Document:

exhibit_10-5.htm

EXHIBIT 10.5

 

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR

SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION

STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY

SATISFACTORY TO VENTA INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

 

	
 

	 	
VENTA, INC.

2131 N. Collins Ave 433-614 

Arlington, TX 76011

1-888-VENTA08

www.ventainc.com

  

	
 Principal Amount $30,000.00 

	
 Issue Date: February 8, 2010

 

 

CONVERTIBLE NOTE

 

FOR VALUE RECEIVED, VENTA INC., a Nevada corporation (hereinafter called "Borrower"), hereby promises to pay to Danielle ONeal, 9013 Wild Horse Drive, North Richland Hills, TX 76180 (the "Holder") the sum of Fifteen Thousand Dollars ($15,000.00). with interest accruing thereon, on February 8 , 2012 (the "Maturity Date"), if not retired sooner.

 

The following terms shall apply to this Note:

ARTICLE I

 

GENERAL PROVISIONS

 

1.1    Interest Rate. Interest shall accrue on this Note at the rate of ten (10%) per annum based on 365 day calendar year. Following the occurrence and during the continuance of an Event of Default, which, if susceptible to cure is not cured within thirty (30) days, otherwise then from the first date of such occurrence, the annual interest rate on this Note shall (subject to Section 4.7) be fifteen percent (15%) and calculated on a 365 day year.

 

1.2    Maturity Date. Subject to the right of the Holder with respect to its conversion rights hereunder, all principal with interest accruing thereon is otherwise due on April 21, 2012 (the "Maturity Date"); provided however, that should the Borrower close a subsequent financing transaction of either debt or equity in an amount exceeding $1,000,000 prior to the Maturity Date, then this Note shall become due and payable in full at such closing of the subsequent financing, inclusive of all interest.

    

1.3    Conversion Privileges. The Conversion Privileges set forth in Article II shall remain in full force and effect immediately from the occurrence of an Event of Default as defined in Article III hereof and until the Note is paid in full regardless of the subsequent cure of the Event of Default. The Note shall be payable in full on the Maturity Date, unless previously converted into Common Stock in accordance with Article II hereof.

 

  

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ARTICLE II

 

CONVERSION RIGHTS

 

2.1    Holder's Conversion Rights. Subject to Section 2,2, the Holder shall have the right, but not the obligation at any time from the date of issuance of this Note, to convert all or any portion of the then aggregate outstanding Principal Amount of this Note, into shares of Common Stock, subject to the terms and conditions set forth in this Article lI at lower forty percent (40%) discount to the market price of the Borrower's Common Stock or $0.015 per share . The "market price" shall be determined at the average of the closing bid of the Company's Common Stock for the five (5) trading days immediately prior to the date of conversion. The Holder may exercise such right by delivery to the Borrower of a written Notice of Conversion pursuant hereto.

 

A.            Merger, Sale of Assets, etc. If the Borrower at any time shall consolidate with or merge into or sell or convey all or substantially all its assets to any other corporation, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase such number and kind of shares or other securities and property as would have been issuable or distributable on account of such consolidation, merger, sale or conveyance, upon or with respect to the securities subject to the conversion or purchase right immediately prior to such consolidation, merger, sale or conveyance. The foregoing provision shall similarly apply to successive transactions of a similar nature by any such successor or purchaser. Without limiting the generality of the foregoing, the anti-dilution provisions of this Section shall apply to such securities of such successor or purchaser after any such consolidation, merger, sale or conveyance.

 

B.            Reclassification, etc. If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.

 

C.            Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.,

 

D.            Whenever the Conversion Price is adjusted pursuant to Section 2.1(c) above, the Borrower shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a statement of the facts requiring such adjustment.

 

2.2     Method of Conversion. This Note may be converted by the Holder in whole or in part as described in Section 2.1(a) hereof and the Subscription Agreement. Upon partial conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Note and interest which shall not have been converted or paid.

