| COSR | $400,000PROMISSORYNOTE | Interestfreeifpaidin fullwithin3 months |
FORVALUERECEIVED,Co-Signer,Inc.,aNevadacorporation(the“Borrower”)withatleast112,000,000commonsharesissuedandoutstanding,promisestopaytoJMJFinancialoritsAssignees(the“Lender”)thePrincipalSumalongwiththeInterestRateandanyotherfeesaccordingtothetermsherein.ThisNotewillbecomeeffectiveonlyuponexecutionbybothpartiesanddeliveryofthefirstpaymentofConsiderationbytheLender(the“EffectiveDate”).
ThePrincipalSumis$400,000(fourhundredthousand)plusaccruedandunpaidinterestandanyotherfees.TheConsiderationis$360,000(threehundredsixtythousand)payablebywire(thereexistsa$40,000originalissuediscount(the“OID”)).TheLendershallpay$50,000ofConsiderationuponclosingofthisNote.TheLender maypayadditionalConsiderationtotheBorrowerinsuchamountsandatsuchdatesasLendermaychooseinitssolediscretion.THEPRINCIPALSUMDUETOLENDERSHALLBE PRORATEDBASED ONTHECONSIDERATIONACTUALLYPAIDBYLENDER(PLUSANAPPROXIMATE10%ORIGINALISSUEDISCOUNTTHATISPRORATEDBASED ONTHECONSIDERATIONACTUALLY PAIDBYTHELENDERAS WELLASANY OTHERINTERESTORFEES)SUCHTHATTHEBORROWERIS ONLYREQUIREDTO REPAYTHEAMOUNTFUNDEDANDTHEBORROWERISNOTREQUIREDTOREPAYANYUNFUNDEDPORTIONOFTHISNOTE.The MaturityDateisoneyearfromtheEffectiveDateofeachpayment(the“MaturityDate”)andisthedateupon whichthePrincipalSumofthisNote,aswellasanyunpaidinterestandotherfees,shallbedueandpayable.TheConversionPriceis60%ofthelowesttradepriceinthe25tradingdaysprevioustotheconversion(InthecasethatconversionsharesarenotdeliverablebyDWACanadditional10%discountwillapply;andifthesharesareineligiblefordepositintotheDTCsystemandonlyeligiblefor Xclearingdepositanadditional5%discountshallapply;inthecaseofbothanadditionalcumulative15%discountshallapply).Unlessotherwiseagreedinwritingbybothparties,atnotimewilltheLenderconvertanyamountoftheNoteintocommonstockthatwouldresultintheLenderowning morethan4.99%ofthecommonstockoutstanding.
1.ZEROPercentInterestfortheFirstThreeMonths.TheBorrowermayrepaythisNoteatanytimeonorbefore90daysfromtheEffectiveDate,afterwhichtheBorrowermaynotmakefurtherpaymentsonthisNotepriortotheMaturityDatewithoutwrittenapprovalfromLender.IftheBorrowerrepaystheNoteonorbefore90daysfromtheEffectiveDate,theInterestRateshallbeZEROPERCENT(0%).IfBorrowerdoesnotrepaytheNoteonorbefore90daysfromtheEffectiveDate,aone-timeInterestchargeof12%shallbeappliedtothePrincipalSum.AnyinterestpayableisinadditiontotheOID,andthatOID(orproratedOID,ifapplicable)remainspayableregardlessoftimeandmannerofpaymentbyBorrower.
2.Conversion.TheLenderhastheright,atanytimeaftertheEffectiveDate,atitselection,toconvertallorpartoftheoutstandingandunpaidPrincipalSumandaccruedinterest(andanyotherfees)intosharesoffullypaidandnon-assessablesharesofcommonstockoftheBorrower asperthisconversionformula:NumberofsharesreceivableuponconversionequalsthedollarconversionamountdividedbytheConversionPrice.ConversionsmaybedeliveredtoBorrowerbymethodofLender’schoice(includingbutnotlimitedtoemail,facsimile,mail,overnightcourier,orpersonaldelivery),andallconversionsshallbecashlessandnotrequirefurtherpaymentfromtheLender.IfnoobjectionisdeliveredfromBorrowertoLenderregardinganyvariableorcalculationoftheconversionnoticewithin24hoursofdeliveryoftheconversionnotice,theBorrowershallhavebeenthereafterdeemedtohaveirrevocablyconfirmedandirrevocablyratifiedsuchnoticeofconversionandwaivedanyobjectionthereto.TheBorrowershalldeliverthesharesfromanyconversiontoLender(inanynamedirectedbyLender)within3(three)businessdaysofconversionnoticedelivery.
