Document:

Exhibit 10.62 6.30.2013

Exhibit 10.62

MODIFICATION NO. 4 TO LOAN AND SECURITY AGREEMENT

This Modification No. 4 to Loan and Security Agreement (“Modification”) is entered into as of May 10, 2013 (the “Modification No. 4 Effective Date”), by and between Partners for Growth III, L.P., a Delaware limited partnership with its principal place of business at 150 Pacific Avenue, San Francisco, California 94111 ("PFG") and Cardiovascular Systems, Inc., Inc., a Delaware corporation with its principal place of business at 651 Campus Drive, St. Paul, MN 55112 ("Borrower"). 

WHEREAS, PFG and Borrower entered into that certain Loan and Security Agreement dated as of April 14, 2010 (the “Loan Agreement”) and certain other Security Documents (as defined below), pursuant to which Borrower has borrowed and PFG has loaned pursuant to Convertible Promissory Notes up to $4,000,000 at any one time outstanding;

WHEREAS, the parties entered into that certain Modification No. 1 to Loan and Security Agreement dated as of August 23, 2011 (the “First Modification”);

WHEREAS, the parties entered into that certain Modification No. 2 to Loan and Security Agreement dated as of December 27, 2011 (the “Second Modification”);

WHEREAS, the parties entered into that certain Modification No. 3 to Loan and Security Agreement dated as of June 30, 2012 (the “Third Modification” and, together with the First and Second Modifications, the “Prior Modifications”);

WHEREAS, Borrower and the Senior Lender are amending the Senior Loan Documents and such amendment requires a facilitating amendment of the Loan Agreement;

NOW THEREFORE, the parties hereby agree as follows:

1.    DESCRIPTION OF EXISTING INDEBTEDNESS:  Borrower is indebted to PFG for Obligations pursuant to the Loan Documents. The Loan Agreement provides for the issuance of up to $5,000,000 in Notes to PFG from time to time, of which an aggregate principal amount of $5,000,000 in Notes are issued and outstanding on the date of this Modification.  Defined terms used but not otherwise defined herein shall have the same meanings set forth in the Loan Agreement.  

2.    DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral, as described in the Loan Agreement and an Intellectual Property Security Agreement of even date therewith. The above-described security documents, together with all other documents securing repayment of the Obligations, shall be referred to herein as the "Security Documents". Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations are referred to as the "Existing Loan Documents".

3.    MODIFICATIONS TO LOAN AGREEMENT.  The Schedule is hereby amended as follows:

3.1      Financial Covenants.  Section 5 of the Schedule to the Loan Agreement is hereby amended and restated in its entirety to read as follows:

5.  FINANCIAL COVENANTS 
(Section 4.1):    

		
	          “Liquidity:  
	Borrower must at all times maintain a Liquidity Ratio of greater than 1.25:1.00. 

For purposes of the foregoing Financial Covenant, “Liquidity Ratio” is the ratio of (a) Borrower’s unrestricted Cash and Cash Equivalents held with the Senior Lender (and its affiliates) plus Borrower’s Net Accounts Receivable, divided by (b) the sum of outstanding Credit Extensions under the Senior Loan Documents, plus all sums owed by Borrower in connection with Bank Services.  Capitalized terms used in the foregoing definition of Liquidity Ratio and not defined in this Agreement have their meanings as set forth in the Senior Loan Documents as in effect on the Modification No. 4 Effective Date, without regard to waiver of any provision thereof by the Senior Lender.

For purposes of the foregoing definition of Liquidity Ratio, the term “Net Accounts Receivable” means the accounts receivable of Borrower recorded in accordance with GAAP on the balance sheet of Borrower as of the end of the most recent monthly reporting period, net of any reserves for doubtful accounts, as reported to the Senior Lender.
Springing Fixed Charge Coverage Ratio:
From and after the date Borrower has maintained a Fixed Charge Coverage Ratio in excess of 1.50 to 1.00 for two consecutive fiscal quarters, Borrower must maintain a Fixed Charge Coverage Ratio in excess of 1.25 to 1.00 at all times.  The Fixed charge Coverage Ratio shall have the meaning set forth in the Senior Loan Documents as in effect on the Modification No. 4 Effective Date, without regard to waiver of any provision thereof by the Senior Lender or the effectiveness of the Senior Loan Documents at any time.

