Document:

EX-4.2

 Exhibit 4.2 

 
  

COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P., as Issuer 

COLUMBIA PROPERTY TRUST, INC., as Guarantor 

U.S. BANK NATIONAL ASSOCIATION, as Trustee 

FIRST SUPPLEMENTAL INDENTURE 

Dated as of 

March 12, 2015 
 to

 INDENTURE 

Dated as of 

March 12, 2015 
  

 
 4.150% Senior
Notes due 2025 
  
  

 

 TABLE OF CONTENTS 

 

							
	 	 	 	  	PAGE	 
	ARTICLE 1	  
	DEFINITIONS	  
			
	 Section 1.01.
	 	 Relationship with Indenture
	  	 	2	  
	 Section 1.02.
	 	 Definitions
	  	 	2	  
	 Section 1.03.
	 	 Other Definitions
	  	 	8	  
	
	ARTICLE 2	  
	ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES	  
			
	 Section 2.01.
	 	 Issue of Notes
	  	 	9	  
	 Section 2.02.
	 	 Form, Dating and Denominations; Legends
	  	 	9	  
	 Section 2.03.
	 	 Execution and Authentication; Additional Notes
	  	 	9	  
	 Section 2.04.
	 	 Registration, Transfer and Exchange
	  	 	10	  
	
	ARTICLE 3	  
	OPTIONAL REDEMPTION	  
			
	 Section 3.01.
	 	 Optional Redemption of Notes
	  	 	13	  
	 Section 3.02.
	 	 Notice of Redemption; Selection of Notes
	  	 	14	  
	 Section 3.03.
	 	 Payment of Notes Called for Redemption by the Issuer
	  	 	16	  
	 Section 3.04.
	 	 Sinking Fund
	  	 	16	  
	
	ARTICLE 4	  
	PARTICULAR COVENANTS	  
			
	 Section 4.01.
	 	 Aggregate Debt Test
	  	 	16	  
	 Section 4.02.
	 	 Debt Service Test
	  	 	17	  
	 Section 4.03.
	 	 Secured Debt Test
	  	 	18	  
	 Section 4.04.
	 	 Maintenance of Total Unencumbered Assets
	  	 	18	  
	
	ARTICLE 5	  
	EVENTS OF DEFAULT; REMEDIES	  
			
	 Section 5.01.
	 	 Events of Default
	  	 	19	  
	
	ARTICLE 6	  
	SUPPLEMENTAL INDENTURES	  
			
	 Section 6.01.
	 	 Supplemental Indentures with and without Consent of Noteholders
	  	 	19	  

  
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	ARTICLE 7	  
	CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE	  
			
	 Section 7.01.
		 Issuer May Consolidate on Certain Terms
		 	19	  
	 Section 7.02.
		 General Partner May Consolidate on Certain Terms
		 	20	  
	
	ARTICLE 8	  
	FUTURE GUARANTEES	  
			
	 Section 8.01.
		 Guarantees
		 	21	  
	 Section 8.02.
		 Release of Guarantee
		 	22	  
	 Section 8.03.
		 Notices
		 	22	  
	
	ARTICLE 9	  
	MISCELLANEOUS PROVISIONS	  
			
	 Section 9.01.
		 Continued Effect
		 	22	  
	 Section 9.02.
		 Payments
		 	22	  
	 Section 9.03.
		 Governing Law
		 	22	  
	 Section 9.04.
		 No Security Interest Created
		 	23	  
	 Section 9.05.
		 Table of Contents, Headings, etc
		 	23	  
	 Section 9.06.
		 Execution in Counterparts
		 	23	  
	 Section 9.07.
		 Severability
		 	23	  
			
	 EXHIBIT A
		 Form of Note
				
	 EXHIBIT B
		 Form of Supplemental Indenture
				

  
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 FIRST SUPPLEMENTAL INDENTURE 

FIRST SUPPLEMENTAL INDENTURE dated as of March 12, 2015 (this “Supplemental Indenture”) among Columbia Property Trust,
Inc., a Maryland corporation (hereinafter called the “General Partner”), Columbia Property Trust Operating Partnership, L.P., a Delaware limited partnership and subsidiary of the General Partner (hereinafter called the
“Issuer”), and U.S. Bank National Association, as trustee (hereinafter called the “Trustee”). 

RECITALS 
 WHEREAS, the
General Partner, the Issuer and the Trustee are parties to an Indenture dated as of March 12, 2015 (the “Indenture”), providing for the issuance from time to time of one or more series of the Issuer’s debt securities (the
“Securities”), the terms of which are to be determined as set forth in Section 301 of the Indenture; and 
 WHEREAS,
pursuant to Section 901(6) of the Indenture, without the consent of any Holders, the Issuer, when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures
supplemental to the Indenture to establish the form or terms of securities of any series as permitted by Sections 201 and 301 of the Indenture; and 

WHEREAS, pursuant to this Supplemental Indenture, the Issuer desires to create a new series of Securities under the Indenture, to be titled
the 4.150% Senior Notes due 2025 in an initial aggregate principal amount of $350,000,000 (the “Notes”) and to establish the forms and the terms, conditions, rights and preferences thereof; 

WHEREAS, all action on the part of the Issuer necessary to authorize the issuance of the Notes under the Indenture and this Supplemental
Indenture has been duly taken; and 
 WHEREAS, all acts and requirements necessary to make the Notes, when executed by the Issuer and
authenticated and delivered by the Trustee as provided in the Indenture and this Supplemental Indenture, the valid and binding obligations of the Issuer and to make this Supplemental Indenture a valid and binding agreement in accordance with the
Indenture have been done and performed; 
 NOW, THEREFORE, in consideration of the premises, agreements and obligations set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of all Holders of the Notes, as follows: 

 ARTICLE 1 

DEFINITIONS 

Section 1.01. Relationship with Indenture. With respect to the Notes, this First Supplemental Indenture constitutes an integral
part of the Indenture. In the event of any inconsistency between the Indenture and this First Supplemental Indenture, this First Supplemental Indenture shall govern with respect to the Notes. References to “Security” or
“Securities” shall be deemed to refer to the Notes, unless the context otherwise requires. In addition, the words “herein,” “hereof,” “hereunder,” and words of similar import shall refer to this First
Supplemental Indenture. 
 Section 1.02. Definitions. All terms contained in this Supplemental Indenture shall, except as
specifically provided herein or except as the context may otherwise require, have the meanings defined in the Indenture. Solely with respect to the Notes and this Supplemental Indenture, the following definitions shall be added to Section 101
of the Indenture and replace any existing definitions (as applicable) in the Indenture, each in appropriate alphabetical order, unless the context requires otherwise. 

“Acquired Debt” means Debt of a Person: 

(a) existing at the time such Person is merged or consolidated with or into the General Partner or any of its Subsidiaries or becomes a
Subsidiary of the General Partner; or 
 (b) assumed by the General Partner or any of its Subsidiaries in connection with the acquisition of
assets from such Person. 
 Acquired Debt shall be deemed to be incurred on the date the acquired Person is merged or consolidated with or into the General
Partner or any of its Subsidiaries or becomes a Subsidiary of the General Partner or the date of the related acquisition, as the case may be. 

“Agent Member” means a member of, or a participant in, the Depositary. 

