Document:

Exhibit
10.78

 

SETTLEMENT
AGREEMENT AND STIPULATION

 

THIS
SETTLEMENT AGREEMENT and Stipulation dated as of September 20, 2013 by and
between
ASC Recap LLC ("ASC"), a limited liability company formed under the laws of the State of Connecticut, with offices in
Fairfield County, Connecticut, and Bioneutral Group, Inc., a corporation incorporated under the laws of Nevada, with offices in
Newark, New Jersey ("COMPANY").

 

BACKGROUND:

 

WHEREAS,
there are bona fide outstanding Claims against the Company in the principal amount of not less than $266,298.17; and

 

WHEREAS,
these liabilities are past due; and

 

WHEREAS,
ASC acquired such liabilities on the terms and conditions set forth in the annexed Claim Purchase Agreement(s), subject however
to the agreement of the Company and compliance with the provisions hereof; and

 

WHEREAS,
ASC and the Company desire to resolve, settle, and compromise among other things the liabilities as more particularly set forth
on Schedule A annexed hereto (hereinafter collectively referred to as the "Claims").

 

NOW,
THEREFORE, the parties hereto agree as follows:

 

1.     Defined
Terms. As used in this Agreement, the following terms shall have the following meanings specified or indicated (such meanings
to be equally applicable to both the singular and plural forms of the terms defined): 

 

"AGREEMENT"
shall have the meaning specified in the preamble hereof.

 

    	1

    	 

    

  

"CLAIM
AMOUNT" shall mean $266,298.17.

 

"COMMON
STOCK" shall mean the Company's common stock, $0.00001 par value per share, and any shares of any other class of common stock
whether now or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and
assets (upon liquidation of the Company).

 

"COURT"
shall mean the Superior Court of the State of New Jersey.

 

"DISCOUNT"
shall mean twenty five (20%) percent.

 

"DTC"
shall have the meaning specified in Section 3b.

 

"DWAC"
shall have the meaning specified in Section 3b.

 

"FAST"
shall have the meaning specified in Section 3b.

 

"GROSS
PROCEEDS" shall mean proceeds from sales of Settlement Shares by ASC. "LEGAL FEES" shall have the meaning specified
in Section 3a.

 

"NET
PROCEEDS" shall mean Gross Proceeds less all brokerage, clearing and delivery related fees and charges associated with the
generation of such Gross Proceeds, including but not limited to, commission and execution fees, ticket and deposit fees, DTC and
Non-DTC, transfer agent and clearing agent fees.

 

"PRINCIPAL
MARKET" shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the Over the Counter Bulletin Board, OTCXD, the
American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock.

 

    	2

    	 

    

 

"REMITTANCE
AMOUNT" shall mean NET
PROCEEDS multiplied by one minus the Discount ((1  – 0.20)
or 0.80);

 

"SELLER"
shall mean any individual or entity listed on Schedule A, who originally owned the Claims.

 

"SETTLEMENT
SHARES" shall have the meaning specified in Section 3a.

 

"TRADING
DAY" shall mean any day during which the Principal Market shall be open for business.

 

"TRANSFER
AGENT" shall mean the transfer agent for the Common Stock (and to any substitute or replacement transfer agent for the Common
Stock upon the Company's appointment of any such substitute or replacement transfer agent).

 

2.     Fairness
Hearing. Upon the execution hereof, Company and ASC agree, pursuant to Section 3(a) (10) of the Securities Act of 1933 (the
"Act") , to promptly submit the terms and conditions of this Agreement to the Court for a hearing on the fairness of
such terms and conditions, and the issuance exempt from registration of the Settlement Shares. This Agreement shall become binding
upon the parties only upon entry of an order by the Court substantially in the form annexed hereto as Exhibit A (the "Order").

 

    	3

    	 

    

 

3.     Settlement
Shares. a. Following entry of an Order by the Court in accordance with Paragraph 2 herein and the delivery by ASC and Company
of the Stipulation of Dismissal (as defined below), in settlement of the Claims, the Company shall issue and deliver to ASC shares
of its Common Stock (the "Settlement Shares") in one or more tranches as necessary,and subject to adjustment and ownership
limitations as set forth below, sufficient to generate proceeds such that the aggregate Remittance Amount equals the Claim Amount.
In addition, upon the execution of this Agreement, the Company shall issue to ASC a convertible promissory note in the amount
of $15,000.00, maturing six (6) months from the date of issuance, to cover legal expenses (the "Legal Fee"). The Note
shall have no registration rights, and shall be convertible into the common stock of the Company at 75% of the lowest closing
bid price during the twenty (20) Trading Days prior to conversion. 

