UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): September 17, 2015
HIGH
PERFORMANCE BEVERAGES COMPANY
(Exact
name of registrant as specified in its charter)
| Nevada |
|
333-170393 |
|
27-3566307 |
| (State
of Incorporation) |
|
(Commission
File Number) |
|
(IRS
Employer Identification No.) |
5137
E. Armor St., Cave Creek, AZ 85331
(Address
of principal executive offices) (Zip code)
602.326.8290
(Registrant's
telephone number, including area code)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement.
On
September 17, 2015, High Performance Beverages Company (the “Company”) entered into a Settlement Agreement
(the “Settlement Agreement”) with Centaurian Fund, L.P. (“Centaurian”). In accordance with
the Settlement Agreement, the Company agreed to issue to Centaurian a convertible promissory note in the principal amount of $240,500
(the “Note”), in exchange for the return and cancellation of certain outstanding debt held by Centaurian. The
debt was comprised of an aggregate of $240,500 of principal and interest on i) a convertible debenture in the original principal
amount of $60,000 issued to Centaurian on April 30, 2013, ii) a senior secured convertible promissory note with an original principal
balance of $100,000, which Centaurian had assumed from Mr. Pierce Csurgo on June 17, 2013, and iii) a convertible note with an
original principal amount of $42,000 issued to Centaurian on March 31, 2014 (collectively, the “Cancelled Debt”).
The
Note is convertible into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”),
at any time at Centaurian’s option. It is convertible at a price per share equal to fifty percent (50%) of the lowest closing
bid price or closing sale price for a share of Common Stock during the ten (10) consecutive trading days immediately preceding
the date of conversion (the “Conversion Price”), to be adjusted for any stock splits, stock dividends, stock
combinations, re-classifications or other similar corporate actions. No effect shall be given to conversions that would result
in Centaurian or its affiliates holding an aggregate of more than 4.99% of the Company’s outstanding Common Stock, which
may be increased at Centaurian’s option to 9.99% upon sixty-one (61) days’ prior notice to the Company. If at any
time after September 17, 2015 the Company issues or sells any shares of Common Stock for consideration per share (the “New
Issuance Price”) lower than the Conversion Price the Conversion Price in effect shall be reduced to the New Issuance
Price.
The
Note shall mature on the earlier of (i) December 3, 2015, (ii) the consummation of a Major Transaction (as defined in the Note)
or (iii) an Event of Default (as defined in the Note) (the “Maturity Date”). The Note shall bear interest at
a rate of ten percent (10%) per annum (the “Interest Rate”), but the Interest Rate shall be increased to twenty-two
percent per annum (22%) immediately upon the occurrence of and for the duration of an Event of Default (the “Default
Interest Rate”). In the event the Event of Default is cured, the Default Interest Rate will no longer be effective and
the Interest Rate will apply. Prior to the Maturity Date, the Company may prepay, without penalty, all or any portion of the Note
and interest thereon upon not less than ten (10) days’ written notice to Centaurian.
In
accordance with the Settlement Agreement and the Note, the Company has authorized VStock Transfer, LLC, the Company’s transfer
agent, to set aside an initial reserve of five hundred million (500,000,000) shares of Common Stock for Centaurian’s conversion
of the Note, and the Company has agreed that not later than October 8, 2015, to instruct VStock Transfer, LLC to reserve an additional
two hundred fifty million (250,000,000) shares of Common Stock, for an aggregate reserve of seven hundred and fifty million (750,000,000)
shares of Common Stock.
The
foregoing descriptions of the Settlement Agreement and the Note is qualified in its entirety by reference to the full text of
the Settlement Agreement which is filed as Exhibit 10.1 and Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein
by reference.
Item
3.02. Unregistered Sales of Equity Securities.
The
information reported in Item 1.01 is incorporated by reference into this Item 3.02.
On
September 16, 2015, the Board of Directors of the Company approved and authorized the issuance of the Settlement Shares in partial
satisfaction of its obligations under the Settlement Agreement. The issuance of the Settlement Shares is exempt from the
registration requirements of the Securities Act pursuant to Section 3(a)(10) thereof, as an issuance of securities in exchange
for bona fide outstanding claims, where the terms and conditions of such issuance are approved by a court after a hearing
upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange
shall have the right to appear.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit Number | |
Description |
| 10.1 | |
Settlement Agreement dated September 17, 2015 |
| 10.2 | |
Convertible Note dated September 17, 2015 |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
| |
DETHRONE
ROYALTY HOLDINGS, INC. |
| |
|
|
| Dated:
September 22, 2015 |
By: |
/s/
Toby McBride |
| |
Name: |
Toby McBride |
|
Title: |
Chief Executive Officer |
4
Exhibit
10.1
SETTLEMENT
AGREEMENT
This
settlement agreement (hereinafter "Agreement") is entered into as of September , 2015 (the "Effective Date")
by and among High Performance Beverages Co. ("TBEV") and Centaurian Fund, L.P. ("Centaurian") (collectively,
the "Parties) as follows:
WHEREAS,
Centaurian purchased an 18% Senior Convertible Debenture in the principal amount of $60,000 (the "Debenture") from
TBEV and TBEV did not repay the Debenture on or before the maturity date;
WHEREAS,
Centaurian assumed an outstanding $100,000 note issued by TBEV pursuant to an Amended and Restated Senior Secured Convertible
Promissory Note (the "Senior Secured Note") and TBEV did not repay the Senior Secured Note on or before the maturity
date;
WHEREAS,
Centaurian purchased a convertible note with a principal balance of $42,000 (the "Note") from TBEV and TBEV did
not repay the Note on or before the maturity date, although a portion of principal of the Note was converted to TBEV common stock;
WHEREAS,
the Debenture, the Senior Secured Note, and the Note required TBEV to reserve a sufficient amount of shares of its Common
Stock (the "Common Stock") to convert all amounts owed by the TBEV to Centarian under the Debenture, the Senior Secured
Note and the Note (collectively, the "3 Instruments"), into shares of Common Stock;
WHEREAS,
as of the date of this Agreement, the 3 Instruments are convertible into hundreds of thousands of shares of Common Stock;
and
WHEREAS, TBEV
does not have sufficient funds to pay all amounts due under the 3 Instruments, the Debenture, the Senior Secured Note, and the
Note.