“Annual Debt Service Charge” means, for any period, the interest expense of the General Partner and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP, including, without duplication: 
 (a) all amortization of debt discount
and premium and deferred financing costs; 
 (b) all accrued interest; 

(c) all capitalized interest; and 

  
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 (d) the interest component of capitalized lease obligations, excluding the interest expense
component of capitalized lease obligations in respect of Approved Bond Transactions. 
 “Approved Bond Transaction” means
those real property projects and any other real property developments (a) in which the General Partner or any of its Subsidiaries acquires an interest as a lessee in real property subject to a bond transaction encumbering the property wherein
the General Partner or any of its Subsidiaries is also the owner of the applicable bonds; (b) pursuant to which rental payments of the General Partner or any of its Subsidiaries as lessee ultimately run to the General Partner or any of its
Subsidiaries in the form of payments on the applicable bonds and are in an amount that are equivalent (or nearly so) with the required payments under the bonds; and (c) which lease (i) has a remaining term of not less than twenty
(20) years or provides a purchase option in favor of the General Partner or any of its Subsidiaries for the underlying land that is exercisable by the General Partner or any of its Subsidiaries at the option of the General Partner or any of its
Subsidiaries, as appropriate, prior to or simultaneously with the expiration of the lease and for a de minimus or nominal purchase price, (ii) under which any required rental payment or other payment due under such lease from the General
Partner or any of its Subsidiaries to the lessor have been assigned to secure the bonds held by the General Partner or any of its Subsidiaries and no payment default has occurred and no other default has occurred which would permit the termination
of the lease, (iii) where no party to such lease is the subject of bankruptcy, insolvency, receivership or other similar events, (iv) contains customary provisions either (A) protective of any lender to the lessee or (B) whereby
the lessor expressly agrees upon request to subordinate the lessor’s fee interest to the rights and remedies of such a lender, (v) where the General Partner’s or any of its Subsidiaries’ interest in the real property or the lease
is not subject to any Lien (other than a permitted Lien) and the instruments securing the bonds held by the General Partner or any of its Subsidiaries, and (vi) such lease and bond documents permit reasonable transferability thereof (including
the right to sublease to occupancy tenants). 
 “Cash Equivalents” means: (a) securities issued, guaranteed or insured
by the United States of America or any of its agencies with maturities of not more than one year from the date acquired; (b) certificates of deposit with maturities of not more than one year from the date acquired which are issued by a United
States federal or state chartered commercial bank of recognized standing, or a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision
of any such country, acting through a branch or agency, which bank at the time of the acquisition thereof has capital and unimpaired surplus in excess of $500,000,000 and which bank or its holding company at the time of the acquisition thereof has a
short-term commercial paper rating of at least A-2 or the equivalent by S&P or at least P-2 or the equivalent by Moody’s; (c) reverse repurchase agreements with terms of not more than seven days from the

  
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date acquired, for securities of the type described in clause (a) above and entered into only with commercial banks having the qualifications described in clause (b) above;
(d) commercial paper issued by any Person incorporated under the laws of the United States of America or any State thereof and rated at the time of the acquisition thereof at least A-2 or the equivalent thereof by S&P or at least P-2 or the
equivalent thereof by Moody’s, in each case with maturities of not more than one year from the date acquired; and (e) investments in money market funds registered under the Investment Company Act of 1940, which have at the time of the
acquisition thereof net assets of at least $500,000,000 and at least 85% of whose assets consist of securities and other obligations of the type described in clauses (a) through (d) above. 

“Certificated Note” means a Note in registered individual form without interest coupons. 

“Close of Business” means 5:00 p.m., New York City time. 

“Consolidated Income Available for Debt Service” for any period means Consolidated Net Income of the General Partner and its
Subsidiaries for such period, plus amounts which have been deducted and minus amounts which have been added for, without duplication: 
 (a)
interest expense on Debt (excluding the interest expense component of capitalized lease obligations in respect of Approved Bond Transactions); 

(b) provision for taxes based on income; 

(c) amortization of debt discount, premium ‘and deferred financing costs; 

(d) provisions for gains and losses on sales or other dispositions of properties and other investments, and impairment charges; 

(e) property depreciation and amortization; 

(f) the effect of any non-cash items, including the effect of non-recurring or other unusual items, as determined by us in good faith, and
swap ineffectiveness charges or income or expense attributable to transactions involving derivative instruments that do not qualify for hedge accounting; and 

(g) amortization of deferred charges, 
 all
determined on a consolidated basis in accordance with GAAP. 
 “Consolidated Net Income” for any period means the amount of
net income (or loss) of the General Partner and its Subsidiaries for such period, excluding, without duplication: 
 (a) extraordinary
items; and 

  
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 (b) the portion of net income (but not losses) of the General Partner and its Subsidiaries
allocable to minority interests in unconsolidated Persons to the extent that cash dividends or distributions have not actually been received by the General Partner or one of its Subsidiaries, 

all determined on a consolidated basis in accordance with GAAP. 

“Custodian” means U.S. Bank National Association, as custodian with respect to the Global Notes, or any successor entity
thereto. 
 “Depositary” means the clearing agency registered under the Exchange Act that is designated to act as the
depositary for the Global Notes. DTC shall be the initial Depositary, until a successor shall have been appointed and become such pursuant to the applicable provisions of the Indenture, and thereafter, “Depositary” shall mean or
include such successor. 
 “Equity Interest” means, with respect to any Person, any share of capital stock of (or other
ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person, any security
convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests),
and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is
authorized or otherwise existing on any date of determination. 
 “Fair Market Value” means, with respect to any asset or
property, the fair market value, as determined in good faith by the Board of Directors. 
 “General Partner” shall have the
meaning set forth in the recitals, and shall include its successors and assigns. 
 “Global Note” means a Note in
registered global form without interest coupons. 
 “Guarantee” means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation under any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation under any Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial 

  
 5 

 
statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Debt or other obligation under any Debt of the payment thereof or to
protect such obligee against loss in respect thereof, in whole or in part; provided that the term “Guarantee” does not include endorsements for collection or deposit in the ordinary course of business. The terms
“Guarantee” and “Guaranteeing,” used as verbs, have a corresponding meaning. 
 “Guarantors” means
(i) the General Partner and (ii) each of the Issuer’s or the General Partner’s Subsidiaries, if any, that in the future executes a supplemental indenture in which such Subsidiary agrees to be bound by the terms of the Indenture
and this Supplemental Indenture as set forth in Article 8 of this Supplemental Indenture and Article 15 of the Indenture as a Guarantor; provided that any Subsidiary constituting a Guarantor as described above shall cease to constitute a
Guarantor with respect to the Notes when its respective guarantee is released in accordance with the terms of the Indenture and this Supplemental Indenture. 

“Indenture” shall have the meaning set forth in the recitals to this Supplemental Indenture. 

“Interest Payment Date” means each April 1 and October 1 of each year, commencing October 1, 2015. 

“Investment” means, with respect to any Person, any acquisition or investment (whether or not of a controlling interest) by
such Person, by means of any of the following: (a) the purchase or other acquisition of any Equity Interest in another Person; (b) a loan, advance or extension of credit to, capital contribution to, guaranty of indebtedness of, or purchase
or other acquisition of any indebtedness of, another Person, including any partnership or joint venture interest in such other Person; (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another
Person that constitute the business or a division or operating unit of another Person; (d) the purchase or other acquisition of Cash Equivalents or (e) the acquisition in the ordinary course of business of any interests in real property or
any other investment. Any binding commitment to make an Investment in any other Person, as well as any option of another Person to require an Investment in such Person, shall constitute an Investment. Except as expressly provided otherwise, for
purposes of determining compliance with any covenant contained in the Indenture, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment. 

“Issue Date” means, with respect to the Notes being issued on the date hereof, the date hereof, and with respect to any
additional Notes, the date of original issuance of such additional Notes. 
 “Maturity Date” means April 1, 2025. 

  
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 “Moody’s” means Moody’s Investors Service, Inc. and its successors.

 “Note” or “Notes” shall have the meaning set forth in the recitals to this Supplemental Indenture. 

“principal,” when used with respect to any Note, shall be deemed to include a reference to “and premium, if any,”
unless otherwise expressly stated or the context otherwise requires. 
 “Property” means any parcel of real property,
together with all improvements thereon, owned or leased pursuant to a ground lease by the General Partner or any of its Subsidiaries or any Unconsolidated Affiliate of the General Partner or any of its Subsidiaries and which is located in a state of
the United States of America or the District of Columbia. 
 “Regular Record Date” for the interest payable on any Interest
Payment Date means the March 15 or September 15 (whether or not a Business Day) next preceding such Interest Payment Date. 

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw Hill Companies, Inc. and its
successors. 
 “Subsidiary Guarantors” means each Subsidiary of the Issuer or the General Partner, if any, that in the
future executes a supplemental indenture in accordance with Section 8.01 in which such Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor. 

