Cross Click Media (XCLK) 10-Q 2013 Q3 Quarterly report

NEITHER THEISSUANCEANDSALEOFTHESECURITIES REPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICH THESESECURITIESARECONVERTIBLE HAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATESECURITIES LAWS.THESECURITIES MAYNOT BEOFFEREDFOR SALE,SOLD,TRANSFERRED ORASSIGNED(I) IN THEABSENCEOF(A)ANEFFECTIVE REGISTRATIONSTATEMENTFOR THESECURITIESUNDER THESECURITIES ACT OF1933,ASAMENDED,OR(B)ANOPINIONOFCOUNSEL(WHICHCOUNSEL SHALLBESELECTEDBYTHEHOLDER),INAGENERALLY ACCEPTABLEFORM,THATREGISTRATION ISNOT REQUIREDUNDERSAIDACTOR(II)UNLESS SOLDPURSUANTTORULE144ORRULE144AUNDERSAIDACT. NOTWITHSTANDING THEFOREGOING, THESECURITIESMAY BEPLEDGED INCONNECTIONWITHABONA FIDEMARGINACCOUNTOROTHERLOANORFINANCINGARRANGEMENTSECUREDBYTHESECURITIES.

Principal Amount:$42,500.00	IssueDate: November25, 2013
Purchase Price:$42,500.00

CONVERTIBLE PROMISSORYNOTE

FOR VALUERECEIVED,CO-SIGNER,INC., aNevadacorporation(hereinafter calledthe“Borrower”),herebypromisestopaytotheorderofASHERENTERPRISES,INC.,aDelawarecorporation,orregisteredassigns (the“Holder”)thesumof$42,500.00togetherwithanyinterestas setforthherein,onAugust27,2014(the“MaturityDate”),andtopayintereston theunpaid principalbalancehereofattherate ofeightpercent (8%) (the“InterestRate”) perannumfrom thedatehereof(the“IssueDate”)until thesame becomes dueandpayable,whether at maturity oruponacceleration orbyprepaymentor otherwise.This Notemay notbe prepaid inwholeor inpartexceptas otherwise explicitlysetforthherein. Any amount ofprincipal orintereston thisNote which is notpaid when dueshall bearinterestatthe rate of twentytwopercent (22%) per annumfrom the due datethereof until thesame is paid(“DefaultInterest”).Interestshall commenceaccruingon thedate thatthe Noteis fully paidandshallbe computedon thebasisofa365-dayyearandtheactualnumber ofdayselapsed.Allpaymentsduehereunder(to the extent notconvertedintocommonstock, $0.001par value pershare(the“Common Stock”)inaccordance withtheterms hereof)shall bemadeinlawful moneyoftheUnitedStates ofAmerica.Allpaymentsshallbemadeatsuchaddressas theHoldershallhereafter givetotheBorrowerbywrittennoticemadeinaccordancewiththeprovisionsofthisNote.Wheneveranyamount expressed to be duebythetermsof thisNote is due onanydaywhich is not abusiness day,thesameshallinsteadbedueonthenextsucceedingday whichisabusinessdayand,inthecase ofanyinterest paymentdatewhich is not thedate onwhich thisNoteispaid infull, the extension oftheduedatethereof shallnotbetakenintoaccount forpurposesofdeterminingtheamountofinterest dueonsuchdate.As used in thisNote, theterm “businessday”shallmean anydayother than aSaturday,Sunday or aday onwhichcommercialbanks in thecityofNewYork,NewYorkareauthorized orrequiredbylaw orexecutiveorder toremainclosed.Each capitalizedtermusedherein, and nototherwisedefined,shall have themeaningascribed thereto inthatcertainSecurities PurchaseAgreementdatedthedatehereof, pursuanttowhichthisNotewasoriginally issued(the “Purchase Agreement”).

