Document:

Exhibit 10.4

 

INDEMNIFICATION
AGREEMENT

 

THIS INDEMNIFICATION
AGREEMENT (the “Agreement”) is made and entered into as of January 12, 2015 between Glori Energy Inc., a Delaware
corporation, formerly known as Glori Acquisition Corp. (the “Company”), and James C. Musselman (“Indemnitee”).

 

RECITALS

 

WHEREAS, highly competent
persons have become more reluctant to serve corporations as directors, officers or in other capacities unless they are provided
with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of such corporations;

 

WHEREAS, the Board
of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals,
the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the
Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary
and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given
current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more
exclusions.  At the same time, directors, officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally
would have been brought only against the Company or business enterprise itself.  The Bylaws and Certificate of Incorporation
of the Company require or authorize indemnification of the directors and officers of the Company.  Indemnitee may also
be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).  The
Bylaws and Certificate of Incorporation of the Company and the DGCL expressly provide that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board,
officers and other persons with respect to indemnification;

 

WHEREAS, the uncertainties
relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board
has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such
protection in the future;

 

WHEREAS, it is reasonable,
prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such
persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue
concern that they will not be so indemnified;

 

WHEREAS, this Agreement
is a supplement to and in furtherance of the Bylaws and Certificate of Incorporation of the Company and any resolutions adopted
pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

 

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WHEREAS, Indemnitee
does not regard the protection available under the Company’s Bylaws, Certificate of Incorporation and insurance as adequate
in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity.  Indemnitee is willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that he be so indemnified; and

 

WHEREAS, Indemnitee
may have certain rights to indemnification and/or insurance provided by a principal stockholder of the Company which Indemnitee
and such stockholder intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein.

 

NOW, THEREFORE, in
consideration of Indemnitee’s agreement to serve as a director or officer after the date hereof, the parties hereto agree
as follows:

 

1.           Indemnity
of Indemnitee.  The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted
by law, as such may be amended from time to time.  In furtherance of the foregoing indemnification, and without limiting
the generality thereof:

 

(a)          Proceedings
Other Than Proceedings by or on Behalf of the Company.  Indemnitee shall be entitled to the rights of indemnification
provided in this Section 1(a) if, by reason of his Corporate Status (as hereinafter defined), Indemnitee is, or is
threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or on behalf
of the Company.  Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as
hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on
his behalf, in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in
a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal
Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

 

(b)          Proceedings
by or on Behalf of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this
Section 1(b) if, by reason of his Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant
in any Proceeding brought by or on behalf of the Company.  Pursuant to this Section 1(b), Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by Indemnitee, or on Indemnitee’s behalf, in connection
with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall
be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable
to the Company, unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification
may be made.

 

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(c)          Indemnification
for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement,
to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise,
in any Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against
all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.  If Indemnitee is not
wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims,
issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Section
and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice,
shall be deemed to be a successful result as to such claim, issue or matter.

 

2.           Additional
Indemnity.  In addition to, and without regard to any limitations on, the indemnification provided for in Section 1
of this Agreement, the Company shall indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is,
or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or on behalf of the Company),
including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.  The
only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall
not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions,
set forth in Sections 6 and 7 hereof) to be unlawful.

 

3.           Contribution.

 

(a)          Whether
or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened,
pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement
of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and
relinquishes any right of contribution it may have against Indemnitee.  The Company shall not enter into any settlement
of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

(b)          Without
diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee
shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action,
suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding),
the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors
or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action,
suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent
necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors
or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted
in such Expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may
require to be considered.  The relative fault of the Company and all officers, directors or employees of the Company,
other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the
one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary
and the degree to which their conduct is active or passive.

 

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(c)          The
Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers,
directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

 

(d)          To
the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee
for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee,
whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection
with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in
light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of
the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

4.           Indemnification
for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee
is, by reason of his Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to
which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his
behalf in connection therewith.

 

5.           Advancement
of Expenses.  Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred
by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty
(30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include an undertaking by or on behalf of Indemnitee to repay any Expenses
advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.  Any
advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

 

6.           Procedures
and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to
secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State
of Delaware.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event
of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

 

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(a)          To
obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including such documentation
and information as is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification and
is reasonably available to Indemnitee. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee
to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any
liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests
of the Company.

 

(b)          Upon
written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination
with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods,
which shall be at the election of the Board: (1) by a majority vote of the Disinterested Directors, even though less than a quorum,
(2) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than
a quorum, (3) if there are no Disinterested Directors or if the Disinterested Directors so direct, by Independent Counsel in a
written opinion to the Board, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board, by the
stockholders of the Company.

 

(c)          If
the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof,  the
Independent Counsel shall be selected by the Board with prompt notice of such selection being delivered to the Indemnitee. Indemnitee
may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to
such selection; provided, however, that such objection may be asserted only on the ground that the Person so selected does not
meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection
shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the Person
so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Person selected may not serve
as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.
If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof,
no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been
made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel
of a Person selected by the court or by such other Person as the court shall designate, and the Person with respect to whom all
objections are so resolved or the Person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company
shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with
acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures
of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

 

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(d)          In
making a determination with respect to entitlement to indemnification hereunder, the Persons making such determination shall presume
that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall
have the burden of proof and the burden of persuasion by clear and convincing evidence.  Neither the failure of the Company
(including any failure by its directors or independent legal counsel) to have made a determination prior to the commencement of
any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee
has not met the applicable standard of conduct.

 

(e)          Indemnitee
shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise
(as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise  in
the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports
made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable
care by the Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent
or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under
this Agreement.  Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in
any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence.

 

(f)          If
the Persons empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within 60 days after receipt by the Company of the request therefor, the requisite determination
of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional
30 days, if the Persons making such determination with respect to entitlement to indemnification in good faith requires such additional
time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions
of this Section 6(g) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders
pursuant to Section 6(b) of this Agreement and if (A) within 15 days after receipt by the Company of the request for
such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders
for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made
thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made
thereat.