“Total Assets” means, with respect to any Person, the sum of, without duplication: 

(a) Undepreciated Real Estate Assets; and 

(b) all other assets of such Person (excluding (i) accounts receivable, (ii) intangibles (but not excluding intangibles related to
real property acquisitions) and (iii) the principal component of capitalized lease obligations in respect of Approved Bond Transactions), 
 all
determined on a consolidated basis in accordance with GAAP. 
 “Total Unencumbered Assets” means, with respect to any
Person, the sum of, without duplication: 
 (a) those Undepreciated Real Estate Assets which are not subject to a Lien securing Debt; and

 (b) all other assets (excluding (i) accounts receivable, (ii) intangibles (but not excluding intangibles related to real
property acquisitions) and (iii) the principal component of capitalized lease obligations in respect of Approved Bond Transactions) of the General Partner and its Subsidiaries not subject to a Lien securing Debt, 

  
 7 

 all determined on a consolidated basis in accordance with GAAP; provided, however, that, in determining Total
Unencumbered Assets as a percentage of outstanding Unsecured Debt for purposes of Section 4.04 all investments in unconsolidated limited partnerships, unconsolidated limited liability companies and other unconsolidated entities shall be excluded
from Total Unencumbered Assets. For the avoidance of doubt, cash held by a “qualified intermediary” in connection with proposed like-kind exchanges pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, which may
be classified as “restricted” for purposes of United Stated generally accepted accounting purposes, will nonetheless be considered Total Unencumbered Assets, so long as the General Partner or a Subsidiary thereof has the right to
(i) direct the qualified intermediary to return such cash to the General Partner or a Subsidiary thereof if and when the General Partner or a Subsidiary thereof fails to identify or acquire the proposed like-kind property or at the end of the
180-day replacement period or (ii) direct the qualified intermediary to use such cash to acquire like-kind property. 

“Unconsolidated Affiliate” means, in respect of any Person, any other Person (a) in whom such Person holds an
Investment, which Investment is accounted for in the financial statements of such Person on an equity basis of accounting and whose financial results would not be consolidated under GAAP with the financial results of such first Person on the
consolidated financial statements of such first Person, or (b) which is not a Subsidiary of such first Person. 

“Undepreciated Real Estate Assets” means, with respect to any Person, as of any date, the cost (original cost plus capital
improvements) of real estate assets of such Person and its Subsidiaries on such date, before depreciation and amortization, all determined on a consolidated basis in accordance with. GAAP. 

“Unsecured Debt” means Debt of the General Partner or any of its Subsidiaries which is not secured by a Lien on any property
or assets of the General Partner or any of its Subsidiaries. 
 Certain terms used in Article 3 are defined in Section 3.01. 

Section 1.03. Other Definitions. 
  

			
	 Term
	  	Defined in Section
	 “Comparable Treasury Issue”
	  	3.01
	 “Comparable Treasury Price”
	  	3.01
	 “Event of Default”
	  	5.01
	 “Independent Investment Banker”
	  	3.01
	 “Primary Treasury Dealer”
	  	3.01

  
 8 

			
	 Term
	  	Defined in Section
	 “Redemption Date”
	  	3.02
	 “Redemption Price”
	  	3.01
	 “Reference Treasury Dealer Quotations”
	  	3.01
	 “Reference Treasury Dealer”
	  	3.01
	 “Treasury Rate”
	  	3.01

 ARTICLE 2 

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES 
 Section 2.01. Issue of Notes. A new series of Securities is to
be issued under the Indenture as supplemented by this Supplemental Indenture. The series shall be titled the “4.150% Senior Notes due 2025.” 

Section 2.02. Form, Dating and Denominations; Legends. The Notes and the Trustee’s certificate of authentication will be
substantially in the form attached as Exhibit A. The terms and provisions contained in the form of the Notes annexed as Exhibit A constitute, and are hereby expressly made, a part of the Indenture and this Supplemental Indenture. The Notes may have
notations, legends or endorsements required by law, rules of or agreements with national securities exchanges to which the Issuer is subject, or usage. 

Section 2.03. Execution and Authentication; Additional Notes. (a) The aggregate principal amount of Notes which may be
authenticated and delivered under the Indenture is unlimited; provided that upon initial issuance on the date hereof the aggregate principal amount of Notes outstanding shall not exceed $350,000,000, except for Notes issued upon exchange or
registration of transfer of other Notes as provided herein and except as provided in Section 2.04 and 3.03. The Issuer may, without the consent of or notice to the Holders of Notes, issue additional Notes from time to time in the future with
the same terms, provisions and the same CUSIP number as the Notes issued on the date hereof, except for any difference in issue price, Interest accrued prior to the issue date and first Interest Payment Date of those additional Notes;
provided that such additional Notes shall be treated as part of the same issue as and fungible with the Notes issued on the date hereof for United States federal income tax purposes and shall carry the same right to receive accrued and unpaid
Interest as the other Notes then outstanding; provided, however, that, notwithstanding the foregoing, (i) if the additional Notes are not fungible with the Notes for United States federal income tax purposes, the additional Notes will have a
separate CUSIP number and (ii) if the Issuer has effected legal defeasance or covenant defeasance with respect to the Notes pursuant to Section 402 of the Indenture or has effected satisfaction and discharge with respect to the Notes
pursuant to Section 401 of the Indenture, no additional Notes may be issued. The Notes issued on the date hereof and any such additional Notes shall constitute a single series of debt securities, and in

  
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circumstances in which the Indenture provides for the Holders of Notes to vote or take any action, the Holders of the Notes issued on the date hereof and any such additional Notes will vote or
take that action as a single class. 
 (b) At any time and from time to time after the execution and delivery of this Supplemental
Indenture, the Issuer may deliver Notes executed by the Issuer to the Trustee for authentication. The Trustee will authenticate and deliver 

(i) Notes for original issue in the aggregate principal amount not to exceed $350,000,000, and 

(ii) additional Notes from time to time for original issue in aggregate principal amounts specified by the Issuer. 

Section 2.04. Registration, Transfer and Exchange. (a) The Notes will be issued in registered form only, without coupons, and
the Issuer shall cause the Trustee to maintain a Security Register of the Notes, for registering the record ownership of the Notes by the Holders and transfers and exchanges of the Notes. 

(b) (1) Each Global Note will be registered in the name of the Depositary or its nominee and, so long as DTC is serving as the Depositary
thereof, will bear the DTC Legend. 
 (2) Each Global Note will be delivered to the Trustee as custodian for the Depositary.
Transfers of a Global Note (but not a beneficial interest therein) will be limited to transfers thereof in whole, but not in part, to the Depositary, its successors or their respective nominees, except (1) as set forth in Section 2.04(b)(4) and
(2) transfers of portions thereof in the form of Certificated Notes may be made upon request of an Agent Member (for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on behalf of the Depositary in
accordance with customary procedures of the Depositary and in compliance with this Section. 
 (3) Agent Members will have no
rights under the Indenture with respect to any Global Note held on their behalf by the Depositary, and the Depositary may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner and Holder of such
Global Note for all purposes whatsoever. Notwithstanding the foregoing, the Depositary or its nominee may grant proxies and otherwise authorize any Person (including any Agent Member and any Person that holds a beneficial interest in a Global Note
through an Agent Member) to take any action which a Holder is entitled to take under the Indenture or the Notes, and nothing herein will impair, as between the Depositary and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any security. 