3.2    Amortization Trigger.   The Amortization Trigger set forth in Section 1(d) of the Schedule which prior to the Modification No. 4 Effective Date read as follows (italicized for ease of reference):
“(d) Amortization Trigger:           If Borrower should fail to maintain a Liquidity Ratio (as defined below) of at least 1.5 : 1.0, measured monthly, PFG may elect to amortize all or (at PFG’s sole option) part of the Loan, over a 24-month period from the date such PFG election is made (the “Amortization Right”), which Amortization Right must be exercised, if at all, not later than the twentieth (20th) Business Day following the date PFG receives the Borrower report certifying compliance (or failure to comply) with the Liquidity Ratio and, if PFG so elects, Borrower shall thereafter commence to make monthly payments of principal and interest on all then outstanding Notes in conformity with the amortization schedule notified at such time by PFG. PFG may suspend Borrower’s obligation to make amortized payments at any time upon notice 

in its sole discretion. If PFG at any time exercises the Amortization Right, PFG’s obligation to make Loans to Borrower under Section 1(a) of this Schedule (other than the initial Note) and Borrower’s right to request borrowings under this Agreement shall terminate.
“Liquidity Ratio” shall mean the ratio of (a) Borrower’s Cash and Cash Equivalents held with the Senior Lender and its Affiliates plus Borrower’s Eligible Accounts under the Senior Debt Documents, divided by (b) the sum of the outstanding principal amount of Indebtedness to the Senior Lender (including any amounts used for Cash Management Services as defined in the Senior Loan Documents), plus the face amount of any outstanding letters of credit under the Senior Debt Documents (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve, each as defined in the Senior Loan Documents), plus the FX Reduction Amount (as defined in the Senior Loan Documents), plus all other indebtedness for borrowed money (other than the UBS Loans and the Subordinated Debt to PFG) or the deferred price of property or services (other than unsecured indebtedness to trade creditors incurred in the ordinary course of business).”

shall be replaced in its entirety with and read prospectively with effect from the Modification No. 4 Effective Date, as follows:
		
	“ (d) Amortization Trigger:
	      If Borrower should fail to maintain a Liquidity Ratio (as defined below) of at least 2.0 to 1.0, measured monthly, PFG may elect to amortize all or (at PFG’s sole option) part of the Loan, over a 24-month period from the date such PFG election is made (the “Amortization Right”), which Amortization Right must be exercised, if at all, not later than the twentieth (20th) Business Day following the date PFG receives the Borrower report certifying failure to comply with the Liquidity Ratio and, if PFG so elects, Borrower shall thereafter commence to make monthly payments of principal and interest on all then outstanding Notes in conformity with the amortization schedule notified at such time by PFG. PFG may suspend Borrower’s obligation to make amortized payments at any time upon notice in its sole discretion. If PFG at any time exercises the Amortization Right, PFG’s obligation to make Loans to Borrower under Section 1(a) of this Schedule (other than the initial Note) and Borrower’s right to request borrowings under this Agreement shall terminate.

		
	“Liquidity Ratio” 
	      For purposes of the Amortization Trigger (only), “Liquidity Ratio” shall mean the ratio of (a) the sum of (i) Borrower’s Cash and Cash Equivalents held with the Senior Lender and its Affiliates plus (ii) Borrower’s Net Accounts Receivable, divided by (b) the sum of outstanding Credit Extensions under the Senior Loan Documents, plus all sums owed by Borrower in connection 

with Bank Services, plus the amount of all outstanding monetary Obligations owing by Borrower to PFG.”

4.    CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above. 

5.    PAYMENT OF EXPENSES.  Borrower shall pay to PFG all of PFG’s reasonable and documented out-of-pocket costs and expenses in connection with this Modification.

