Document:

EX-10.1

 Exhibit 10.1 

REGISTRATION RIGHTS AGREEMENT 

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into on January 23, 2015, between Zayo Group,
LLC, a Delaware limited liability company (the “Company”), Zayo Capital, Inc., a Delaware corporation (the “Co-Issuer” and together with the Company, the “Issuers”), the subsidiary guarantors party
hereto (the “Guarantors”) and Goldman, Sachs & Co., as representative (the “Representative”) of the several initial purchasers (the “Initial Purchasers”) set forth in Schedule I to the
Purchase Agreement. 
 This Agreement is made pursuant to the Purchase Agreement dated January 20, 2015, between the Issuers, the
certain Guarantors party thereto and the Initial Purchasers (the “Purchase Agreement”), which provides for the sale by the Issuers to the Initial Purchasers of an aggregate of $700,000,000 principal amount of the Issuers’ 6.00%
Senior Notes Due 2023 (the “Notes”), which will be guaranteed by the Guarantors under the Indenture, as defined herein (the “Guarantees”). The Notes and the Guarantees attached thereto are herein referred to as the
“Securities”. In order to induce the Initial Purchasers to enter into the Purchase Agreement and for good and valuable consideration to the Holders of the Securities, the Issuers have agreed to provide to the Initial Purchasers and
their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement. 

In consideration of the foregoing, the parties hereto agree as follows: 

1. Definitions. 
 As used
in this Agreement, the following capitalized defined terms shall have the following meanings: 
 “1933 Act” shall mean the
Securities Act of 1933, as amended from time to time. 
 “1934 Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time. 
 “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under
the 1934 Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the 1934 Act), such “person” will be deemed to have beneficial ownership of all
securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms
“Beneficially Owns” and “Beneficially Owned” will have correlative meanings. 
 “Closing Date” shall
mean the Closing Date as defined in the Purchase Agreement. 
 “Co-Issuer” shall have the meaning set forth in the preamble
and shall also include the Co-Issuer’s successors. 

 “Company” shall have the meaning set forth in the preamble and shall also
include the Company’s successors. 
 “Exchange Dates” shall have the meaning set forth in Section 2(a)(ii). 

“Exchange Offer” shall mean an exchange offer by the Issuers of Exchange Securities for Registrable Securities pursuant to
Section 2(a) hereof. 
 “Exchange Offer Registration” shall mean a registration under the 1933 Act effected pursuant to
Section 2(a) hereof. 
 “Exchange Offer Registration Statement” shall mean an exchange offer registration statement on
Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference
therein. 
 “Exchange Securities” shall mean securities issued by the Issuers under the Indenture containing terms identical
to the Securities (except that (i) interest thereon shall accrue from the last date on which interest was paid on the Notes or, if no such interest has been paid, from January 23, 2015 and (ii) the Exchange Securities will not contain
restrictions on transfer) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer. 

“Free Writing Prospectus” shall mean each free writing prospectus (as defined in Rule 405 under the 1933 Act) prepared by or
on behalf of any Issuer or Guarantor or used by any Issuer or Guarantor in connection with a Shelf Registration. 

“Guarantor” shall have the meaning set forth in the preamble and shall also include each Guarantor’s successors. 

“Holder” shall mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their respective
successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture, including any Person that acquired any Registrable Securities prior to the date hereof; provided that for purposes of
Sections 4 and 5 of this Agreement, the term “Holder” shall include Participating Broker-Dealers (as defined in Section 4(a)). 

“Indenture” shall mean the Indenture relating to the Notes dated as of the Closing Date among the Issuers, the Guarantors and
The Bank of New York Mellon Trust Company N.A., as trustee, and as the same may be supplemented from time to time in accordance with the terms thereof. 

“Initial Purchasers” shall have the meaning set forth in the preamble. 

“Issuers” shall have the meaning set forth in the preamble. 

  
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 “Majority Holders” shall mean the Holders of a majority of the aggregate
principal amount of outstanding Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by any Issuer or
Guarantor or any of their affiliates (as such term is defined in Rule 405 under the 1933 Act) (other than the Initial Purchasers or subsequent Holders of Registrable Securities if such subsequent Holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount. 

“Notes” shall have the meaning set forth in the preamble. 

“Participating Broker-Dealer” shall have the meaning set forth in Section 4(a). 

“Person” shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization,
or a government or agency or political subdivision thereof. 
 “Prospectus” shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including all material incorporated or deemed by securities laws to be incorporated by reference
therein. 
 “Purchase Agreement” shall have the meaning set forth in the preamble. 

“Registrable Securities” shall mean the Securities; provided, however, that the Securities shall cease to be
Registrable Securities (i) when a Registration Statement with respect to such Securities shall have been declared effective under the 1933 Act and either (a) such Securities are exchanged for Exchange Securities in the Exchange Offer or
(b) such securities were not tendered by the Holder thereof in the Exchange Offer (provided that the Exchange Offer was conducted in accordance with the terms of this Agreement, including with respect to periods during which Notes may be
exchanged), (ii) when a Registration Statement with respect to such Securities shall have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to such Registration Statement, (iii) when such
Securities have been sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144(A)) under the 1933 Act or (iv) when such Securities shall have ceased to be outstanding. 

“Registration Default” shall have the meaning set forth in Section 2(d). 

  
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 “Registration Expenses” shall mean any and all expenses incident to performance
of or compliance by the Issuers and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or Financial Industry Regulatory Authority registration and filing fees, (ii) all fees and expenses incurred
in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable
Securities), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable
securities laws, (vi) the fees and disbursements of the Trustee and its counsel and any depositary for book-entry Securities, (vii) the fees and disbursements of counsel for the Issuers and the Guarantors and, in the case of a Shelf
Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the fees and disbursements
of the independent public accountants of the Company (and, if necessary, any other certified public accountant of the Co-Issuer and any subsidiary of the Issuers, or of any business acquired by any Issuer for which financial statements and financial
data are or are required to be included in the Registration Statement), including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance, but excluding fees and expenses of
counsel to the underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a
Holder. 
 “Registration Statement” shall mean any registration statement of the Issuers and the Guarantors that covers any
of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated or deemed by securities laws to be incorporated by reference therein. 

“SEC” shall mean the Securities and Exchange Commission. 

“Securities” shall have the meaning set forth in the preamble. 

“Shelf Registration” shall mean a registration effected pursuant to Section 2(b) hereof. 

“Shelf Registration Statement” shall mean a “shelf” registration statement of the Issuers and the Guarantors
pursuant to the provisions of Section 2(b) of this Agreement which covers all of the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are covered by such Shelf Registration Statement)
on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated or deemed by securities law to be incorporated by reference therein. 

  
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 “Staff” shall have the meaning set forth in Section 4(a) hereof. 

“Trustee” shall mean the trustee with respect to the Securities under the Indenture. 

“Underwriter” shall have the meaning set forth in Section 3 hereof. 

“Underwritten Registration” or “Underwritten Offering” shall mean a registration in which Registrable
Securities are sold to an Underwriter for reoffering to the public. 
 2. Registration Under the 1933 Act. 

(a) To the extent not prohibited by any applicable law or applicable interpretation of the Staff, the Issuers and the Guarantors shall
(i) file an Exchange Offer Registration Statement covering the offer by the Issuers to the Holders to exchange all of the Registrable Securities for Exchange Securities and (ii) use their reasonable best efforts to have the Exchange Offer
Registration Statement declared effective by the SEC as promptly as practicable after such Registration Statement has been filed. The Issuers shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement has been
declared effective by the SEC. The Issuers shall commence the Exchange Offer by mailing the related exchange offer Prospectus and accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law:

 (i) that the Exchange Offer is being made pursuant to this Registration Rights Agreement and that all Registrable Securities validly
tendered will be accepted for exchange; 
 (ii) the dates of acceptance for exchange (which shall be a period of at least 20 business days
from the date such notice is mailed) (the “Exchange Dates”); 
 (iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any rights under this Registration Rights Agreement; 
 (iv) that Holders
electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the enclosed letters of transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice prior to the close of business on the last Exchange Date; provided, however, that, if any of the Registrable Securities are in book-entry form, such Prospectus and accompanying
documents shall also specify how the surrender is to be effected in accordance with applicable book-entry procedures; and 
 (v) that Holders
will be entitled to withdraw their election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice a
telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing his election to have such Securities
exchanged. 

  
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 As soon as practicable after the last Exchange Date, the Issuers shall: 

(i) accept for exchange Registrable Securities or portions thereof tendered and not validly withdrawn pursuant to the Exchange Offer; and 

(ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange
by the Issuers and the Guarantors and issue, and cause the Trustee to promptly authenticate and mail to each Holder, an Exchange Security equal in principal amount to the principal amount of the Registrable Securities surrendered by such Holder;
provided that if any of the Registrable Securities are in book-entry form, the Issuers shall, in co-operation with the Trustee, effect the exchange of Registrable Securities in accordance with applicable book-entry procedures. 

The Issuers and the Guarantors shall use their best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements
of the 1933 Act, the 1934 Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff. The Issuers shall, if requested by the Initial Purchasers, use their reasonable efforts to inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the
Initial Purchasers shall have the right, subject to applicable law, to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. 