  
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 (4) If (x) the Depositary notifies the Issuer that it is unwilling or unable
to continue as Depositary for a Global Note and a successor depositary is not appointed by the Issuer within 90 days of the notice or (y) an Event of Default has occurred and is continuing and the Trustee has received a request from the
Depositary, the Trustee will promptly exchange each beneficial interest in the Global Note for one or more Certificated Notes in authorized denominations having an equal aggregate principal amount registered in the name of the owner of such
beneficial interest, as identified to the Trustee by the Depositary, and thereupon the Global Note will be deemed canceled. 
 (c) Each
Certificated Note will be registered in the name of the holder thereof or its nominee. 
 (d) A Holder may transfer a Note (or a beneficial
interest therein) to another Person or exchange a Note (or a beneficial interest therein) for another Note or Notes of any authorized denomination by presenting to the Trustee a written request therefor stating the name of the proposed transferee or
requesting such an exchange, accompanied by any certification, opinion or other document as the Trustee may reasonably request. The Trustee will promptly register any transfer or exchange that meets the requirements of this Section by noting the
same in the register maintained by the Trustee for the purpose; provided that 
 (x) no transfer or exchange will be
effective until it is registered in such register and 
 (y) the Trustee will not be required (i) to issue, register the
transfer of or exchange any Note for a period of 15 days before any selection of Notes for redemption, (ii) to register the transfer of or exchange any Note so selected for redemption or purchase in whole or in part, except, in the case of a
partial redemption or purchase, that portion of any Note not being redeemed or purchased, or (iii) if a redemption is to occur after a Regular Record Date but on or before the corresponding Interest Payment Date, to register the transfer of or
exchange any Note on or after the Regular Record Date and before the date of redemption or purchase. Prior to the registration of any transfer, the Issuer, the Trustee and their agents will treat the Person in whose name the Note is registered as
the owner and Holder thereof for all purposes (whether or not the Note is overdue), and will not be affected by notice to the contrary. 

From time to time the Issuer will execute and the Trustee will authenticate additional Notes as necessary in order to permit the registration
of a transfer or exchange in accordance with this Section. 
 No service charge will be imposed in connection with any transfer or exchange
of any Note, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than a transfer tax or other similar governmental charge payable upon exchange
pursuant to subsection (b)(4)). 

  
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 (e) (1) Global Note to Global Note. If a beneficial interest in a Global Note is
transferred or exchanged for a beneficial interest in another Global Note, the Trustee will (x) record a decrease in the principal amount of the Global Note being transferred or exchanged equal to the principal amount of such transfer or
exchange and (y) record a like increase in the principal amount of the other Global Note. Any beneficial interest in one Global Note that is transferred to a Person who takes delivery in the form of an interest in another Global Note, or
exchanged for an interest in another Global Note, will, upon transfer or exchange, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer and exchange
restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. 

(2) Global Note to Certificated Note. If a beneficial interest in a Global Note is transferred or exchanged for a
Certificated Note, the Trustee will (x) record a decrease in the principal amount of such Global Note equal to the principal amount of such transfer or exchange and (y) deliver one or more new Certificated Notes in authorized denominations
having an equal aggregate principal amount to the transferee (in the case of a transfer) or the owner of such beneficial interest (in the case of an exchange), registered in the name of such transferee or owner, as applicable. 

(3) Certificated Note to Global Note. If a Certificated Note is transferred or exchanged for a beneficial interest in a
Global Note, the Trustee will (x) cancel such Certificated Note, (y) record an increase in the principal amount of such Global Note equal to the principal amount of such transfer or exchange and (z) in the event that such transfer or
exchange involves less than the entire principal amount of the canceled Certificated Note, deliver to the Holder thereof one or more new Certificated Notes in authorized denominations having an aggregate principal amount equal to the untransferred
or unexchanged portion of the canceled Certificated Note, registered in the name of the Holder thereof. 
 (4)
Certificated Note to Certificated Note. If a Certificated Note is transferred or exchanged for another Certificated Note, the Trustee will (x) cancel the Certificated Note being transferred or exchanged, (y) deliver one or more new
Certificated Notes in authorized denominations having an aggregate principal amount equal to the principal amount of such transfer or exchange to the transferee (in the case of a transfer) or the Holder of the canceled Certificated Note (in the case
of an exchange), registered in the name of such transferee or Holder, as applicable, and (z) if such transfer or exchange involves less than the entire principal amount of the canceled Certificated Note, deliver to the Holder thereof one or

  
 12 

 
more Certificated Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Certificated Note, registered in the
name of the Holder thereof. 
 ARTICLE 3 

OPTIONAL REDEMPTION 

Section 3.01. Optional Redemption of Notes. (a) The Issuer shall have the right, at its option, to redeem the Notes for cash
at any time or from time to time prior to January 1, 2025, in whole or in part, at a redemption price (with respect to the Notes to be redeemed on any Redemption Date pursuant to this Section 3.01(a), the “Redemption
Price”) equal to the greater of: (i) 100% of the principal amount of the Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and Interest on the Notes to be redeemed
(exclusive of Interest accrued to the applicable Redemption Date) discounted to such Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points, plus, in each case,
accrued and unpaid Interest on the principal amount of the Notes being redeemed to, but excluding, such Redemption Date. In addition, the Issuer may, at its option, redeem the Notes, at any time or from time to time on or after January 1, 2025,
in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid Interest on the principal amount of the Notes being redeemed to, but not including, the applicable Redemption Date.

 “Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield
to maturity of the Comparable Treasury Issue, calculated by the Issuer using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury
Rate shall be calculated on the third Business Day preceding the applicable Redemption Date and shall not be less than zero. 

“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having
a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity
to the remaining term of the Notes. 
 “Independent Investment Banker” means one of J.P. Morgan Securities LLC, Morgan
Stanley & Co. LLC or Wells Fargo Securities, LLC and each of their respective successors (whichever shall be appointed by the Issuer in respect of the applicable Redemption Date) or, if any such firm or its respective successor, if any, is
unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuer. 

  
 13 

 “Comparable Treasury Price” means, with respect to any Redemption Date,
(i) if four Reference Treasury Dealer Quotations are obtained, the average (as calculated by the Issuer) of the remaining Reference Treasury Dealer Quotations for such Redemption Date after excluding the highest and lowest such Reference
Treasury Dealer Quotations from the four selected, (ii) if fewer than four but more than one such Reference Treasury Dealer Quotations are obtained, the average (as calculated by the Issuer) of all such quotations, or (iii) if only one
such Reference Treasury Dealer Quotation is obtained, such Reference Treasury Dealer Quotation. 
 “Reference Treasury
Dealer” means each of (i) J.P. Morgan Securities LLC (or its successor) or an affiliate thereof which is a Primary Treasury Dealer; (ii) Morgan Stanley & Co. LLC (or its successor) or an affiliate thereof which is a
Primary Treasury Dealer; (iii) a Primary Treasury Dealer selected by Wells Fargo Securities, LLC (or its successor); provided, however, that if any such firm (or, if applicable, any of their affiliates) or any of their successors, as the case
may be, shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Issuer will substitute therefor another Primary Treasury Dealer; and (iv) one other Primary Treasury
Dealer selected by the Issuer. 
 “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average (as calculated by the Issuer) of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Issuer by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. 
 (b) Notwithstanding
the foregoing, the Issuer shall not redeem the Notes pursuant to Section 3.01(a) on any date if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded or cured on or prior to such date. 