3.ConversionDelays.IfBorrowerfailstodeliversharesinaccordancewiththetimeframestatedinSection2,Lender,atanytimepriortosellingallofthoseshares,mayrescindanyportion,inwholeorinpart,ofthatparticularconversionattributabletotheunsoldsharesandhavetherescindedconversionamountreturnedtothePrincipalSumwiththerescindedconversionsharesreturnedtotheBorrower(underLender’sandBorrower’sexpectationsthatanyreturnedconversionamountswilltackbacktotheoriginaldateoftheNote).Inaddition,foreachconversion,intheeventthatsharesarenotdeliveredbythefourthbusinessday(inclusiveofthedayofconversion),apenaltyof$2,000perdaywillbeassessedforeachdayafter thethird businessday(inclusiveofthedayoftheconversion)untilshare deliveryismade;andsuchpenaltywillbeaddedtothePrincipalSumoftheNote (underLender’sandBorrower’sexpectationsthatanypenaltyamountswilltackbacktotheoriginaldateoftheNote).
4.ReservationofShares.AtalltimesduringwhichthisNoteisconvertible,theBorrowerwillreservefromitsauthorizedandunissuedCommonStocktoprovidefortheissuanceofCommonStockuponthefullconversionofthisNote.TheBorrowerwillatalltimesreserveatleast5,000,000sharesofCommonStockforconversion.
5.PiggybackRegistrationRights.TheBorrowershallincludeonthenextregistrationstatementtheBorrowerfileswithSEC(oronthesubsequentregistrationstatementifsuchregistrationstatementiswithdrawn)allsharesissuableuponconversionofthisNote.Failuretodosowillresultinliquidateddamagesof25%oftheoutstandingprincipalbalanceofthisNote,butnotlessthan$25,000,beingimmediatelydueandpayabletotheLenderatitselectionintheformofcashpaymentoradditiontothebalanceofthisNote.
6.ThisSectionLeftIntentionallyBlank.
7.Default.ThefollowingareeventsofdefaultunderthisNote:(i)theBorrowershallfailtopayanyprincipalundertheNotewhendueandpayable(orpayablebyconversion)thereunder;or(ii)theBorrowershallfailtopayanyinterestoranyotheramountundertheNotewhendueandpayable(orpayablebyconversion)thereunder;or(iii) areceiver,trusteeorothersimilarofficialshallbeappointedovertheBorroweror amaterialpartofitsassetsandsuchappointmentshallremainuncontested fortwenty(20)daysorshallnotbedismissedordischargedwithinsixty(60)days;or(iv)theBorrowershallbecomeinsolventorgenerallyfailstopay,oradmitsinwritingitsinabilitytopay,itsdebtsastheybecomedue,subjecttoapplicablegraceperiods,ifany;or(v)theBorrowershallmake ageneralassignmentforthebenefit ofcreditors;or(vi)theBorrowershallfile apetitionforreliefunderanybankruptcy,insolvencyorsimilarlaw(domesticorforeign);or(vii)aninvoluntaryproceedingshallbecommencedorfiledagainstthe Borrower;or(viii)theBorrowershallloseitsstatusas“DTCEligible”ortheborrower’sshareholdersshalllosetheabilitytodeposit(eitherelectronicallyorbyphysicalcertificates,orotherwise)sharesintotheDTCSystem;or(ix)theBorrowershallbecomedelinquentin itsfilingrequirementsas afully-reportingissuerregisteredwiththeSEC.
8.Remedies.Intheeventofanydefault,theoutstandingprincipalamountofthisNote,plusaccruedbutunpaidinterest,liquidateddamages,feesandotheramountsowingin respectthereofthroughthedateof acceleration,shallbecome,attheLender’selection,immediatelydueandpayableincashattheMandatoryDefaultAmount.TheMandatoryDefaultAmountmeansthegreaterof(i)theoutstandingprincipalamountofthisNote,plusallaccruedandunpaidinterest,liquidateddamages,feesandotheramountshereon,dividedbytheConversionPriceonthedatetheMandatoryDefaultAmountiseitherdemandedorpaidinfull,whicheverhasalowerConversionPrice,multipliedbytheVWAPonthedatetheMandatoryDefaultAmountiseitherdemandedorpaidinfull,whicheverhas ahigherVWAP,or(ii)150%oftheoutstandingprincipalamountofthisNote,plus 100%ofaccruedandunpaidinterest,liquidateddamages,feesandotheramountshereon.Commencingfive(5)daysaftertheoccurrenceofanyeventofdefaultthatresultsintheeventualaccelerationofthisNote,theinterestrateonthisNoteshallaccrueataninterestrateequaltothelesserof18%perannumorthemaximumratepermittedunderapplicablelaw.Inconnectionwithsuchaccelerationdescribedherein,theLenderneednotprovide,andtheBorrowerherebywaives,anypresentment,demand,protestorothernoticeofanykind,andtheLendermay immediatelyandwithoutexpirationofanygraceperiodenforceanyandallofitsrightsandremedieshereunderandallotherremediesavailabletoitunderapplicablelaw.SuchaccelerationmayberescindedandannulledbyLenderatanytimeprior topayment hereunderandtheLendershallhaveallrightsas aholderofthenoteuntilsuchtime,ifany,astheLenderreceivesfullpaymentpursuanttothisSection8.Nosuchrescissionorannulmentshallaffectanysubsequenteventofdefaultorimpairanyrightconsequentthereon.NothinghereinshalllimitLender’srighttopursueanyotherremediesavailableto itatlawor in equityincluding,withoutlimitation, adecreeofspecificperformanceand/orinjunctivereliefwithrespecttotheBorrower’sfailuretotimelydelivercertificatesrepresentingsharesofCommonStockuponconversionoftheNoteasrequiredpursuanttothetermshereof.