This Noteisfreefrom alltaxes,liens, claimsandencumbranceswith respecttotheissuethereof andshallnotbesubjecttopreemptiverightsorother similarrightsofshareholdersoftheBorrower andwill not impose personal liabilityupon the holder thereof.

The followingterms shall applyto thisNote:

ARTICLEI.CONVERSION RIGHTS

1.1   ConversionRight. TheHolder shallhavetherightfromtimetotime,andatanytimeduringtheperiodbeginningonthedate whichisonehundredeighty(180)days followingthedateofthisNote andendingonthelater of:(i)theMaturityDateand(ii)thedate ofpaymentof the DefaultAmount(asdefinedinArticle III)pursuant toSection 1.6(a) orArticle III,each inrespect of theremainingoutstandingprincipalamount of thisNotetoconvert all or any part of theoutstandingandunpaidprincipalamount of thisNoteinto fullypaid and non-assessableshares of CommonStock,assuch CommonStockexists ontheIssueDate, or anysharesofcapitalstockorothersecuritiesoftheBorrowerintowhichsuchCommonStockshall hereafter bechanged orreclassified at the conversionprice(the“ConversionPrice”)determined asprovidedherein(a “Conversion”);provided,however, that in no eventshall theHolder beentitled toconvertany portion of thisNote in excess ofthatportionof thisNote uponconversion ofwhich the sum of (1) the number ofsharesof CommonStockbeneficiallyowned by theHolderanditsaffiliates(otherthan shares of CommonStockwhich may bedeemed beneficiallyownedthroughthe ownership of the unconvertedportion of theNotesor theunexercised orunconvertedportion of anyothersecurityof theBorrower subject to alimitation onconversionorexerciseanalogous to thelimitations containedherein)and (2)thenumberofshares of CommonStock issuable upon theconversion of theportionof thisNotewithrespectto which thedetermination ofthisproviso isbeing made,would result inbeneficialownership by theHolderand itsaffiliatesofmorethan 9.99% of theoutstanding sharesof CommonStock.Forpurposesof the proviso to theimmediately preceding sentence,beneficial ownershipshall bedeterminedinaccordancewith Section13(d) of theSecurities Exchange Act of 1934,asamended (the“ExchangeAct”),andRegulations13D-Gthereunder,except asotherwiseprovidedinclause (1) ofsuchproviso,provided,further,however,thatthelimitations onconversionmay bewaivedby theHolderupon,attheelectionof theHolder,notlessthan61days’priornoticeto theBorrower,and the provisions of theconversionlimitationshall continue to apply untilsuch 61st day(or such laterdate,asdeterminedby theHolder,as may bespecifiedinsuchnotice ofwaiver). The number of shares of CommonStock to beissueduponeachconversionof thisNoteshall bedeterminedby dividing theConversionAmount(asdefinedbelow)by theapplicableConversionPricethenineffectonthedatespecifiedinthenotice ofconversion,in theformattached heretoas Exhibit A(the“NoticeofConversion”), delivered to theBorrower by the Holder inaccordance withSection 1.4below; providedthat theNotice ofConversionissubmitted byfacsimile ore-mail(or byothermeans resulting in, or reasonablyexpected toresult in,notice)to theBorrowerbefore 6:00 p.m.,NewYork,New York time onsuchconversiondate (the“ConversionDate”). Theterm “ConversionAmount” means,withrespecttoanyconversionof thisNote,the sumof(1) theprincipalamountof thisNotetobeconvertedinsuchconversionplus(2) at theHolder’s option,accrued andunpaidinterest,ifany, onsuch principal amountat theinterestratesprovidedinthisNotetotheConversion Date,plus(3)attheHolder’s option,DefaultInterest, if any, on theamountsreferredto in theimmediatelyprecedingclauses(1) and/or(2)plus(4)at theHolder’soption, any amountsowed to theHolder pursuant toSections 1.3and1.4(g) hereof.