Section 3.02. Notice of Redemption; Selection of Notes. In case the Issuer shall desire to exercise the right to redeem all or, as
the case may be, any part of the Notes pursuant to Section 3.01, it shall fix a date for redemption (the “Redemption Date”) and it or, at its written request received by the Trustee not fewer than five Business Days prior (or such
shorter period of time as may be acceptable to the Trustee) to the date the notice of redemption is to be mailed, the Trustee in the name of and at the expense of the Issuer, shall mail or cause to be mailed a notice of such redemption not fewer
than 30 days nor more than 60 days prior to the Redemption Date to each Holder of Notes so to be redeemed in whole or in part at its last address as the same appears on the Security Register; provided that the text of the notice shall be
prepared by the Issuer. Each such notice of 

  
 14 

 
redemption shall specify: (i) the aggregate principal amount of Notes to be redeemed, (ii) the CUSIP number or numbers of the Notes being redeemed, (iii) the Redemption Date (which
shall be a Business Day), (iv) the Redemption Price at which Notes’ are to be redeemed, (v) the place or places of payment and that payment will be made upon presentation and surrender of such Notes and (vi) that Interest accrued
and unpaid to, but excluding, the Redemption Date will be paid as specified in said notice, and that on and after said date Interest on Notes or portions of Notes to be redeemed will cease to accrue. If fewer than all the Notes are to be redeemed,
the notice of redemption shall identify the Notes to be redeemed (including CUSIP numbers, if any). In case any Note is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and
shall state that, on and after the Redemption Date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof will be issued. Such mailing shall be by first class mail. The notice, if mailed in the
manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for
redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. 
 Whenever any
Notes are to be redeemed, the Issuer will give the Trustee written notice of the Redemption Date, together with an Officers’ Certificate as to the aggregate principal amount of Notes to be redeemed not fewer than 30 days (or such shorter period
of time as may be acceptable to the Trustee) prior to the Redemption Date. 
 On or prior to the Redemption Date specified in the notice of
redemption given as provided in this Section 3.02, the Issuer will deposit with the Paying Agent (other than the Issuer or the General Partner acting as its own Paying Agent) an amount of money in immediately available funds sufficient to redeem on
the Redemption Date all the Notes (or portions thereof) so called for redemption at the appropriate Redemption Price, together with accrued and unpaid Interest, if any, on the Notes or portions thereof to be redeemed; provided that if such
payment is made on the Redemption Date, it must be received by the Paying Agent, by 11:00 a.m., New York City time, on such date. The Issuer shall be entitled to retain any interest, yield or gain on amounts deposited with the Paying Agent pursuant
to this Section 3.02 in excess of amounts required hereunder to pay the Redemption Price, together with accrued and unpaid Interest, if any, on the Notes or portions thereof to be redeemed. 

If fewer than all of the outstanding Notes are to be redeemed, the Trustee shall select the Notes or portions thereof of the Global Note or
the Certificated Notes to be redeemed (in minimum denominations of $2,000 principal amount and integral multiples of $1,000 in excess thereof) on a pro rata basis or by another method that the Trustee deems fair and appropriate or that is
required by the Depositary. 

  
 15 

 Section 3.03. Payment of Notes Called for Redemption by the Issuer. If notice
of redemption has been given as provided in Section 3.02, the Notes or portion of Notes with respect to which such notice has been given shall become due and payable on the Redemption Date and at the place or places stated in such notice at the
Redemption Price, together with accrued and unpaid Interest, if any, thereon, and if the Paying Agent holds funds sufficient to pay the Redemption Price of such Notes, together with accrued and unpaid Interest, if any, thereon, then, on and after
such Redemption Date (a) such Notes will cease to be outstanding and (b) Interest on the Notes or portion of Notes so called for redemption shall cease to accrue and, except as provided in Article 4 of the Indenture, such Notes shall cease
to be entitled to any benefit or security under the Indenture, and the Holders thereof shall have no right in respect of such Notes except the right to receive the Redemption Price thereof, together with accrued and unpaid Interest, if any, thereon.
On presentation and surrender of such Notes at a place of payment in said notice specified, the said Notes or the specified portions thereof shall be paid and redeemed by the Issuer at the Redemption Price, together with Interest accrued thereon, if
any, to, but excluding, the Redemption Date. 
 Upon presentation of any Note redeemed in part only, the Issuer shall execute and the
Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Issuer, a new Note or Notes, of authorized denominations, in principal amount equal to the unredeemed portion of the Notes so presented. 

Prior to the applicable Redemption Date, the Issuer shall provide to the Trustee an Officers’ Certificate that shall set forth the
applicable Redemption Price and the calculation thereof in reasonable detail. The Trustee shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in acting upon the Issuer’s calculation
of the Redemption Price. 
 Section 3.04. Sinking Fund. There shall be no sinking fund provided for the Notes. 

ARTICLE 4 

PARTICULAR COVENANTS 

Section 4.01. Aggregate Debt Test. The General Partner will not, and will not permit any of its Subsidiaries to, incur any Debt
(including without limitation Acquired Debt) if, immediately after giving effect to the incurrence of such Debt and the application of the proceeds from such Debt on a pro forma basis, the aggregate principal amount of all outstanding Debt of the
General Partner and its Subsidiaries (determined on a consolidated basis in accordance with GAAP) is greater than 60% of the sum of the following (without duplication): 

(a) the Total Assets of the General Partner and its Subsidiaries as of the last day of the then most recently ended fiscal quarter; and 

  
 16 

 (b) the aggregate purchase price of any real estate assets or mortgages receivable acquired, and
the aggregate amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by the General Partner or any of its Subsidiaries since the
end of such fiscal quarter, including the proceeds obtained from the incurrence of such additional Debt. 
 For purposes of this Section 4.01, Debt will be
deemed to be incurred by the General Partner or any of its Subsidiaries whenever the General Partner or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof. 

Section 4.02. Debt Service Test. The General Partner will not, and will not permit any of its Subsidiaries to, incur any Debt
(including without limitation Acquired Debt) if the ratio of Consolidated Income Available for Debt Service to Annual Debt Service Charge for the period consisting of the four consecutive fiscal quarters most recently ended prior to the date on
which such additional Debt is to be incurred shall have been less than 1.5:1 on a pro forma basis after giving effect to the incurrence of such Debt and the application of the proceeds from such Debt (determined on a consolidated basis in accordance
with GAAP), and calculated on the following assumptions: 
 (a) such Debt and any other Debt (including without limitation Acquired Debt)
incurred by the General Partner or any of its Subsidiaries since the first day of such four-quarter period had been incurred, and the application of the proceeds from such Debt (including to repay or retire other Debt) had occurred, on the first day
of such period; 
 (b) the repayment or retirement of any other Debt of the General Partner or any of its Subsidiaries since the first day
of such four-quarter period had occurred on the first day of such period (provided that, except to the extent set forth in clause (a) above or clause (c) below, in making this computation, the amount of Debt under any revolving
credit facility, line of credit or similar facility will be computed based upon the average daily balance of such Debt during such period); and 

(c) in the case of any acquisition or disposition by the General Partner or any of its Subsidiaries of any asset or group of assets with a
Fair Market Value in excess of $1.0 million since the first day of such four-quarter period, whether by merger, stock purchase or sale or asset purchase or sale or otherwise, such acquisition or disposition had occurred as of the first day of such
period with the appropriate adjustments with respect to such acquisition or disposition being included in such pro forma calculation. 

  
 17 

 If the Debt giving rise to the need to make the calculation described in this Section 4.02 or any
other Debt incurred after the first day of the relevant four-quarter period bears interest at a floating rate, then, for purposes of calculating the Annual Debt Service Charge, the interest rate on such Debt will be computed on a pro forma basis by
applying the average daily rate which would have been in effect during the entire four-quarter period to the greater of the amount of such Debt outstanding at the end of such period or the average amount of such Debt outstanding during such period.
For purposes of this Section 4.02, Debt will be deemed to be incurred by the General Partner or any of its Subsidiaries whenever the General Partner or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof.

 Section 4.03. Secured Debt Test. The General Partner will not, and will not permit any of its Subsidiaries to, incur any Debt
(including without limitation Acquired Debt) secured by any Lien on any property or assets of the General Partner or any of its Subsidiaries, whether owned on the date of this Supplemental Indenture or subsequently acquired, if, immediately after
giving effect to the incurrence of such Debt and the application of the proceeds from such Debt on a pro forma basis, the aggregate principal amount (determined on a consolidated basis in accordance with GAAP) of all outstanding Debt of the General
Partner and its Subsidiaries which is secured by a Lien on any property or assets of the General Partner or any of its Subsidiaries is greater than 40% of the sum of (without duplication): 

(a) the Total Assets of the General Partner and its Subsidiaries as of the last day of the then most recently ended fiscal quarter; and 

(b) the aggregate purchase price of any real estate assets or mortgages receivable acquired, and the aggregate amount of any securities
offering proceeds received (to the extent such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by the General Partner or any of its Subsidiaries since the end of such fiscal quarter, including
the proceeds obtained from the incurrence of such additional Debt. 
 For purposes of this Section 4.03, Debt will be deemed to be incurred
by the General Partner or any of its Subsidiaries whenever the General Partner or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof. 