9.NoShorting.LenderagreesthatsolongasthisNotefromBorrowertoLenderremainsoutstanding,Lenderwillnotenterintooreffect“shortsales”oftheCommonStockorhedgingtransactionwhichestablishes anetshortpositionwithrespecttotheCommonStockofBorrower.Borroweracknowledgesandagreesthatupondeliveryof aconversion noticebyLender,LenderimmediatelyownsthesharesofCommonStockdescribedintheconversion noticeandanysaleofthosesharesissuableundersuchconversion noticewouldnotbeconsideredshortsales.
10.Assignability. TheBorrowermaynotassignthisNote.ThisNotewillbebindingupontheBorroweranditssuccessorsandwillinuretothebenefitoftheLenderanditssuccessorsandassignsandmaybeassignedbytheLendertoanyoneofitschoosingwithoutBorrower’sapproval.
11.GoverningLaw.ThisNotewillbegovernedby,andconstruedandenforcedinaccordancewith,thelawsoftheStateofFlorida,withoutregardtotheconflictoflawsprinciplesthereof.AnyactionbroughtbyeitherpartyagainsttheotherconcerningthetransactionscontemplatedbythisAgreementshallbebroughtonlyinthestatecourtsofFloridaorinthefederalcourtslocatedinMiami-DadeCounty,intheStateofFlorida.BothpartiesandtheindividualssigningthisAgreementagreetosubmittothejurisdictionofsuchcourts.
12.DeliveryofProcessbyLendertoBorrower.IntheeventofanyactionorproceedingbyLenderagainstBorrower,andonlyby LenderagainstBorrower,serviceofcopiesofsummonsand/orcomplaintand/oranyotherprocesswhichmaybeservedinanysuchactionorproceedingmaybemadebyLenderviaU.S.Mail,overnightdeliveryservicesuchasFedExorUPS,email,fax,orprocessserver,orbymailingorotherwisedeliveringacopyofsuchprocesstotheBorroweratitslastknownattorneyassetforthinitsmostrecentSECfiling.
13.AttorneyFees.IntheeventanyattorneyisemployedbyeitherpartytothisNotewithregardtoanylegalorequitableaction,arbitrationorotherproceedingbroughtbysuchpartyfortheenforcementofthisNoteorbecauseofanallegeddispute,breach,defaultormisrepresentationinconnectionwithanyoftheprovisionsofthisNote,theprevailingpartyinsuchproceedingwillbeentitledtorecoverfromtheotherpartyreasonableattorneys'feesandothercostsandexpensesincurred,inadditiontoanyotherrelieftowhichtheprevailingpartymaybeentitled.
14.OpinionofCounsel.IntheeventthatanopinionofcounselisneededforanymatterrelatedtothisNote,Lenderhastherighttohaveanysuchopinionprovidedbyitscounsel.LenderalsohastherighttohaveanysuchopinionprovidedbyBorrower’scounsel.
15.Notices.Anynoticerequiredorpermittedhereunder(includingConversionNotices)mustbeinwritingandeitherpersonallyserved,sentbyfacsimileoremailtransmission,orsentbyovernightcourier.Noticeswillbedeemedeffectivelydeliveredatthetimeoftransmissionifbyfacsimileoremail,andifbyovernightcourierthebusinessdayaftersuchnoticeisdepositedwiththecourierservicefordelivery.
[SignaturePagetoFollow]
| Borrower: | Lender: |
| | |
| /s/ Darren Magot | /s/ Authorized Signatory |
| Co-Signer, Inc. | JMJ Financial |
| Chief Executive Officer | Its Principle |
| | |
| Date: 9/23/2013 | Date: 9/23/2013 |
[SignaturePageto$400,000PromissoryNote]
