subscriber’s Subscription
Proceeds.

 

11.General.

 

(a)This
Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements
made and to be entirely performed within such State, without regard to choice of law principles, and any action brought hereunder
shall be brought in the courts of the State of New York, located in the County of New York. Each party hereto irrevocably waives
any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service
of process by mail or in any manner permitted by applicable law and consents to the jurisdiction of said courts. EACH OF THE PARTIES
HERETO HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.

 

(b)This
Agreement sets forth the entire agreement and understanding of the parties with respect to the matters contained herein and supersedes
all prior agreements, arrangements and understandings relating thereto.

 

(c)All
of the terms and conditions of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the parties
hereto, as well as their respective successors and assigns.

 

    	 	8	 

    	 

    

 

(d)This
Agreement may be amended, modified, superseded or canceled, and any of the terms or conditions hereof may be waived, only by a
written instrument executed by each party hereto or, in the case of a waiver, by the party waiving compliance. The failure of
any party at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time
to enforce the same. No waiver of any party of any condition, or of the breach of any term contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of
any such condition or breach or a waiver of any other condition or of the breach of any other term of this Agreement. No party
may assign any rights, duties or obligations hereunder unless all other parties have given their prior written consent.

 

(e)If
any provision included in this Agreement proves to be invalid or unenforceable, it shall not affect the validity of the remaining
provisions.

 

(f)This
Agreement and any modification or amendment of this Agreement may be executed in several counterparts or by separate instruments
and all of such counterparts and instruments shall constitute one agreement, binding on all of the parties hereto.

 

12.Form
of Signature. The parties hereto agree to accept a facsimile transmission copy of their respective actual signatures as evidence
of their actual signatures to this Agreement and any modification or amendment of this Agreement; provided, however,
that each party who produces a facsimile signature agrees, by the express terms hereof, to place, promptly after transmission
of his or her signature by fax, a true and correct original copy of his or her signature in overnight mail to the address of the
other party.

 

13.No
Third-Party Beneficiaries. This Agreement is solely for the benefit of the parties and their respective successors and permitted
assigns, and no other person has any right, benefit, priority, or interest under or because of the existence of this Agreement.

 

    	 	9	 

    	 

    

 

IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above.

 

SQN
ASSET INCOME FUND V, L.P.

 

	By:
    SQN AIF V GP, LLC, its general partner	 
	 	 	 
	By:
    		 
	 	 	 
	Name:
    	 	 
	Title:	 	 
	 	 	 
	SQN
    AIF V GP, LLC	 
	 	 	 
	By:
    		 
	 	 	 
	Name:
    	 	 
	Title:	 	 
	 	 	 
	SQN
    SECURITIES, LLC	 
	 	 	 
	By:
    	 	 
	 	 	 
	Name:
    	 	 
	Title:
    	 	 
	 	 	 
	SIGNATURE
    BANK	 
	 	 	 
	By:
    	 	 
	 	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	By:
    	 	 
	 	 	 
	Name:	 	 
	Title:	 	 

  

    	 	10	 

    	 

    

  

Schedule
I

 

OFFERING
DOCUMENTS

 

    	 	 	 

    	 

    

 

Schedule
II

 

The
Escrow Agent is authorized to accept instructions signed or believed by the Escrow Agent to be signed by any one of the following
on behalf of the General Partner.

 

SQN
AIF V GP, LLC

 

	Name	 	True
    Signature
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

    	 	 	 

    	 

    

 

Exhibit
A

 

FORM
OF ESCROW RELEASE NOTICE

 

Date:

 

Signature
Bank

485
Madison Avenue, 11th Floor

New
York, New York 10022

Attention:
Chris Efstratiou

 

Mr.
Efstratiou:

 

In
accordance with the terms of Section 2(c) of an Escrow Deposit Agreement dated as of ________ __, 201_ (the “Escrow Agreement”),
by and among SQN AIF V GP, LLC, a Delaware limited liability Company (the “General Partner”), SQN Asset Income
Fund V, L.P., a Delaware limited partnership and SIGNATURE BANK, a New York State chartered bank (the “Escrow
Agent”), the General Partner hereby notify the Escrow Agent that the initial closing will be held on ___________ for
gross proceeds of $_________.

 

PLEASE
DISTRIBUTE FUNDS BY WIRE TRANSFER AS FOLLOWS (wire instructions attached):

 

Very
truly yours,

 

SQN
AIF V GP, LLC

 

	By:	 	 
	Name:	 	 
	Title:

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