Section 4.04. Maintenance of Total Unencumbered Assets. The General Partner will not have at any time Total Unencumbered Assets of
less than 150% of the aggregate principal amount of all outstanding Unsecured Debt of the General Partner and its Subsidiaries determined on a consolidated basis in accordance with GAAP. 

  
 18 

 ARTICLE 5 

EVENTS OF DEFAULT; REMEDIES 

Section 5.01. Events of Default. In addition to the Events of Default set forth in Section 501 of the Indenture, each of
which shall apply to the Notes, each of the following shall constitute an Event of Default with respect to the Notes (for which the provisions set forth in Article 5 of the Indenture shall apply): 

(a) failure on the part of either the Issuer or the General Partner to comply with its respective obligations under Article 7; and 

(b) any guarantee by a Guarantor (excluding, in the case of a Subsidiary Guarantor, a Subsidiary Guarantor that is not also a Significant
Subsidiary) ceases for any reason to be, or is asserted in writing by us or such Guarantor not to be, in full force and effect and enforceable in accordance with its terms except to the extent contemplated by the Indenture and any such Guarantee.

 ARTICLE 6 

SUPPLEMENTAL INDENTURES 

Section 6.01. Supplemental Indentures with and without Consent of Noteholders. Clauses (1) and (9) of Section 901
of the Indenture shall not apply with respect to the Notes. In addition, the Issuer and the General Partner, when authorized by resolutions of the Board of Directors of the General Partner and the General Partner on behalf of the Issuer, and the
Trustee may from time to time, and at any time, enter into an indenture or indentures supplemental to the Indenture and this Supplemental Indenture without the consent of any Holder of the Notes for either of the following purposes (in which case
the provisions of Article 9 of the Indenture shall apply: 
 (a) to cure any ambiguity, defect or inconsistency in the Indenture;
provided that this action shall not adversely affect the interests of the Holders of the Notes in any respect; or 
 (b) to
supplement any of the provisions of the Indenture and this Supplemental Indenture to the extent necessary to permit or facilitate satisfaction and discharge, legal defeasance or covenant defeasance pursuant to Article 4 of the Indenture;
provided that the action shall not adversely affect the interests of the Holders of the Notes in any respect. 
 ARTICLE 7 

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE 

Section 7.01. Issuer May Consolidate on Certain Terms. Nothing contained in the Indenture or in the Notes shall prevent any
consolidation or 

  
 19 

 
merger of the Issuer with or into any other Person or Persons (whether or not affiliated with the Issuer), or successive consolidations or mergers, or shall prevent any sale, conveyance, transfer
or lease of all or substantially all of the property of the Issuer to any other Person (whether or not affiliated with the Issuer); provided, however, that the following conditions are met: 

(a) the Issuer shall be the continuing entity, or if other than the Issuer, the successor entity formed by or resulting from any consolidation
or merger or which shall have received the transfer of assets shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume payment of the principal
of, premium, if any, and Interest on all of the Notes and the due and punctual performance and observance of all of the covenants and conditions in the Indenture; 

(b) immediately after giving effect to such transaction, no Event of Default and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing; and 
 (c) either the Issuer or the successor Person, as the case may be,
shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture complies with this Article 7 and that all conditions precedent herein provided for relating to such transaction have been complied with. 

No such consolidation, merger, sale, conveyance, transfer or lease shall be permitted by this Section 7.01 unless prior thereto the General
Partner shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that the Guarantors obligations hereunder shall remain in full force and effect thereafter. 

Section 7.02. General Partner May Consolidate on Certain Terms. Nothing contained in the Indenture or in the Notes shall prevent
any consolidation or merger of the General Partner with or into any other Person or Persons (whether or not affiliated with the General Partner), or successive consolidations or mergers, or shall prevent any sale, conveyance, transfer or lease of
all or substantially all of the property of the General Partner to any other Person (whether or not affiliated with the General Partner); provided, however, that: 

(a) the General Partner shall be the continuing entity, or the successor entity (if other than the General Partner) formed by or resulting
from any consolidation or merger or which shall have received the transfer of assets shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume the
obligations of the General Partner under the Guarantees and the due and punctual performance and observance of all of the covenants and conditions in the Indenture; 

  
 20 

 (b) immediately after giving effect to such transaction, no Event of Default and no event which,
after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and 
 (c) either the
General Partner or the successor Person, as the case may be, shall have delivered to the Trustee an Officers’ Certificate, as the case may be, and an Opinion of Counsel, each stating that such consolidation, sale, merger, conveyance, transfer
or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article 7, that all conditions precedent herein provided for relating to such transaction have been complied
with, and each stating that the Guarantors obligations hereunder shall remain in full force and effect thereafter. 
 ARTICLE 8 

FUTURE GUARANTEES 

Section 8.01. Guarantees. Article 15 of the Indenture shall apply to the Notes. In addition, from and after the Issue Date, the
Issuer or the General Partner, as applicable, shall cause any Subsidiary of the Issuer or the General Partner that guarantees payment of more than $35,000,000 of the Issuer’s indebtedness for money borrowed or more than $35,000,000 of the
indebtedness for money borrowed of the Issuer’s or the General Partner’s other Subsidiaries to execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary shall guarantee payment of the Notes, whereupon
such Subsidiary shall become a Guarantor for all purposes under the Indenture. The Issuer or the General Partner, as applicable, shall cause each Subsidiary that is required to become a Guarantor pursuant to the immediately preceding sentence to
promptly execute and deliver to the Trustee a supplemental indenture substantially in the form set forth in Exhibit B to this Supplemental Indenture, or otherwise in form and substance reasonably satisfactory to the Trustee, evidencing its
Guarantee on substantially the terms set forth in Article 15 of the Indenture. Concurrently therewith, the Issuer or the General Partner, as applicable, shall deliver to the Trustee an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and that, subject to applicable bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization,
moratorium and other laws now or hereafter in effect affecting creditors’ rights or remedies generally and to general principles of equity (including standards of materiality, good faith, fair dealing and reasonableness), whether considered in
a proceeding at law or at equity, such supplemental indenture is a valid and binding agreement of such subsidiary, enforceable against such subsidiary in accordance with its terms. 

  
 21 

 Section 8.02. Release of Guarantee. In addition to the circumstances under which a
Guarantor may be released as set forth in Section 1505 of the Indenture, and notwithstanding the provisions of Section 1505 of the Indenture, a Subsidiary Guarantor shall be automatically and unconditionally released from its obligations
under the Indenture and this Supplemental Indenture: 
 (a) upon the sale or other disposition of such Guarantor; 

(b) upon the sale or disposition of all or substantially all of the assets of such Guarantor; 

provided, however, that in either case, (1) such sale or other disposition is made to a Person other than the General Partner or any of its
Subsidiaries and (2) such sale or disposition is otherwise permitted by the Indenture. Upon any such occurrence specified in this Section 8.02, at the Issuer’s request, and upon delivery to the Trustee of an Officers’ Certificate and
an Opinion of Counsel, each stating that all conditions precedent under the Indenture relating to such release have been complied with, the Trustee shall execute any documents reasonably requested by the Issuer evidencing such release. 

Section 8.03. Notices. Notice to any Guarantor shall be sufficient if addressed to such Guarantor care of the Issuer at the
address, place and manner provided in Section 105 of the Indenture. 
 ARTICLE 9 

MISCELLANEOUS PROVISIONS 

Section 9.01. Continued Effect. Except as expressly supplemented and amended by this Supplemental Indenture, the Indenture shall
continue in full force and effect in accordance with the provisions thereof, and the Indenture (as further supplemented and amended by this Supplemental Indenture) is in all respects hereby ratified and confirmed. This Supplemental Indenture and all
its provisions shall be deemed a part of the Indenture in the manner and to the extent herein and therein provided. 
 Section 9.02.
Payments. If any Interest Payment Date or Maturity Date or Redemption Date falls on a day that is not a Business Day, the required payment shall be made on the next Business Day as if it were made on the date such payment was due and no interest
shall accrue on the amount so payable from and after such Interest Payment Date or Maturity Date or Redemption Date, as the case may be, to such next Business Day. 