(b) In the event that (i) the Issuers and the Guarantors are not permitted to consummate the Exchange Offer provided for in
Section 2(a) above because the Exchange Offer is not permitted by applicable law or any applicable interpretation of the Staff, (ii) for any reason, the Exchange Offer is not consummated on or before January 23, 2016, or
(iii) any Beneficial Owner of Registrable Securities notifies the Issuers that (A) it is prohibited by law or SEC policy from participating in the Exchange Offer, (B) it may not resell the Exchange Securities acquired by it in the
Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales; or (C) it is a broker-dealer and owns Securities acquired
directly from the Company or an affiliate of the Company, then the Issuers and the Guarantors shall file after such determination date or notice is given to the Issuers, as the case may be, a Shelf Registration Statement providing for the sale by
the Holders of all of the Registrable Securities and to use their reasonable best efforts to cause the Shelf Registration Statement to be declared effective by the SEC as promptly as possible after the obligation to file such shelf registration
statement arises. In the event the Issuers are required to file a Shelf Registration Statement solely as a result of the matters referred to in clause (iii)(B) of the preceding sentence, the Issuers and Guarantors shall use their best efforts to
file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a

  
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combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the
Exchange Offer. The Issuers and the Guarantors agree to use their reasonable best efforts to keep the Shelf Registration Statement continuously effective until the earlier of (i) two years from the Closing Date and (ii) the date on which
all Registrable Securities registered thereunder are disposed of in accordance therewith. The Issuers and the Guarantors further agree to supplement or amend the Shelf Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Issuers and the Guarantors for such Shelf Registration Statement or by the 1933 Act or by any other rules and regulations thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use their best efforts to cause any such amendment to become effective and such Shelf Registration Statement to become usable as soon as thereafter practicable. The Issuers agree to furnish to
the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. 
 (c)
The Issuers shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) and Section 2(b). Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the
sale or disposition of such Holder’s Registrable Securities pursuant to the Shelf Registration Statement. 
 (d) An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided,
however, that, if, after it has been declared effective, the offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be deemed not to have become effective during the period of such interference until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. In
the event (1) the Issuers and the Guarantors fail to consummate the Exchange Offer on or before January 23, 2016; or (2) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales or exchanges of Registrable Securities during the periods specified in this Agreement (each such event referred to in clauses (1) and (2) above, a “Registration
Default”), then with respect to the first 90-day period immediately following the occurrence of the first Registration Default, the interest rate on the Securities will be increased by 0.25% per annum on the principal amount of
Securities held by such Holder. The amount of additional interest will increase by an additional 0.25% per annum on the principal amount of Securities with respect to each 90-day period until all Registration Defaults have been cured, up to
maximum amount of additional interest for all Registration Defaults of 1.0% per annum. 
 All accrued additional interest will be paid by the Issuers
or the Guarantors on each interest payment date to the Holder of a global note by wire transfer of immediately available funds or by federal funds check and to Holders of certificated notes by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults, the accrual of additional interest will cease. 

  
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 (e) Without limiting the remedies available to the Initial Purchasers and the Holders, the
Issuers and the Guarantors acknowledge that any failure by any Issuer or Guarantor to comply with their respective obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may
be required to specifically enforce the obligations of the Issuers and the Guarantors under Section 2(a) and Section 2(b) hereof. 

3. Registration Procedures. 

In connection with the obligations of the Issuers and Guarantors with respect to the Registration Statements pursuant to Section 2(a) and
Section 2(b) hereof, the Issuers and the Guarantors shall as expeditiously as possible: 
 (a) prepare and file with the SEC a
Registration Statement on the appropriate form under the 1933 Act, which form (x) shall be selected by the Company and (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling
Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and use its best efforts to cause such
Registration Statement to become effective and remain effective in accordance with Section 2 hereof; 
 (b) prepare and file with the
SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period and cause each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to keep each Prospectus current during the period described under Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Securities or Exchange Securities; 
 (c) in the case of a Shelf Registration, furnish to
each Holder of Registrable Securities, to counsel for the Initial Purchasers, to counsel for the Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or Underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities;
and the Issuers and Guarantors consent to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Securities and any such Underwriters in connection with the
offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; 

  
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 (d) use their best efforts to register or qualify the Registrable Securities under all applicable
state securities or “blue sky” laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement is declared
effective by the SEC, to cooperate with such Holders in connection with any filings required to be made with the Financial Industry Regulatory Authority and do any and all other acts and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that no Issuer or Guarantor shall be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) file any general consent to service of process or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject; 
 (e) in the case of a Shelf Registration, notify each Holder of Registrable Securities, counsel
for the Holders and counsel for the Initial Purchasers promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendment thereto
has been filed and becomes effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has
become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the
effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Issuers and Guarantors contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to the offering cease to be true and correct in all material respects or if any Issuer or Guarantor receives any notification with respect to the suspension of the qualification of the Registrable Securities
for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is effective which makes any statement made in such Registration Statement or
the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading and (vi) of any determination by the Company
that a post-effective amendment to a Registration Statement would be appropriate; 
 (f) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide immediate notice to each Holder of the withdrawal of any such order; 

(g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); 

  
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 (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be in such denominations (consistent with
the provisions of the Indenture) and registered in such names as the selling Holders may reasonably request at least one business day prior to the closing of any sale of Registrable Securities; 

(i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use their best efforts
to prepare and file with the SEC a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to
the purchasers of the Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company agrees to notify the Holders to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and the Holders hereby agree to suspend use of the Prospectus until the Issuers and
Guarantors have amended or supplemented the Prospectus to correct such misstatement or omission; 
 (j) a reasonable time prior to the filing
of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus after initial
filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) and make such of the representatives of the Issuers
and Guarantors as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) available for discussion of such document, and shall not at any time file
or make any amendment to the Registration Statement, any Prospectus or any amendment of or supplement to a Registration Statement or a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus,
of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel
(and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall reasonably object; 
 (k) obtain a CUSIP number for
all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement; 
 (l)
cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the “TIA”), in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be, cooperate with the
Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and execute, and use their best efforts to cause the Trustee to execute, all documents as
may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; 

  
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 (m) in the case of a Shelf Registration, make available for inspection by a representative of the
Holders of the Registrable Securities, any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and attorneys and accountants designated by the Holders, at reasonable times and in a reasonable manner, all
financial and other records, pertinent documents and properties of the Issuers and Guarantors, and cause the respective officers, directors and employees of the Issuers and Guarantors to supply all information reasonably requested by any such
representative, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; 
 (n) in the case of a Shelf
Registration, use their best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued by any Issuer or Guarantor are then listed if requested by the
Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements; 
 (o) use their best efforts to cause
the Exchange Securities or Registrable Securities, as the case may be, to be rated by two nationally recognized statistical rating organizations (as such term is defined in Rule 436(g)(2) under the 1933 Act); 

(p) if reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and (ii) make all required filings of such Prospectus supplement or such post-effective
amendment as soon as the Company has received notification of the matters to be incorporated in such filing; and 
 (q) in the case of a
Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the Holders of a majority of the Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such
Registrable Securities with respect to the business of the Issuers and their subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Issuers and Guarantors (which counsel and opinions, in form, scope and
substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested
in underwritten offerings, (iii) obtain “comfort” letters from the independent certified public accountants 

  
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of the Company (and, if necessary, any other certified public accountant of the Co-Issuer and any subsidiary of the Issuers, or of any business acquired by the Issuers for which financial
statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type
customarily covered in “comfort” letters in connection with underwritten offerings, and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable
Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Issuers and the Guarantors made pursuant to clause
(i) above and to evidence compliance with any customary conditions contained in an underwriting agreement. 
 In the case of a Shelf
Registration Statement, the Issuers may require each Holder of Registrable Securities to furnish to the Issuers such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Issuers may from
time to time reasonably request in writing. 
 In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any
notice from any Issuer or Guarantor of the happening of any event of the kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such
Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by the Issuers, such Holder will deliver to the Issuers (at its expense) all copies in its possession, other
than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. If any Issuer shall give any such notice to suspend the disposition of
Registrable Securities pursuant to a Registration Statement, the Issuers shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. The Issuer, in total, may give any such notice
only twice during any 365 day period and any such suspensions may not exceed 30 days for each suspension and there may not be more than four suspensions in effect during any 365 day period. 

The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the “Underwriters”) that will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering. 

  
 12 

 4. Participation of Broker-Dealers in Exchange Offer. 

(a) The staff of the SEC (the “Staff”) has taken the position that any broker-dealer that receives Exchange Securities for its
own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a “Participating Broker-Dealer”), may be deemed to be an
“underwriter” within the meaning of the 1933 Act and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities. 