 

 

  

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ARTICLE III

 

EVENT OF DEFAULT

 

The occurrence of any of the following events of default ("Event of Default") shall, at the option of the Holder hereof, make all sums of principal and interest then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand, without presentment, or grace period, all of which hereby are expressly waived, except as set forth below:

 

3.1    Failure to Pay Principal or Interest. The Borrower fails to pay any installment of principal, interest or other sum due under this Note when due and such failure continues for a period of thirty (30) days after the due date. The thirty (30) day period described in this Section 3.1 is the same ten (30) day period described in Section 1.1 hereof.

 

3.2    Breach of Covenant. The Borrower breaches any material covenant of this Note in any material respect and such breach, if subject to cure, continues for a period of thirty (30) business days after written notice to the Borrower from the Holder.

 

3.3    Breach of Representations and Warranties. Any material representation or warranty of the Borrower made herein, or in any agreement, statement or certificate given in writing pursuant hereto or in connection therewith shall be false or misleading in any material respect as of the date made and the Closing Date, and would otherwise have a material adverse effect on the Borrower.

 

3.4    Receiver or Trustee. 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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3.5    Judgments. Any money judgment, writ or similar final process shall be entered or filed against Borrower or any of its property or other assets for more than $500,000; and shall remain unvacated, unbonded or unstayed for a period of ninety (90) days.

3.6    Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower and if instituted against Borrower are not dismissed within 90 days of initiation.

 

3.7    Delistine. Delisting of the Common Stock from any Principal Market; failure to comply with the requirements for continued listing on a Principal Market for a period of thirty consecutive trading days; or notification from a Principal Market that the Borrower is not in compliance with the conditions for such continued listing on such Principal Market.

 

3..8    Non-Payment. A default by the Borrower under any one or more obligations in an aggregate monetary amount in excess of $500,000 for more than twenty days after the due date, unless the Borrower is contesting the validity of such obligation in good faith.

 

3.9    Stop Trade. An SEC or judicial stop trade order or Principal Market trading suspension that lasts for thirty (30) or more consecutive trading days.

 

3.10    Failure to Deliver Common Stock or Replacement Note. Borrower's failure to timely delivers Common Stock to the Holder pursuant to and in the form required by this Note or, if required, a replacement Note.

 

3.11    Reservation Default. Failure by the Borrower to have reserved for issuance upon conversion of the Note the amount of Common stock as set forth in this Note.

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

 

  

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ARTICLE IV

 

HOLDER REPRESENTATIONS

 

Holder hereby represents and warrants to and agrees with the Company only as to such Holder that:

 

(a)             Information on Company. The Holder has been informed about the company's goals and future plans of development. In addition, if requested, the Holder has received in writing from the Company such other information concerning its operations, financial condition and other matters (such other information is collectively, the "Other Written Information"), and considered all factors the Holder deems material in deciding on the advisability of investing in the Securities.

 

(b)             Information on Holder. The Holder is, and will be at the time of the conversion of the Notes, an "accredited investor", as such term is defined in Regulation D promulgated by the Commission under the 1933 Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Holder to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment. The Holder has the authority and is duly and legally qualified to purchase and own the Securities. The Holder is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. The information set forth on the signature page hereto regarding the Holder is accurate.

 

(c)             Purchase of Notes. On the Closing Date, the Holder will purchase the Notes as principal for its own account for investment only and not with a view toward, or for resale in connection with, the public sale or any distribution thereof, but Holder does not agree to hold the Notes and Warrants for any minimum amount of time.

 

(d)             Compliance with Securities Act. The Holder understands and agrees that the Securities have not been registered under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the 1933 Act (based in part on the accuracy of the representations and warranties of Holder contained herein), and that such Securities must be held indefinitely unless a subsequent disposition is registered under the 1933 Act or any applicable state securities laws or is exempt from such registration, Notwithstanding anything to the contrary contained in this Agreement, such Holder may transfer (without restriction and without the need for an opinion of counsel) the Securities to its Affiliates (as defined below) provided that each such Affiliate is an "accredited investor" under Regulation D and such Affiliate agrees to be bound by the terms and conditions of this Agreement. For the purposes of this Agreement, an "Affiliate" of any person or entity means any other person or entity directly or indirectly controlling, controlled by or under direct or indirect common control with such person or entity. Affiliate when employed in connection with the Company includes each Subsidiary [as defined in Section 5(a)] of the Company. For purposes of this definition, "control" means the power to direct the management and policies of such person or firm, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

 

(e)     Shares Legend. The Shares shall bear the following or similar legend:

 

 

 

  

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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VENTA INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

 

(f)    Note Legend. The Note shall bear the following legend:

 

"THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VENTA INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

 

(g)    Communication of Offer. The offer to sell the Securities was directly communicated to the Holder by the Company. At no time was the Holder presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.