Section 9.03. Governing Law. The Indenture, the Notes and the Guarantees shall be governed by, and construed in accordance with,
the laws of the State of New York. 

  
 22 

 Section 9.04. No Security Interest Created. Nothing in the Indenture or in the Notes,
expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction in which property of the Issuer or its subsidiaries
is located. 
 Section 9.05. Table of Contents, Headings, etc. The table of contents and the titles and headings of the Articles
and Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. 

Section 9.06. Execution in Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one and the same instrument. 
 Section 9.07.
Severability. In case any provision in this Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, then, to the maximum extent permitted by applicable law, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. 
 U.S. Bank National Association hereby accepts the trusts in this
Supplemental Indenture declared and provided, upon the terms and conditions herein above set forth. 
 IN WITNESS WHEREOF, the parties
hereto have caused this Supplemental Indenture to be duly executed. 
 [Signature pages follow] 

  
 23 

 
			
	COLUMBIA PROPERTY TRUST, INC.
		
	By:		 /s/ James A. Fleming

	Name:		James A. Fleming
	Title:		Executive Vice President and Chief Financial Officer

  
 [Signature page to
Supplemental Indenture] 

 
			
	 COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.

		
	By:		Columbia Property Trust, Inc.
	Its:		General Partner
		
	By:		 /s/ James A. Fleming

	Name:		James A. Fleming
	Title:		Executive Vice President and Chief Financial Officer

  
 [Signature page to
Supplemental Indenture] 

 Confirmed and accepted as of the date first above written: 

 

			
	U.S. BANK NATIONAL ASSOCIATION,
	    as Trustee
		
	By:		 /s/ Richard Prokosch

	Name:		Richard Prokosch
	Title:		Vice President

  
 [Signature page to
Supplemental Indenture] 

 EXHIBIT A 

[FACE OF NOTE] 
 No. [    ]

 COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P. 

4.150% SENIOR NOTES DUE 2025 

CUSIP: 19828J AA6 

$             

Columbia Property Trust Operating Partnership, L.P., a Delaware limited partnership (the “Issuer”, which term includes any successor
under the Indenture hereinafter referred to), for value received, promises to pay to                     , or its registered assigns, the principal
sum of             DOLLARS ($        ) [or such other amount as indicated on the Schedule of Exchange of Notes attached hereto] on April 1,
2025. 
  

			
	Interest Rate:		4.150% per annum
		
	Interest Payment Dates:		April 1 and October 1, commencing October 1, 2015
		
	Regular Record Dates:		March 15 and September 15

 Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which will
for all purposes have the same effect as if set forth at this place. 

  
 A-1 

 IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed. 

Dated: 
  

			
	 COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P.

		
	By:		Columbia Property Trust, Inc., as its sole general partner
		
	By:		  

	Name:		
	Title:		
		
	By:		  

	Name:		
	Title:		

 I, [name], [title] of Columbia Property Trust, Inc., do hereby certify that [name] is on the date hereof
the duly elected or appointed, qualified and acting [title] of Columbia Property Trust, Inc., and that [name] is on the date hereof the duly elected or appointed, qualified and acting [title] of Columbia Property Trust, Inc., and that the signatures
set forth above are the genuine signatures of such officers, respectively. 
  

			
	  

	Name:		
	Title:		

  
 A-2 

 (Form of Trustee’s Certificate of Authentication) 

This is one of the 4.150% Senior Notes due 2025 described in the Indenture referred to in this Note. 

Dated: 
  

			
	 U.S. BANK NATIONAL ASSOCIATION, as Trustee

		
	By:		  

			Authorized Signatory

  
 A-3 

 [REVERSE SIDE OF NOTE] 

COLUMBIA PROPERTY TRUST OPERATING PARTNERSHIP, L.P. 

4.150% SENIOR NOTES DUE 2025 

Principal and Interest 

The Issuer promises to pay the principal of this Note on April 1, 2025. 

The Issuer promises to pay interest on the principal amount of this Note on each interest payment date, as set forth on the face of this Note,
at the rate of 4.150% per annum (subject to adjustment as provided below). 
 Interest will be payable semiannually (to the holders of
record of the Notes at the close of business on the March 15 or September 15 immediately preceding the interest payment date) on each interest payment date, commencing October 1, 2015. Interest on the Notes shall be computed on the
basis of a 360-day year consisting of twelve 30-day months. 
 Interest on this Note will accrue from the most recent date to which interest
has been paid on this Note [(or, if there is no existing default in the payment of interest and if this Note is authenticated between a regular record date and the next interest payment date, from such interest payment date)]1 or, if no interest has been paid, from [the Issue Date]2. 

Interest on any Global Note shall be paid by wire transfer of immediately available funds to the account of the Depositary or its nominee.
Payment of the principal of Notes not represented by a Global Note shall be made at the office or agency designated by the Issuer for such purpose. Interest on Notes not represented by a Global Note shall be paid (i) to Holders having an
aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these Notes and (ii) to Holders having an aggregate principal amount of more than $5,000,000, either by check mailed to each Holder or, upon application by a
Holder to the Security Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder’s account within the United States, which application shall remain in effect until the Holder
notifies, in writing, the Security Registrar to the contrary. 
  

 

	1 	Insert if applicable. 

	2 	For additional Notes, should be the date of their original issue. 

  
 A-4 

 Interest on any overdue installments of principal of and (to the extent that payment of such
Interest is lawful) Interest on the Notes shall accrue and be payable at the same rate as Interest is otherwise payable on the Notes. Interest not paid when due and any Interest on principal, premium or Interest not paid when due will be paid to the
Persons that are Holders on a special record date, which will be the 15th day preceding the date fixed by the Issuer for the payment of such Interest, whether or not such day is a Business Day. At least 15 days before a special record date, the
Issuer will send to each Holder and to the Trustee a notice that sets forth the special record date, the payment date and the amount of Interest to be paid. 

Indentures; Note Guarantee 

This is one of the Notes issued under an Indenture dated as of March 12, 2015, as amended by the First Supplemental Indenture thereto
dated as of March 12, 2015 (as so amended and as otherwise amended from time to time, the “Indenture”), among the Issuer, the Guarantor party thereto and U.S. Bank National Association, as Trustee. Capitalized terms used herein are
used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the
terms of the Indenture will control. 
 The Notes are general unsecured obligations of the Issuer. The Indenture limits the original
aggregate principal amount of the Notes to $350,000,000, but additional Notes may be issued pursuant to the Indenture, and the originally issued Notes and all such additional Notes vote together for all purposes as a single class. This Note is
guaranteed, as set forth in the Indenture. 
 Registered Form; Denominations; Transfer; Exchange 

The Notes are in registered form without coupons in denominations of $2,000 principal amount and any multiple of $1,000 in excess thereof. A
Holder may register the transfer or exchange of Notes in accordance with the Indenture. The Trustee may require a Holder to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the
Indenture. Pursuant to the Indenture, there are certain periods during which the Trustee will not be required to issue, register the transfer of or exchange any Note or certain portions of a Note. 

  
 A-5 

 Redemption and Repurchase; Discharge Prior to Redemption or Maturity 

The Issuer shall have the right to redeem the Notes, in whole at any time and from time to time in part, at the Redemption Price and on the
terms and conditions set forth in the Indenture. 
 The Notes are not subject to redemption through the operation of any sinking fund. 

Subject to certain conditions set forth in the Indenture, the Issuer at any time may terminate some or all of its obligations under the Notes
and the Indenture if the Issuer deposits with the Trustee money or Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be. 

Defaults and Remedies 
 If
an Event of Default, as defined in the Indenture, occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Issuer occurs and is continuing, then the principal amount of and Interest accrued and unpaid on all the Notes shall be immediately due and payable without any declaration or other action on the part of the Trustee or any Holder of
Notes. 
 Amendment and Waiver 

The Indenture contains provisions permitting the Issuer, the General Partner, the Subsidiary Guarantors and the Trustee, with the consent of
the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the Holders of the Notes, subject to certain exceptions. 