The Issuers and the Guarantors understand that it is the Staff’s position that if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the 1933 Act in connection with resales of Exchange Securities for their own accounts, so long as the
Prospectus otherwise meets the requirements of the 1933 Act. 
 (b) In light of the above, notwithstanding the other provisions of this
Agreement, the Issuers and the Guarantors agree that the provisions of this Agreement as they relate to a Shelf Registration shall also apply to an Exchange Offer Registration to the extent, and with such reasonable modifications thereto as may be,
reasonably requested by the Initial Purchasers or by one or more Participating Broker-Dealers, in each case as provided in clause (ii) below, in order to expedite or facilitate the disposition of any Exchange Securities by Participating
Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above; provided that: 
 (i) the Issuers and
the Guarantors shall not be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i), for a period exceeding 180 days after the last Exchange Date
(as such period may be extended pursuant to the penultimate paragraph of Section 3 of this Agreement) and Participating Broker-Dealers shall not be authorized by the Issuers or the Guarantors to deliver and shall not deliver such Prospectus
after such period in connection with the resales contemplated by this Section 4; and 
 (ii) the application of the Shelf Registration
procedures set forth in Section 3 of this Agreement to an Exchange Offer Registration, to the extent not required by the positions of the Staff of the SEC or the 1933 Act and the rules and regulations thereunder, will be in conformity with the
reasonable request to the Issuers and the Guarantors by the Initial Purchasers or with the reasonable request in writing to the Issuers and the Guarantors by one or more broker-dealers who certify to the Initial Purchasers, on one hand, and the
Issuers and the Guarantors, on the other hand, in writing that they anticipate that they will be Participating Broker-Dealers; and provided further that, in connection with such application of the Shelf Registration procedures set
forth in Section 3 to an Exchange Offer Registration, the Issuers and the Guarantors shall be obligated (x) to deal only with one entity representing the Participating Broker-Dealers, which shall be Goldman, Sachs & Co. unless it
elects not to act as such representative, (y) to pay the fees and expenses of only one counsel representing the Participating Broker-Dealers, which shall be counsel to the Initial Purchasers unless such counsel elects not to so act and
(z) to cause to be delivered 

  
 13 

 
only one, if any, “comfort” letter from the independent certified public accountants of the Company (and, if necessary, one “comfort” letter from each of the other certified
public accountants of the Co-Issuer and any subsidiary of the Issuers, or of any business acquired by the Issuers for which financial statements and financial data are or are required to be included in the Registration Statement) with respect to the
Prospectus in the form existing on the last Exchange Date and with respect to each subsequent amendment or supplement, if any, effected during the period specified in clause (i) above. 

(c) The Initial Purchasers shall have no liability to the Issuers, the Guarantors or any Holder with respect to any request that they may make
pursuant to Section 4(b) above. 
 5. Indemnification and Contribution. 

(a) The Issuers and the Guarantors, jointly and severally, agree to indemnify and hold harmless the Initial Purchasers and their affiliates,
each Holder and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common control with, or is controlled by, any Initial
Purchaser or any Holder, from and against all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by the Initial Purchasers or any of their affiliates, any Holder or any such
controlling or affiliated Person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto)
pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or caused by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or caused by any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented if the Issuers or the Guarantors
shall have furnished any amendments or supplements thereto) or any Free Writing Prospectus taken together with the Prospectus or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in
light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information
relating to any Initial Purchaser or any Holder furnished to the Company in writing through Goldman, Sachs & Co. or any selling Holder expressly for use therein. In connection with any Underwritten Offering permitted by Section 3, the
Issuers and the Guarantors will also, jointly and severally, indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. 

  
 14 

 (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Issuers,
the Guarantors, the Initial Purchasers and their affiliates, and the other selling Holders, and each of their respective directors, officers who sign the Registration Statement and each Person, if any, who controls the Issuers, the Guarantors, any
Initial Purchaser and any other selling Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Issuers and the Guarantors to the Initial
Purchasers and the Holders, but only with reference to information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement (or any amendment thereto), any Prospectus (or any
amendment or supplement thereto) or any Free Writing Prospectus. 
 (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the “indemnified party”) shall promptly notify the Person against
whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Initial Purchasers and all Persons, if any, who control any Initial Purchaser within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees
and expenses of more than one separate firm (in addition to any local counsel) for the Issuers and the Guarantors and their respective directors and officers who sign the Registration Statement and each Person, if any, who controls the Issuers or
the Guarantors within the meaning of either such Section and (c) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Holders and all Persons, if any, who control any Holder within the meaning of
either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In such case involving the Initial Purchasers and Persons who control the Initial Purchasers, such firm shall be designated in writing by Goldman,
Sachs & Co. In such case involving the Holders and such Persons who control Holders, such firm shall be designated in writing by the Majority Holders. In all other cases, such firm shall be designated by the Company. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its written consent but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which
such indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are
the subject matter of such proceeding. 

  
 15 

 (d) If the indemnification provided for in paragraph (a) or paragraph (b) of this
Section 5 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and
of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the
Issuers and the Guarantors, on the one hand, and the Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers and the Guarantors, on the one hand, or by the Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders’ respective obligations to contribute pursuant to this Section 5(d) are several in proportion to the respective principal amount of Registrable Securities of such Holder that were registered pursuant
to a Registration Statement. 
 (e) The Issuers and the Guarantors, on the one hand, and each Holder, on the other hand, agree that it would
not be just or equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5, no Holder shall be required to indemnify or contribute any
amount in excess of the amount by which the total price at which Registrable Securities were sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. 

The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers or any of their affiliates, any Holder or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of any
Issuer or Guarantor or their respective officers or directors or any Person controlling the Issuers or Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf
Registration Statement. 

  
 16 

 6. Miscellaneous. 

(a) No Inconsistent Agreements. The Issuers and the Guarantors, jointly and severally, represent, warrant and agree that neither the
Issuers nor any Guarantor has entered into, and on or after the date of this Agreement will not enter into, any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The Issuers and the Guarantors, jointly and severally, represent, warrant and agree that the rights granted to the Holders hereunder do not and will not in any way conflict with and are and will not be not inconsistent
with the rights granted to the holders of the other issued and outstanding securities of any Issuer or Guarantor under any such agreements. 

(b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Issuers have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or consent; provided, however, that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall
be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. 
 (c) Notices. All
notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, electronic mail or any courier guaranteeing overnight delivery (i) if to a Holder,
at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in the
Purchase Agreement; and (ii) if to the Issuers or Guarantors, initially at the Company’s address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this
Section 6(c). 
 All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied or emailed; and on the next business day if timely delivered to an
air courier guaranteeing overnight delivery. 
 Copies of all such notices, demands, or other communications shall be concurrently delivered
by the Person giving the same to the Trustee, at the address specified in the Indenture. 
 (d) Successors and Assigns. This Agreement
shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to

  
 17 

 
have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The Initial Purchasers (in their
capacity as Initial Purchasers) shall have no liability or obligation to the Issuers or Guarantors with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement.

 (e) Purchases and Sales of Securities. The Company shall not, and shall use its best efforts to cause its affiliates (as defined in
Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise transfer any Securities. 
 (f) Third Party Beneficiary.
The Holders shall be third party beneficiaries to the agreements made hereunder between the Issuers and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to
the extent it deems such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. 
 (g)
Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute
one and the same agreement. 
 (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. 
 (i) Governing Law. This Agreement shall be governed by the laws of the State of New York.

 (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 

  
 18 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

  

			
	ZAYO GROUP, LLC
		
	By:	 	 /s/ Ken desGarennes

		 	Name: Ken desGarennes
		 	Title: Chief Financial Officer
	
	ZAYO CAPITAL, INC.
		
	By:	 	 /s/ Ken desGarennes

		 	Name: Ken desGarennes
		 	Title: Vice President & Chief Financial Officer
	
	ABOVENET COMMUNICATIONS, LLC
	ACCESS COMMUNICATIONS, INC.
	ZAYO COLOCATION, LLC
	USCARRIER, LLC
	FIBERLINK, LLC
	ZAYO CAPITAL, INC.
	ZAYO PROFESSIONAL SERVICES, LLC
	COLO FACILITIES ATLANTA, LLC
	ZAYO CORELINK ACQUISITION SUB, LLC
	FIBERNET TELECOM, INC.
	LOCAL FIBER, LLC
	IDEATEK SYSTEMS, INC.
		
	By:	 	 /s/ Ken desGarennes

		 	Name: Ken desGarennes
		 	Title: Vice President & Chief Financial Officer

 Signature Page to the Registration Rights Agreement 

			
	Confirmed and accepted as of
	the date first above written:
	
	Goldman, Sachs & Co.
		
	By:	 	 /s/ Michael Hickey

		 	Name: Michael Hickey
		 	Title: Managing Director

 As Representative of the several Initial Purchasers 

Signature Page to the Registration Rights Agreementkonaredexh10_1.htm

 Exhibit 10.1

 

 

CONVERTIBLE DEBENTURE

PURCHASE AGREEMENT

This CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this “Agreement”), is entered into as of January 20, 2015, by and among KonaRed Corporation, a Nevada corporation (the “Company”), and Group 10 Holdings, LLC (the “Investor”).  Each party to this Agreement is referred to herein as a “Party,” and they are referred to collectively as the “Parties.”

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to sell to the Investor, and the Investor desires to purchase from the Company, convertible debentures in an aggregate principal amount of up to One Million One Hundred Thousand Dollars ($1,100,000), a form of which is attached hereto as Exhibit A.