 

(g)          Indemnitee
shall cooperate with the Persons making such determination with respect to Indemnitee’s entitlement to indemnification, including
providing to such Persons upon reasonable advance request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any
Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination
regarding the Indemnitee’s entitlement to indemnification under this Agreement.  Any costs or expenses (including
attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the Persons making such determination shall
be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

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(h)          The
Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to
avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee
is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement
of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee
has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(i)          The
termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

7.           Remedies
of Indemnitee.  

 

(a)          In
the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no
determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within 90 days after
receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement
within 10 days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within
10 days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have
been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court
of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification.
Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first
has the right to commence such proceeding pursuant to this Section 7(a).  The Company shall not oppose Indemnitee’s
right to seek any such adjudication.

 

(b)          In
the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a
de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).

 

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(c)          If
a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification
under applicable law.

 

(d)          In
the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover
damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies
maintained by the Company, the Company shall pay on his behalf, in advance, any and all Expenses actually and reasonably incurred
by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification,
advancement of Expenses or insurance recovery.

 

(e)          The
Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company
is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested
by Indemnitee, shall (within 10 days after receipt by the Company of a written request therefore) advance, to the extent not prohibited
by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification
or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance
policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification,
advancement of Expenses or insurance recovery, as the case may be.

 

(f)          Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the Proceeding.

 

8.           Non-Exclusivity;
Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.  

 

(a)          The
rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may
at any time be entitled under applicable law, the Certificate of Incorporation of the Company, the Bylaws of the Company, any agreement,
a vote of stockholders, a resolution of directors of the Company or otherwise.  No amendment, alteration or repeal of
this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any
action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.  To
the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded
currently under the Certificate of Incorporation, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion
or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
right or remedy.

 

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(b)          To
the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees,
or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise that such Person serves at the request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent
or fiduciary under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms
hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement
of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company
shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable
as a result of such proceeding in accordance with the terms of such policies.

 

(c)          The
Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance
provided by a stockholder of the Company and certain of its affiliates (collectively, the “Fund Indemnitors”).  The
Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation
of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee
are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable
for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted
and as required by the terms of this Agreement and the Certificate of Incorporation or Bylaws of the Company (or any other agreement
between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and, (iii)  that
it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for
contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement
or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification
from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to
the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.  The Company
and Indemnitee agree that the Fund Indemnitors and each of them are express third party beneficiaries of the terms of this Section
8(c).

 

(d)          Except
as provided in Section 8(c), in the event of any payment under this Agreement, the Company shall be subrogated to the extent
of such payment to all of the rights of recovery of Indemnitee (other than against the Fund Indemnitors), who shall execute all
papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.

 

(e)          Except
as provided in Section 8(c), the Company shall not be liable under this Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise.

 

(f)          Except
as provided in Section 8(c), the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who
is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received
as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise.

 

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9.          Exception
to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under
this Agreement to make any indemnity in connection with any claim made against Indemnitee:

 

(a)          for
which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except
with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing
shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in Section 8(c) above; or

 

(b)          for
an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within
the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or similar provisions of state statutory law or common law; or

 

(c)          in
connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of
any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless
(i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

10.         Duration
of Agreement.  All agreements and obligations of the Company contained herein shall continue during the period
Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and for a period of ten years
after the end thereof and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding
commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such
capacity at the time any liability or Expense is incurred for which indemnification can be provided under this Agreement.  This
Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

 

11.         Security.  To
the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security
to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any
such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

 

12.         Enforcement.  

 

(a)          The
Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby
in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is
relying upon this Agreement in serving as an officer or director of the Company.

 

    	- 10 -

    	 

    

 

(b)          This
Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter
hereof.

 

(c)          The
Company shall not seek from a court, or agree to, a “bar order” which would have the effect of prohibiting or limiting
the Indemnitee’s rights to receive advancement of expenses under this Agreement.

 

13.         Definitions.  For
purposes of this Agreement:

 

(a)          “Corporate
Status” describes the status of a person who is or was a director, officer, partner, trustee, member, employee, agent
or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, limited liability company, employee
benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

 

(b)          “Disinterested
Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.

 

(c)          “Enterprise”
means the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that
Indemnitee is or was serving at the express written request of the Company as a director, officer, partner, trustee, member, employee,
agent or fiduciary.

 

(d)          “Expenses”
shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery
in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and
any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as
bond, or other appeal bond or its equivalent.  Expenses, however, shall not include amounts paid in settlement by Indemnitee
or the amount of judgments or fines against Indemnitee.

 

    	- 11 -

    	 

    

 

(e)          “Independent
Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material
to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding
the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees of the Independent Counsel
referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out
of or relating to this Agreement or its engagement pursuant hereto.

 

(f)          “Person”  shall
have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i)
the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any
corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership
of stock of the Company.  

 

(g)          “Proceeding”
includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or on behalf of the
Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved
as a party or otherwise, by reason of his or her Corporate Status, by reason of any action taken by him or her or of any inaction
on his or her part while acting in his or her Corporate Status; in each case whether or not he is acting or serving in any such
capacity at the time any liability or Expense is incurred for which indemnification can be provided under this Agreement; including
one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7
of this Agreement to enforce his or her rights under this Agreement.

 

14.         Severability.  The
invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.  Without
limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest
extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall
be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

 

15.         Amendments
and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent
of both parties. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof. No waivers
of or exceptions to any term, condition, or provision of the Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such term, condition or provision.

 

16.         Third
Parties.  Except as expressly provided herein, nothing contained in this Agreement shall create any rights in,
or be deemed to have been executed for the benefit of, any Person other than the parties hereto and, (a) with respect to the Company,
its successors and permitted assigns, and (b) with respect to Indemnitee, Indemnitee's estate, heirs, executors and successors.

 

    	- 12 -

    	 

    

 

17.         Notice
By Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise
receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter
which may be subject to indemnification covered hereunder.  The failure to so notify the Company shall not relieve the
Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that
such failure or delay materially prejudices the Company.

 

18.         Notices.  All
notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications
shall be sent:  

 

(i)          To
Indemnitee at the address set forth below Indemnitee’s signature hereto.

 

(ii)         To
the Company at:

 

4315 South Drive

Houston, Texas  77053

Attention:  Stuart M. Page

Facsimile: (713) 237-8585

 

With a copy which shall not constitute notice to:

 

Fulbright & Jaworski LLP

1301 McKinney, Suite 5100

Houston, TX 77010-3095

Attention:  Charles Powell

Facsimile: (713) 651-5246

 

or to such other address as may have been furnished to Indemnitee
by the Company or to the Company by Indemnitee, as the case may be.