Subject to the provisions of the Indenture, the Holders of not less than a majority in aggregate principal amount of the Notes at the time
outstanding may, on behalf of the Holders of all of the Notes, waive any past default or Event of Default, subject to the exceptions set forth in the Indenture. 

  
 A-6 

 No Recourse 

Except as expressly provided in the Indenture, no recourse for the payment of the principal of (including the Redemption Price upon redemption
pursuant to the Indenture) or Interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Issuer or any Guarantor in the Indenture or any
supplemental indenture or in this Note, or because of the creation of any indebtedness represented thereby, or in the Guarantees, shall be had against any incorporator, stockholder, trustee, partner, member, manager, employee, agent, officer,
director or subsidiary, as such, past, present or future, of the Issuer or any Guarantor or any of the Issuer’s or Guarantor’s respective Subsidiaries or of any successor thereto, either directly or through the Issuer or any Guarantor or
any of the Issuer’s or any Guarantor’s respective Subsidiaries or of any successor thereto, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a condition of, and as consideration for, the execution of the Indenture and the issue of this Note. 

Authentication 
 This Note
is not valid until the Trustee (or Authenticating Agent) signs the certificate of authentication on the other side of this Note. 

Governing Law 
 The Notes
shall be governed by, and construed in accordance with, the laws of the State of New York. 
 Abbreviations 

Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act). 

Other 
 The Issuer will
furnish a copy of the Indenture to any Holder upon written request and without charge. 

  
 A-7 

 [FORM OF TRANSFER NOTICE] 

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto 

Insert Taxpayer Identification No. 
  

 
  

 
 Please print or typewrite name and
address including zip code of assignee 
  
  

the within Note and all rights thereunder, hereby irrevocably constituting and appointing 

 
  

attorney to transfer said Note on the books of the Issuer with full power of substitution in the premises. 

Signature Guarantee:3
                     
  

			
	By		  

	To be executed by an executive officer

  

	3 	Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer
Association Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended. 

  
 A-8 

 SCHEDULE OF EXCHANGES OF NOTES4 

The following exchanges of a part of this Global Note for Physical Notes or a part of another Global Note have been made: 

 

									
	 Date of Exchange
	 	 Amount of decrease

in principal amount
 of this
Global Note
	 	 Amount of increase

in principal amount

of this Global Note
	 	 Principal amount of

this Global Note
 following
such
 decrease (or

increase)
	 	 Signature of

authorized officer of

Trustee

		 		 		 		 	
		 		 		 		 	
		 		 		 		 	

  
  

	4 	For Global Notes 

  
 A-9 

 EXHIBIT B 

SUPPLEMENTAL INDENTURE 

dated as of             ,          

among 
 COLUMBIA PROPERTY TRUST
OPERATING PARTNERSHIP, L.P., 
 COLUMBIA PROPERTY TRUST, INC. 

and 
 U.S. BANK NATIONAL
ASSOCIATION, 
 as Trustee 
  

 
 4.150% Senior
Notes due 2025 

 THIS
[                    ] SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), entered into as of
                ,     , among Columbia Property Trust Operating Partnership, L.P., a Delaware limited partnership (the “Issuer”),
the General Partner (defined below), [insert each Guarantor executing this Supplemental Indenture and its jurisdiction of incorporation] (each an “Undersigned”) and U.S. Bank National Association, as trustee (the
“Trustee”). 
 RECITALS 

WHEREAS, the Issuer, Columbia Property Trust, Inc., a Maryland corporation (the “General Partner”) and the Trustee entered
into the Indenture (the “Base Indenture”), as supplemented by the First Supplemental Indenture (the “Supplemental Indenture”), each dated as of March 12, 2015 (as so supplemented and as otherwise supplemented
from time to time, the “Indenture”), relating to the Issuer’s 4.150% Senior Notes due 2025 (the “Notes”); 

WHEREAS, pursuant to Section 8.01 of the Supplemental Indenture, the Issuer and the General Partner agree to cause subsidiaries to
provide Guaranties in circumstances specified therein; 
 AGREEMENT 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and intending to be legally bound, the parties to this
Supplemental Indenture hereby agree as follows: 
 Section 1. Capitalized terms used herein and not otherwise defined herein are used
as defined in the Indenture. 
 Section 2. Each Undersigned, by its execution of this Supplemental Indenture, agrees to be a Guarantor
under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 15 of the Base Indenture. 

Section 3. This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. 

Section 4. This Supplemental Indenture may be signed in various counterparts which together will constitute one and the same instrument.

 Section 5. This Supplemental Indenture is an amendment supplemental to the Indenture and the Indenture and this Supplemental
Indenture will henceforth be read together. 

  
 B-1 

 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed as of the date first above written. 
  

			
	 Columbia Property Trust Operating Partnership, L.P., as Issuer

		
	By:		  

	Name:		
	Title:		
	
	Columbia Property Trust, Inc., as General Partner
		
	By:		  

	Name:		
	Title:		
	
	[GUARANTOR]
		
	By:		  

	Name:		
	Title:		
	
	U.S. Bank National Association, as Trustee
		
	By:		  

	Name:		
	Title:		

  
 B-2ex1.htm

Exhibit 10.1

 

 

 

NEITHER 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.

 

 

THE ISSUE PRICE OF THIS NOTE IS $110,000.00. THE ORIGINAL ISSUE DISCOUNT IS $10,000.00.

 

 

	
Principal Amount: $110,000.00 
	
Issue Date: August 19, 2014 

	
Purchase Price: $100,000.00 
	
 

 

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, XCELMOBILITY INC., a Nevada 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$110,000.00 together with any interest as set forth herein, on August 21, 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 otherwiseprovided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

  

 

2

 

 

1.2 Conversion Price.

 

(a) Calculation of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “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.

 

(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.

  

 

3

 

 

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.

 

 

4

 

 

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

 

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

 

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

 

(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

shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

 

 

5

 

 

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 NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BEPLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

  

 

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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.

 

 

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

 

 

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

 

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

 

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

  

 

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(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 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.

  

 

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1.9 Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to 112%, 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.

 

Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is thirty-one (31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Second Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Second Optional Prepayment Amount”) equal to 117%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Second Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

  

 

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Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61) days following the Issue Date and ending on the date which is ninety (90) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Third Optional Prepayment Amount”) equal to 122%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) day from the Issue Date and ending one hundred twenty (120) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fourth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Fourth Optional Prepayment Amount”) equal to 127%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fourth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

  

 

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Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Fifth Optional Prepayment Amount”) equal to 132%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Fifth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

Notwithstanding any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred fifty-one (151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Sixth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Sixth Optional Prepayment Amount”) equal to 137%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Sixth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

  

 

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

 

ARTICLE II. CERTAIN COVENANTS

 

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

 

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

 

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

  

 

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

 

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

 

 

ARTICLE III. EVENTS OF DEFAULT

 

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

 

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

 

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

  

 

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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 OTC (which specifically includes the Pink Sheets electronic quotation system) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

  

 

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

 

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

 

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

 

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

 

3.13 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.

  

 

17

 

 

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

  

 

18

 

 

 

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

 

ARTICLE IV. MISCELLANEOUS

 

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

 

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

 

 

If to the Borrower, to: XCELMOBILITY INC.

2225 East Bayshore Road - Suite 200

Palo Alto, CA 94303

Attn: RENYAN GE, Chief Executive Officer 

facsimile:

  

 

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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.

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.

 

 

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

 

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

 

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

 

 

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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 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 August 19, 2014.

 

	
XCELMOBILITY INC.
	
 

	
 
	
 
	
 

	
By: 
	
 
	
 

	
 
	
RENYAN GE 
	
 

	
 
	
Chief Executive Officer 
	
 

 

 

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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 XCELMOBILITY INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of August 19, 2014 (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.

80 Cuttermill Road – Suite 410

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:	 	 

 

 

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