NOW,
THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, and subject to the terms and
conditions set forth below, the Parties agree as follows:
| 1. |
Issuance
of a New Note. As a condition to and in partial consideration of Centurian entering into this Agreement, TBEV shall
issue a new convertible promissory note to Centaurian in the face amount of $240,500 in the form and having the terms set
forth in Exhibit A to this Agreement (the "New Note"), solely in exchange for the 3 Instruments. The New
Note, matures on December 3, 2015, unless earlier pursuant to the terms set of the Note. Upon issuance of the New Note, the
Debenture, the Senior Secured Note and the Note shall be cancelled. |
| 2. |
Centaurian
Reserve. On or about September 3, 2015, and prior to the execution of this Agreement, TBEV issued irrevocable instructions
to VSTOCK Transfer, Inc., the Company's stock transfer agent (the "Transfer Agent"), dated September 3, 2015
(the "Prior TA Letter") to irrevocably and immediately segregate and reserve 500,000,000 shares of its Common
Stock (the "500,000,000 Initial Share Reserve") to be used solely for the conversion by Centurian of amounts
owed by the TBEV to Centurian under the 3 Instruments into shares of Common Stock. It is hereby agreed that as a condition
to and as partial consideration of Centurian entering into this Agreement, upon execution of this Agreement and the simultaneous
delivery of the New Note to Centurian by TBEV, TBEV shall issue and deliver an amended and restated letter to the Transfer
Agent and Centurian, in the foini annexed hereto as Exhibit B (the "AR-TA Letter"), which AR-TA Letter
amends and restates the Prior TA Letter to provide that (i) the 500,000,000 Initial Share Reserve shall be used solely to
issue shares of Common Stock to Centurian upon conversion of the New Note (and for such other items related to the New Note
as the parties hereto may subsequently agree in writing); and (ii) the 3 Instruments were exchanged solely for the New Note
and thereafter cancelled. The parties hereto acknowledge that as of the date hereof, the 500,000,000 shares of Common Stock
constituting the 500,000,000 Initial Share Reserve has been reduced to effectuate the issuance of shares of Common Stock to
Centurian upon conversion by Centurian of $22,500 of the 3 Instruments pursuant to a conversion notice dated and delivered
to the Transfer Agent on or about September 3, 2015 by Centurian. The Parties hereto further agree that (i) no later than
October 8, 2015, TBEV shall pursuant to irrevocable written instructions to the Transfer Agent irrevocably and immediately
segregate and reserve an additional 250,000,000 shares of its Common Stock to be used solely for the conversion of all amounts
owed under and as represented by the New Note (the "Additional TA Letter"), which instruction letter shall
be in substantially the same form as the Prior TA Letter (and shall be in form and substantially reasonably satisfactory to
the Centurian), and as a result the Initial Share Reserve shall be increased from 500,000,000 shares to 750,000,000 shares
(less any shares issued to conversion notice prior to October 8, 2015) , and (ii) on the date hereof, the Company shall provide
to Centurian a fully-executed unanimous written consent of its Board of Directors authorizing and/or ratifying, as the case
may be, this Agreement, and all transactions contemplated herein, in the form annexed hereto as Exhibit C. In the event
that TBEV fails to deliver to the Transfer Agent the AR/TA Letter, within two business days from the date hereof, or the New
TA Letter by October 8. 2015, Centaurian may, at its option,
declare this Settlement Agreement and the release hereunder, to be null and void, declare an Event of Default under the New
Note and/or take any other action available to it at law, and/or equity, under the 3 Prior Instruments or New Note, but not
both the Prior Instrument and New Note, and/or otherwise, all such remedies shall be cumulative. |
| |
3. |
Limited
Release by Centaurian. In consideration of the covenants herein, Centaurian, on behalf of itself and its officers,
directors, members, managers, owners, successors and assigns,
releases TBEV, and each of its officers, directors, shareholders, employees, members, managers, owners, attorneys, agents,
servants, partners, representatives, heirs, estates, beneficiaries, executors, trustees, predecessors, legatees, administrators,
fiduciaries, participants, and successors and assigns, in an individual and corporate capacity (collectively, the "TBEV
Released Parties") from, any and all manner of rights, claims, actions, accounts, sums of money, demands, liens, levies,
attachments, judgments, writs of execution, contracts, debts, controversies, agreements, liabilities, damages and causes of
action whatsoever, whether known or unknown, liquidated or unliquidated, contingent or otherwise, suspected or unsuspected,
which Centaurian may now or hereafter have, own or claim to have against the Released Parties, relating to or arising out
of the Debenture, the Senior Secured Note, and the Note except for the conversion of $22,500 of amounts owed under the Senior
Secured Note into shares of Common Stock pursuant to a Conversion Notice submitted by Centaurian on or about the date hereof.
Nothing in this paragraph shall release TBEV from its obligations pursuant to the New Note or this Agreement. |
| |
4. |
Limited
Release by TBEV. In consideration of the covenants herein, TBEV, on behalf of itself and its officers, directors,
members, managers, owners, successors and assigns, releases Centaurian, and each of its officers, directors, shareholders,
employees, members, managers, owners, attorneys, agents, servants, partners, representatives, heirs, estates, beneficiaries,
executors, trustees, predecessors, legatees, administrators, fiduciaries, participants, and successors and assigns, in an
individual and corporate capacity (collectively, the "Centaurian Released Parties") from, any and all manner of
rights, claims, actions, accounts, sums of money, demands, liens, levies, attachments, judgments, writs of execution, contracts,
debts, controversies, agreements, liabilities, damages and causes of action whatsoever, whether known or unknown, liquidated
or unliquidated, contingent or otherwise, suspected or unsuspected, which TBEV may now or hereafter have, own or claim to
have against the Centaurian Released Parties, relating to or arising out of the Debenture, the Senior Secured Note, and the
Note. Nothing in this paragraph shall release Centaurian from its obligations pursuant to this Agreement. |
| |
5. |
Notices.
Any notice, demand, request, consent, approval, or communication that any party desires or is required to give to another
party, including any request for conversion or demand for payment of a dividend, shall be addressed to the other party at
the address set forth below. Any party may change its address by notifying the other Parties of the change of address in writing. |
For
Centaurian:
Centaurian
Fund L.P.