 

b.     No
later than the fifth Trading Day following the date that the Court enters the Order, time being of the essence, Company shall:
(i) cause its legal counsel to issue an opinion to Company's transfer agent, in form and substance reasonably acceptable to ASC
and such transfer agent, that the shares of Common Stock to be issued as the Initial Issuance and any additional issuance are
legally issued, fully paid and non-assessable, are exempt from registration under the Securities Act, may be issued without restrictive
legend, and may be resold by ASC without restriction pursuant to the Court Order; and (ii) issue the Settlement Shares, in tranches
as necessary, by physical delivery, or as Direct Registration Systems (DRS) shares to ASC's account with The Depository Trust
Company (DTC) or through the Fast Automated Securities Transfer (FAST) Program of DTC's Deposit/Withdrawal Agent Commission (DWAC)
system, without any legends or restriction on transfer pursuant to the Court Order. The date upon which the first tranche of the
Settlement Shares has been received into ASC's account and are available for sale by ASC shall be referred to as the "Issuance
Date".

 

    	4

    	 

    

 

c.     The
Company shall deliver to ASC, through the initial tranche and any required additional tranches, that number of Settlement Shares
the proceeds of sales of which generate an aggregate Remittance Amount equal to the Claim Amount. Following the sale and settlement
of each tranche of Settlement Shares issued by the Company to ASC, ASC shall cause to be disbursed the Remittance Amount associated
with such tranche to Sellers in accordance with the Claim Purchase Agreements. To the extent that the Company issues Settlement
Shares in excess of that necessary to satisfy the aggregate Claim Amount, ASC shall return any excess Settlement Shares to Company
for retirement to treasury stock. The parties reasonably estimate that the fair market value of the Settlement Shares and all
other amounts received or to be received by ASC is equal to approximately $330,000.00. The parties acknowledge that the number
of Settlement Shares to be issued pursuant to this Agreement is indeterminable as of the date of its execution, and could well
exceed the current existing number of shares outstanding as of the date of its execution.

 

d.     Notwithstanding
anything to the contrary contained herein, the Settlement Shares beneficially owned by ASC at any given time shall not exceed
the number of such shares that, when aggregated with all other shares of Company then beneficially owned by ASC, or deemed beneficially
owned by ASC, would result in ASC owning more than 9.99% of all of such Common Stock as would be outstanding on such date, as
determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. In compliance therewith,
the Company agrees to deliver the Initial Issuance and any additional issuances in one or more tranches.

 

    	5

    	 

    

 

4.     Necessary
Action. At all times after the execution of this Agreement and entry of the Order by the Court, each party hereto agrees to
take or cause to be taken all such necessary action including, without limitation, the execution and delivery of such further
instruments and documents, as may be reasonably requested by any party for such purposes or otherwise necessary to effect and
complete the transactions contemplated hereby.

 

5.     Releases.
Upon receipt of all of the Settlement Shares required to be delivered hereby, in consideration of the terms and conditions
of this Agreement, and except for the obligations, representations and covenants arising or made hereunder or a breach hereof,
the parties hereby release, acquit and forever discharge the other and each, every and all of their current and past officers,
directors, shareholders, affiliated corporations, subsidiaries, agents, employees, representatives, attorneys, predecessors, successors
and assigns (the "Released Parties"), of and from any and all claims, damages, cause of action, suits and costs, of
whatever nature, character or description, whether known or unknown, anticipated or unanticipated, which the parties may now have
or may hereafter have or claim to have against each other with respect to the Claims. Nothing contained herein shall be deemed
to negate or affect ASC's right and title to any securities heretofore or hereafter issued to it by Company or any subsidiary
of Company.