6.    BORROWERS’ REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants that:
(a)    immediately upon giving effect to this Modification (i) except for the matters set forth in Exhibit A and in the capitalization table appended hereto as Exhibit B, the representations and warranties contained in the Loan Agreement are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (ii) no Event of Default has occurred and is continuing;
(b)    Borrower has the corporate power and authority to execute and deliver this Amendment and to perform its obligations under the Existing Loan Documents, as amended by this Modification;
(c)    the certificate of incorporation, bylaws and other organizational documents of Borrower delivered to PFG remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
(d)    the execution and delivery by Borrower of this Modification and the performance by Borrower of its obligations under the Existing Loan Documents, as amended by this Modification, have been duly authorized by all necessary corporate action on the part of Borrower;
(e)    this Modification has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against it in accordance with the terms of this Modification, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights; 
(f)    as of the date hereof, Borrower has no defenses against its obligation to repay the Obligations and it has no claims of any kind against PFG.  Borrower acknowledges that PFG has acted in good faith and has conducted in a commercially reasonable manner its relationship with such Borrower in connection with this Modification and in connection with the Existing Loan Documents;
(g)    the Security Documents relating to Intellectual Property either disclose an accurate, complete and current listing of all Collateral that consists of Intellectual Property or Borrower has included revised and updated Intellectual Property schedules as part of an update to the Representations required in Section 8 of this Modification; and 
(h)    as of the date hereof, except for the matters set forth in Exhibits A and B hereto, Borrower ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in 

the Representations dated as of August 8, 2011, and as of the date Borrower makes a request to issue a Note on or after the date hereof, Borrower shall ratify, confirm and reaffirm, all and singular, the terms and disclosures contained in the Representations dated as of August 8, 2011 as  modified by Exhibits A and B hereto, and shall acknowledge, confirm and agree that the disclosures and information Borrower provided to PFG in Part A - Sections 1-6 (except as further noted in this sentence) and Part B - Sections 11, 12 and 13 of the Representations shall not have changed as of the date of such borrowing request, and all other Sections of the Representations, including Part A Section 3(d),(e) (g) and (i) shall have not changed as of such borrowing request in any material respect or, if the Representations require additional disclosure in order to be true, accurate and complete as of the date hereof, Borrower shall have provided the update to the Representations required in Section 8 hereof. 
Borrower understands and acknowledges that PFG is entering into this Modification in reliance upon, and in partial consideration for, the above representations and warranties, and agrees that such reliance is reasonable and appropriate.
7.    CONTINUING VALIDITY.  Borrower understands and agrees that in modifying the existing Obligations, PFG is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Modification, the terms of the Existing Loan Documents remain unchanged and in full force and effect.  PFG's agreement to modifications to the existing Obligations in no way shall obligate PFG to make any future consents, waivers or modifications to the Obligations. Nothing in this Modification shall constitute a satisfaction of the Obligations or a waiver of any default under the Existing Loan Documents.  It is the intention of PFG and Borrower to retain as liable parties all makers and endorsers of Existing Loan Documents, unless the party is expressly released by PFG in writing.  Unless expressly released herein, no maker, endorser, or guarantor will be released by virtue of this Modification.  The terms of this paragraph apply not only to this Modification, but also to all subsequent loan modification agreements.

8.      CONDITIONS.  The effectiveness of this Modification is conditioned upon each of:

(a)    Execution and Delivery.  Borrower shall have duly executed and delivered to PFG a counterpart of this Modification and a true and correct copy of the Senior Loan Documents, as amended to the Modification No. 4 Effective Date. 
(b)    Payment of PFG Expenses.  Borrower shall have paid upon demand all PFG expenses (including all reasonable attorneys’ fees and expenses) incurred in connection with this Modification in accordance with Section 5 hereof.
(c)    Updates to Borrower Information. On or prior to the expiry of thirty (30) days from the Modification No. 4 Effective Date, Borrower shall have provided an update to the Representations previously delivered to PFG. 
(d)    No Default under Senior Debt Documents. There shall be no default under the Senior Debt Documents that has not been cured or waived.
(e)    SVB Subordination. If required by the Senior Lender, PFG and the Senior Lender shall have entered into an amendment to or ratification of their existing Subordination Agreement reflecting the amendment to the Senor Loan Documents. 