Attn.: Jody Eisenman
c/o
Legend Securities
45
Broadway
New
York, New York 10006
For
TBEV:
High
Performance Beverages Co.
Attn:
Toby McBride 5137 E. Armor Street
Cave Creek, Arizona 85331
| |
6. |
Further
Instruments. The Parties agree to cooperate and execute such further instruments and to take such further action as
may be reasonably necessary to carry out the intent of this Agreement. |
| |
7. |
Applicable
Law. This Agreement, together with the exhibits hereto, shall be governed by and construed in accordance with the
laws of the State of New York without regard to choice of law principles. Any action brought by the Parties for breach of
this Agreement shall be brought and maintained exclusively the State or Federal courts sitting in the State of New York, County
of New York, and the Parties irrevocably submit and consent to the jurisdiction of said Courts for such purposes. |
| |
8. |
Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of each Party;
provided, however, that a Party may not assign this Agreement in whole or in part without obtaining the express prior
written approval of the other Party. |
| |
9. |
Entire
Agreement. This Agreement, along with all annexed Exhibits hereto, represents the entire agreement between the Parties
and supersedes all prior and contemporaneous oral and written agreements, understandings and discussions pertaining to the
subject matter of this Agreement. Each of the Parties hereto acknowledges that neither any of the parties hereto, nor agents
or counsel of any other party whomsoever, has made any promise, representation or warranty whatsoever, express or implied,
not contained herein concerning the subject hereto, to induce it to execute this Agreement, and acknowledges and warrants
that it is not executing this Agreement in reliance on any promise, representation or warranty not contained herein. This
Agreement supersedes and revokes all previous negotiations, arrangements, letters of intent, representations, whether oral
or written, between the Parties, their respective representatives, or any other person purporting to represent them. Any representations,
promise or condition in connection herewith not specifically incorporated herein shall not be binding upon any party. |
| |
10. |
Modification.
This Agreement may not be modified except in a writing signed by an authorized representative of each Party hereto. No
breach of any provision of this Agreement can be waived unless in writing signed by the party to be charged with such a waiver.
Waiver of any one breach of any provision hereof, in whole or in part, shall not be deemed to be a waiver of any other breach
of the same or any other provision hereof. |
| |
11. |
Invalidity.
If any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.
If such condition, covenant or other provisions shall be deemed invalid due to its scope or breadth, such covenant, condition
or other provision shall be deemed valid to the extent of the scope or breadth permitted by law. |
| 12. |
Drafting.
This Agreement is the result of negotiation and compromise among the Parties and no party shall be prejudiced as having
been the drafter of the Agreement or any related exhibits incorporated therein. This Agreement shall be construed without
regard to any presumption against the drafter, and any ambiguities shall not be construed against the interest of either party
solely by reason of it having drafted all or any part of this Agreement. |
| |
13. |
Reliance
on Counsel. Each party represents and warrants that it has carefully read this Agreement and knows and understands
the contents, and that they signed this Agreement freely and voluntarily and have had the benefit of the advice of legal counsel
before executing this Agreement. |
| |
14. |
Counterparts.
This Agreement may be executed in counterparts and delivered electronically, each of which shall be an original, but all
of which together shall constitute one instrument. |
| 15. |
Warranty
of Authority. Each party warrants and represents that it has all necessary right, title, and authority to enter into
this Agreement, to grant the rights and interests herein granted, and to perform all of its obligations under this Agreement. |
IN
WITNESS WHEREOF, the Parties hereto has executed this Agreement as of the Effective Date.
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HIGH PERFORMANCE BEVERAGE CO. |
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|
|
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By: |
|
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|
|
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|
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CENTAURIAN FUND, L.P. |
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|
|
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By: |
 |
EXHIBIT
A
Form
of New Note
EXHIBIT
B
Form
of A/R-TA Letter
EXHIBIT
C
Unanimous
Written Consent
9
| Page
Exhibit 10.2
NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY
TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF.
HIGH
PERFORMANCE BEVERAGES CO.
CONVERTIBLE
NOTE
| Issuance
Date: September 17, 2015 |
Original Principal Amount: U.S. $240,500 |
Note
No.: CFLLP Ð Exchange Note -1
FOR
VALUE RECEIVED, High Performance Beverages Co., a Nevada corporation (and together with each and every of its current and
future Subsidiaries (as defined below), the “Company”), hereby promises to pay to Centurian Fund, LP or registered
assigns (the “Holder”) $240,500 (the “Original Principal Amount”, and as reduced pursuant
to the terms hereof pursuant to prepayment, conversion or otherwise, the “Principal”), when due, whether upon
the Loan Maturity Date (as defined below) or otherwise and to pay interest (“ Interest ”) on any outstanding
Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, whether upon the Loan Maturity Date or otherwise (in each case in accordance with the
terms hereof).
This
Convertible Note (including all Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”)
was issued on September 9, 2015 (the “Issuance Date”), pursuant to the terms of the Settlement Agreement (as
defined below) in exchange for the (i) 15% $42,000 Face Amount Original Issue Discount Convertible Promissory Note date March
31, 2014 of the Company (the “3/2014 Note”), issued by the Company to the original holder, which as of September
3, 2015 (the “Issuance Date”) (x) the aggregate principal amount outstanding on the 3/2014 Note was $29,796,
and (y) all accrued but unpaid interest thereon was $2,254 (ii) the 20% $100,000 aggregate principal amount Senior Secured Convertible
Promissory Note dated November 15, 2012 originally sold to Pierce Csurgo by the Company who pursuant to a Note Purchase and Assignment
Agreement dated June 17, 2013, sold and assigned such note to the Holder, which note was subsequently amended pursuant to Amendment
No. 1 to the Senior Secured Convertible Promissory Note and the Term Sheet, dated as of March 31, 2014 by and between the Company
and the original Holder (collectively, the “11/2012 Note”), and which as of the Issuance Date (x) the aggregate
principal amount outstanding on the 11/2012 Note was $100,000 in the aggregate, and (y) all accrued but unpaid interest thereon
was approximately $52,500, and (iii) an 18% Senior Convertible Debenture in the aggregate principal amount of $60,000 of the Company
issued by the Company to the Holder, dated April 30, 2013 (the “4/2013 Note” and together with the 3/2014 Note
and the 11/2012 Note collectively, the “3 Prior Notes”), which as of the Issuance Date (x) the aggregate
principal amount on the 4/2013 Note was $37,554, and (y) all accrued but unpaid interest on such 4/2013 Note is $21,456. Certain
capitalized terms used herein are defined in Section 23.