 

    	6

    	 

    

 

6.     Representations.
Company hereby represents, warrants and covenants to ASC as follows:

 

a.     There
are 200,000,000 shares of Common Stock of the Company authorized, of which 164,616,730 Shares of Common Stock are issued and outstanding
as of September 10, 2013;

 

b.     The
shares of Common Stock to be issued pursuant to the Order are duly authorized, and when issued will be duly and validly issued,
fully paid and non-assessable, free and clear of all liens, encumbrances and preemptive and similar rights to subscribe for or
purchase securities;

 

c.     Upon
Court approval of this Stipulation and entry of the Order, the shares will be exempt from registration under the Securities Act
and issuable without any restrictive legend;

 

d.     The
Company has reserved from its duly authorized capital stock a number of shares of Common Stock at least equal to the number of
shares that could be issued pursuant to the terms of the Order;

 

e.     If
at any time it appears reasonably likely that there may be insufficient authorized shares to fully comply with the Order, Company
shall promptly increase its authorized shares to ensure its ability to timely comply with the Order;

 

f.     The
execution of this Agreement and performance of the Order by Company and ASC will not (1) conflict with, violate or cause a breach
or default under any agreements between Company and any creditor (or any affiliate thereof) related to the account receivables
comprising the Claims, or (2) require any waiver, consent, or other action of the Company or any creditor, or their respective
affiliates, that has not already been obtained;

 

    	7

    	 

    

 

g.     Without
limitation, the Company hereby waives any provision in any agreement related to the account receivables comprising the Claims
requiring payments to be applied in a certain order, manner, or fashion, or providing for exclusive jurisdiction in any court
other than this Court;

 

h.     
The Company has all necessary power and authority to execute, deliver and perform all of its obligations under this Agreement;

 

i.     The
execution, delivery and performance of this Agreement by Company has been duly authorized by all requisite action on the part
of Company (including a majority of its independent directors), and this Agreement has been duly executed and delivered by Company;

 

j.     Company
did not enter into the transaction giving rise to the Claims in contemplation of any sale or distribution of Company's common
stock or other securities;

 

k.     There
has been no modification, compromise, forbearance, or waiver entered into or given by the Company with respect to the Claims.
There is no action based on the Claims by the Company that is currently pending in any court or other legal venue, and no judgments
based upon the Claims have been previously entered in any legal proceeding;

 

l.     There
are no taxes due, payable or withholdable as an incident of Seller's provision of goods and services, and no taxes will be due,
payable or withholdable as a result of settlement of the Claims;

 

    	8

    	 

    

 

m.     Except
as set forth on Exhibit 6 (m), no Seller within the past ninety (90) days has been directly or indirectly through one or more
intermediaries in control, controlled by, or under common control with, the Company and is not an affiliate of the Company as
defined in Rule 144 promulgated under the Act;

 

n.     To
the best of the Company's knowledge, no Seller is, directly or indirectly, utilizing any of the proceeds received from ASC for
selling the Claims to provide any consideration to or invest in any manner in the Company or any affiliate of the Company;

 

o.     Company
has not received any notice (oral or written) from the SEC or Principal Market regarding a halt, limitation or suspension of trading
in the Common Stock; and

 

P.     No
Seller will, directly or indirectly, receive any consideration from or be compensated in any manner by, the Company, or any affiliate
of the Company, in exchange for or in consideration of selling the Claims.

 

q.     Company
acknowledges that ASC or its affiliates may from time to time, hold outstanding securities of the Company, including securities
which may be convertible in shares of the Company's common stock at a floating conversion rate tied to the current market price
for the stock. The number of shares of Common Stock issuable pursuant to this Agreement may increase substantially in certain
circumstances, including, but not necessarily limited to the circumstance wherein the trading price of the Common Stock declines
during the Valuation Period. The Company's executive officers and directors have studied and fully understand the nature of the
transaction contemplated by this Agreement and recognize that they
have a potential dilutive effect. The board of directors of the Company has concluded in its good faith business judgment that
such transaction is in the best interests of the Company. The Company specifically acknowledges that its obligation to issue the
Settlement Shares is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

 

    	9

    	 

    

 

ASC
hereby represents, warrants and covenants to Company as follows:

 

a.     It
is the owner of the Claims;

 

b.     It
is a limited liability company duly filed and in good standing under the laws of Connecticut, and

 

c.     The
execution, delivery and performance of this Stipulation by ASC has been duly authorized by all requisite action on the part of
ASC, and this Stipulation has been duly executed and delivered by ASC.

 

7.     Continuing
Jurisdiction.
Simultaneously with the execution of this Agreement,the
attorneys representing the parties hereto will execute a stipulation of dismissal substantially in the form annexed hereto as
Exhibit B (the "Stipulation of Dismissal").Notwithstanding the Stipulation, in order to enable the Court to grant specific
enforcement or other equitable relief in connection with this Agreement, (a) the parties consent to the continuing jurisdiction
of the Court for purposes of enforcing this Agreement, and (b) each party to this Agreement expressly waives any contention that
there is an adequate remedy at law or any like doctrine that might otherwise preclude injunctive relief to enforce this Agreement.