 

19.         Assignment.
This Agreement and all obligations of the Company and Indemnitee are personal to such party and may not be transferred or delegated
by such party at any time; provided that the Company may assign its rights and obligations under this Agreement pursuant to a sale
of all or substantially all of the  assets of the Company.

 

20.         Interpretation.  The
titles, subtitles and headings used in this Agreement are for convenience only and are not to be considered in construing or interpreting
this Agreement.  In this Agreement, unless the context otherwise requires:  (a) any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa; (b) “including” (and with correlative meaning “include”) means including without
limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by
the words “without limitation”; (c) the words “herein,” “hereto,” and “hereby”
and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not
to any particular section or other subdivision of this Agreement; and (d) the term “or” means “and/or”.

 

    	- 13 -

    	 

    

 

21.         Other
Agreements. Nothing in this Agreement shall limit any of the rights or remedies of the parties or any of the obligations
under any other agreement between the parties or any certificate or instrument executed by the parties, and nothing in any other
agreement, certificate or instrument shall limit any of the rights or remedies of the parties or any of the obligations of the
parties.

 

22.         Counterparts;
Facsimile.  This Agreement may be executed and delivered by facsimile signature or by email in portable document
format in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and
the same Agreement.

 

23.         Governing
Law; Jurisdiction.  This Agreement and any dispute or controversy arising out of or relating to this Agreement
shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws
principles that would result in the application of any law other than the law of the State of Delaware.  The Company
and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection
with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”),
and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent
to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection
with this Agreement, (iii) agree that to the extent Indemnitee is not otherwise subject to service of process in the State
of Delaware, Indemnitee irrevocably appoints the Company as its agent in the State of Delaware for acceptance of legal process
in connection with any such action or proceeding against such party with the same legal force and validity as if served upon Indemnitee
personally within the State of Delaware, and that the Company’s address for such purpose is c/o The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801, (iv) waive any objection to the laying of venue of any such action or proceeding
in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in
the Delaware Court has been brought in an improper or inconvenient forum.

 

24.         Prior
Indemnification Agreements.  From and after the date hereof, this Agreement supersedes and replaces in all respects
any and all prior indemnification agreements, if any, between Indemnitee and the Company. For the avoidance of doubt, such prior
indemnification agreements, if any, shall remain in full force and effect with respect to events or circumstances occurring prior
to the date hereof.

 

Signature Page Follows

 

    	- 14 -

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.

 

	 	GLORI ENERGY INC.
	 	 
	 	By	/s/ Stuart M. Page
	 	Name	Stuart Page
	 	Title	Chief Executive Officer
	 	 
	 	INDEMNITEE
	 	 
	 	By	/s/ James C. Musselman
	 	 
	 	Address:
	 	8401 N. Central Expressway, Suite 400
	 	Dallas, TX 75225
	 	 

 

Signature page to Indemnification
AgreementNEITHER THE ISSUANCE
AND SALE
OF THE
SECURITIES REPRESENTED BY
THIS CERTIFICATE
NOR THE SECURITIES
INTO WHICH THESE
SECURITIES ARE
CONVERTIBLE HAVE BEEN
REGISTERED UNDER
THE SECURITIES
ACT OF
1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED,
OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL
SHALL BE SELECTED
BY THE HOLDER),
IN A GENERALLY
ACCEPTABLE FORM,
THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT
TO RULE
144 OR RULE
144A UNDER
SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION
WITH A BONA
FIDE MARGIN
ACCOUNT OR
OTHER LOAN
OR FINANCING
ARRANGEMENT SECURED BY
THE SECURITIES.

 

	Principal Amount: $33,000.00	Issue
Date: January 9, 2015
	Purchase Price: $33,000.00	

 

CONVERTIBLE
PROMISSORY NOTE

 

FORVALUE  RECEIVED,  RICHPHARMACEUTICALS,  INC.,  aNevada
corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of KBM WORLDWIDE, INC., a New York corporation, or registered assigns (the “Holder”) the sum of $33,000.00 together
with any interest as
set forth herein, on October 13, 2015 (the
“Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest
Rate”) per annum from the date hereof
(the “Issue Date”) until
the same becomes due and
payable, whether at maturity or upon acceleration
or by prepayment or otherwise. This Note may
not be prepaid in whole or in part
except as otherwise explicitly set forth
herein. Any amount of principal or interest
on this Note which is not paid
when due shall bear
interest at the rate of
twenty two percent (22%) per annum
from the due date thereof
until the same is paid
(“Default Interest”). Interest shall commence
accruing on the date that the Note
is fully paid and shall be computed
on the basis of a 365-day year and
the actual number of days elapsed.
All payments due
hereunder (to the extent
not converted into common stock,
$0.001 par value per share (the
“Common Stock”) in accordance
with the terms hereof) shall
be made in lawful money of the United States
of America. All payments shall be made at
such address as the Holder shall
hereafter give to the Borrower by written
notice made in accordance with
the provisions of this Note. Whenever any amount
expressed to be due by the terms
of this Note is due on any day which is
not a business day, the same shall
instead be due on the next succeeding day
which is a business day and, in
the case of
any interest payment date which
is not the date on

    	 

    	 

    

 

 

which
this Note
is paid
in full,
the extension
of the
due date
thereof shall
not be taken
into account
for purposes of
determining the
amount of
interest due
on such
date. As
used in this
Note, the
term “business day”
shall mean any
day other than
a Saturday, Sunday
or a day on which
commercial banks in the city of New York, New
York are authorized or required by law or
executive order
to remain
closed. Each capitalized
term used herein,
and not otherwise defined,
shall have the meaning
ascribed thereto
in that
certain Securities
Purchase Agreement dated
the date hereof, pursuant to
which this Note was
originally issued (the “Purchase
Agreement”).