9.    FURTHER ASSURANCES.  Borrower agrees to execute such further documents and instruments and to take such further actions as PFG may request in its good faith business judgment to carry out the purposes and intent of this Modification.

10.    INTEGRATION; CONSTRUCTION.  The Loan Agreement, the Prior Modifications, this Modification and any documents executed in connection therewith and herewith contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, offers and negotiations, oral or written, with respect thereto and no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if any, involving this Modification; provided, however, that any financing statements or other agreements or instruments filed by PFG with respect to Borrower shall remain in full force and effect. The quotation marks around modified clauses set forth herein and any differing font styles in which such clauses are presented herein are for ease of reading only and shall be ignored for purposes of construing and interpreting this Modification. This Modification is subject to the General Provisions of Section 8 of the Loan Agreement.

11.    GOVERNING LAW; VENUE.  THIS MODIFICATION SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.  Borrower and PFG submit to the exclusive jurisdiction of the State and Federal courts in San Francisco County, California, in connection with any proceeding or dispute arising in connection herewith.

This Modification is executed as of the date first written above.

[Signature Page Follows]

	
		
	Borrower:
Cardiovascular Systems, Inc.

By /s/ Laurence L. Betterley      
        Chief Financial Officer

By /s/ James  E. Flaherty       
   Secretary or Ass't Secretary 
	PFG:
PARTNERS FOR GROWTH III, L.P. 

By /s/ Lorraine Nield         
Name:  Lorraine Nield         

Title: Manager, Partners for Growth III, LLC, Its General Partner

EXHIBIT A

EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES

Officers and Directors

		
	1.
	Scott Kraus has been replaced as Vice President of Sales by Jim Briedenstein.

		
	2.
	Paul Koehn’s title has been changed from Vice President of Manufacturing to Vice President of Quality and Operations.

		
	3.
	The Company has added the following officers:

Vice President of Marketing—Bryan Claseman
Vice President of Coronary Marketing—David Veino 

		
	4.
	 Brian Doughty has left the Company.

		
	5.
	Dr. Geoffrey Hartzler passed away on March 10, 2012 and so no longer serves as a director.

		
	6.
	Scott Bartos was elected as a director on October 31, 2012.

Part A, Section 3(i) of August 8, 2011 Representations Letter

	
					
	Name of Entity
	Cash and Cash Equivalents*
	Inventory*
	All other tangible assets*
	Intangible Assets*

	Cardiovascular Systems, Inc.
	$69,932,000
	$6,796,000
	$18,497,000
	$3,808,000
 (includes patents)

*as of March 31, 2013

EXHIBIT B

Capitalization Table

	
																						
	Schedule 1
	 

	Capitalization Table
	 

	5/6/2013
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	Total
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	Shares
	%
	 
	 
	 
	 
	 
	 

	Common Stock
	 
	 
	 
	24,041,826
	85.4
	%
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Options Outstanding
	 
	 
	1,828,332
	6.5
	%
	 
	 
	 
	 
	 
	 

	Warrants Outstanding
	 
	 
	2,291,812
	8.1
	%
	 
	 
	 
	 
	 
	 

	Total Options and Warrants
	 
	4,120,144
	14.6
	%
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Total All Securities
	 
	 
	28,161,970
	100.0
	%
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	There are 323,875 remaining shares available for grant under the 2007 Equity Plan.
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	There are 90,709 available shares for purchase through the Employer Stock purchase plan.
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	The Company has $5.0MM in outstanding loans under a convertible debt facility with Partners for Growth III, L.P. (PFG).
	 