 

    	10

    	 

    

 

8.     Conditions
Precedent/ Default.

 

a.     If
Company shall default in promptly delivering the Settlement Shares to ASC in the form and mode of delivery as required by Section
3 herein;

 

 b.     
If the Order shall not have been entered by the Court on or prior to November 30„ 2013;

 

c.     If
the Company shall fail to comply with the Covenants set forth in Paragraph 14 hereof;

 

d.     If
Bankruptcy, dissolution, receivership, reorganization, insolvency or liquidation proceedings or other proceedings for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company; or if the trading of the
Common Stock shall have been halted, limited, or suspended by the SEC or on the Principal Market; or trading in securities generally
on the Principal Market shall have been suspended or limited; or, minimum prices shall been established for securities traded
on the Principal Market or eligible for delivery via DTC or DWAC; or the Common Stock is no longer eligible for book transfer
delivery via DTC or DWAC; or there shall have been any material adverse change (i) in the Company's finances or operations, or
(ii) in the financial markets such that, in the reasonable judgment of the ASC, makes it impracticable or inadvisable to trade
the Settlement Shares; and such suspension, limitation or other action is not cured within ten (10) trading days;then the Company
shall be deemed in default of the Agreement and Order and this Agreement shall be null and void, unless otherwise agreed by written
agreement of the parties.

 

    	11

    	 

    

 

9.     Information.
Company and ASC each represent that prior to the execution of this Agreement, they have fully informed themselves of its terms,
contents, conditions and effects, and that no promise or representation of any kind has been made to them except as expressly
stated in this Agreement.

 

10.     Ownership
and Authority. Company and ASC represent and warrant that they have not sold, assigned, transferred, conveyed or otherwise
disposed of any or all of any claim, demand, right, or cause of action, relating to any matter which is covered by this Agreement,
that each is the sole owner of such claim, demand, right or cause of action, and each has the power and authority and has been
duly authorized to enter into and perform this Agreement and that this Agreement is the binding obligation of each, enforceable
in accordance with its terms.

 

11.     No
Admission. This Agreement is contractual and it has been entered into in order to compromise disputed claims and to avoid
the uncertainty and expense of the litigation. This Agreement and each of its provisions in any orders of the Court relating to
it shall not be offered or received in evidence in any action, proceeding or otherwise used as an admission or concession as to
the merits of the Action or the liability of any nature on the part of any of the parties hereto except to enforce its terms.

 

12.     Binding
Nature. This Agreement shall be binding on all parties executing this Agreement and their respective successors, assigns and
heirs.

 

    	12

    	 

    

 

13.     Authority
to Bind. Each party to this Agreement represents and warrants that. the execution, delivery and performance of this Agreement
and the consummation of the transactions provided in this Agreement have been duly authorized by all necessary action of the
respective entity and that the person executing this Agreement on its behalf has the full capacity to bind that entity. Each party
further represents and warrants that it has been represented by independent counsel of its choice in connection with the negotiation
and execution of this Agreement, and that counsel has reviewed this Agreement.

 

14.     Covenants.

 

  a.     For
so long as ASC or any of its affiliates holds any shares of Common Stock, neither Company nor any of its affiliates shall, without
the prior written consent of ASC (which may not be unreasonably withheld), vote any shares of Common Stock owned or controlled
by it (unless voting in favor of a proposal approved by a majority of Company's Board of Directors), or solicit any proxies or
seek to advise or influence any person with respect to any voting securities of Company; in favor of (1) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving Company or any of its subsidiaries, (2) a sale or transfer
of a material amount of assets of Company or any of its subsidiaries, (3) any change in the present board of directors or management
of Company, including any plans or proposals to change the number of term of directors or to fill any existing vacancies on the
board, (4) any material change in the present capitalization or dividend policy of Company, (5) any other material change in Company's
business or corporate structure,
(6) a change in Company's charter, bylaws or instruments corresponding thereto (7) causing a class of securities of Defendant
to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system
of a registered national securities association, (8) causing a class of equity securities of Company to become eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, (9) terminating its Transfer
Agent (10) taking any action which would impede the purposes and objects of this Settlement Agreement or (11) taking any action,
intention, plan or arrangement similar to any of those enumerated above. The provisions of this paragraph may not be modified
or waived without further order of the Court.