NOW, THEREFORE, in consideration of the mutual representations, warranties, and covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.            DEFINITIONS.  As used in this Agreement, the following terms shall have the following meanings:

“Closing” means the closing(s) of the transactions contemplated herein, which shall take place in accordance with the terms of Section 2 of this Agreement.

“Initial Closing” means the closing of the transactions contemplated herein that occurs concurrently with the execution of this Agreement.

“Debentures” means that certain Unsecured Convertible Debenture executed concurrently herewith by and among the Company and the Investor together with each subsequent convertible debenture issued pursuant to Section 2 of this Agreement.

“Subscription Amount” means such purchase price as the Investor is determining to pay to the Company on a particular Closing Date hereunder.

“Subsequent Closing Criteria” means the fulfillment and maintenance of all of the following conditions as of the date hereof until the date of the applicable Closing: (i) the closing price of the Company’s common stock shall not be less than $0.10 per share for any three (3) consecutive Trading Days (as defined in the Debentures); (ii) the market capitalization of the Company shall not be less than Eight Million Dollars ($8,000,000) for any three (3) consecutive Trading Days; (iii) the Company shall not have engaged in any debt financing in an amount greater than One Hundred Fifty Thousand Dollars ($150,000), excluding any debt owed by the Company from time to time pursuant to a Senior Convertible Note (the “Senior VDF Note”) issued to VDF FutureCeuticals, Inc. (“VDF”) on January 28, 2014 in a principal amount equal, at any time, to the sum of any payments due by the Company to VDF FutureCeuticals, Inc. 

 

 

  

  

  

 

 

pursuant to a certain license agreement entered into with VDF and any accrued and unpaid interest thereon; and (iv) solely with respect to the third Closing, the Company’s net sales for the six (6) months ending June 30, 2015 shall not be less than the Company’s net sales for the six (6) months ending June 30, 2014 as reported in the Company’s Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission (the “SEC”) for the period ending June 30, 2015.

“Transaction Documents” means this Agreement, the Debenture, and all other certificates, documents, agreements, and instruments delivered to the Investor under or in connection with this Agreement.

2.            SALE AND ISSUANCE OF THE DEBENTURES; CLOSING(S); COVENANTS.

2.1           Sale and Issuance of the Debentures.  Subject to the terms and conditions of this Agreement and upon receipt of the Subscription Amount, the Investor agrees to purchase at each Closing, and the Company agrees to sell and issue to the Investor at each Closing, the Debentures as follows:

 

2.1.1       At the Initial Closing, the Investor agrees to purchase and the Company agrees to sell and issue to the Investor a convertible debenture in the principal amount of Four Hundred Forty Thousand Dollars ($440,000) (the “First Debenture”), a form of which is attached hereto as Exhibit A, for a purchase price of Four Hundred Thousand Dollars ($400,000).

 

2.1.2       Upon the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 with the SEC, subject to the satisfaction of the Subsequent Closing Criteria, the Investor agrees to purchase and the Company, may in its sole discretion, agree to sell and issue to the Investor a second convertible debenture in the principal amount of Three Hundred Thirty Thousand Dollars ($330,000) (the “Second Debenture”), which shall take substantially the same form as Exhibit A hereto, for a purchase price of Three Hundred Thousand Dollars ($300,000); provided, however, that the Second Debenture shall differ from the First Debenture with regard to the issuance date, principal amount and share reserve as such terms are defined thereunder. In the event that the Company has not met the Subsequent Closing Criteria, the purchase, sale and issuance of the Second Debenture may be consummated upon mutual agreement of the Parties in their discretion.

 

2.1.3       Upon the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2015 with the SEC, subject to the satisfaction of the Subsequent Closing Criteria, the Investor agrees to purchase and the Company, may in its sole discretion, agrees to sell and issue to the Investor a third convertible debenture in the principal amount of Three Hundred Thirty Thousand Dollars ($330,000) (the “Third Debenture”), which shall take substantially the same form as Exhibit A hereto, for a purchase price of Three Hundred Thousand Dollars ($300,000); provided, however, that the Third Debenture shall differ from the First Debenture with regard to the issuance date, principal amount and share reserve as such terms are defined thereunder. In the event that the Company has not met the Subsequent Closing Criteria, the purchase, sale and issuance of the Third Debenture may be consummated upon mutual agreement of the Parties in their discretion.

 

 

  

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2.2           The Closing(s). The purchase and sale of the Debentures shall be consummated at one or more Closings, which are to take place at 1100 Glendon Avenue, Suite 850, Los Angeles, CA 90024, or at such other place as the Parties shall mutually agree, upon the satisfaction of all the conditions to Closing set forth in this Agreement; provided, however, that the Initial Closing shall occur concurrently with the execution of the Transaction Documents. The “Closing Date” shall be the date that the Investor’s funds—such representing the amount due to the Company for the Subscription Amount—are transmitted by wire transfer to or for the benefit of the Company. Each Party shall bear the cost of its own legal and out of pocket expenses related to the Closing.

2.3           Deliveries.

2.3.1.       Items to be delivered to the Investor at the Closing by the Company.  The Investor’s obligations under this Agreement at each Closing, as applicable and to the extent not previously delivered, are conditioned upon the following closing conditions and deliveries:

2.3.1.1       The Company shall deliver or cause to be delivered to the Investor this Agreement duly executed by the Company;

2.3.1.2       The Company shall deliver or cause to be delivered to the Investor the applicable Debentures duly executed by the Company; and

2.3.1.3       The representations and warranties of the Company set forth in Section 3 of this Agreement shall be true and correct in all material respects as of the relevant Closing Date, and all obligations, covenants, and agreements of the Company required to be performed at or prior to the relevant Closing Date shall have been performed.

2.3.2        Items to be delivered to the Company at the Closing by the Investor.  The Company’s obligations under this Agreement and at each Closing, as applicable and to the extent not previously delivered, are conditioned on the following closing conditions and deliveries:

2.3.2.1       The Investor shall deliver or cause to be delivered to the Company the signature page hereto, duly executed by the Investor;

2.3.2.2       The Investor shall deliver or cause to be delivered the Subscription Amount via wire transfer to the Company; and

2.3.2.3       The Investor’s representations and warranties set forth in Section 4 of this Agreement shall be true and correct in all material respects as of the relevant Closing Date, and all obligations, covenants, and agreements of the Investor required to be performed at or prior to the relevant Closing Date shall have been performed.

 

 

  

3

  

 

 

2.4           Covenants.

 

2.4.1       The Company shall preserve and maintain in good standing its existence as a corporation under the laws of the State of Nevada and to comply in all material respects with all applicable federal, state, and local laws and regulations.

 

2.4.2       The Company shall use the proceeds from the Subscription Amount for working capital. For the avoidance of doubt, none of the proceeds may be applied towards existing indebtedness, except for any amounts owed to VDF, outstanding trade accounts payable, debt payments approved in advance by the Investor, or for payments to security holders of the Company, whether in the form of dividends, distributions or otherwise.

 

2.4.3       As long as any Debenture remains outstanding, unless the Investor shall otherwise consent in writing, the Company shall not, directly or indirectly (a) amend its charter documents in any manner that adversely affects any rights of the Investor; or (b) pay dividends on any equity securities of the Company.

 

3.            REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth in the Company’s filings with the SEC (the “SEC Filings”), the Company hereby represents and warrants to the Investor and agrees as follows:

3.1           Organization and Qualification.  The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Company is not in violation or in default of any of the provisions of its organizational or charter documents.  The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on  the legality, validity, or enforceability of this Agreement or any other Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, or condition (financial or otherwise) of the Company, taken as a whole, or (iii) a material adverse effect on the ability of the Company to perform in any material respect on a timely basis its obligations under this Agreement or any other Transaction Document, and no legal proceeding has been instituted; or, to its knowledge, threatened, in any such jurisdiction revoking, limiting, or curtailing or seeking to revoke, limit, or curtail such power and authority or qualification (a “Material Adverse Effect”).

3.2           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement or the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement and the other Transaction Documents to which it is party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company.  Upon delivery to the Investor, this Agreement and the other Transaction Documents to which the Company is a party will have been duly 

 

 

 

  

4

  

 

 

executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

3.3           Capitalization.  The authorized securities of the Company is as set forth in the Company’s SEC Filings.  All outstanding stock has been duly authorized, validly issued, and is fully paid and non assessable.

3.4           No Conflicts. The execution and delivery of this Agreement and the other Transaction Documents to which the Company is a party does not, and the performance by the Company of its obligations under this Agreement and the Transaction Documents and the consummation of the transactions contemplated hereby and thereby do not and will not, conflict with or result in a violation or breach of any term or provision of any contract, law, order, permit, statute, rule, or regulation applicable to the Company or any of its affiliates.

3.5           Issuance of the Debentures.  The Debentures are duly authorized and, when issued and paid for in accordance with this Agreement and the Debentures, the Common Stock into which the Debentures are convertible will be duly and validly issued, fully paid, and nonassessable.

3.6           Private Placement.  Subject to the accuracy of the Investor’s representations and warranties set forth in Section 4 and any post-Closing filings as may be required, the offer, issue and sale of the Debentures are and will be exempt from the registration and prospectus delivery requirements of the Securities Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.