 

(h)    Authority; Enforceability. This Agreement and other agreements delivered together with this Agreement or in connection herewith have been duly authorized, executed and delivered by the Holder and are valid and binding agreements enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights generally and to general principles of equity; and Holder has full corporate power and authority necessary to enter into this Agreement and such other agreements and to perform its obligations hereunder and under all other agreements entered into by the Holder relating hereto.

 

(i)             No Governmental Review. Holder understands that no United States federal or state agency or any other governmental or state agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(j)             Correctness of Representations. Holder represents as that the foregoing representations and warranties are true and correct as of the date hereof and, unless a Holder otherwise notifies the Company prior to the Closing Date shall be true and correct as of the Closing Date.

 

(k)             Survival. The foregoing representations and warranties shall survive the Closing Date until three years after the Closing Date.

 

 

  

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ARTICLE V

 

MISCELLANEOUS

 

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

 

5.2    Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to the Borrower to: VENTA INC., 2131 N. Collins Ave 433-614, Arlington TX 76011, Attn: Dmitri Tisnoi, Phone: 1-888-VENTA08.

 

5.3    Amendment Provision. 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.

 

5.4    Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns.

 

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

 

5.6    Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Tarrant County, State of Texas. Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs,

 

5.7    Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

 

 

 

  

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5.8    Shareholder Status. The Holder shall not have rights as a shareholder of the Borrower with respect to unconverted portions of this Note. However, the Holder will have all the rights of a shareholder of the Borrower with respect to the shares of Common Stock to be received by Holder after delivery by the Holder of a Conversion Notice to the Borrower.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the 8th Day of February, 2010.

 

	
 Borrower

	  	
 VENTA INC.

	  	  	  
	  	  	  
	
 By /s/ Danielle ONeal

	  	
 By: /s/ Dmitri Tisnoi

	  	  	
 Name: Dmitri Tisnoi,

	  	  	
 Title: Chief Executive Officer

	  	  	  

Date:

 

WITNESS:

 

_____________________________

/s/

 

 

 

 

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NOTICE OF CONVERSION

 

(To be executed by the Registered Holder in order to convert the Note)

 

The undersigned hereby elects to convert $_________________  of the principal and $ ___________of the interest due on the Note issued by on February 8, 2010 into Shares of Common Stock of YENTA INC. (the "Borrower") according to the conditions set forth in such Note, as of the date written below.

 

 

 

	
Date of Conversion:

	  	  
	  	  	  
	
Conversion Price:

	  	  
	  	  	  
	
Shares To Be Delivered:

	  	  
	  	  	  
	
 Signature:

	  	  
	  	  	  
	
 Print Name:

	  	  
	  	  	  
	
Address:

	  	  

 

 

 

 

 

 

 

 

 

 

 10mPhase Technologies, Inc. - Exhibit 10.71 - Filed by newsfilecorp.com

EXHIBIT 10.71 

THIS CONVERTIBLE NOTE AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS CONVERTIBLE NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS. 

CONVERTIBLE NOTE
OF 

  mPHASE TECHNOLOGIES, INC. 