 

    	13

    	 

    

 

  b.     Immediately
upon the signing of the Settlement Order by the Court, the Company shall cause to be filed a Form 8-K with the Securities and
Exchange Commission disclosing the settlement. The Company shall file such additional SEC filings as may be required in respect
of the transactions.

 

15.     Indemnification.
Company shall indemnify, defend and hold ASC and its affiliates harmless with respect to all obligations of Company
arising from or incident or related to this Agreement, including, without limitation, any claim or action brought
derivatively or directly by the Seller or shareholders of Company.

 

16.     Legal
Effect. The parties to this Agreement represent that each of them has been advised as to the terms and legal effect of this
Agreement and the Order provided for herein, and that the settlement and compromise stated herein is final and conclusive forthwith,
subject to the conditions stated herein, and each attorney represents that his or her client has freely consented to and authorized
this Agreement after have been so advised.

 

    	14

    	 

    

 

17.     Waiver
of Defense. Each party hereto waives a statement of decision, and the right to appeal from the Order after its entry. Company
further waives any defense based on the rule against splitting causes of action. The prevailing party in any motion to enforce
the Order shall be awarded its reasonably attorney fees and expenses in connection with such motion. Except as expressly set forth
herein, each party shall bear its own attorneys' fees, expenses and costs.

 

18.     Signatures.
This Agreement may be signed in counterparts and the Agreement, together with its counterpart signature pages, shall be
deemed valid and binding on each party when duly executed by all parties. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement thereof. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter hereof.

 

19.     Choice
of Law, Etc. Notwithstanding the place where this Agreement may be executed by either of the parties, or any other factor,
all terms and provisions hereof shall be governed by and construed in accordance with the laws of the State of New Jersey, applicable
to agreements made and to be fully performed in that State and without regard to the principles of conflicts of laws thereof.
Any action brought to enforce, or otherwise arising out of this Agreement shall be brought only in State Court sitting in Essex
County, New Jersey.

 

    	15

    	 

    

 

20.     Exclusivity
For a period of thirty (30) days from the date of the execution of this Agreement, (a) Company and its representatives shall not
directly or indirectly discuss, negotiate or consider any proposal, plan or offer from any other party relating to any liabilities,
or any financial transaction having an effect or result similar to the transactions contemplated hereby, and (b) ASC shall have
the exclusive right to negotiate and execute definitive documentation embodying the terms set forth herein and other mutually
acceptable terms.

 

21.     Inconsistency.
In the event of any inconsistency between the terms of this Agreement and any other document executed in connection herewith,
the terms of this Agreement shall control to the extent necessary to resolve such inconsistency.

 

22.     NOTICES.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of

 

(a)     the
date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission,

 

(b)     the
seventh business day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or

 

(c)     the
second business day after mailing by domestic or international express courier, with delivery costs and fees prepaid,

 

    	16

    	 

    

 

in
each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as
such party may designate by ten (10) days' advance written notice similarly given to each of the other parties hereto):

 

	Company:	
	 	 
	 	Bioneutral
    Group, Inc.
	 	Attn:
    Chief Executive Officer
	 	Telephone
    No.: (856) 332-7808
	 	E-mail
    : tom.cbionetral.com
	 	 
	Mobile: 856.332.7808

 

	 	with
                                                   a copy to:

	Norman
I. Klein, Esq.
	 	 	Carlet, Garrison,
    Klein and Zaretsky
	 	 	1135
    Clifton Ave.
	 	 	Clifton,
    NJ 07013
	 	 	Telephone
    No.: (973) 777-6200 ext. 130
	 	 	Telecopier
    No.: (973) 777-0412
	 	 	E-mail:
    nklein@cgkesqs.com
	 	 	 
	 	 	ASC
    Recap LLC
	 	 	 
	 	 	90
    Grove Street
	 	 	Ridgefield
    CT 06877
	 	 	Telephone
    No.: 203-431-8300
	 	 	E-mail
	 	 	 
	 	 	            and
	 	 	 
	 	 	Krieger
    & Prager LLP
	 	 	39
    Broadway
	 	 	Suite
    920
	 	 	New
    York, NY 10006
	 	 	Attn:
    Samuel M. Krieger, Esq.
	 	 	Telephone
    No.: (212) 363-2900
	 	 	Telecopier
    No.: (212) 363-2999
	 	 	E-mail
    : sk@kplawfirm.com

 

Signature.
This Agreement may be executed in counterparts and by facsimile, portable document format or other electronic means, each of
which shall constitute an original and all of which when taken together shall constitute one document.