	At any time prior to the maturity date, PFG may at its option convert any of the outstanding loans into shares of the Company’s
	 

	common stock at the applicable conversion price.  In aggregate, the outstanding loans can be converted into 321,102 shares of
	 

	the Company's common stock.
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	DETAIL
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Date
	 
	Loan Bal
	 
	Con price
	 
	Shares
	 
	 
	 
	 
	 

	2011-08-04
	 
	

	$500,000
	

	 
	

	$15.30
	

	 
	32,680
	 
	

	$500,000.00
	

	 
	 
	 

	2013-02-07
	 
	

	$1,000,000
	

	 
	

	$15.26
	

	 
	65,531
	 
	

	$1,000,000.00
	

	 
	 
	 

	2013-02-11
	 
	

	$1,500,000
	

	 
	

	$15.53
	

	 
	96,587
	 
	

	$1,500,000.00
	

	 
	 
	 

	2013-02-21
	 
	

	$1,500,000
	

	 
	

	$15.80
	

	 
	94,937
	 
	

	$1,500,000.00
	

	 
	 
	 

	2013-02-28
	 
	

	$500,000
	

	 
	

	$15.94
	

	 
	31,368
	 
	

	$500,000.00
	

	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	5,000,000
	

	 
	 
	 
	321,102
	 
	

	$5,000,000.00
	

	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	Weighted Avg
	

	$15.57Exhibit 10.1

 

 

 

Suite
208/209,

Great Western Studios,

65 Alfred Road,

London,W2 5EU

 

 

 

THE SECURITIES REPRESENTED BY THIS DOCUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS SUCH SALE, TRANSFER OR ASSIGNMENT IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, OR SATISFIES THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR IS EFFECTED PURSUANT TO AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM SUCH REGISTRATION.

 

LOT78, INC.

UNSECURED SENIOR CONVERTIBLE PROMISSORY
NOTE 2016

$100,000Issue
Date: September 9, 2013

Lot78, Inc., a Nevada
corporation (the “Company”), for value received, promises to pay to the order of MONUMENT ASSETS & RESOURCES
COMPANY LTD or its permitted assigns (the “Holder”), the principal sum of Dollars ($100,000) plus simple interest
thereon from the date of this Note (the “Issue Date”) until fully paid at the rate of ten percent (10%) per
annum.

1.Payment
of Principal and Interest. Interest payments shall be due and payable semi-annually and the interest shall be satisfied
by the issue to the Holder of fully paid and nonassessable shares of common stock at the Conversion Price (as defined in Section
5 below) and such shares shall be registered in accordance with Section 6 below . Payments of principal and any accrued but unpaid
interest are to be made on or before the Maturity Date (as defined below). All payments are to be made at the address of Holder
set forth on the signature page of this Note or at such other place as Holder designates to the Company in writing. Interest under
this Note shall be computed on the basis of a 365-day year and the actual number of days elapsed. Interest shall be paid gross.

In the event of
the Company’s failure to make any payment when due (“Default”), this Note shall bear an interest rate
of fifteen percent (15%) per annum (the “Default Interest”) commencing on the date of Default until the
date upon which the entire principal balance and any accrued interest are fully paid.

2.Maturity.
This Note shall mature automatically and the entire outstanding principal amount, together with all interest accrued under this
Note, shall become due and payable on 1 September 2016 (“Maturity Date”), unless this Note, before such date,
is converted into shares of capital stock of the Company pursuant to Section 5 hereof. On the Maturity Date, the Company shall
make payment to the Holder of an amount in cash equal to one hundred and twelve percent (112%) multiplied by the sum of the outstanding
principal amount of the Note plus any interest and Default Interest validly accrued and not paid by the Company.

3.Prepayment.
Subject to the Holder’s right to convert pursuant to Section 5 hereof, this Note may be prepaid, in whole and not in part,
at any time during the period beginning on the Issue Date of this Note and ending one hundred eighty (180) days following the Issue
Date, upon ten (10) days advance written notice to the Holder (the “Prepayment Notice”). If the Company exercises
its right to prepay the Note, the Company shall make payment to the Holder of an amount in cash equal to one hundred and twenty
percent (120%) multiplied by the sum of the outstanding principal amount of the Note plus any interest and Default Interest validly
accrued and not paid by the Company.