	$25,000.00 	Made as of August 10, 2011

          mPhase
Technologies, Inc., a New Jersey corporation (the “Company”),
hereby promises to pay to Jay O. Wright (the “Holder”), or his
registered assigns, six (6) months from the date of this Note (i.e. February 10,
2012) (the “Maturity Date”), the principal sum of $25,000.00 (the
“Principal Amount”), or such lesser amount as shall then equal the
outstanding Principal Amount hereunder, together with interest on the unpaid
principal balance equal to one percent (1.00%) per month prior to maturity, and
upon default or after maturity two percent (2.00%) per month, in both cases
compounded monthly, computed on the basis of the actual number of days elapsed
and a year of 365 days from the date of this Convertible Note unless the
Principal Amount and all interest accrued thereon and all other amounts owed
hereunder are converted, as provided in Section 6 hereof. All payments received
by the Holder hereunder will be applied first to costs of collection, if any,
then to interest and the balance to principal. Principal and interest shall be
payable in lawful money of the United States of America. 

          This
Convertible Note may be prepaid in whole at any time by the Company at a price
equal to 105% of the amount of principal and accrued interest then outstanding
upon ten (10) days actual notice to the Holder.

          The
Company has issued and herewith delivers to the Holder, in consideration of his
purchase of this Note, a warrant to purchase 3,676,471 shares of its Common
Stock at an exercise price equal to the Conversion Price, as set forth in
Section 14 hereof ("Warrant"). 

          The
following is a statement of the rights of the Holder and the conditions to which
this Convertible Note is subject, and to which the Holder hereof, by the
acceptance of this Convertible Note, agrees: 

          1.    
    DEFINITIONS. The following
definitions shall apply for all purposes of this Convertible Note: 

          
           1.1.      “Closing”
means the date on which the purchase and sale of the Convertible Note occurred,
or August 10, 2011. 

                
     1.2.     
“Company” means the “Company” as defined above and
includes any corporation which shall succeed to or assume the obligations of the
Company under this Convertible Note. 

                 
     1.3.      “Common
Stock” means the shares of common stock of the Company.

                 
     1.4.      “Conversion
Price” means $0.0068 per share of Common Stock. 

                 
     1.5.      “Conversion
Stock” means the Common Stock into which any unpaid Principal Amount and
the accrued and unpaid interest due under this Convertible Note convert. The
number of shares of Conversion Stock are subject to adjustment as provided
herein. 

                  
    1.6.      “Convertible
Note” means this Convertible Note.

                 
     1.7.      “Holder”
means any person who shall at the time be the registered holder of this
Convertible Note. 

          2.       
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to Holder that the statements in the
following paragraphs of this Section 2 are all true and complete as of
immediately prior to the Closing: 

    
                2.1.      Organization,
Good Standing and Qualification. The Company has been duly
organized, and is validly existing and in good standing, under the laws of the
State of New Jersey. The Company has the power and authority to own and operate
its properties and assets and to carry on its business as currently conducted
and as presently proposed to be conducted. 

        
            2.2.     
Due Authorization. All corporate action on the part of the
Company’s directors and stockholders necessary for the authorization, execution,
delivery of, and the performance of all obligations of the Company under the
Convertible Note has been taken or will be taken prior to the Closing, and the
Convertible Note when executed and delivered, will constitute, valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditor’s rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies. 

           
         2.3.      Corporate
Power. The Company has the power and authority to execute and
deliver this Convertible Note to be purchased by the Holder hereunder, to issue
the Convertible Note and to carry out and perform all its obligations under the
Convertible Note. 

          
          2.4.      Valid
Issuance. The Convertible Note and the Conversion Stock issued upon
conversion of the Convertible Note, when issued, sold and delivered in
accordance with the terms of this Convertible Note for the consideration
provided for herein, will be duly and validly issued, fully paid and
nonassessable. 

           
         2.5.      Securities
Law Compliance. Based in part on the representations made by the
Holder in Section 3 hereof, the offer and sale of the Convertible Note solely to
the Holder in accordance with the terms herein are exempt from the registration
and prospectus delivery requirements of the U.S. Securities Act of 1933, as
amended (the “1933 Act”) and the securities registration and
qualification requirements of the currently effective provisions of the
securities laws of the states in which the Holder is a resident based upon the
address set forth herein. 

             
         2.6.     
  Use of Proceeds. The Proceeds of the Note will be used for working
  capital of EIP and to pay brokerage fees to Source Capital Group.