The
$240,500 Original Principal Amount of this Note equaled through and including the Issuance Date the sum of (i) $167,350 aggregate
principal amount of 3 Prior Notes, and (ii) $73,150 of accrued but unpaid interest on the 3 Prior Notes.
The
Company hereby acknowledges and agrees that because (i) $167,350 of the Original Principal Amount, constitutes outstanding principal
amount of the 3 Prior Loans to the Company all of which was paid to the Company more than 12 months prior to the Issuance Date,
and (ii) $73,150 of the Original Principal Amount constitutes accrued and unpaid interest on the 3 Prior Notes, which pursuant
to Rule 144 of the Securities Act all such interest tacks back to the date the principal relating to such interest of the 3 Prior
Notes was paid by the Holder to the Company (x) the entire $240,500 Original Principal Amount is convertible under Rule 144 into
unrestricted and unlegended shares of Common Stock (as defined below), and (y) all accrued but unpaid Interest on this Note following
the Issuance Date also is convertible into unrestricted and unlegended shares of Common Stock.
1) PAYMENT
OF PRINCIPAL. On the Loan Maturity Date the Company shall pay to the Holder an amount in cash equal to the Loan Maturity Date
Payment (as defined in Section 3 below) in accordance with Section 3. The “Loan Maturity Date”
shall mean the earlier to occur of (i) December 3, 2015, (ii) of the consummation of a Major Transaction and (iii) of an Event
of Default. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal
or accrued and unpaid Interest, if any.
2) INTEREST;
INTEREST RATE.
a) Interest
on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and twelve 30-day
months and shall be payable in arrears on the first (1st) day of each calendar month after the Issuance Date or, if
any such date falls on a Holiday, the next day that is not a Holiday (each, an “Interest Date”) with the first
(1st) Interest Date being October 1, 2015. Interest shall be payable on each Interest Date, to the record holder of
this Note in cash.
b) Interest
on this Note shall accrue and compound daily at the Interest Rate. From and after the occurrence and during the continuance of
an Event of Default, the Interest Rate shall be increased to twenty-two (22%) percent. In the event that such Event of Default
is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such
cure; provided, that the Interest as calculated and unpaid at such increased rate during the continuance of such Event
of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and
including the date of cure of such Event of Default.
3)
CONVERSION OF NOTES. This Note shall be convertible into shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”), on the terms and conditions set forth in this Section 3.
a) Conversion
Right. Subject to the provisions of Section 3(d), at any time or times commencing on the Issuance Date, the Holder
shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and
nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company
shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock to the nearest whole share.
The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery
of Common Stock upon conversion of any Conversion Amount.
b)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section
3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
i) “Conversion
Amount” means the sum of (A) the portion of the Principal to be converted, with respect to which any determination
is being made, and (B) all accrued and unpaid Interest with respect to such portion of the Principal and all other amounts
due to the Holder hereunder and/or under any of the other Documents.
ii) “Conversion
Price” means, as of any Conversion Date (as defined below) or other date of determination, the Market Price (as
defined below).
c) Mechanics
of Conversion.
i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York time, on such
date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company and the Transfer Agent and (B) if required by Section 3(c)(iii), surrender this Note to a common carrier
for delivery to the Company as soon as practicable on or following such date (or an indemnification undertaking with respect to
this Note in the case of its loss, theft or destruction). On or before the first (1st) Business Day following the date
of receipt of a Conversion Notice, the Company shall transmit by facsimile a confirmation of receipt of such Conversion Notice
to the Holder and the Transfer Agent. On or before the third (3rd) Trading Day following the date of receipt of a Conversion
Notice (the “Share Delivery Date”), the Company shall (x) provided that the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder
shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian
system or (y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver
to the address as specified in the Conversion Notice, 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. If required by Section 3(c)(iii), within three
(3) Business Days following a conversion of this Note, the Holder shall surrender this Note (or deliver an indemnification undertaking
with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 12(b)) to the Company.
If this Note is physically surrendered for conversion if required by Section 3(c)(iii) and the outstanding Principal of
this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable
and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the
Holder a new Note (in accordance with Section 12(d)) representing the outstanding Principal not converted. The Person or
Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the Conversion Date, irrespective of the date such
Conversion Shares are credited to the Holder’s account with DTC or the date of delivery of the certificates evidencing such
Conversion Shares, as the case may be.
ii) Company’s
Failure to Timely Convert. If the Company shall fail to issue a certificate to the Holder or credit the Holder’s balance
account with DTC, as applicable, for the number of shares of Common Stock to which the Holder is entitled upon conversion of any
Conversion Amount on or prior to the Share Delivery Date (a “Conversion Failure”), then (A) the Company shall
pay damages to the Holder for each Trading Day of such Conversion Failure in an amount equal to 5.0% of the product of (1) the
sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Date and to which the Holder
is entitled, and (2) the Closing Sale Price of the Common Stock on the Share Delivery Date and (B) the Holder, upon written notice
to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any portion of
this Note that has not been converted pursuant to such Conversion Notice; provided that the voiding of a Conversion Notice
shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant
to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if the Company shall fail on or prior to the Share
Delivery Date to issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC for the number
of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of any Conversion Amount or on any
date of the Company’s obligation to deliver shares of Common Stock as contemplated pursuant to clause (ii) below, and if
on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction
of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a
“Buy-In”), then the Company shall, within three (3) Trading Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to issue and deliver such certificate or credit the Holder’s
balance account with DTC for the shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of
the applicable Conversion Amount shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate
or certificates representing such Common Stock or credit the Holder’s balance account with DTC for the number of shares
of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock, times (B) the Closing Sale Price on the Conversion Date.
iii) Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the name
and address of the Holders of the Note and the principal amount of the Note held by such Holders (the “Registered
Notes”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The
Company and the Holders of the Note shall treat each Person whose name is recorded in the Register as the owner of a Note for
all purposes, including, without limitation, the right to receive payments of Principal and Interest, if any, hereunder,
notwithstanding notice to the contrary. The Registered Note may be assigned or sold in whole or in part only by registration
of such assignment or sale on the Register. Upon its receipt of a written request to assign or sell all or part of any
Registered Note by a Holder, together with any required documentation including any legal opinions, if applicable, the
Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same
aggregate Principal Amount as the Principal Amount of the surrendered Registered Note to the designated assignee or
transferee pursuant to Section 12. Notwithstanding anything to the contrary set forth herein, upon conversion of any
portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note
to the Company unless (A) the full Principal amount represented by this Note is being converted or (B) the Holder has
provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of
this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal
and Interest, if any, converted and the dates of such conversions or shall use such other method, reasonably satisfactory to
the Holder and the Company, so as not to require physical surrender of this Note upon conversion.
iv) Disputes.