3.7           Brokers.  No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Company or the Investor for any commission, fee or other compensation as a finder or broker, or in any similar capacity.

3.8           Taxes.  The Company has filed all material tax returns that are required to be filed by it and has paid all taxes due pursuant to such returns before any such taxes become delinquent or any penalty accrued with respect thereto, or pursuant to any assessment received by it, except for any such taxes being diligently contested in good faith and by appropriate proceedings.

3.9           Compliance with Laws.  To the best of its knowledge, the Company is in compliance in all material respects with all applicable laws, rules, and regulations, other than such laws, rules or regulations: (i) the validity or applicability of which the Company is contesting in good faith by appropriate proceedings, or (ii) failure to comply with which cannot reasonably be expected to have a Material Adverse Effect.

 

 

  

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3.10         Consents.  No consent or approval of any person, regulatory authority, governmental organization, or third party, and no approval, order, license, permit, franchise, declaration, or filing of any nature (with the exception of required Regulation D and “blue sky” filings with the appropriate federal and state securities agencies), is required as a result of or in connection with the execution, delivery, and performance of the obligations of the Company under this Agreement or any other Transaction Document.

 

3.11         Litigation.  No actions (including, without limitation, derivative actions), suits, proceedings, or investigations are pending or, to the knowledge of the Company, threatened against or affecting the Company at law or in equity in any court or before any other governmental authority that if adversely determined (a) would (alone or in the aggregate) reasonably be expected to have a Material Adverse Effect or (b) seeks to enjoin, either directly or indirectly, the execution, delivery or performance by the Company of this Agreement or the Transaction Documents or the transactions contemplated hereby or thereby.

 

3.12         Patents and Trademarks; Assets.  The Company owns, or possesses adequate rights or licenses to use, all trademarks, trade names, service marks, service mark registrations, service names, patents, patent applications, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets, and other intellectual property rights (“Intellectual Property Rights”) necessary to conduct the Company’s business as now conducted.  There is no claim, action, or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company regarding its Intellectual Property Rights.  The Company has good and valid title to, or otherwise has the right to use pursuant to a valid and enforceable lease, license, or similar contractual arrangement, all of the assets necessary to conduct the Company’s business as now conducted or as proposed to be conducted.

 

3.13         Reservation of Shares.  The Company has a sufficient number of shares of its Common Stock reserved and set aside in order to effectuate the conversion of the Debentures.

4.            REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.  The Investor hereby represents, warrants and covenants to the Company as follows:

4.1           Due Authorization.  The Investor has all requisite capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  This Agreement constitutes the legal, valid, and binding obligation of the Investor, enforceable against the Investor in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

4.2           Own Account.  The Investor understands that the Debentures are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Debentures as a principal for his, her, or its own account and not with a view to or for distributing or reselling the Debentures or any part thereof in violation of the Securities Act or any applicable state securities 

 

 

  

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law, has no present intention of distributing the Debentures in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of the Debentures in violation of the Securities Act or any applicable state securities law.

4.3           Investor Status.  At the time the Investor was offered the Debentures, he, she, or it was, and as of the date hereof and at each Closing he, she, or it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.  The Investor is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.

4.4           Experience of the Investor.  The Investor, either alone or together with his, her, or its representatives, has such knowledge, sophistication, and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Debentures, and has so evaluated the merits and risks of such investment.  The Investor is able to bear the economic risk of an investment in the Debentures and, at the present time, is able to afford a complete loss of such investment.

4.5           Access to Documents and Information.  The Investor has (i) received and reviewed all information that it considers necessary or appropriate for deciding whether to purchase the Debentures; (ii) had an opportunity, with his, her, or its professional advisor, if any, to ask questions and receive answers from the Company regarding this Agreement and regarding the business, financial condition, and other aspects of the Company, and all such questions have been answered to the Investor’s full satisfaction; and (iii) had the opportunity to obtain all information (to the extent that the Company possesses or can acquire such information without unreasonable effort or expense) that the Investor deems necessary to evaluate the investment and to verify the accuracy of information otherwise provided to the Investor.

 

4.6           Reliance on Information.  The Investor has not relied on any information or representations with respect to the Company or the Debentures, other than as expressly set forth herein and in the other Transaction Documents.  The Investor understands that no person has been authorized to give any information or to make any representations other than those expressly contained herein and in the other Transaction Documents.  To the extent the Investor has determined it necessary to protect his, her, or its interest in connection with the investment in the Debentures, the Investor has relied on his, her, or its own analysis and investigation and that of his, her, or its advisors in determining whether to invest in the Debentures.

4.7           Tax Advice.  The Investor represents that he, she, or it has consulted with his, her, or its tax, investment, and legal advisors with respect to the federal, state, local, and foreign tax consequences arising from the purchase and ownership of the Debentures.

4.8           Government Approval.  The Investor is aware and understands that no federal or state agency has made any recommendation or endorsement of the Debentures as an investment, nor has any such governmental agency reviewed or passed upon the adequacy of information disclosed to the Investor.

 

 

  

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4.9           No Registration.  The Investor understands that the Debentures have not been, and other than expressly set forth in the Transaction Documents, the Investor has no rights to require that the Debentures or the shares of Common Stock of the Company into which such Debentures are convertible be, registered or qualified under the Securities Act; that there is not now any public market for the Debentures or the stock into which such Debentures are convertible and none is anticipated; that neither the Debentures nor the shares of Common Stock into which such Debentures are convertible will be readily accepted as collateral for a loan; and that it may be extremely difficult to sell the Debentures or the stock into which such Debentures are convertible in the event of a financial emergency.  As a consequence, the Investor understands that he, she, or it must bear the economic risks of the investment in the Debentures for an indefinite period of time.

4.10         Good Faith. At no time has any of the Investor, its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any action designed to manipulate, or cause or result in de-stabilization of the price per share of Common Stock of the Company, or engaged in the (i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock and such Investor, its agents, representatives or affiliates shall not engage in any such short sales, or any activities which may be categorized as manipulation while any Debentures remain outstanding under this Agreement.

5.       ADDITIONAL INVESTOR RIGHTS

 

5.1           Participation Right. The Investor shall have the pro rata right, relative to the Company’s shareholders (calculated as if the Investor’s Debentures were fully converted), as applicable, to participate in any subsequent debt or equity financings (the “Qualified Financings”) conducted during the respective terms of its Debentures (the “Participation Right”).  The Company will provide notice to the Investor of any such Participation Right by way of writing at least five (5) business days prior to the intended closing of the Qualified Financing, indicating the terms and conditions of any Qualified Financings (the “Financing Notice”).  Should the Investor elect to exercise his, her, or its Participation Right, he, she, or it shall notify the Company, in writing, of such election at least three (3) business days prior to the anticipated closing date set forth in the Financing Notice (the “Participation Notice”).  In the event the Investor does not return a Participation Notice to the Company, the Participation Right granted hereunder shall terminate and be of no further force and effect in respect of that particular Qualified Financing only.

6.            GENERAL PROVISIONS

6.1           Amendment.  No provision of this Agreement may be modified, supplemented, or amended except in a written instrument signed by the Investor and the Company.

6.2           Further Assurances.  The Parties hereto will, upon reasonable request, execute, and deliver all such further assignments, endorsements, agreements, and documents, and take such other action as may be necessary in order to consummate or evidence the transactions contemplated hereby.

 

 

  

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6.3           Notice.  All notices, requests, payments, instructions, or other documents to be given hereunder will be in writing and will be deemed to have been duly given if (i) delivered personally (effective upon delivery), (ii) mailed by certified mail, return receipt requested, postage prepaid (effective five business days after dispatch), (iii) sent by a reputable, established courier service that provides evidence of delivery and guarantees next business day delivery (effective the next business day), (iv) via electronic mail transmission, or (v) sent by facsimile followed by confirmation, addressed as follows (or to such other address as the recipient party may have furnished to the sending party for the purpose pursuant to this Section 6.3):

(a)            If to the Company:

KonaRed Corporation

Attn.: John Dawe, Corporate Secretary

1101 Via Callejon #200

San Clemente, CA 92673

 

(b)            If to Holder:

Group 10 Holdings LLC

Attn: Adam Wasserman, Managing Member

11 Island Ave. #1108

Miami Beach, FL 33139

 

6.4           Successors and Assigns.  This Agreement shall be binding upon, enforceable against, and inure to the benefit of, the Parties hereto and their respective heirs, administrators, executors, personal representatives, successors, and assigns, and nothing herein is intended to confer any right, remedy, or benefit upon any other person.  This Agreement may not be assigned by the Investor or the Company hereto except with the prior written consent of the other Party.

 

6.5           Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without regard to the principals of conflicts of law thereof.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action, or proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such suit, action, or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action, or proceeding by mailing a copy thereof 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 manner permitted by law.

 

 

  

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6.6           Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal, or unenforceable under present or future laws, then, and in that event:  (1) the performance of the offending term or provision (but only to the extent its application is invalid, illegal, or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid, and enforceable; and (2) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal, or unenforceable) shall not be affected thereby, and shall continue in full force and effect to the fullest extent provided by law.

6.7           Counterparts.  This Agreement may be executed in counterparts and each counterpart shall have the same force and effect as an original and constitute an effective, binding agreement on the part of each of the undersigned.  This Agreement may be transmitted by electronic signature.