          3.      
 REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF
HOLDER. Holder hereby represents and warrants to, and agrees with,
the Company, that: 

       
             3.1.      Authorization.
This Convertible Note constitutes such Holder’s valid and legally binding
obligation, enforceable in accordance with its terms except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies. Holder represents that such Holder has full power and
authority to enter into this Convertible Note. 

       
             3.2.      Purchase
for Own Account. The Convertible Note and the shares of the
Company’s Common Stock issuable upon conversion of this Convertible Note
(collectively, the “Securities”) are being acquired for investment
for Holder’s own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the 1933 Act, and
such Holder has no present intention of selling, granting any participation in,
or otherwise distributing the same. 

      
              3.3.     
Disclosure of Information. Such Holder has received or has had
full access to all the information it considers necessary or appropriate to make
an informed investment decision with respect to the Securities. Such Holder
further has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Securities and
to obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to such Holder or to which such
Holder had access. The foregoing, however, does not in any way limit or modify
the representations and warranties made by the Company in Section 2. 

                
    3.4.      Investment
Experience. Such Holder understands that the purchase of the
Securities is highly speculative and involves substantial risk. Such Holder has
such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests and the ability to
bear the economic risk of its investment. 

                    
3.5.      Restricted
Securities. Such Holder understands that the Securities are
characterized as “restricted securities” under the 1933 Act and Rule 144
promulgated thereunder inasmuch as they are being acquired from the Company in a
transaction not involving a public offering, and that under the 1933 Act and
applicable regulations thereunder such securities may be resold without
registration under the 1933 Act only in certain limited circumstances. In this
connection, such Holder is familiar with Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the 1933 Act.

          4.      
 FURTHER LIMITATIONS ON DISPOSITION. Without in any
way limiting the representations set forth above, such Holder further agrees not
to make any disposition of all or any portion of the Securities unless and
until: 

                    
4.1.      there is then in effect
a registration statement under the 1933 Act covering such proposed disposition
and such disposition is made in accordance with such registration statement; or

                    
4.2.      such Holder
shall have notified the Company of the proposed disposition, and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and, at the expense of such Holder or its transferee, with
an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such securities under the 1933 Act.

Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be required: (i) for
any transfer of any Convertible Note or Conversion Stock in compliance with Rule
144 or Rule 144A; (ii) for any transfer of any Convertible Note or Conversion
Stock by a Holder that is a partnership or a corporation to (A) a partner of
such partnership or shareholder of such corporation, (B) a controlled affiliate
of such partnership or corporation, (C) a retired partner of such partnership
who retires after the date hereof, (D) the estate of any such partner or
shareholder; or (iii) for the transfer by gift, will or in testate succession by
any Holder to his or her spouse or lineal descendants or ancestors or any trust
for any of the foregoing; provided that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this Section 4 to the
same extent as if the transferee were an original Holder hereunder. The Company
acknowledges and agrees that for purpose of calculating the Rule 144 holding
period, that any period of Holder holding its investment in the form of this
Note shall be “tacked” to the period that Holder holds Conversion Stock. 

          5.      LEGENDS.
Such Holder understands and agrees that the certificates evidencing the
Securities will bear legends substantially similar to those set forth below:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS. 

The legend set forth above shall be removed by the Company from
any certificate evidencing the Securities upon delivery to the Company of an
opinion of counsel, reasonably satisfactory to the Company, that a registration
statement under the 1933 Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale (other than pursuant to Rule 144 or Rule 145 under the 1933 Act) without
such a registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Securities. 

          6.       
CONVERSION. 

          
          6.1.      Optional
Conversion. Upon the request of the Holder, this Convertible Note
may be converted, in whole or in part, into shares of Common Stock at the
Conversion Price. 

            
        6.2.      Issuance
of Conversion Stock. Within two (2) business days after conversion
of this Convertible Note in whole or in part, the Company at its expense will
cause to be issued in the name of and delivered to the Holder, a certificate or
certificates for the Common Stock to which the Holder shall be entitled upon
such conversion or, at the Holder’s request and if eligible under Rule 144,
shares shall be DWAC’d to a brokerage account designated by the Holder, together
with any other securities and property to which the Holder is entitled upon such
conversion under the terms of this Convertible Note. If upon any conversion of
this Convertible Note (and all other Convertible Notes held by the same Holder,
after aggregating all such conversions), a fraction of a share of Common Stock
would otherwise result, then in lieu of such fractional share of Common Stock
the Company will pay the cash value of that fractional share, calculated on the
basis of the applicable Conversion Price. 