 

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

 

The
following terms shall apply
to this Note:

 

ARTICLE
I. CONVERSION
RIGHTS

 

1.1 
 Conversion Right.
The Holder
shall have
the right from
time to time,
and at
any time during
the period beginning
on the date
which is one
hundred eighty
(180) days
following the date
of this Note
and ending
on the later
of: (i)
the Maturity Date
and (ii)
the date of payment
of the Default Amount (as defined
in Article III) pursuant to Section
1.6(a) or Article III, each in
respect of the remaining
outstanding principal amount
of this Note to convert
all or any part of the outstanding and
unpaid principal amount of this
Note into fully paid
and non- assessable shares of
Common Stock, as such
Common Stock exists on
the Issue Date, or any shares
of capital
stock or
other securities
of the Borrower
into which
such Common
Stock shall
hereafter be changed or reclassified
at the conversion price (the
“Conversion Price”) determined
as provided herein (a
“Conversion”); provided, however,
that in no event shall the Holder
be entitled to convert any portion of
this Note in excess of that portion
of this Note upon conversion
of which the sum of (1) the number of shares
of Common Stock beneficially
owned by the Holder and
its affiliates (other than
shares of Common Stock which
may be deemed beneficially owned through
the ownership of the unconverted portion of the Notes
or the unexercised or unconverted
portion of any other
security of the Borrower subject
to a limitation on conversion
or exercise
analogous to the limitations
contained herein) and
(2) the number
of shares of Common Stock
issuable upon the conversion of the portion
of this Note with respect
to which the determination of this
proviso is being made, would
result in beneficial ownership
by the Holder and its affiliates
of more than 4.99% of the outstanding
shares of Common Stock. For purposes
of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined
in accordance with
Section 13(d) of the Securities
Exchange Act of 1934, as amended
(the “Exchange Act”),
and Regulations
13D-G thereunder, except
as otherwise provided
in clause (1) of such proviso,
provided, further, however, that
the limitations on conversion
may be waived by the Holder
upon, at the election
of the Holder, not
less than
61 days’ prior notice
to the Borrower, and the provisions
of the conversion limitation shall
continue

    	2

    	 

    

 

 

to
apply until such
61st day (or
such later date,
as determined
by the Holder,
as may be
specified in
such notice
of waiver).
The number
of shares of
Common Stock
to be issued
upon each
conversion of
this Note
shall be determined
by dividing
the Conversion Amount
(as defined below)
by the applicable Conversion
Price then in effect
on the date specified in the
notice of conversion,
in the form attached
hereto as Exhibit A
(the “Notice of
Conversion”), delivered
to the Borrower by
the Holder in accordance with
Section 1.4 below; provided that
the Notice of Conversion
is submitted by facsimile
or e-mail (or by
other means resulting in, or
reasonably expected to result in, notice)
to the Borrower before 6:00 p.m.,
New York, New
York time on such conversion
date (the “Conversion
Date”). The term
“Conversion Amount”
means, with
respect to any conversion of this
Note, the sum of (1) the principal
amount of this Note to be converted
in such conversion
plus (2) at
the Holder’s option,
accrued and unpaid
interest, if any,
on such principal amount at
the interest rates provided in
this Note to the Conversion Date,
plus

(3)
at the
Holder’s option,
Default Interest,
if any, on
the amounts
referred to
in the immediately
preceding clauses
(1) and/or
(2) plus
(4) at
the Holder’s
option, any amounts
owed to
the Holder
pursuant to Sections 1.3 and
1.4(g) hereof.

 

		1.2	Conversion
                                         Price.

 

(a)   
Calculation of
Conversion Price.
The conversion
price (the
“Conversion Price”)
shall equal
the Variable
Conversion Price
(as defined
herein) (subject
to equitable
adjustments for
stock splits,
stock dividends
or rights
offerings by
the  Borrower
relating to the Borrower’s
securities or the securities of any
subsidiary of the Borrower, combinations,
recapitalization, reclassifications,
extraordinary distributions and
similar events). The
"Variable Conversion
Price" shall mean
58% multiplied
by the Market
Price (as
defined herein)
(representing a discount rate
of 42%). “Market
Price” means
the average
of the lowest
three (3)
Trading Prices (as
defined below)
for the
Common Stock
during the ten
(10) Trading Day
period ending on the
latest complete
Trading Day prior to the
Conversion Date.
“Trading Price” means,
for any security as
of any
date, the closing
bid price on the
Over-the-Counter Bulletin
Board, Pink
Sheets electronic
quotation system
or applicable trading market
(the “OTC”) as
reported by a reliable reporting
service (“Reporting Service”)
designated by the Holder (i.e.
Bloomberg) or, if the OTC is
not the principal trading market
for such security, the closing
bid price of
such security on the principal
securities exchange or trading
market where such security is
listed or traded or,
if no closing bid price
of such security
is available in any of the foregoing
manners, the average of the closing bid prices
of any market
makers for such security that
are listed in the
“pink sheets”. If
the Trading
Price cannot be
calculated for such
security on such date in the
manner provided above, the
Trading Price shall be
the fair market
value as mutually determined by
the Borrower and the holders
of a majority in interest of
the Notes being converted for which
the calculation of the Trading Price
is required in order to determine the
Conversion Price of such
Notes. “Trading Day” shall mean
any day
on which the Common Stock is
tradable for any
period on the OTC, or on the principal
securities exchange or other
securities market on which
the Common Stock is then
being traded.

    	3

    	 

    

 

 

(b)  
Conversion Price
During Major
Announcements. Notwithstanding
anything contained
in Section 1.2(a)
to the contrary,
in the event
the Borrower
(i) makes
a public announcement
that it intends
to consolidate
or merge
with any
other corporation
(other than
a merger in which the Borrower
is the surviving or continuing
corporation and its capital stock
is unchanged) or sell or transfer
all or substantially all of the
assets of the Borrower or (ii)
any person,
group or entity (including the Borrower)
publicly announces a tender offer
to purchase 50% or more of the Borrower’s
Common Stock (or any
other takeover scheme) (the
date of the announcement
referred to in clause
(i) or
(ii) is
hereinafter referred
to as the “Announcement
Date”), then the Conversion Price
shall, effective upon the Announcement
Date and continuing through
the Adjusted Conversion Price
Termination Date (as defined
below), be equal to the lower
of (x) the Conversion Price
which would have
been applicable for a Conversion
occurring on the Announcement
Date and
(y) the Conversion
Price that
would otherwise
be in effect.
From and after
the Adjusted Conversion
Price Termination
Date, the Conversion
Price shall be determined
as set
forth in this
Section 1.2(a).
For purposes hereof,
“Adjusted Conversion
Price Termination Date”
shall mean, with respect
to any proposed transaction or tender offer
(or takeover scheme) for which
a public announcement as contemplated
by this Section 1.2(b)
has been made,
the date
upon which
the Borrower
(in the case
of clause
(i) above)
or the person,
group or entity (in
the case
of clause
(ii) above)
consummates or
publicly announces the
termination or abandonment of
the proposed transaction or tender offer
(or takeover scheme) which
caused this Section 1.2(b) to become
operative.