6.8           Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits, and schedules.

6.9           Construction.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms.  The words “include”, “includes”, and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument, or other document herein shall be construed as referring to such agreement, instrument, or other document as from time to time amended, restated, supplemented, or otherwise modified (subject to any restrictions on such amendments, restatements, supplements, or modifications set forth herein), (ii) the words “herein”, “hereof”, and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (iii) all references herein to Sections or clauses shall be construed to refer to Sections and clauses of this Agreement.

6.10         Certain Adjustments. Notwithstanding anything herein to the contrary, any references to share numbers or share prices shall be proportionately adjusted for any stock dividend, stock split, stock combination or other similar transaction.

 

 

[Signature Pages Follow]

 

 

 

 

  

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

 

 

	 	KONARED CORPORATION	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Shaun Roberts	 
	 	 	Shaun Roberts, President & CEO	 
	 	 	 	 
	 	 	 	 
	 	Group 10 Holdings, LLC	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Adam Wasserman	 
	 	 	Adam Wasserman, Managing Member	 
	 	 	11 Island Ave #1108	 
	 	 	Miami Beach, FL 33139	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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EXHIBIT A

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

UNSECURED SUBORDINATED CONVERTIBLE DEBENTURE

 

	Issuance Date: January 20, 2015	Principal Amount: $440,000

 

 

FOR VALUE RECEIVED, KonaRed Corporation, a Nevada corporation (“Borrower”), hereby promises to pay to Group 10 Holdings LLC (“Holder”) or its registered assigns or successors in interest, the sum of Four Hundred and Forty Thousand Dollars ($440,000) (the “Principal Amount”), together with all accrued interest thereon, on the eighteen (18) month anniversary from the Issuance Date (the “Maturity Date”), if not sooner paid.

The following terms and conditions shall apply to this Convertible Debenture (the “Debenture”):

ARTICLE I

DEFINITIONS

 

1.1           Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, the following terms shall have the following meanings:

“Bankruptcy Event’’ means any of the following events: (a) Borrower or any subsidiary (as such term is defined in Rule l-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to Borrower or any subsidiary thereof; (b) there is commenced against Borrower or any subsidiary thereof any such case or proceeding that is not dismissed within sixty (60) days after commencement; (c) Borrower or any subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) Borrower or any subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within sixty (60) calendar days after such appointment; (e) Borrower or any subsidiary thereof makes a general assignment for the benefit of creditors; (f) Borrower or any subsidiary thereof calls a meeting of its creditors with a view to arrange a composition, adjustment or restructuring of its debts; or (g) Borrower or any subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

 

  

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“Business Day” means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Issuance Date” means the date of the issuance of this Debenture, regardless of any transfers of any Debenture and regardless of the number of instruments which may be issued to evidence this Debenture.

“Lowest Closing Price” means, for any date, the price determined by the first of the following clauses that applies: (a) the lowest closing bid price of Borrower’s Common Stock during the twenty-five (25) consecutive Trading Days prior to such date as reported on www.NASDAQ.com or (b) if the Common Stock is not then quoted on a Trading Market, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by Holder and reasonably acceptable to Borrower.

 “Person” means a natural person, sole proprietorship, corporation, limited liability company, firm, partnership, association, joint venture, trust, unincorporated organization, or other entity, whether acting in an individual, fiduciary, or other capacity.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Trading Day” means a day on which the principal Trading Market is open for business.

 

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, or the OTC Markets QX Market, QB Market of Pink Market.

 

ARTICLE II

INTEREST & AMORTIZATION

2.1           Contract Rate.  Subject to Sections 7.1 and 8.7 hereof, interest payable on this Debenture shall accrue at a rate per annum equal to twelve percent (12%) and shall be computed on the basis of a 365-day year.

              2.2     Consideration. In consideration for the Debenture, Holder shall pay to Borrower a purchase price equal to Four Hundred Thousand Dollars ($400,000), payable by wire transfer or other immediately available funds.  Thus, as of the Issuance Date, there shall exist a Forty Thousand Dollar ($40,000) Original Issue Discount (the “OID”) from the Principal Amount. Interest shall accrue and be payable on the full Principal Amount of the Debenture, inclusive of the OID, and payment of the full Principal Amount shall be required regardless of time and manner of payment or prepayment by Borrower.  Upon conversion, Holder shall receive credit for the full Principal Amount converted.

2.3           Payments.  Unless prepaid or converted, payment of the aggregate Principal Amount, together with all accrued interest thereon shall be made on the Maturity Date.

 

 

  

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2.4           Prepayment Option. Borrower may prepay in cash all or any portion of the Principal Amount of this Debenture and accrued interest thereon, with a premium, at any time as set forth below (each a “Prepayment Premium”). The amount of each Prepayment Premium shall be as follows: (a) one hundred five percent (105%) of the then outstanding Principal Amount plus accrued interest due and payable thereon if such prepayment is made at any time from the Issuance Date until ninety (90) days thereafter; (b) one hundred fifteen percent (115%) of the then outstanding Principal Amount plus accrued interest due and payable thereon if such prepayment is made at any time from ninety-one (91) days after the Issuance Date until one hundred forty-nine (149) days after the Issuance Date; and (c) one hundred twenty-five percent (125%) of the then outstanding Principal Amount plus accrued interest due and payable thereon if such prepayment is made at any time after one hundred fifty (150) days from the Issuance Date. Notwithstanding the foregoing, if the Borrower repays the Debenture on the Maturity Date, no Prepayment Premium shall apply.

ARTICLE III

CONVERSION REPAYMENT

3.1           Optional Conversion.  Subject to the terms of this Article III, Holder shall have the right, but not the obligation, at any time after the Issuance Date and until the Maturity Date, or thereafter during an Event of Default, to convert all or any portion of the outstanding Principal Amount, accrued interest and fees due and payable thereon into fully paid and non-assessable shares of Common Stock of Borrower at the Conversion Price, as defined below (the “Conversion Shares”).

3.2           Calculation of Conversion Price.  Subject to Section 3.3 and Section 4.6 hereof, the conversion price (the “Conversion Price”) shall mean the greater of (a) (i) fifty-five percent (55%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of forty-five percent (45%)) (the “Discount Percentage”) or (b) ten cents ($0.10); provided, however, that if the closing price of the Borrower’s Common Stock is less than $0.125 for three (3) consecutive Trading Days at any time in which this Debenture remains outstanding, the Conversion Price shall be determined pursuant to the Discount Percentage.

3.3           Conversion Price Adjustments.

 

(i)            If the Conversion Price is determined pursuant to the Discount Percentage, such Conversion Price shall be subject to the following adjustments:

 

	
  

	
(i)

	
If the closing price of the Borrower’s Common Stock on the Trading Day immediately prior to the date of the Notice of Conversion is between $0.20 and $0.25, inclusive, then the Conversion Price shall be fifty-seven and one half percent (57.5%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of forty-two and one half percent (42.5%));

	
  

	
(ii)

	
If the closing price of the Borrower’s Common Stock on the Trading Day immediately prior to the date of the Notice of Conversion is greater than or equal to $0.26 and less than $0.30, then the Conversion Price shall be sixty percent (60%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of forty percent (40%)); and

 

 

  

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(iii)

	
 
If the closing price of the Borrower’s Common Stock on the Trading Day immediately prior to the date of the Notice of Conversion is greater than or equal to $0.30, then the Conversion Price shall be sixty-two and one half percent (62.5%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of thirty-seven and one half percent (37.5%)).

 

(b)           Notwithstanding and in addition to the adjustments to the Conversion Price provided in Section 3.3(a), the Conversion Price shall be subject to the following adjustments:

	
  

	
(i)

	
If the market capitalization of the Borrower is less than Three Hundred Thousand Dollars ($300,000) on the day immediately prior to the date of the Notice of Conversion, then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)); and

	
  

	
(ii)

	
If the closing price of the Borrower’s Common Stock on the day immediately prior to the date of the Notice of Conversion is less than $0.001, then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)).

 

3.4           Conversion Limitation.  Notwithstanding anything contained herein to the contrary, the number of Conversion Shares that may be acquired by Holder upon conversion of this Debenture (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by Holder and its affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with that of Holder for purposes of Section 13(d) of the Exchange Act does not exceed 4.99% of the total number of issued and outstanding shares of Common Stock, including, for such purpose, the shares of Common Stock issuable upon such conversion, but excluding the number of shares of Common Stock issuable upon (a) conversion of the remaining, unconverted Principal Amount of this Debenture beneficially owned by Holder or any of its affiliates and  (b) exercise or conversion of the unexercised or unconverted portion of any other securities of Borrower subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other debenture or warrant) beneficially owned by Holder or any of its affiliates. For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  By written notice to Borrower, Holder may increase, decrease or waive the provisions of this Section 3.4 as to itself but any such waiver will not be effective until the sixty-first (61st) day after delivery thereof.