In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of
this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute
in accordance with Section 17.
d) Limitations
on Conversions. The Company shall not effect any conversion of this Note, and the Holder of this Note shall not
have the right to convert any portion of this Note pursuant to the terms and conditions of this Note, to the extent that
after giving effect to such conversion, the Holder (together with the Holder’s Affiliates) would beneficially own
in excess of 4.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding
immediately after giving effect to such conversion. For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note
beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation, any Other Notes or warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of
its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(d)(i), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”). For purposes of this Section 3(d)(i), in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Form 10-K, Form 10-Q, Form 8-K or other public filing with the SEC, as the case may be, (y) a
more recent public announcement by the Company or (z) any other notice by the Company or the Transfer Agent setting forth the
number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Note, by the Holder or its Affiliates since the date
as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may
increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided
that (i) any such increase will not be effective until the sixty-first (61 st ) day after such notice is delivered to the
Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of Notes. The
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the
terms of this Section 3(d)(i) to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable
to properly give effect to such limitation.
4)
PREPAYMENT OF THE NOTE; PAYMENT ON LOAN MATURITY DATE.
a) Optional
Prepayment. Prior to the Loan Maturity Date, the Company may prepay, without penalty, all (but not less than all) of the aggregate
Principal Amount of this Note and Interest due thereon up to the date of prepayment. (an “Optional Prepayment”).
An Optional
Prepayment shall be paid upon not less than ten (10) Business Days prior irrevocable written notice (the “Optional Prepayment
Notice”), to the Holder from the Company detailing the Optional Prepayment Amount to be paid and setting forth the specific
date the Optional Prepayment Amount shall be paid (such date hereinafter to be referred to as the “Optional Prepayment
Date”). The Optional Prepayment Amount shall be paid in full in cash to the Holder by the Company by wire transfer of
immediately available funds on the Optional Prepayment Date.
b) Payments
on the Loan Maturity Date. The Company shall pay to the Holder on the Loan Maturity Date, all principal, interest and any
other amount due under this Note in cash by wire transfer in immediately available funds pursuant to wire transfer instructions
provided by the Company to the Holder.
5)
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT.
a) Event
of Default. Each of the following events shall constitute an “Event of Default”:
i) The
Common Stock is no longer DTC Eligible or DTC has issued a “freeze” or “chill” on the Common Stock, which
has not been cured with five (5) trading days of the occurrence of same;
ii) the
suspension from trading or quotation eligibility or failure of the Common Stock to be listed or eligible for quotation on an Eligible
Market for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 360-day
period;
iii) the
Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within
five (5) days after the applicable Conversion Date or (B) notice, written or oral, to the Holder, including by way of public
announcement or through any of its agents, at any time, of its intention not to comply with a request for conversion of the
Note into shares of Common Stock that is tendered in accordance with the provisions of the Note, other than as a result of Section
3(d);
iv) the
Company’s failure to pay to the Holder any amount of Principal, Interest or other amounts when and as due under this Note;
v) any
default under or acceleration prior to maturity of an aggregate amount of Indebtedness in excess of $50,000 of the Company;
vi) the
Company, pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or state law for the relief
of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents to the entry of an
order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator
or similar official (a “Custodian”), (D) makes a general assignment for the benefit of its creditors or (E)
admits in writing that it is generally unable to pay its debts as they become due;
vii) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company
in an involuntary case, (B) appoints a Custodian of the Company or (C) orders the liquidation of the Company;
viii) a
final judgment or judgments for the payment of money aggregating in excess of $50,000 are rendered against the Company and which
judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged
within sixty (60) days after the expiration of such stay;
ix) other
than as specifically set forth in another clause of this Section 5(a), the Company breaches any representation, warranty,
agreement, covenant or other term or condition of this Note and the Settlement Agreement and/or the Transfer Agent Letter;
x) any
failure to comply with any provision of Section 8; or
xi) any
event of default occurs with respect to any Indebtedness of the Company.
b)
Remedies Upon an Event of Default. Upon the occurrence and continuance of any Event of Default, notwithstanding anything
to the contrary provided herein, in the other Documents and/or elsewhere, Holder may, in its sole and absolute discretion, among
other actions declare all Principal, Interest and/or other amounts owed to the Holder by the Company under this Note and any of
the other Documents, all through and including the date all amounts owed to the Holder from the Company pursuant to this Note,
the other Documents, and/or otherwise, are received in full by the Holder in cash by the payment of immediately available funds
by wire transfer pursuant to wire transfer instruction provided to the Company from the Holder (the “Amount”),
to be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Company, and the Company shall pay to Holder an amount equal to the product of (i) 110% multiplied by (ii) the Base
Amount plus (y) all Other Amounts (collectively, the “Event of Default Payment Amount”); provided, that
upon the occurrence of an Event of Default under Section 5(a)(vi)-(vii) hereof, all amounts set forth in this Section
5(b) shall automatically become forthwith due and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Company and the Company shall pay to Holder the Event of Default Payment Amount;
c) Remedies
Are Severable and Cumulative. All provisions contained herein pertaining to any remedy of the Holder shall be and are severable
and cumulative and in addition to all other rights and remedies available herein and in the other Documents, at law and in equity,
and any one or more may be exercised simultaneously or successively. Any notification required pursuant to this Article 5
or under applicable law shall be reasonably and properly given to Company at the address and by any of the methods of giving such
notice as set forth in Section 6.3 of the Securities Purchase Agreement.
d) No
Waiver. No waiver or failure to exercise at any time any default and/or remedy or right upon a default shall operate as a
direct and/or indirect waiver of any other default or right or of the same default or right on any subsequent occasion..