 

1.3 
 Authorized Shares.
The Borrower
covenants that
during the period
the conversion
right exists,
the Borrower
will reserve
from its authorized
and unissued
Common Stock
a sufficient
number of
shares, free
from preemptive
rights, to
provide for
the issuance
of Common Stock upon the
full conversion of this Note
issued pursuant to the Purchase
Agreement. The Borrower
is required at
all times to have authorized
and reserved
five times the number of
shares that is actually issuable
upon full conversion of the Note
(based on the Conversion
Price of the Notes in effect
from time to time)(the “Reserved
Amount”). The Reserved Amount
shall be increased from time
to time in accordance with the Borrower’s
obligations hereunder. The
Borrower represents that
upon issuance, such shares will
be duly and
validly issued, fully
paid and non-assessable.
In addition, if the
Borrower shall issue
any securities or make
any change to its capital
structure which would change
the number of shares of Common
Stock into which the Notes
shall be convertible
at the then
current Conversion
Price, the
Borrower shall
at the same
time make
proper provision so
that thereafter
there shall be
a sufficient number
of shares
of Common Stock
authorized and reserved, free
from preemptive rights, for conversion
of the outstanding Notes. The
Borrower (i) acknowledges that
it has irrevocably instructed
its transfer agent
to issue certificates
for the Common
Stock issuable
upon conversion of
this Note,
and

(ii)  
agrees that
its issuance
of this Note
shall constitute
full authority
to its officers
and agents
who are
charged with
the duty of
executing stock certificates
to execute
and issue
the necessary certificates
for shares
of Common Stock
in accordance with
the terms
and conditions
of this Note.

    	4

    	 

    

 

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

 

		1.4	Method
                                         of
                                         Conversion.

 

(a)   
Mechanics of
Conversion. Subject
to Section
1.1, this
Note may
be converted
by the Holder
in whole
or in part
at any time
from time
to time after
the Issue
Date, by

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

 

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

 

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

 

(d)  
Delivery of
Common Stock
Upon Conversion.
Upon receipt
by the
Borrower from
the Holder of
a facsimile
transmission or e-mail
(or other
reasonable means
of communication)
of a Notice
of Conversion
meeting the requirements
for conversion
as provided

    	5

    	 

    

 

 

in
this Section
1.4, the Borrower
shall issue and
deliver or cause
to be
issued and
delivered to
or upon the
order of
the Holder certificates
for the Common
Stock issuable
upon such
conversion within
three (3)
business days
after such
receipt (the
“Deadline”) (and,
solely in the case of conversion
of the entire unpaid principal
amount hereof, surrender of this Note)
in accordance with the terms
hereof and the Purchase Agreement.

 

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

 

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

 

(g)  
Failure to
Deliver Common
Stock Prior
to Deadline.
Without in any
way limiting the
Holder’s right to pursue
other remedies, including
actual damages and/or
equitable relief,
the parties
agree that
if delivery of
the Common Stock
issuable upon conversion
of this Note is not delivered
by the Deadline (other than a failure
due to the circumstances described
in Section 1.3 above,
which failure shall be governed
by such Section)
the Borrower shall
pay to the Holder $2,000 per day
in cash, for each day beyond
the Deadline that the Borrower
fails to deliver
such Common Stock.
Such cash
amount shall
be paid
to Holder
by the

    	6

    	 

    

 

 

fifth
day
of the
month following the
month in which
it has
accrued or,
at the option
of the Holder
(by written
notice to
the Borrower
by the
first day
of the month
following the
month in which
it has
accrued), shall
be added to
the principal amount
of this Note, in
which event
interest shall accrue
thereon in accordance with
the terms of
this Note and
such additional principal amount
shall be convertible
into Common Stock
in accordance with
the terms
of this  Note.
 The Borrower
agrees that the right
to convert is a valuable
right to the Holder.
The damages resulting from
a failure, attempt to frustrate,
interference with such conversion
right are difficult if not impossible
to qualify. Accordingly the parties
acknowledge that the liquidated
damages provision contained in
this Section 1.4(g)
are justified.

 

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

 

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

    	7

    	 

    

 

 

OTHER 
LOAN  OR 
FINANCING  ARRANGEMENT
 SECURED 
BY  THE SECURITIES.”

 

The
legend set
forth above
shall be
removed and
the Borrower
shall issue to
the Holder
a new certificate
therefore free
of any
transfer legend
if (i)
the Borrower
or its transfer
agent shall
have received
an opinion
of counsel, in
form, substance
and scope
customary for opinions of counsel
in comparable transactions, to the effect
that a public sale or transfer of
such Common Stock may be made
without registration under the
Act, which opinion shall be
accepted by the Company so
that the sale
or transfer
is effected
or (ii)
in the case
of the Common Stock
issuable upon conversion of this Note,
such security is registered for
sale by the Holder under an
effective registration statement
filed under the Act or otherwise
may be sold pursuant
to Rule 144 without any
restriction as to the number
of securities as of a particular date
that can then be immediately
sold. In the event that the Company
does not accept the opinion of counsel
provided by the Holder with respect
to the transfer of Securities
pursuant to an exemption from registration,
such as Rule 144 or Regulation
S, at the Deadline, it will
be considered an Event
of Default pursuant to Section
3.2 of the Note.