1.2 Conversion Price.

(a)    CalculationofConversionPrice. The conversion price(the“Conversion Price”)shallequaltheVariableConversionPrice(asdefinedherein)(subjecttoequitableadjustmentsforstocksplits,stockdividendsorrightsofferings bytheBorrowerrelatingtotheBorrower’ssecuritiesor thesecuritiesofany subsidiary of theBorrower, combinations,recapitalization,reclassifications, extraordinarydistributionsandsimilarevents).The "VariableConversionPrice"shallmean58%multipliedby theMarketPrice(asdefinedherein)(representing adiscountrateof42%).“Market Price”meanstheaverageofthelowestthree (3)TradingPrices(as definedbelow)fortheCommonStockduringtheten (10)Trading Dayperiodending onthelatest completeTrading DaypriortotheConversionDate.“TradingPrice”means,forany securityasofanydate, theclosing bid priceon theOver-the-CounterBulletin Board, orapplicabletradingmarket(the“OTCBB”)asreportedbyareliablereportingservice(“ReportingService”)designatedby theHolder (i.e.Bloomberg)or, if theOTCBBis nottheprincipal tradingmarketfor suchsecurity, theclosingbid priceofsuch security on theprincipalsecurities exchange or tradingmarketwhere such security is listed ortraded or, if noclosingbidpriceofsuchsecurity isavailableinanyof theforegoingmanners, theaverageof theclosingbidpricesofanymarket makersforsuch security that arelistedinthe“pinksheets”by theNational QuotationBureau,Inc.If theTrading Pricecannot becalculatedforsuchsecurity onsuchdate inthemannerprovidedabove,theTradingPriceshallbethefair marketvalueasmutuallydeterminedby theBorrowerand theholders of amajority ininterestof theNotes beingconvertedforwhich thecalculation of theTradingPrice isrequiredin order todetermine theConversion PriceofsuchNotes.“Trading Day”shallmeananydayonwhichtheCommonStockistradableforanyperiodontheOTCBB,or ontheprincipalsecuritiesexchange or othersecuritiesmarket onwhich theCommonStock isthenbeing traded.

(b)    ConversionPriceDuringMajorAnnouncements.Notwithstanding anythingcontainedinSection1.2(a)tothecontrary,intheeventtheBorrower(i)makesapublicannouncement thatitintendstoconsolidateormergewithanyothercorporation (otherthanamerger inwhichtheBorrower is thesurviving orcontinuing corporationand itscapital stock isunchanged) orsell ortransferall orsubstantially all of theassets of theBorrower or(ii)anyperson, group or entity (including theBorrower) publiclyannouncesa tenderoffer topurchase 50% ormore of theBorrower’s CommonStock(oranyothertakeover scheme)(thedate of theannouncementreferred to inclause(i)or(ii)ishereinafterreferredtoasthe“Announcement Date”),then the ConversionPrice shall,effective upon theAnnouncement DateandcontinuingthroughtheAdjusted ConversionPrice TerminationDate(asdefined below), beequal to thelowerof (x)theConversionPrice whichwould havebeenapplicable for aConversion occurring ontheAnnouncementDate and(y)theConversionPricethatwould otherwisebeineffect.From andafter theAdjustedConversion PriceTerminationDate, theConversion Priceshall bedeterminedas setforth in thisSection1.2(a). Forpurposeshereof,“Adjusted ConversionPriceTerminationDate” shallmean,with respect to any proposed transaction ortenderoffer(ortakeover scheme)for which a public announcementascontemplatedby thisSection1.2(b) hasbeenmade,thedateuponwhichtheBorrower(inthecaseofclause(i)above)ortheperson, grouporentity(inthecaseofclause(ii)above)consummatesorpubliclyannouncesthetermination orabandonmentof theproposedtransaction or tender offer(ortakeover scheme)which caused this Section1.2(b)tobecome operative.