 

    	17

    	 

    

 

IN
WITNESS WHEREOF, the parties have duly executed this Settlement Agreement and Stipulation as of the date first indicated above.

 

	 	ASC
    RECAP LLC
	 	 
	 	By:	/s/
    STEPHEN HICKS
	 	 	Name:
    STEPHEN HICKS
	 	 	Tittle
    : MANAGER
	 	 	 
	 	BIONEUTRAL
    GROUP, INC.
	 	 
	 	By:	/s/
    MARK LOWENTHAL
	 	 	Name:
    MARK LOWENTHAL
	 	 	Tittle
    : Chief Executive Officer

 

    	18

    	 

    

 

SCHEDULE
A

 

CLAIMS

 

	Seller	 	Nature of Claim	 	Amount	 
	DH Technical Consulting, LLC	 	Contract Consulting Fees	 	$	17,850.00	 
	Thomas Thornton	 	Invoices Deferred Salary	 	 	4,800.03	 
	Gersten Savage LLP	 	Invoices Attorneys' Fees	 	 	7,200.00	 
	DL Piper (US) LLP	 	Invoices Consulting Fees	 	 	112,500.00	 
	DH Technical Consulting, LLC	 	Invoices Consulting Fees	 	 	20,000.00	 
	CT Partners	 	 	 	 	103,948.14	 
	 	 	Total	 	$	266,298.17	 

 

    	19

    	 

    

 

Exhibit
6 (m)

 

AffiliatesExhibit
10.79

 

NEITHER
THIS SECURITY NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE RESTRICTED
AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION
OR SAFE HARBOR THEREFROM.

 

	No. ______________	 	US $15,000.00

 

BIONEUTRAL
GROUP, INC.

 

PROMISSORY
NOTE DUE MAY 31, 2014

 

THIS
Note is a duly authorized issuance of up to $15,000.00 of BIONEUTRAL GROUP, INC., a Nevada corporation (the "Company")
designated as its Note.

 

FOR
VALUE RECEIVED, the Company promises to pay to ASC RECAP LLC, the registered holder hereof (the "Holder"), the
principal sum of fifteen thousand and 00/100 Dollars (US $15,000.00) on May 31, 2014 (the "Maturity Date"). The principal
of this Note is payable in United States dollars, at the address last appearing on the Note Register of the Company as designated
in writing by the Holder. The Company will pay the outstanding principal amount of this Note in cash on the Maturity Date to the
registered holder of this Note. The forwarding of such wire transfer shall constitute a payment hereunder and shall satisfy and
discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer plus any
amounts so deducted.

 

This
Note is subject to the following additional provisions:

 

1.          The
Note is exchangeable for an equal aggregate principal amount of Note of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

 

2.          The
Holder of this Note is entitled any time after the Maturity Date, subject to the following provisions, to convert all or a portion
of the principal amount of this Note into shares of Common Stock at a conversion price for each share of Common Stock equal to
the Current Market Price multiplied by seventy five percent (75%) (the "Conversion Price"). "Current Market Price"
means the lowest closing bid price for the Common Stock as reported by Bloomberg, LP or, if not so reported, as reported on the
over-the-counter market, for the twenty (20) trading days ending on the trading day immediately before the relevant Conversion
Date (as defined below). The amount of shares issuable pursuant to a conversion shall equal the principal amount (or portion thereof)
of the Note to be converted, divided by the Conversion Price.

    	1

    	 

    

Conversion
shall be effectuated by surrendering the Note to the Company, accompanied by or preceded by facsimile or other delivery to
the Company of the form of conversion notice attached hereto as Exhibit A, executed by the Holder evidencing such Holder's
intention to convert a specified portion hereof. No fractional shares of Common Stock or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date
on which notice of conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder
faxes or otherwise delivers the conversion notice ("Notice of Conversion"), substantially in the form annexed
hereto as Exhibit A, duly executed, to the Company. Facsimile delivery of the Notice of Conversion shall be accepted by the
Company at facsimile number ( )________________ ATTN: Chief Financial Officer. Certificates representing
Common Stock upon conversion will be delivered within three (3) business days from the Conversion Date. ("Delivery
Date")

 