 

4.Right
to Appoint an Observer and receive Information, Noteholder meetings . For so long as not less than USD$250,000 remains
outstanding in respect of this Note, the Holder shall be entitled to appoint an observer to attend and observe at each meeting
and committee meeting (including the audit committee) of the Board Directors of the Company. The Company shall not have any obligation
to pay costs or expenses in relation to this observer.

The Holder shall
receive copies of all communications and notices circulated to shareholders and shall be entitled to attend all shareholder meetings.

As Holder there
shall be annual meeting of Note holders and the holder shall be entitled to call for a meeting of Note holders on 21 days written
notice at which voting shall be in accordance with the monetary amount of Notes held

.5.Conversion
of Note.

(a)Conversion
into Stock. At the option of the Holder, at any time, the entire principal amount of this Note plus any accrued interest and
Default Interest may be converted, in whole, into fully paid and nonassessable shares of common stock (“Conversion”)
at the Conversion Price (as defined herein). The number of such shares of common stock that Holder shall be entitled to receive,
and shall receive, upon such Conversion shall be determined by dividing the aggregate amount of principal and any accrued interest
and Default Interest under this Note being so converted by the Conversion Price (as defined herein). Holder agrees to execute and
deliver the form of Notice of Conversion attached hereto. Upon receipt by the Company of any such Notice of Conversion, the election
to convert shall be irrevocable and the date the Notice of Conversion executed by the Holder shall be the “Conversion
Date.” Notwithstanding the above, upon receipt of a Prepayment Notice, Holder shall have five (5) business days in which
to elect to convert the entire Note, including any and all accrued interest and Default Interest and deliver a Notice of Conversion.

(b)Conversion
Price. Subject to adjustment as provided below, the “Conversion Price” shall equal $0.125 per common share.

(c)Stock
Certificates. Upon Conversion into common stock, the Company shall issue and deliver to Holder, or to Holder’s nominee
or nominees, a certificate or certificates representing the number of shares of common stock to which Holder shall be entitled
as a result of Conversion as provided herein.

(d)Adjustment Due
to Dilutive Issuance. If, at any time when this Note is issued and outstanding, the Company issues or sells, or 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 Company in such Dilutive Issuance and Holder shall be entitled to receive that number of shares which shall allow
Holder to maintain at least the same percentage of issued and outstanding shares of the Company as the Holder held prior to the
Dilutive Issuance, to be calculated on a fully-diluted basis.

 

The Company shall be deemed
to have issued or sold shares of common stock if the Company 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 Company as consideration for the issuance or granting of all such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company 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 Company
shall be deemed to have issued or sold shares of common stock if the Company 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 Company 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 Company 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)Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to Conversion of
the Note, 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 Company shall be changed into the same or a different number of
shares of another class or classes of stock or securities of the Company or another entity, or in case of any sale or
conveyance of all or substantially all of the assets of the Company other than in connection with a plan of complete
liquidation of the Company, 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 Company shall not affect any transaction described in this Section 5(e) 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 Company) assumes by written instrument the obligations of this Section 5(e). The above
provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(f)Adjustment Due
to Distribution. If the Company 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 Company’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.

 

(g)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
5, the Company, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder of
a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment
is based. The Company 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.

 

6.Registration
Rights. After the date of this Note, the Company is obligated to register any shares converted hereunder in a Registration
Statement on Form S-1 filed by the Company with the Securities and Exchange Commission. Any costs associated with this registration
shall be paid by the Company. The Company shall use its best-efforts to register the shares within one hundred and eighty (180)
days of the date of this Note.

 

7.Unsecured Obligation.
This Note represents a senior unsecured obligation of the Company and will not be subordinate
to any other debt of the Company now existing or hereafter incurred. Notwithstanding the foregoing, this Note will rank pari passu
with all other senior unsecured obligations of the Company with respect to right of payment and priority.