 

3.5           Mechanics of Holder’s Conversion.  Subject to Section 3.4 hereof, this Debenture may be converted by Holder, in whole or in part from time to time after the Issuance Date, by submitting to Borrower and/or Transfer Agent of record a notice of conversion (“Notice of Conversion”), the form of which is attached hereto as Exhibit A.  Such Notice of Conversion shall specify the Principal Amount of the Debenture to be converted and the date on which such conversion shall be effected (the “Conversion Date”). Pursuant to the terms of the Notice of Conversion, Borrower shall issue instructions to the transfer agent within two (2) Trading Days from the receipt of the Notice of Conversion and shall within three (3) Trading Days from the receipt of the Notice of Conversion (the “Delivery Date”): (A) if legends are not required to be placed on certificates of Common Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) (for which the Holder shall provide an opinion from its counsel that is reasonable acceptable to the Company) and provided that the Company’s transfer agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the 

 

 

  

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Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system; or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Notice of Conversion, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to the Rule 144.

 

In the  case of the exercise of the conversion rights set forth herein, the conversion privilege shall be deemed to have been exercised, and the Conversion Shares issuable upon such conversion shall be deemed to have been issued, upon the Delivery Date and Holder shall be treated for all purposes as the record holder of such Common Stock, unless Holder provides Borrower with written instructions to the contrary. Conversions hereunder shall have the effect of lowering the outstanding Principal Amount of this Debenture in an amount equal to the applicable conversion. Holder and Borrower shall maintain records showing the Principal Amount(s) converted and the Conversion Date(s). In the event of any dispute or discrepancy, the records of Holder shall be controlling and determinative in the absence of manifest error.

 

3.6           Conversion Mechanics.  The number of shares of Common Stock to be issued upon each conversion of this Debenture shall be determined by dividing that portion of the Principal Amount and interest and fees to be converted, if any, by the then applicable Conversion Price.

 

3.7           Fractional Shares.  No fractional shares shall be issued upon the conversion of this Debenture.  As to any fraction of a share which Holder would otherwise be entitled to upon such conversion, Borrower shall round up to the next whole share.

 

3.8           Late Delivery of Conversion Shares.  Borrower understands that a delay in the delivery of Conversion Shares in the form required pursuant to this Article III beyond the Delivery Date could result in economic loss to Holder. As compensation to Holder for such loss, Borrower agrees to pay late fees to Holder for late issuance of such shares in the form required pursuant to this Article III upon conversion of the Debenture, in the amount equal to one thousand dollars ($1,000) per Business Day after the Delivery Date but capped at 100% of the then outstanding Principal Amount.  Borrower shall pay any fees incurred under this Section in immediately available funds upon demand and such fees shall also be eligible to be converted into Common Stock pursuant to this Article III.

 

3.9           Authorized and Reserved Shares.

 

(a)           Borrower represents and warrants and covenants and agrees that upon issuance, the Conversion Shares will be duly and validly issued, fully issued and non-assessable.  Borrower agrees that its issuance of this Debenture 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 Conversion Shares in accordance with the terms and conditions of this Debenture.

 

(b)           At all times during which this Debenture is outstanding, Borrower shall reserve and keep available from its authorized and unissued shares of Common Stock (the “Share Reserve”) for the sole purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual or contingent purchase rights of Persons other than Holder, not less than five times the aggregate number of shares of the Common Stock that shall be issuable upon the conversion of the outstanding Principal Amount of this Debenture and payment of interest hereunder. Initially, the Share Reserve shall be equal to 22,000,000 shares, and shall. The Holder may reasonably request increases from time to time to reserve such amounts 

 

 

  

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based on a conversion price equal to the Lowest Closing Price, as defined in the Debenture, as of such date, and may be increased from time to time by written instructions from the Investor to Transfer Agent to comply with the required reserve, subject to the Company being provided two (2) days within which to object to the amount of any increase in the shares reserve. Borrower agrees that it will take all such reasonable actions as may be necessary to assure that the Conversion Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the applicable Trading Market upon which the Common Stock may be listed. Borrower agrees to provide Holder with confirmation evidencing the execution of such share reservation within three (3) Business Days from the Issuance Date.

 

3.10          Issuance of New Debenture.  Upon any partial conversion of this Debenture, a new Debenture containing the same date and provisions of this Debenture shall, at the request of Holder, be issued by Borrower to Holder for the principal balance of this Debenture and accrued interest which shall not have been converted or paid. Subject to the provisions of Article VI, Borrower will pay no costs, fees or any other consideration to Holder for the production and issuance of a new Debenture.

 

3.11           Par Value; Further Assurances.

 

(a)           Borrower covenants that during the period that the Principal Amount of this Debenture and any accrued interest and fees thereon remain outstanding, it will ensure that the par value of any Conversion Shares shall not exceed the amount payable therefor upon such exercise immediately prior to such exercise.

 

(b)           Except and to the extent as waived or consented to by Holder, Borrower shall not by any action, including, without limitation, amending its articles or certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Debenture, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Debenture against impairment. Without limiting the generality of the foregoing, Borrower will (a) not increase the par value of any Conversion Shares above the amount payable therefor upon such exercise immediately prior to such exercise, (b) take all such action as may be necessary or appropriate in order that Borrower may validly and legally issue fully paid and nonassessable Conversion Shares upon the exercise of this Debenture and (c) use its commercially best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable Borrower to perform its obligations under this Debenture.

 

3.12          Transfer Taxes.  The issuance of certificates for Conversion Shares shall be made without charge to Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that Borrower shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of Holder and Borrower shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to Borrower the amount of such tax or shall have established to the satisfaction of Borrower that such tax has been paid.

 

3.13          Issuer’s Representation Letter.  In the event that Holder’s brokers dealer requires an  Issuer’s Representation Letter (the “Representation Letter”), Holder will submit to Borrower the Representation Letter along with a corresponding Notice of Conversion upon which Borrower will have forty-eight (48) hours to execute and return the Representation Letter.

 

 

  

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ARTICLE IV

CERTAIN ADJUSTMENTS

 

4.1           Fundamental Transaction. If, at any time while this Debenture is outstanding, (a) Borrower effects any merger or consolidation of Borrower with or into another Person, (b) Borrower effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (c) any tender offer or exchange offer (whether by Borrower or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (d) Borrower effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Debenture, Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, holder of one (1) share of Common Stock (the “Alternate Consideration”). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and Borrower shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to Borrower or surviving entity in such Fundamental Transaction shall issue to Holder a new Debenture consistent with the foregoing provisions and evidencing Holder’s right to convert such Debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 4.1 and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 

4.2           Calculations. All calculations under this Article III shall be made to four decimal places or the nearest 1/100th of a share, as the case may be. For purposes of this Article III, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of Borrower) issued and outstanding.

 

4.3           Notice to Holder.

 

a)             Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Article IV, Borrower shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

b)             Notice to Allow Conversion by Holder. If (i) Borrower shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (ii) Borrower shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (iii) Borrower shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (iv) the approval of any stockholders of Borrower shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to 

 

 

 

  

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which Borrower is a party, any sale or transfer of all or substantially all of the assets of Borrower, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (v) Borrower shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of Borrower, then, in each case, Borrower shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to Holder at its last address as it shall appear upon Borrower’s books and records, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. Holder is entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice.

 

ARTICLE V

NEGATIVE COVENANTS

 

As long as any portion of this Debenture remains outstanding, unless Holder shall have otherwise given prior written consent, Borrower shall not, and shall not permit any of its subsidiaries (whether or not a subsidiary on the Issuance Date) to, directly or indirectly:

 

5.1           except for issuances to directors, officers, employees, or consultants, issue any shares of Common Stock in exchange for satisfaction or accord, in whole or in part, of any outstanding accounts payable obligations of Borrower, where such shares would be freely tradable (without restrictions, manner of sale obligations or reporting obligations) by the recipient thereof (or any transferee thereof) prior to the date which is six (6) months following the date of issuance thereof, whether pursuant to Section 3(a)(10) of the Securities Act or otherwise;

 

5.2           amend its charter documents, including, without limitation, its articles or certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of Holder;

 

5.3           combine (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares;

 

5.4           enter into any transaction with any affiliate of Borrower which would be required to be disclosed in any public filing with the Securities and Exchange Commission (the “SEC”), unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of Borrower (even if less than a quorum otherwise required for board approval); or

 

5.5           enter into any agreement with respect to any of the foregoing.

 

 

 

 

  

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ARTICLE VI

EVENTS OF DEFAULT

 

The occurrence of any of the following events, while this Debenture is outstanding, shall be an “Event of Default;” provided that any Event of Default may be cured within a one (1) Business Day except as otherwise provided herein:

 

6.1           Failure to Pay Principal, Interest or Other Fees.  Borrower fails to pay the Principal Amount, interest or other fees hereon as and when the same shall become due and payable and such failure shall continue for a period of three (3) Business Day following the date upon which any such payment was due.

 

6.2           Breach of Covenant.  Borrower breaches any covenant or other term or condition of this Debenture, including, but not limited, to the negative covenants provided in Article V, in any material respect and such breach, if subject to cure, continues for a period of three (3) Business Day after the occurrence thereof.

 

6.3           Breach of Representations and Warranties.  Any representation or warranty of Borrower made herein or in any other report, financial statement or certificate made or delivered to Holder shall be false or misleading in any material respect as of the date when made or deemed made.