6)
DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
a) Distribution
of Assets. If the Company shall declare or make any dividend or other distributions of its assets (or rights to acquire
its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation,
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (the “ Distributions ”), then the Holder
will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately
prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record
holders of Common Stock are to be determined for such Distributions (provided, however, that to the extent that the Holder’s
right to participate in any such Distribution would result in the Holder exceeding the Maximum Percentage, then the Holder shall
not be entitled to participate in such Distribution to such extent (or beneficial ownership of such shares of Common Stock as
a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage).
b) Purchase
Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion
of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately prior
to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would
result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right
to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would
not result in the Holder exceeding the Maximum Percentage, at which time the Holder shall be granted such right to the same extent
as if there had been no such limitation).
c) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any
Major Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with
respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s
option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which
the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the
Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility
of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other
assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts
as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions
of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations
on the conversion or redemption of this Note.
7)
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
a) Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Subscription
Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares
of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time on or after the Subscription Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination will be proportionately increased.
b)
Issuance of Securities Below the Conversion Price. If and whenever on or after the Subscription Date, the Company issues
or sells, or in accordance with this Section 7 is deemed to have issued or sold, any shares of Common Stock (including
the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded
Securities issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”)
less than a price equal to the Conversion Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Conversion Price then in effect is referred to as the “Applicable Price”) (the foregoing a “ Dilutive
Issuance”), then immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an
amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price under this Section 7(b),
the following shall be applicable:
i) Issuance
of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to
be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price
per share. For purposes of this Section 7(b)(i), the “lowest price per share for which one share of Common Stock
is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such
Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise
of such Option and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon
the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise
of any such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the
granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred
on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price
shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the
time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 7(b)(ii),
the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange
thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible Security for
which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid
or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security
plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security
(or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual
issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such
issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been
or is to be made pursuant to other provisions of this Section 7(b), except as contemplated below, no further adjustment
of the Conversion Price shall be made by reason of such issue or sale.
iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price
which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially
granted, issued or sold. For purposes of this Section 7(b)(iii), if the terms of any Option or Convertible Security that
was outstanding as of the Issuance Date are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section
7(b) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.
iv) Calculation
of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific consideration is allocated to such options by the parties
thereto, (x) the Options will be deemed to have been issued for the Option Value of such Options and (y) the other securities
issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate
consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other
securities of the Company, less (II) the Option Value. If any shares of Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration other than cash received by the Company will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by
the Company for such securities will be the Closing Sale Price of such security on the date of receipt. If any shares of Common
Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in
which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence
of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined
within five (5) Trading Days after the tenth (10th) day following the Valuation Event by an independent, reputable
appraiser selected by the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest
error and the fees and expenses of such appraiser shall be borne by the Company.
v) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for
or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
c)
Voluntary Adjustment By Company. The Company may at any time during the term of this Note reduce the then current Conversion
Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
8)
RESERVATION OF AUTHORIZED SHARES.
a) Reservation.
Prior to the issuance of this Note, the Company issued a letter dated September 3, 2015 (the “Original TA Letter”)
to VStock Stock Transfer, Inc. the Company’s stock transfer agent (the “Transfer Agent”) (a copy of which
is attached as Exhibit A hereto), pursuant to which the Transfer Agent reserved for issuance upon conversion of the 3 Prior Notes,
out of the Company’s authorized and unissued shares of Common Stock, 500,000,000 shares of Common Stock (the “Required
Reserve Amount”). Notwithstanding anything to the contrary provided herein or elsewhere, as a condition to and as partial
consideration for Centurian entering into this Note and the Settlement Agreements (i) the Original TA Letter will be amended and
restated (the “AR/TA Letter”), to provide, among other items set forth in the Settlement Agreement, the 500,000,000
Share Required Reserve Amount can be used only to issue to Centurian shares of Common Stock upon conversion of this Note (and/or
other issuances agreed to by Centurian related to this Note), less the amount of shares issued pursuant to Centaurian’s
September 8, 2015 conversion of $22,500 in principal of the Old Notes, and (ii) no later than October 8, 2015, the Company shall
reserve an additional 250,000,000 shares of Common Stock for issuance upon conversions of the Note. As a result of the above,
the Required Reserve Amount shall be increased from 500,000,000 shares of Common Stock to 750,000,000 shares of Common Stock no
later than October 8, 2015, less any shares issued to satisfy conversion notices of Centaurian prior to October 8, 2015 (the “New
Required Reserve Amount”). The 500,000,000 Share Required Reserved Amount shall be set forth in the AR/TA Letter and
by a Unanimous Written Consent of the Board of Directors of the Company (the “Reservation Consent”), each to
be delivered fully executed to the Holder and the Transfer Agent on the Issuance Date, plus proof from the Transfer Agent of such
share reservation; and the 750,000,000 New Required Reserve Amount shall be set forth in a letter to the Company’s Transfer
Agent substantially identical to the Original TA Letter (which must be reasonably acceptable to Centurian) and in the Reservation
Consent, and following October 8, 2015, the Company shall provide proof from the Transfer Agent of such 250,000,000 further share
reservation.
b) Insufficient
Authorized Shares. If at any time while this Note remain outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of this Note at least
a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then
the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount for this Note. Without limiting the generality of
the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall either (x) obtain the written
consent of its stockholders for the approval of an increase in the number of authorized shares of Common Stock and provide each
stockholder with an information statement with respect thereto or (y) hold a meeting of its stockholders for the approval of an
increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder
with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal; provided,
however, notwithstanding anything in this Section 8(b) or elsewhere to the contrary, nothing herein or elsewhere shall prevent
or be deemed a waiver of the Holder’s right to declare an Event of Default pursuant to Section 5.
9) VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided
in this Note.