 

		1.6	Effect
                                         of
                                         Certain Events.

 

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

 

(b)  
Adjustment
Due
to Merger,
Consolidation, Etc.
If, at
any time
when this
Note is
issued and
outstanding and
prior to
conversion of
all of
the Notes, there
shall be any
merger, consolidation,
exchange of shares,
recapitalization, reorganization,
or other 
similar event, as
a result of which shares of Common Stock
of the Borrower shall be changed
into the same or a different
number of shares of another
class or classes of stock or securities
of the Borrower or another entity,
or in case of any sale
or conveyance of all or substantially
all of the assets
of the Borrower other than
in connection with a plan
of complete liquidation of the
Borrower, then
the Holder of
this Note
shall thereafter
have the
right to
receive upon
conversion of this Note,
upon the basis and
upon the terms
and conditions specified
herein and
in lieu
of the shares
of Common Stock immediately theretofore
issuable upon conversion, such stock,
securities or assets
which the
Holder would
have been
entitled to
receive in
such transaction
had

    	8

    	 

    

 

 

this
Note been
converted in full
immediately prior to
such transaction
(without regard
to any
limitations on
conversion set
forth herein),
and in
any such
case appropriate
provisions shall
be made
with respect to the
rights and interests
of the Holder
of this Note
to the end that
the provisions hereof (including,
without limitation, provisions
for adjustment
of the Conversion Price
and of the number of shares issuable
upon conversion of the Note)
shall thereafter be applicable, as
nearly as may be practicable
in relation to any securities
or assets thereafter deliverable
upon the conversion hereof.
The Borrower shall not affect
any transaction described in this Section
1.6(b) unless (a) it first
gives, to the extent practicable,
thirty (30) days
prior written notice
(but in any
event at
least fifteen
(15) days prior written
notice) of the record
date of the special
meeting of shareholders to approve,
or if there
is no such record date, the consummation
of, such merger, consolidation, exchange
of shares,
recapitalization, reorganization or
other similar
event or
sale of assets (during
which time the
Holder shall
be entitled to convert this Note)
and (b) the resulting successor
or acquiring entity (if not the Borrower)
assumes by written instrument
the obligations of this Section 1.6(b).
The above provisions shall similarly
apply to successive consolidations, mergers,
sales, transfers or
share exchanges.

 

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

 

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

 

The
Borrower shall
be deemed
to have
issued or
sold shares
of Common Stock
if the Borrower
in any
manner issues
or grants
any warrants,
rights or options
(not including
employee stock option
plans or
the issuance of
shares to
employees or
consultants for
compensation or the issuance of shares
in consideration for patents
or other intellectual

    	9

    	 

    

 

 

property),
whether or
not immediately
exercisable, to
subscribe for
or to purchase
Common Stock
or other
securities convertible
into or exchangeable
for Common Stock
(“Convertible Securities”)
(such warrants,
rights and
options to purchase
Common Stock
or Convertible Securities
are hereinafter referred
to as “Options”)
and the price
per share for
which Common Stock is issuable
upon the exercise of such
Options is less than the Conversion
Price then in effect, then the
Conversion Price shall be equal
to such price per share.
For purposes of the preceding
sentence, the “price per
share for which Common Stock
is issuable upon the exercise of
such Options”
is determined by dividing (i)
the total
amount, if any,
received or
receivable by
the Borrower as consideration
for the issuance or granting of all
such Options, plus the minimum aggregate
amount of additional consideration, if any,
payable to the Borrower upon the exercise
of all such Options, plus,
in the case of Convertible Securities
issuable upon the exercise of such
Options, the minimum
aggregate amount
of additional
consideration payable
upon the conversion or exchange
thereof at the time such Convertible
Securities first become convertible
or exchangeable, by (ii)
the maximum total number of shares
of Common Stock issuable upon
the exercise of all such Options
(assuming full conversion of Convertible
Securities, if applicable). No
further adjustment to the Conversion Price
will be made upon the actual
issuance of such Common Stock
upon the exercise of such
Options or upon the conversion
or exchange of Convertible Securities
issuable upon exercise of such
Options.

 

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

 

(e)   
Purchase Rights.
If,
at
any time
when any
Notes are
issued and
outstanding, the Borrower
issues any convertible
securities or rights
to purchase
stock, warrants,
securities or other
property (the
“Purchase Rights”)
pro rata
to the record
holders of any
class of
Common Stock,
then the
Holder of this Note will
be entitled to
acquire, upon
the terms applicable
to such
Purchase Rights,
the aggregate Purchase
Rights which
such Holder
could have acquired
if such Holder
had held the number of shares
of Common Stock acquirable upon
complete conversion of this Note
(without regard to any limitations
on conversion contained

    	10

    	 

    

 

 

herein)
immediately before
the date
on which
a record is
taken for the
grant, issuance
or sale
of such
Purchase Rights
or, if no
such record
is taken,
the date
as of
which the
record holders
of Common Stock are
to be determined for the
grant, issue
or sale of such Purchase
Rights.

 

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

 

1.7 
Trading Market
Limitations. Unless
permitted by
the applicable
rules and
regulations of the
principal securities
market on which
the Common Stock
is then
listed or
traded, in
no event shall the Borrower
issue upon conversion of or
otherwise pursuant to
this Note and
the other Notes issued pursuant
to the Purchase Agreement more
than the maximum number
of shares of Common
Stock that
the Borrower can issue pursuant
to any rule of the principal
United States securities market
on which the Common Stock is then
traded (the “Maximum Share Amount”),
which shall be 4.99%
of the total
shares outstanding on the Closing
Date (as defined in the Purchase Agreement),
subject to equitable adjustment
from time to time for
stock splits, stock dividends,
combinations, capital reorganizations
and similar events
relating to the Common Stock occurring
after the date hereof.
Once the Maximum Share Amount
has been issued,
if the Borrower fails to eliminate
any prohibitions under applicable
law or the rules or regulations
of any stock exchange, interdealer
quotation system or other self-regulatory
organization with jurisdiction
over the Borrower
or any of its securities
on the Borrower’s ability
to issue shares
of Common Stock
in excess
of the Maximum Share
Amount, in lieu
of any further
right to convert this Note, this
will be considered an
Event of Default under Section
3.3 of the Note.