 

6.4           SEC Filings. At any point while this Debenture is outstanding, Borrower is not current with its reporting responsibilities under Section 13 of the Exchange Act, other than 8-K reports. Furthermore, Borrower fails to timely file, when due, any SEC report, including any required XBRL file along with such report (e.g., Forms 8-K, 10-Q or 10-K, or Schedules 14A, 14C or 14(f)), or, if the filing date of such report is properly extended pursuant to SEC Rule 12b-25, when the date of any such filing extension lapses, or any post-effective amendment to any SEC Registration Statement.

 

6.5           Stop Trade.  An SEC stop trade order or trading suspension of the Common Stock on the applicable Trading Market shall be in effect for five (5) consecutive Trading Days or five (5) Trading Days during a period of ten (10) consecutive Trading Days, provided that Borrower shall not have been able to cure such trading suspension within thirty (30) Business Days of the notice thereof or list the Common Stock on another Trading Market within sixty (60) Business Days of such notice.

 

6.6           SEC Reporting Status Matters.

 

(a)           Borrower indicates by check mark on the cover page of an SEC report filing that it has not (i) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past ninety (90) days.

 

(b)           Borrower indicates by check mark on the cover page of an SEC report filing that it has not submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding twelve (12) months (or for such shorter period that the registrant was required to submit and post such files).

 

 (c)           Borrower indicates by check mark on the cover page of an SEC report filing that it is a shell company (as defined in Rule 12b-2 of the Exchange Act); or

 

 

  

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(d)           Borrower files a Form 15 with the SEC to deregister its Common Stock.  In such an event, Borrower shall file current reports with attorney opinions on not less than a quarterly basis on www.otcmarkets.com until such time as Borrower re-registers its Common Stock with the SEC.

 

6.7           Receiver or Trustee.  Each of Borrower or its subsidiaries, if any, 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; or shall become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any.

 

6.8           Judgments.  Any money judgment, writ or similar final process shall be entered or filed against Borrower or any of its subsidiaries or any of their respective property or other assets for more than one hundred thousand dollars ($100,000) in the aggregate for Borrower, and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days.

 

6.9           Bankruptcy.  Borrower or any of its subsidiaries shall be subject to a Bankruptcy Event.

 

6.10           DTC Eligibility.  Borrower shall lose its status as “DTC Eligible” or Borrower’s stockholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System through a “deposit chill” or otherwise.

 

6.11           Reservation of Shares.  Borrower shall fail timely to reserve shares of Common Stock from its authorized and unissued shares pursuant to Section 3.9.

ARTICLE VII

DEFAULT RELATED PROVISIONS AND OTHER PRIVILEGES

 

7.1           Default Interest Rate.  If any Event of Default occurs, the outstanding Principal Amount of this Debenture, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at Holder’s election, immediately due and payable in cash in the sum of (a) one hundred eighteen percent (118%) of the outstanding Principal Amount of this Debenture plus one hundred percent (100%) of accrued and unpaid interest thereon and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture (“Mandatory Default Amount”). After the occurrence of any Event of Default, the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, Holder shall promptly surrender this Debenture to or as directed by Borrower. In connection with such acceleration described herein, Holder need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and Holder shall have all rights as a holder of his Debenture until such time, if any, as Holder receives full payment pursuant to this Section 7.1. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

7.2                      Default Penalty Payment.  Following the occurrence and during the continuance of an Event of Default, Borrower agrees to pay to Holder in the amount equal to one thousand dollars ($1,000) per Business Day commencing the Business Day following the date of the Event of Default, subject to such payment being capped at 100% of the then outstanding Principal Amount. Borrower shall pay any fees incurred under this Section in immediately available funds upon demand and such fees shall also be eligible to be converted into Conversion Shares as set forth in Article III. Such conversion privileges shall remain in full force and effect immediately from the date hereof and until this Debenture is paid in full.

 

 

  

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ARTICLE VIII

MISCELLANEOUS

 

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

 

8.2           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 FedEx or other reputable express courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail, whereby a return Email confirming receipt has been delivered, or facsimile, addressed as set forth below.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (y) 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 (z) on the next 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 Borrower:

 

KonaRed Corporation

Attn.: John Dawe, Corporate Secretary

1101 Via Callejon #200

San Clemente, CA 92673

 

If to Holder:

 

Group 10 Holdings LLC

Attn: Adam Wasserman

11 Island Ave. #1108

Miami Beach, FL 33139

  

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No change in any of such addresses shall be effective insofar as notices under this Section 8.2 are concerned unless such changed address is located in the United States of America and notice of such change shall have been given to such other party hereto as provided in this Section 8.2.

 

8.3           Amendment Provision.  Any term of this Debenture may be amended only with the written consent of Holder and Borrower.  . The term “Debenture” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as it may be amended or supplemented.

 

8.4           Assignability.  This Debenture shall be binding upon Borrower and its successors and assigns, and shall inure to the benefit of Holder and its successors and assigns, and may not be assigned by Borrower without the prior written consent of Holder, which consent may not be unreasonably withheld. Any assignment by the Holder shall be made in accordance with any applicable securities laws.

 

8.5           Prevailing Party and Costs.  In the event any attorney is employed by any party with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Debenture or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Debenture, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys' fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

 

8.6           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Debenture shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to principles of conflicts of law.  HOLDER AND BORROWER WAIVE ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS DEBENTURE OR ANY TRANSACTION CONTEMPLATED HEREIN, INCLUDING CLAIMS BASED ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON LAW OR STATUTORY BASES. Each party hereby submits to the exclusive jurisdiction of the state and federal courts located in the borough of Manhattan.  If the jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Debenture or any of the transactions contemplated herein will be finally settled by binding arbitration in New York, New York in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules.  The arbitrator shall apply New York law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration.  Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph.  The expenses of the arbitration, including the arbitrator’s fees and expert witness fees, incurred by the parties to the arbitration, may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator.  Unless and until the arbitrator decides that one party is to pay for all (or a share) of such expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

 

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

 

 

  

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8.8           Construction.  Borrower acknowledges that its legal counsel participated in the preparation of this Debenture and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Debenture to favor any party against the other.

 

8.9           Absolute Obligation.  Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of Borrower, which is absolute and unconditional, to pay the Principal Amount of, interest and liquidated damages (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed.  This Debenture is a direct debt obligation of Borrower.

 

8.10         Lost or Mutilated Debenture.  If this Debenture shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the Principal Amount of this Debenture so mutilated, lost, stolen or destroyed.

 

8.11         Opinion of Counsel.  A Rule 144 opinion of the Law Firm of Richardson & Patel LLP, Greenberg Traurig LLP and Bauman & Associates Law Firm in form, substance and scope customary for opinions of counsel in comparable Rule 144 transactions shall be deemed acceptable to Borrower.

 

8.12         Certain Adjustments. Notwithstanding anything herein to the contrary, any references to share numbers or share prices shall be proportionately adjusted for any stock dividend, stock split, stock combination or other similar transaction.

 

8.13         Unsecured Obligations. The obligations of the Company under this Debenture shall be unsecured and subordinate in all respects to any obligations arising under the Senior Convertible Note issued to VDF FutureCeuticals, Inc. dated January 28, 2014 (the “VDF Note”) and any Transaction Agreements (as defined in the VDF Note), as such may be amended from time to time.

[Signature page follows.]

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, Borrower has caused this Convertible Debenture to be signed in its name effective as of the date first above indicated.

 

BORROWER:

KonaRed Corporation

 

 

By:    /s/ Shaun Roberts                          

Name: Shaun Roberts

Title: President and CEO

 

 

 

HOLDER:

 

Group 10 Holdings, LLC

 

 

By:    /s/ Adam Wasserman                    

 

Name: Adam Wasserman

 

Title: Managing Member

 

 

 

 

 

 

  

25

  

 

 

EXHIBIT A

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert principal and accrued interest under the Convertible Debenture (“Debenture”) of KonaRed Corporation, a Nevada corporation (“Borrower”), into shares of common stock (the “Common Stock”) of Borrower according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by Borrower in accordance therewith. No fee will be charged to the undersigned for any conversion, except for such transfer taxes, if any.

 

By the delivery of this Notice of Conversion the undersigned represents and warrants to Borrower that its ownership of Common Stock does not exceed the amount specified under Section 3.4 of the Debenture, as determined in accordance with Section 13(d) of the Exchange Act.

 

The undersigned agrees to comply with Rule 144 in connection with any transfer of the aforesaid shares of Common Stock pursuant to any prospectus.

	
Conversion calculations:

	  
	  	  
	  	
Date to Effect Conversion:

	  
	 	 	 
	  	
Principal Amount of Note to be Converted:

	  

	  	
Interest Accrued on Account

	  	
of Conversion at Issue:

	  

	  	
Number of shares of Common

Stock to be issued:

	  

 

	  	
Signature:

	  

	  	
 Name:

	
 Group 10 Holdings LLC

	 	 	 
	 	 	Address for Delivery of Common Stock Certificates:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	Or	 
	 	 	 
	 	DWAC Instructions:	 
	 	 	 
	 	 
Broker No:

	 
	 	 
Account No:

	 

 

 

26

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