          7.       
DEFAULT; ACCELERATION OF OBLIGATION. The Company will be
deemed to be in default under this Convertible Note and the outstanding unpaid
principal balance of this Convertible Note, together with all interest accrued
thereon, will immediately become due and payable in full, without the need for
any further action on the part of Holder, upon the occurrence of any of the
following events (each an “Event of Default”): (a) failure to make
payment of principal and interest when due under this Convertible Note; (b) upon
the filing by or against the Company of any voluntary or involuntary petition in
bankruptcy or any petition for relief under the federal bankruptcy code or any other state or
federal law for the relief of debtors; provided, however, with respect to an
involuntary petition in bankruptcy, such petition has not been dismissed within
ninety (90) days after the filing of such petition; (c) upon the execution by
the Company of an assignment for the benefit of creditors or the appointment of
a receiver, custodian, trustee or similar party to take possession of the
Company’s assets or property; (d) if the Company ceases to trade on the OTC
Bulletin Board, Nasdaq or the American Stock Exchange; or (e) the breach of any
provision of this Convertible Note. 

          8.       
REMEDIES ON DEFAULT; ACCELERATION; ADJUSTMENTS. Upon any
Event of Default, the Holder will have, in addition to its rights and remedies
under this Convertible Note, full recourse against any real, personal, tangible
or intangible assets of the Company, and may pursue any legal or equitable
remedies that are available to Holder, and may declare the entire unpaid
principal amount of this Convertible Note and all unpaid accrued interest under
this Convertible Note to be immediately due and payable in full. 

            
        8.1.     
Adjustment Provisions. The number and character of shares of
Conversion Stock issuable upon conversion of this Convertible Note (or any
shares of stock or other securities or property at the time receivable or
issuable upon conversion of this Convertible Note) and the Conversion Price
therefor are subject to adjustment upon occurrence of the following events
between the date this Convertible Note is issued and the date it is converted.
If there is an event of default under this Convertible Note, then the Conversion
Price shall be immediately reduced to $.0025 per share. 

            
        8.2.     
Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
etc. If a stock dividend, stock split, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of Conversion Stock occurs other than a reverse stock split, the
Conversion Price of this Convertible Note and the number of shares of Conversion
Stock issuable upon conversion of this Convertible Note (or any shares of stock
or other securities at the time issuable upon conversion of this Convertible
Note) shall each be proportionally adjusted on a full-ratchet basis to reflect
any stock dividend, stock split, reverse stock split, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of Conversion Stock (or such other stock or securities). If a reverse
stock split occurs, a similar adjustment shall be made, provided however, that
if the closing bid stock price of the Company on the date that the reverse stock
split goes effective (the “New Price”) is more than 10% below the Conversion
Price after giving effect to the reverse stock split, then the Conversion Price
shall be reduced to that New Price. 

            
        8.3.      Adjustment
for Other Dividends and Distributions. In case the Company shall
make or issue, or shall fix a record date for the determination of eligible
holders entitled to receive, a dividend or other distribution payable with
respect to the Common Stock that is payable in (a) securities of the Company
(other than issuances with respect to which adjustment is made under Section 8),
or (b) assets (other than cash dividends paid or payable solely out of retained
earnings), then, and in each such case, the Holder, upon conversion of this
Convertible Note at any time after the consummation, effective date or record
date of such event, shall receive, in addition to the shares of Conversion Stock
issuable upon such exercise prior to such date, the securities or such other
assets of the Company to which the Holder would have been entitled upon such date if the Holder had converted this
Convertible Note immediately prior thereto (all subject to further adjustment as
provided in this Convertible Note). 