10) COVENANTS.
a)
Reporting Status. Until the date on which the Holders shall have sold all of the Conversion Shares and/or no amounts due to
the Holder under this Note is outstanding (the “ Reporting Period ”), the Company shall timely file (taking
into account any extension periods permitted by Rule 12b-25 of the Exchange Act if the appropriate documents are filed by the
Company with the SEC) all reports required to be filed with the SEC pursuant to the Exchange Act of 1934, and the Company shall
not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination.
b)
Listing. The Company shall promptly secure the listing of all of the Conversion Shares upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock then listed (subject to official notice of issuance)
and shall maintain such listing of all Conversion Shares from time to time issuable hereunder. The Company shall maintain the
authorization for quotation of the Common Stock on the Principal Market or any other Eligible Market. Neither the Company nor
any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the
Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations
under this Section 10(b).
c)
Disclosure of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the fourth (4th)
Trading Day following the Issue Date, the Company shall file a Current Report on Form 8-K describing the terms of the transactions
contemplated by this Note and the Settlement Agreement in the form required by the 1934 Act and attaching the material documents
thereto (the “8-K Filing”). From and after the filing of the 8-K Filing, Holder shall not be in possession
of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers,
directors, employees or agents that is not disclosed in the 8-K Filing. In addition, immediately following the 8-K Filing, the
Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents,
on the one hand, and the Holder and/or any of its affiliates, on the other hand, shall terminate. The Company shall not, and shall
cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide
any Holder with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing
of the 8-K Filing with the SEC without the express prior written consent of such Holder. If Holder has, or believes it has, received
any such material, nonpublic information regarding the Company or any of its Subsidiaries from the Company, any of its Subsidiaries
or any of their respective officers, directors, affiliates or agents, it may provide the Company with written notice thereof.
The Company shall, within one (1) Trading Day of receipt of such notice, make public disclosure of such material, nonpublic information.
In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees and agents, in addition to any other remedy provided herein or in any of the other Documents, the
Holder shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of
such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective
officers, directors, employees or agents. No Holder shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents for any such disclosure. To the extent that the Company
delivers any material, non-public information to a Holder without such Holder’s consent, the Company hereby covenants and
agrees that such Holder shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such
material, nonpublic information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Holder shall issue any
press releases or any other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of any Holder, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as
is required by applicable law and regulations (provided that in the case of clause (i) each Holder shall be consulted by the Company
in connection with any such press release or other public disclosure prior to its release). Without the prior written consent
of the Holder, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Holder in any filing,
announcement, release or otherwise.
d)
Public Information. At any time and from time to time following the issue date and ending at such time that all of the
Conversion Shares, if a registration statement is not available for the resale of the Conversion Shares, may be sold without restriction
or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if the Company shall (i)
fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current
public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer described in Rule 144(i)(1)(i)
or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “
Public Information Failure ”) then, as partial relief for the damages to any holder of Conversion Shares by reason
of any such delay in or reduction of its ability to sell the Conversion Shares (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to two and one half
percent (2.5%) of the aggregate purchase price of such holder’s Securities on the day of a Public Information Failure and
on every thirtieth day prorated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such
Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144.
The payments to which a holder shall be entitled pursuant to this Section 10(d) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar
month during which such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure
giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 0.75% per month (prorated
for partial months) until paid in full.
e)
Change in Nature of Business. The Company shall not make any material change in the nature of its business as described in
the Company’s most recent annual report filed on Form 10-K with the SEC. The Company shall not modify its corporate structure
or purpose.
f)
Preservation of Existence, Etc. The Company shall maintain and preserve its existence, rights and privileges, and become or
remain duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it
or in which the transaction of its business makes such qualification necessary, except where the failure to be so qualified would
not have a material adverse effect on the Company.
g)
Maintenance of Properties, Etc. The Company shall maintain and preserve all of its properties which are necessary or useful
in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply in all
material respects to comply in all material respects, at all times with the provisions of all leases to which it is a party as
lessee or under which it occupies property, so as to prevent any material loss or forfeiture thereof or thereunder.
h)
Transactions with Affiliates. The Company shall not enter into, renew, extend or be a party to, any transaction or series
of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets
of any kind or the rendering of services of any kind) with any Affiliate.
i)
Assistance. The Company shall take any and all action reasonably requested by the Holder to effectuate the terms of
this Note including, but no limited to, obtaining and providing any legal opinion so required hereunder to allow the Holder to
sell the Conversion Shares without limitation under Rule 144 into the Principal Market or otherwise.
11)
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company, subject only to compliance with applicable securities laws.
12)
REISSUANCE OF THIS NOTE.
a) Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note (in accordance with Section 12(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if less then the entire outstanding Principal is being
transferred, a new Note (in accordance with Section 12(d)) to the Holder representing the outstanding Principal not being transferred.
The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of any conversions or prepayment
of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face
of this Note.
b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with Section 12(d)) representing the outstanding Principal.
c) Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 12(d) representing in the aggregate the outstanding
Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the
Holder at the time of such surrender.
d) Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 12(a) or Section 12(c), the Principal designated by the Holder
which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed
the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance
date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest, if any, on the Principal of this Note,
from the Issuance Date.
13)
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall
be cumulative and in addition to all other remedies available under this Note and any of the other Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts
set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees
that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security
being required.
14) PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay
the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements.
15) CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and all the Purchasers and shall not be construed
against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of,
or affect the interpretation of, this Note. Terms used in this Note but defined in the other shall have the meanings ascribed
to such terms on the Initial Closing Date in such other Transaction Documents unless otherwise consented to in writing by the
Holder.
16) FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.
17) NOTICES;
PAYMENTS.
a) Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given as follows:
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed telex, facsimile or e-mail if sent during normal business hours of the
recipient; if not, then on the next Trading Day, (c) five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt:
If to
Borrower:
High Performance
Beverage Co.
5137
E. Armor Street
Cave
Creek, AZ
Attn:
Toby McGuire
Telephone:
916-799-8389
Email:
toby@throwdownbeverage.com
With copies to (which shall not constitute notice):
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32nd Floor
New
York, New York 10006
Attn:
Andrea Cataneo, Esq.
Telephone:
(212) 930-9725
Fax:
(212) ___-____
Email:
acataneo@srff.com
If to
the Holder:
Centaurian
Fund L.P.
45
Broadway, 22nd Floor
New
York, New York 10005
Attn:
Jody Eisenman, Managing Member
Telephone:
(201) 694-6054
Fax:
(212) 202-3937
Email:
wstrader99@gmail.com
With copies
to (which shall not constitute notice):
Gusrae
Kaplan Nusbaum PLLC
120
Wall Street, 25th Floor
New
York, New York 10005
Attn:
Lawrence G. Nusbaum, Esq.