The
Company understands that a delay in the issuance of the Shares of Common Stock beyond the Delivery Date (as defined in this Section)
could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay late payments
to the Holder for late issuance of Shares upon Conversion, unless the delay is due to causes beyond the reasonable control of
the Company or the Transfer Agent, in accordance with the following schedule (where "No. Business Days Late" refers
to the number of business days which is beyond three (3)) business days
after the Delivery Date):1

 

	No. Business Days Late	 	 	Late Payment For Each $10,000 

of Note Principal or Interest 

Amount Being Converted	 
	 	 	 	 	 
	 	1	 	 	$	100	 
	 	2	 	 	$	200	 
	 	3	 	 	$	300	 
	 	4	 	 	$	400	 
	 	5	 	 	$	500	 
	 	6	 	 	$	600	 
	 	7	 	 	$	700	 
	 	8	 	 	$	800	 
	 	9	 	 	$	900	 
	 	10	 	 	$	1,000	 
	 	>10	 	 	$	1,000
+ $200 for each Business	 
	 	 	 	 	 	Day Late beyond 10 days	 

 

    	2

    	 

    

 

The
Company shall pay any payments incurred under this Section in immediately available funds upon demand as the Holder's remedy for
such delay. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company
fails for any reason to effect delivery of such shares of Common Stock by close of business on the Delivery Date, unless such
failure is due to causes beyond the Company's reasonable control or that of its Transfer Agent, the Holder will be entitled to
revoke the relevant Notice of Conversion by delivering a notice to such effect to the Company, whereupon the Company and the Holder
shall each be restored to their respective positions immediately prior to delivery of such Notice of Conversion; provided, however,
that an amount equal to any payments contemplated by this Section which have accrued through the date of such revocation notice
shall remain due and owing to the Converting Holder notwithstanding such revocation.

 

If,
by the relevant Delivery Date, the Company fails, unless such failure is due to causes beyond the Company's reasonable control
or that of its Transfer Agent, for any reason to deliver the Shares to be issued upon conversion of the Note and after such Delivery
Date, the Holder of the Note being converted (a "Converting Holder") purchases, in an arm's-length open market transaction
or otherwise, shares of Common Stock (the "Covering Shares") in order to make delivery in satisfaction of a sale of
Common Stock by the Converting Holder (the "Sold Shares"), which delivery such Converting Holder anticipated to make
using the Shares to be issued upon such conversion (a "Buy-In"), the Converting Holder shall have the right, to require
the Company to pay to the Converting Holder, in addition to and not in lieu of the amounts due hereunder (but in addition to all
other amounts contemplated in other provisions of the Transaction Agreements, and not in lieu of any such other amounts), the
Buy-In Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the amount equal to the excess, if any,
of (x) the Converting Holder's total purchase price (including brokerage commissions, if any) for the Covering Shares over (y)
the net proceeds (after brokerage commissions, if any) received by the Converting Holder from the sale of the Sold Shares. The
Company shall pay the Buy-In Adjustment Amount to the Company in immediately available funds immediately upon demand by the Converting
Holder. By way of illustration and not in limitation of the foregoing, if the Converting Holder purchases shares of Common Stock
having a total purchase price (including brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of Common
Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount which Company will be required to pay to the Converting
Holder will be $1,000.

 

In
lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Company's Transfer
Agent is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer program, upon request
of the Holder and its compliance with the provisions contained in this paragraph, so long as the certificates therefore do not
bear a legend and the Holder thereof is not obligated to return such certificate for the placement of a legend thereon, the Company
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 system.

 

    	3

    	 

    

 

The
Holder of the Note shall be entitled to exercise its conversion privilege with respect to the Note notwithstanding the commencement
of any case under 11 U.S.C. §101 et seq. (the "Bankruptcy Code"). In the event the Company is a debtor
under the Bankruptcy Code, the Company hereby waives, to the fullest extent permitted, any rights to relief it may have under
11 U.S.C. §362 in respect of such holder's conversion privilege. The Company hereby waives, to the fullest extent permitted,
any rights to relief it may have under 11 U.S.C. §362 in respect of the conversion of the Note.

 

3.          This
Note has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged
only in compliance with the Securities Act of 1933, as amended (the "Act"), and other applicable state and foreign securities
laws. In the event of any proposed transfer of this Note, the Company may require, prior to issuance of a new Note in the name
of such other person, that it receive reasonable transfer documentation including legal opinions that the issuance of the Note
in such other name does not and will not cause a violation of the Act or any applicable state or foreign securities laws. Prior
to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company's Note Register as the owner hereof for the purpose of receiving payment as herein provided
and for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected
by notice to the contrary.