            
        8.4.      Adjustment
for Reorganization, Consolidation, Merger. In case of any
reorganization of the Company (or of any other entity the securities of which
are at the time receivable on the conversion of this Convertible Note), after
the date this Convertible Note, or in case, after such date, the Company (or any
such corporation) shall consolidate with or merge into another corporation or
convey all or substantially all of its assets to another corporation and then
distribute the proceeds to its interest holders, then, and in each such case,
the Holder, upon the conversion of this Convertible Note (as provided in Section
6) at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the Conversion
Stock or other securities and property receivable upon the conversion of this
Convertible Note prior to such consummation, the stock or other securities or
property to which the Holder would have been entitled upon the consummation of
such reorganization, consolidation, merger or conveyance if the Holder had
converted this Convertible Note immediately prior thereto, all subject to
further adjustment as provided in this Convertible Note, and the successor or
purchasing corporation in such reorganization, consolidation, merger or
conveyance (if other than the Company) shall duly execute and deliver to the
Holder a supplement hereto acknowledging such corporation’s obligations under
this Convertible Note; and in each such case, the terms of the Convertible Note
shall be applicable to the Common Stock or other securities or property
receivable upon the conversion of this Convertible Note after the consummation
of such reorganization, consolidation, merger or conveyance. 

          
          8.5.      Adjustment
for Dilutive Issuances. If the Company, at any time after the date
of this Convertible Note, shall issue any shares of Common Stock or securities
of the Company convertible into shares of Common Stock at a price per share of
Common Stock less than the Conversion Price in effect immediately prior to such
issuance, in any case other than an Excluded Issuance (as hereinafter defined)
(a “Dilutive Issuance”), then, and in each such case, the
Conversion Price shall be reduced to the effective per share price of the Common
Stock in connection with such additional issuance of securities. 

           9.       
NOTICE OF ADJUSTMENTS. The Company shall promptly give
written notice of each adjustment or readjustment of the Conversion Price or the
number of shares of Common Stock or other securities issuable upon conversion of
this Convertible Note. The notice shall describe the adjustment or readjustment
and show in reasonable detail the facts on which the adjustment or readjustment
is based. 

          10.      NO
CHANGE NECESSARY. The form of this Convertible Note need not be
changed because of any adjustment in the Conversion Price or in the number of
shares of Common Stock issuable upon its conversion. 

          11.      NO
RIGHTS OR LIABILITIES AS STOCKHOLDER. This Convertible Note does
not by itself entitle the Holder to any voting rights or other rights as a
stockholder of the Company. In the absence of conversion of this Convertible
Note, no provisions of this Convertible Note, and no enumeration herein of the
rights or privileges of the Holder, shall cause the Holder to be a stockholder
of the Company for any purpose.

          12.     
NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Convertible Note, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder
under this Convertible Note against wrongful impairment. Without limiting the
generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may duly and validly issue
fully paid and nonassessable shares of Common Stock upon the conversion of this
Convertible Note. 

          13.     
PREPAYMENT. The Company may at any time, without penalty, upon
at least five (5) days’ advance written notice to the Holder, prepay in whole or
in part the unpaid balance of this Convertible Note at a price equal to 105% of
par. All payments will first be applied to the repayment of accrued fees and
expenses, then to accrued interest until all then outstanding accrued interest
has been paid, and then shall be applied to the repayment of principal. The
Holder shall have the right to convert this Note prior to such prepayment. 

          14.     
WARRANT. Simultaneously with the execution of this Note, the
Company shall issue a Warrant in the form attached hereto as Exhibit
A, exercisable for five years to purchase 3,333,334 shares of Common
Stock at an exercise price equal to the Conversion Price. 

          15.     
WAIVERS. The Company and all endorsers of this Convertible Note
hereby waive notice, presentment, protest and notice of dishonor. 

          16.     
ATTORNEYS’ FEES. In the event any party is required to engage
the services of any attorneys for the purpose of enforcing this Convertible
Note, or any provision thereof, the prevailing party shall be entitled to
recover its reasonable expenses and costs in enforcing this Convertible Note,
including attorneys’ fees. 