Telephone:
(212) 269-1400
Fax:
(212) 809-5449
Email:
lnusbaum@gusraekaplan.com
Any
party hereto may from time to time change its address for notices by giving written notice of such changed address to the other
party hereto.
b)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall
be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight
courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of
each of the Purchasers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement);
provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing
the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any
amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be
due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which this
Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount
of Interest due on such date.
18)
CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full,
this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
19) WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
20) GOVERNING
LAW; JURISDICTION; JURY TRIAL. This Note shall be construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The
Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, 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, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is improper. The Company hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by overnight mail by any nationally
recognized overnight courier service to such party at the address it set forth on the signature page hereto 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. Nothing contained herein shall be deemed or operate
to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect
on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or
to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
21) SEVERABILITY.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect
of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
22) CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
a) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under
common control with, such Person, it being understood for purposes of this definition that “control” of a Person means
the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of
directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract
or otherwise.
b) “Bloomberg”
means Bloomberg Financial Markets.
c) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
d) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid
price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if
the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00
p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported
for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly the Pink OTC Markets Inc.).
If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved pursuant to Section 17. All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable
calculation period.
e) “Closing
Date” means September 3, 2015.
f) “Convertible
Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable
or exchangeable for shares of Common Stock.
g) “Documents”
means this Note, the Reservation Consent, the Transfer Agent Letter, the Settlement Agreement, the 8-K Filing and all amendments,
supplements, exhibits, schedules and related documents, agreements and/or instruments to any of the above.
h) “Eligible
Market” shall mean any of the following markets or exchanges on which the Common Stock (or any other common stock
of any other Person that references the Trading Market for its common stock) is listed or quoted for trading on the
date in question: the OTC Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital
Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink
Marketplace or any other tier operated by OTC Markets Group Inc. (or any successor to any of the foregoing).
i) “Excluded
Securities” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the
Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the
Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose at
prices not below the fair market value of the Common Stock as the time of grant or below the Conversion Rate of the
Convertible Note, (b) the issuance of shares of Common Stock pursuant to options, warrants, debenture, preferred stock and/or
promissory notes issued and outstanding on the date of this Convertible Note, provided that such securities have not been
amended since the date of this Convertible Note to increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, (c) securities issued to non-affiliated Persons pursuant to
acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that
any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and
shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction
in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities and (d) any securities issued pursuant to this Convertible Note.
j) “Holiday”
means a day other than a Business Day or on which trading does not take place on the Principal Market.
k) “Interest
Rate” means 10% per annum, subject to adjustment as set forth in Section 2.
l) “Market
Price” means 50% of the lowest Closing Bid Price or Closing Sale Price, as the case may be for a share of Common
Stock during the ten (10) consecutive Trading Days immediately preceding the applicable date of determination. All such
determinations to be appropriately adjusted for any stock split, stock dividend, stock combination, reclassification or other
similar transaction during such period.
m) “Major
Transaction” shall mean any of the following (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or
indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the
holders of 30% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization 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, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or
scheme or arrangement) with another Person whereby such other Person acquires more than 30% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business
combination) and (vi) the majority of directors of the Company as of the date hereof are no longer the majority number of
directors.
n) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
o) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and a government or any department or agency thereof.
p) “Principal
Market” means The OTCQB Marketplace.
q) “Reservation
Consent” shall have the meaning set forth in Section 8(a) hereto, and which is annexed hereto as Exhibit
3.
r) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
s) “Settlement
Agreement” means the Settlement Agreement dated September 9, 2015 by and between the Company, the Original Holder, Michael
Holley and Toby McBride.
t) “Trading
Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during
the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).
u) “Transfer
Agent Letter” shall mean the Irrevocable Instructions to the Transfer Agent by and among the Company, the
Company’s current transfer agent and the original Holder annexed hereto as Exhibit 2.
v) “Voting
Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders
thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class
or classes shall have or might have voting power by reason of the happening of any contingency).
23)
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall
indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder
shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating
to the Company or its Subsidiaries.
[Signature
Page Follows]
IN WITNESS
WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
| |
HIGH PERFORMANCE BEVERAGES, INC. |
| |
|
|
| |
By; |
/s/ Michael Holley |
| |
Name: |
Michael Holley |
| |
Title: |
Executive Officer |
| |
|
|
| |
By: |
/s/ Today McBride |
| |
Name: |
Today McBride |
| |
Title: |
Executive Officer |
Exhibit
1
NOTICE
OF CONVERSION
The
undersigned hereby elects to convert $______________ of the principal amount of the Note (defined below) into shares of
Common Stock of High Performance Beverages, Inc., a Nevada corporation (the “Company”) according to the
terms and conditions of the $240,500 aggregate principal amount convertible note of the Company dated September 3, 2015 (the “Note”).
No fee will be charged to the Holder or Holder’s Custodian for any conversion, except for transfer taxes, if
any.
Box Checked
as to applicable instructions:
| |
☐ |
The Borrower shall electronically transmit the Common Stock issuable pursuant
to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission
system (“DWAC Transfer”). |
Name of
DTC Prime Broker: ______________________________________________________
Account
Number: _____________________________________________________________
| |
☐ |
The undersigned hereby requests that the Borrower issue a certificate or certificates for the
number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in
the name(s) specified immediately below: |
| |
|
|
| |
|
_______________________________________ |
| Date of Conversion: |
|
|
| |
|
|
| Conversion Price: |
|
|
| |
|
|
| Shares to Be Delivered: |
|
|
| |
|
|
Remaining Principal
Balance Due
After This Conversion: |
|
|
| |
|
|
| |
|
|
| |
|
|
| Signature |
|
|
| |
|
|
| |
|
|
| Print Name: |
|
|
Exhibit
2
THE
TRANSFER AGENT LETTER
Exhibit
3
THE
RESERVATION CONSENT
High Performance Beverages (CE) (USOTC:TBEV)
Historical Stock Chart
From Mar 2024 to Apr 2024
High Performance Beverages (CE) (USOTC:TBEV)
Historical Stock Chart
From Apr 2023 to Apr 2024