 

1.8 
Status as
Shareholder. Upon
submission of a
Notice of
Conversion by
a Holder,
(i) the
shares covered
thereby (other than
the shares,
if any,
which cannot
be issued
because their issuance would
exceed such Holder’s
allocated portion of the Reserved
Amount or Maximum Share Amount)
shall be deemed converted into
shares of Common Stock
and (ii) the Holder’s
rights as
a Holder of such
converted portion
of this Note shall cease
and terminate, excepting
only the right to
receive certificates
for such
shares of
Common Stock
and to
any remedies provided herein
or otherwise available at
law or in equity to such Holder because
of a failure by the Borrower
to comply with the terms of this Note.
Notwithstanding the foregoing, if a Holder
has not received certificates
for all shares
of Common Stock prior to the
tenth (10th) business
day after the expiration of the
Deadline with respect
to a conversion of any portion of this Note
for any reason, then (unless
the Holder otherwise elects
to retain its status as
a holder

    	11

    	 

    

 

 

of
Common Stock
by so
notifying the Borrower)
the Holder
shall regain
the rights
of a Holder
of this Note
with respect
to such
unconverted portions
of this Note
and the Borrower
shall, as
soon as
practicable, return
such unconverted
Note to the Holder
or, if the Note has
not been surrendered,
adjust its
records to
reflect that
such portion
of this Note
has not been
converted. In all
cases, the Holder shall retain
all of its rights and
remedies (including, without
limitation, (i) the right
to receive Conversion Default
Payments pursuant to Section
1.3 to the extent required thereby for
such Conversion Default
and any
subsequent Conversion
Default and
(ii) the right
to have the
Conversion Price
with respect
to subsequent
conversions determined
in accordance
with Section 1.3)
for the Borrower’s failure
to convert this Note.

 

1.9             
Prepayment. Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during the
periods set
forth on
the table
immediately following this
paragraph (the
“Prepayment Periods”),
the Borrower
shall have
the right,
exercisable on
not less
than three

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

 

 

	Prepayment
    Period	Prepayment
    Percentage
	1.The
    period beginning
    on the Issue Date
    and ending
    on the date which
    is one hundred twenty (120)
    days following
    the Issue Date.	140%

    	12

    	 

    

 

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

 

ARTICLE
II. 
CERTAIN COVENANTS

 

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

 

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

 

2.3 
Borrowings. So
long as the
Borrower shall
have any
obligation under
this Note,
the Borrower
shall not, without
the Holder’s
written consent,
(a) create,
incur, assume
guarantee, endorse, contingently
agree to purchase or otherwise
become liable upon the obligation
of any other
person, firm, partnership, joint venture
or corporation, except by
the endorsement of negotiable
instruments for deposit
or collection, or
(b) suffer
to exist any liability for borrowed
money, except any borrowings that does
not render the Borrower a "Shell"
company as defined in Rule
12b-2 under the Securities Exchange
Act of 1934.

 

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

    	13

    	 

    

 

 

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

 

ARTICLE
III. 
EVENTS OF
DEFAULT

 

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

 

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

 

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

    	14

    	 

    

 

 

3.3 
Breach of
Covenants.
The Borrower
breaches any material
covenant or other
material term
or condition
contained in
this Note
and any
collateral documents
including but
not limited
to the Purchase
Agreement and
such breach
continues for
a period of
ten (10)
days after
written notice thereof to the
Borrower from the Holder.

 

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

 

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

 

3.6 
Judgments. Any
money judgment,
writ or
similar process
shall be entered
or filed
against the
Borrower or
any subsidiary of
the Borrower
or any of
its property or
other assets
for more
than $50,000,
and shall remain
unvacated, unbonded
or unstayed
for a
period of
twenty

(20)
days unless
otherwise consented
to by
the Holder,
which consent
will not
be unreasonably withheld.

 

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

 

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

 

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

 

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

 

3.11         
Cessation of Operations.
Any cessation
of operations
by Borrower
or Borrower
admits it
is otherwise
generally unable to
pay its
debts as
such debts
become due,

    	15

    	 

    

 

 

provided,
however, that any
disclosure of the
Borrower’s ability
to continue as a “going
concern” shall
not be an admission that
the Borrower cannot
pay its debts as
they become due.

 

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

 

3.13         
Financial Statement
Restatement. The
restatement of any
financial statements
filed by the
Borrower with
the SEC
for any date
or period from
two years
prior to the
Issue Date
of this Note
and until this
Note is no
longer outstanding,
if the result
of such restatement
would, by comparison
to the unrestated
financial statement,
have constituted
a material adverse effect
on the rights of the Holder with
respect to this Note or the Purchase
Agreement.

 

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

 

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

 

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

 

Upon
the occurrence
and during
the continuation
of any
Event of
Default specified
in Section
3.1 (solely with
respect to failure
to pay the
principal hereof
or interest
thereon when
due

    	16

    	 

    

 

 

at the Maturity Date), the Note shall
become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT
OF DEFAULT SPECIFIED IN SECTION
3.2, THE NOTE SHALL BECOME
IMMEDIATELY DUE AND PAYABLE
AND THE BORROWER SHALL PAY TO
THE HOLDER, IN FULL SATISFACTION OF
ITS OBLIGATIONS HEREUNDER,  AN AMOUNT  EQUAL  TO:
(Y)  THE  DEFAULT
SUM  (AS DEFINED HEREIN);
MULTIPLIED BY (Z) TWO (2). Upon the occurrence
and during the continuation of any Event
of Default specified in Sections
3.1 (solely with respect to failure to pay
the principal hereof or interest
thereon when due on this Note upon a Trading
Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3,
3.4, 3.6, 3.8, 3.9, 3.11,
3.12, 3.13, 3.14, and/or 3.
15 exercisable through the delivery of written notice to
the Borrower by such
Holders (the “Default Notice”),
and upon the occurrence of an Event of
Default specified the remaining sections
of Articles III (other than failure
to pay the principal hereof or interest thereon at
the Maturity Date specified in Section
3,1 hereof), the Note shall become
immediately due and payable and the Borrower
shall pay to the Holder, in full
satisfaction of its obligations
hereunder, an amount equal to
the greater of (i) 150% times the sum of (w)
the then outstanding principal amount of
this Note plus (x) accrued
and unpaid interest on the unpaid
principal amount of this Note to
the date of payment (the “Mandatory Prepayment Date”) plus (y) Default
Interest, if any, on the amounts
referred to in clauses (w)
and/or (x) plus (z) any amounts owed to
the Holder pursuant to Sections
1.3 and 1.4(g) hereof (the
then outstanding principal amount
of this Note to the date of payment plus the amounts referred
to in clauses (x), (y) and (z) shall
collectively be known as the “Default Sum”)
or (ii) the “parity
value” of the Default Sum to be prepaid, where parity
value means (a) the highest number of shares of
Common Stock issuable upon conversion
of or otherwise pursuant to such
Default Sum in accordance with Article
I, treating the Trading Day immediately preceding the Mandatory Prepayment
Date as the “Conversion
Date” for purposes of determining the lowest applicable
Conversion Price, unless the Default
Event arises as a result of
a breach in respect of a specific Conversion
Date in which case such Conversion Date
shall be the Conversion Date), multiplied by (b)
the highest Closing Price for
the Common Stock during the period
beginning on the date of first occurrence of
the Event of Default and
ending one day prior to the
Mandatory Prepayment Date (the
“Default Amount”) and all other amounts
payable hereunder shall immediately become
due and payable, all
without demand, presentment
or notice, all of which hereby
are expressly waived, together with all costs, including,
without limitation, legal fees
and expenses, of collection,
and the Holder shall be entitled to exercise
all other rights and remedies available
at law or in equity.