 

8.No
Rights as Stockholder. This Note does not entitle Holder to voting rights or any other right as a shareholder of the Company
before the Conversion hereof.

9. Losses,
Theft or Destruction of Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft or destruction of this Note and of indemnity or security reasonably satisfactory to the Company, the Company shall make and
deliver a new Note that shall carry the same rights to interest (unpaid and to accrue) carried by this Note, stating that such
Note is issued in replacement of this Note, making reference to the original Issue Date of this Note (and any successor hereto)
and dated as of such cancellation, in lieu of this Note.

10.Severability.
Every provision of this Note is intended to be severable. If any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the
balance of the terms and provisions hereof, which shall remain binding and enforceable to the Company and the Holder.

11.
Miscellaneous.

 

(a)No Fractional
Units or Scrip. No fractional shares or scrip representing fractional units shall be issued upon the Conversion of this Note.
In lieu of any fractional shares to which Holder otherwise would be entitled, the Company shall make a cash payment equal to the
Conversion Price then in effect multiplied by such fraction.

(b)Issue
Date. The provisions of this Note shall be construed and shall be given effect in all respects as if this Note had been issued
and delivered by the Company on the earlier of the date hereof or the Issue Date of any Note for which this Note is issued in replacement.
This Note shall be binding on any successor or assign of the Company.

(c)Governing
Law. This Note shall be governed by and construed in accordance with the laws of England, 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 courts of England.

(d)Compliance With
Usury Laws. The Company and Holder intend to comply with all applicable usury laws. In fulfilling this intention, all agreements
between the Company and Holder are expressly limited so that the amount of interest paid or agreed to be paid to the Holder for
the use, forbearance, or detention of money under this Note shall not exceed the maximum amount permissible under applicable law.

 

If for any reason the law
shall prohibit a payment of any amount required under this Note, then the obligation shall be reduced to the maximum allowable
by such law. If for any reason Holder receives as interest an amount that would exceed the highest lawful rate, then the amount
that would constitute excessive interest shall be applied to the reduction of the principal of this Note and not to the payment
of interest. If any conflict arises between this provision and any provision of any other agreement between the Company and Holder,
then this provision shall control.

 

(e)Legal Representation. Holder
agrees and represents that such party has been represented by such party's own legal counsel with regard to all aspects of this
Note, or if such party is acting without legal counsel, that such party has had adequate opportunity and has been encouraged to
seek the advice of such party's own legal counsel prior to the execution of this Agreement.

 

(f)Jurisdiction. This Note shall
be governed by and construed in accordance with the laws of England. The courts of England shall have exclusive jurisdiction to
settle any dispute or claim that arises out of, or in connection with this Note. Accordingly, any action whatsoever brought upon
or relating to this Note shall be instituted and prosecuted in the courts of England

 

(g)Restrictions.
Holder acknowledges that all shares of common stock acquired upon the Conversion of this Note shall be subject to restrictions
on resale imposed by applicable state and federal securities laws.

 

(h)Assignment.
Subject to restrictions on resale imposed by state and federal securities laws, Holder may assign this Note or any of the rights,
interests or obligations hereunder, by operation of law or otherwise, in whole or in part, to any person or entity so long as
such assignee agrees to be bound by the terms and conditions of the Note. Effective upon any such assignment, the person or entity
to whom such rights, interests and obligations are assigned shall have and exercise all of Holder’s rights, interests and
obligations hereunder as if such person or entity were the original holder of this Note. 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

[SIGNATURE PAGE
FOLLOWS]

    	 

    	 

    

IN WITNESS WHEREOF,
Lot78, Inc. has caused this Unsecured Senior Convertible Promissory Note to be executed by its officer thereunto duly authorized.

The “Company”

 

LOT78, INC.

a Nevada corporation

 

 

By: Oliver Amhurst

 

Its: Chief Executive Officer

 

Accepted and Agreed to:

“Holder”

Print Name

 

Signature

Address:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}]]