 

4.          No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct obligation of
the Company.

 

5.          The
Holder of the Note, by acceptance hereof, agrees that this Note is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Note or the shares of Common Stock issuable upon conversion thereof except under circumstances
which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the
sale of securities.

 

6.          This
Note shall be governed by and construed in accordance with the laws of the State of New York. Each of the parties consents to
the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State
of New York sitting in the City of New York in connection with any dispute arising under this Note and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. Each of the parties hereby waives the right to a trial by jury in connection with any dispute
arising under this Note.

 

7.          The
following shall constitute an "Event of Default":

 

	 	a.	The Company shall default in the payment of principal and interest on this Note and same shall continue for a period of five (5) days; or 

    	4

    	 

    

 

		b.	Any of the representations or warranties made by the Company
herein, in any certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection
with the execution and delivery of this Note shall be false or misleading in any material respect at the time made; or
	 	 	 
		c.	The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition, agreement or obligation of any Note and such failure shall continue uncured
for a period of thirty (30) days after written notice from the Holder of such failure; or
	 	 	 
		d.	The Company fails to authorize or to cause its Transfer Agent
to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms
of this Note, fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to
the Holder upon conversion of this Note and when required by this Note, and such transfer is otherwise lawful, or fails to remove
any restrictive legend on any certificate or fails to cause its Transfer Agent to remove such restricted legend, in each case where
such removal is lawful, as and when required by this Note, the Agreement, and any such failure shall continue uncured for ten (10)
business days; or
	 	 	 
		e.	The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment for the benefit of creditors or commence proceedings for its dissolution;
or (3) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property
or business; or
	 	 	 
		f.	A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60)
days after such appointment; or
	 	 	 
		g.	Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within sixty (60) days thereafter; or
	 	 	 
		h.	Any
                                                                                                                                                       money judgment, writ or warrant of attachment, or similar process in excess of Two Hundred
                                                                                                                                                       Thousand ($200,000) Dollars in the aggregate shall be entered or filed against the Company
                                                                                                                                                       or any of its properties or other assets and shall remain unpaid, unvacated, unbonded
                                                                                                                                                       or unstayed for a period of sixty
                                                                                                                                                       (60) days or in any event later than five (5) days prior to the date of any proposed
                                                                                                                                                       sale thereunder; or

 

    	5

    	 

    

 

		i.	Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the
Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations
of, or default in answering a petition filed in any such proceeding; or
	 	 	 
		j.	The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading for in excess of five trading days.

 

Then,
or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's
sole discretion, the Holder may consider all obligations under this Note immediately due and payable within five (5) days of notice,
without presentment, demand, protest or notice of any kinds, all of which are hereby expressly waived, anything herein or in any
note or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the
Holder's rights and remedies provided herein or any other rights or remedies afforded by law.

 

8.          The
Holder may not convert this Note to the extent such conversion would result in the
Holder, together with any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the Exchange
Act and the rules promulgated thereunder) in excess of 9.999% of the then issued and outstanding shares of Common Stock held by
such Holder after application of this Section. Since the Holder will not be obligated to report to the Company the number of shares
of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance
of shares of Common Stock in excess of 9.999% of the then outstanding shares of Common Stock without regard to any other shares
which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine
whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the determination of which portion of the principal amount of
Note are convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice
for a principal amount of Note that would result in the issuance of in excess of the permitted amount hereunder, without regard
to any other shares that the Holder or its affiliates may beneficially own, the Company shall notify the Holder of this fact and
shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date and, at the option
of the Holder, either retain any principal amount tendered for conversion in excess of the permitted amount hereunder for future
conversions or return such excess principal amount to the Holder. The provisions
of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior
notice to the Company. Other Holders shall be unaffected by any such waiver.

 

    	6

    	 

    

 

9.          Nothing contained
in this Note shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive
notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.

 

IN WITNESS
WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.

 

Dated:
November 12, 2013

		BIONEUTRAL GROUP, INC.
	 	 	 
	 	By:	 
	 	 	 
	 	MARK LOWENTHAL
	 	(Print Name)
	 	CEO & PRESIDENT
	 	Title:

  

	ATTESTOR	 
	 	 	 
	By:	 	 

 

 

7

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