          17.      TRANSFER.
Neither this Convertible Note nor any rights hereunder may be assigned, conveyed
or transferred, in whole or in part, without the Company’s prior written
consent, which the Company may withhold in its sole discretion. The rights and
obligations of the Company and the Holder under this Convertible Note shall be
binding upon and benefit their respective permitted successors, assigns, heirs,
administrators and transferees. 

          18.      GOVERNING
LAW; JURISDICTION; VENUE. This Convertible Note shall be governed
by and construed under the internal laws of the State of New Jersey as applied
to agreements among New Jersey residents entered into and to be performed
entirely within New Jersey, without reference to principles of conflict of laws
or choice of laws. Each of the parties irrevocably consents that any legal
action or proceeding for equitable relief which may be brought against any of
them pursuant to the terms of this Convertible Note which arise out of or are in
any manner related to this Convertible Note may be brought in the federal and
state courts of New Jersey. Each party by the execution and delivery of this
Convertible Note, expressly and irrevocably consents and submits to the personal
jurisdiction of any of such courts in any such action or proceeding. Each party
hereby expressly and irrevocably waives any claim or defense in any such action or proceeding based on any alleged lack of
personal jurisdiction, improper venue or forum non conveniens or any similar
basis. 

          19.     
HEADINGS. The headings and captions used in this Convertible
Note are used only for convenience and are not to be considered in construing or
interpreting this Convertible Note. All references in this Convertible Note to
sections and exhibits shall, unless otherwise provided, refer to sections hereof
and exhibits attached hereto, all of which exhibits are incorporated herein by
this reference. 

          20.     
NOTICES. Unless otherwise provided, any notice required or
permitted under this Convertible Note shall be given in writing and shall be
deemed effectively given (i) at the time of personal delivery, if delivery is in
person; (ii) one (1) business day after deposit with an express overnight
courier for United States deliveries, or two (2) business days after such
deposit for deliveries outside of the United States, with proof of delivery from
the courier requested; or (iii) three (3) business days after deposit in the
United States mail by certified mail (return receipt requested) for United
States deliveries when addressed to the party to be notified at the address
indicated for such party or, in the case of the Company, at 587 Connecticut
Avenue, Norwalk, CT 06854, or at such other address as any party or the Company
may designate by giving ten (10) days’ advance written notice to all other
parties, and if to the Holder, at 6701 Democracy Blvd., Suite 300, Bethesda, MD
20817. 

          21.      AMENDMENTS
AND WAIVERS. Any term of this Convertible Note may be amended, and
the observance of any term of this Convertible Note may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Holder. Any amendment or
waiver effected in accordance with this Section shall be binding upon the
Holder, each future holder of such securities, and the Company. 

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

          23.      PIGGYBACK
REGISTRATION. If (but without any obligation to do so) the Company
elects to register (including for this purpose a registration effected by the
Company for shareholders) any of its stock or other securities under the
Securities Act in connection with a public offering of such securities solely
for cash other than (a) a registration on Form S-8 (or other similar successor
form) relating solely to the sale of securities to participants in a Company
stock plan or to other compensatory arrangements to the extent includable on
Form S-8 (or other similar successor form); or (b) a registration on Form S-4
(or other similar successor form), the Company shall, at least thirty (30) days
prior to finalizing a registration statement, promptly give the Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 20, the Company shall cause to be registered under the
Securities Act all of the Conversion Stock not otherwise freely tradable under
Rule 144 of the Securities Act that such Holder thereof has requested to be
registered. In the event that the underwriters advise the Company that marketing
factors require a limitation of the number of shares to be underwritten, the
Company shall use its best commercial efforts to include as many shares of Conversion
Stock as is reasonable in the opinion of the underwriter. The Company shall have
no obligation under this Section 23 to make any offering of its securities, or
to complete an offering of its securities that it proposes to make, and shall
incur no liability to any Holder for its failure to do so. 

[Signature Page Next] 

          IN
WITNESS WHEREOF, the Company has caused this Convertible Note to be signed
in its name as of the date first above written. 

MPHASE TECHNOLOGIES, INC.

	 	By: 	Ronald A. Durando 
	 	 	 
	 	Title: 	CEO 

Exhibit A 

FORM OF WARRANT

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