 

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

    	17

    	 

    

 

ARTICLE
IV.
MISCELLANEOUS

 

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

 

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

 

If
to the Borrower, to:

RICH
PHARMACEUTICALS, INC.

9595 Wilshire
Boulevard -
Suite 900 Beverly
Hills, CA 90212

Attn:
BEN CHANG, Chief Executive Officer
facsimile:

 

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

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

facsimile:
[enter fax number]

 

If
to the Holder:

KBM
WORLDWIDE, INC.

    	18

    	 

    

 

80 Cuttermill
Road – Suite 410 Great
Neck, NY 11021

Attn:
Seth Kramer, President

e-mail:
info@kbmworldwide.com

 

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

Att:
Judah A. Eisner,
Esq. Attn: Bernard
S. Feldman, Esq.
facsimile: 516-466-3555

e-mail:
dyork@nwbmlaw.com

 

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

 

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

 

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

 

4.6 
Governing Law.
This Note
shall be governed
by and
construed in accordance
with the laws
of the State
of New
York without
regard to
principles of
conflicts of
laws. Any
action brought
by either
party against the other
concerning the transactions
contemplated by
this Note shall
be brought
only in the
state courts
of New York or
in the federal
courts located
in the state and
county of Nassau. The
parties to this Note
hereby irrevocably waive any
objection to jurisdiction and
venue of any action instituted hereunder
and shall not assert any defense
based on lack
of jurisdiction
or venue
or based
upon forum non
conveniens.
The Borrower
and Holder
waive trial by jury.
The prevailing party shall be
entitled to recover from the other
party its reasonable attorney's
fees and costs. In the event that
any provision of this Note or any other
agreement delivered
in connection herewith
is invalid
or unenforceable under any applicable
statute or rule of law, then such
provision shall be deemed inoperative
to the extent that it may conflict
therewith and shall be deemed
modified to conform with such
statute or rule of law. Any
such provision
which may prove invalid or
unenforceable under
any law shall
not affect the

    	19

    	 

    

 

validity
or enforceability
of any
other provision
of any
agreement. Each
party hereby irrevocably
waives personal service
of process
and consents
to process
being served
in any
suit, action
or proceeding
in connection
with this
Agreement or
any other
Transaction Document
by mailing
a copy thereof via registered or
certified mail or overnight
delivery (with evidence of delivery)
to such
party at the address
in effect
for notices
to it under
this Agreement
and agrees
that such service shall
constitute good and sufficient
service of process and notice
thereof. Nothing
contained herein
shall be deemed
to limit in
any way
any right
to serve process
in any other manner permitted by
law.

 

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

 

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

 

4.9 
Notice of
Corporate Events.
Except as
otherwise provided
below, the
Holder of this
Note shall
have no
rights as
a Holder
of Common
Stock unless
and only to the
extent that
it converts
this Note
into Common
Stock. The
Borrower shall
provide the
Holder with
prior notification of any meeting of
the Borrower’s shareholders (and
copies of proxy materials and
other information sent to shareholders).
In the event of any taking
by the Borrower of a record of
its shareholders for the purpose
of determining shareholders who
are entitled to receive payment
of any dividend
or other distribution, any
right to subscribe for, purchase
or otherwise acquire
(including by way of merger, consolidation,
reclassification or recapitalization)
any share of any class or
any other securities or
property, or to receive
any other right,
or for
the purpose
of determining shareholders
who are entitled
to vote in connection
with any
proposed sale, lease
or conveyance of all
or substantially all of the assets
of the Borrower or any proposed
liquidation, dissolution or winding up of the Borrower,
the Borrower shall mail
a notice to the Holder, at
least twenty (20) days prior to the record
date specified therein (or
thirty (30) days prior
to the consummation of the transaction
or event, whichever is earlier),
of the date on which any such
record is to be taken
for the purpose of
such dividend,
distribution, right
or other event, and
a brief statement regarding the
amount and character
of such dividend, distribution,
right or other event
to the extent
known at
such time. The
Borrower shall
make a
public announcement
of any

    	20

    	 

    

 

event
 requiring
 notification
 to 
the  Holder 
hereunder  substantially 
simultaneously  with 
the notification to the
Holder in accordance
with the terms of
this Section 4.9.

 

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

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by
its duly authorized officer this January 9,
2015.

 

RICH
PHARMACEUTICALS, INC.

 

By:
/s/ Ben Chang

BEN
CHANG

Chief
Executive Officer

    	21

    	 

    

 

EXHIBIT
A -- 
NOTICE OF
CONVERSION

 

The undersigned hereby elects to convert $principal amount of the Note (defined
below) into that number of shares of Common Stock to be issued pursuant to  the conversion of the Note (“Common Stock”) as set forth below, of RICH PHARMACEUTICALS, INC., a Nevada corporation (the
“Borrower”) according to the conditions of the convertible note of the Borrower
dated as of
January 9, 2015 (the
“Note”), as of the
date written below. No fee will be charged to the Holder
for any conversion, except for
transfer taxes, if any.

 

Box
Checked as to applicable
instructions:

 

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

 

Name
of DTC
Prime Broker:

Account Number:

 

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

 

KBM
WORLDWIDE, INC.

111 Great Neck Road - Suite 216

Great Neck,
NY 11021 

Attention:
Certificate Delivery

e-mail:
info@kbmworldwide.com

 

Date of Conversion: __________

Applicable
Conversion Price:$ __________

Number of
Shares of
Common Stock to be Issued

Pursuant to
Conversion of the
Notes:__________

Amount of
Principal Balance Due
remaining

Under the Note
after this
conversion:__________

 

KBM
WORLDWIDE, INC.

 

By:
__________

Name:
 Seth
Kramer

Title: President

Date:

    	22

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