(ii)                                                  AuthorizedShares.TheBorrower covenantsthat during the period theconversionrightexists,theBorrower willreserve fromitsauthorizedandunissuedCommonStockasufficient numberofshares, free frompreemptiverights,toprovidefortheissuanceofCommonStock upon the fullconversion ofthis Note issuedpursuant to thePurchase Agreement.TheBorrowerisrequiredatalltimestohaveauthorizedandreservedfivetimesthenumberofsharesthatisactuallyissuable uponfullconversionof theNote(basedontheConversionPrice of theNotes ineffectfrom time totime)(the“Reserved Amount”). TheReservedAmount shall beincreasedfromtimetotimeinaccordancewiththeBorrower’sobligationshereunder.TheBorrowerrepresentsthatuponissuance, suchshareswillbedulyandvalidlyissued, fullypaidandnon-assessable. In addition, iftheBorrowershall issue anysecurities ormake any changeto itscapitalstructurewhich wouldchange thenumber ofsharesof CommonStock intowhich theNotesshallbeconvertibleatthethencurrentConversionPrice,theBorrowershallatthesame timemakeproperprovisionsothatthereafterthereshallbeasufficientnumberofsharesofCommonStock authorizedandreserved,freefrompreemptiverights, forconversionof theoutstandingNotes.The Borrower(i)acknowledgesthatithas irrevocablyinstructed itstransferagenttoissuecertificates fortheCommonStockissuableuponconversionofthisNote,and agreesthat itsissuanceof thisNoteshallconstitute full authorityto itsofficersandagentswho arechargedwith the dutyofexecuting stockcertificates toexecute and issue the necessarycertificatesfor sharesofCommonStockinaccordancewiththetermsandconditionsofthisNote.

If, atanytimetheBorrowerdoesnotmaintaintheReservedAmountitwillbeconsideredan Event of DefaultunderSection 3.2 ofthe Note.

1.3 Methodof Conversion.

(A)                                                      Mechanicsof Conversion.SubjecttoSection1.1,thisNotemaybeconvertedbytheHolderinwholeorinpart atanytimefromtimetotimeaftertheIssueDate,bysubmittingtotheBorroweraNoticeofConversion(byfacsimile,e-mail orother reasonablemeansofcommunicationdispatchedontheConversionDatepriorto6:00p.m.,NewYork, NewYorktime) and(B)subjecttoSection1.4(b),surrenderingthisNoteattheprincipaloffice of theBorrower.

(a)    SurrenderofNoteUponConversion. Notwithstandinganything tothecontrarysetforth herein,uponconversionofthisNoteinaccordancewiththetermshereof,theHoldershallnotberequiredtophysicallysurrender thisNote totheBorrower unlesstheentireunpaid principalamount of thisNote is soconverted.The Holder and theBorrowershallmaintain records showing the principalamountsoconvertedand thedates of suchconversionsorshall usesuchothermethod,reasonably satisfactory totheHolder andtheBorrower,soas not torequire physical surrenderofthisNoteuponeachsuchconversion.In theevent of any disputeordiscrepancy,suchrecords oftheBorrower shall,primafacie,becontrollingand determinative in theabsence ofmanifest error.Notwithstanding theforegoing,ifany portion of thisNote isconvertedasaforesaid,theHoldermaynottransfer thisNote unlesstheHolderfirstphysicallysurrenders thisNote totheBorrower, whereupon theBorrowerwillforthwithissueanddeliver upon theorderoftheHolderanewNoteofliketenor,registered as theHolder(uponpaymentbytheHolderofanyapplicable transfer taxes) mayrequest, representing in theaggregate theremaining unpaidprincipalamountofthisNote.The Holderandanyassignee,byacceptanceof thisNote,acknowledge andagreethat,byreasonoftheprovisionsofthisparagraph,followingconversionofaportionofthisNote,theunpaidandunconvertedprincipal amountof thisNote represented by thisNotemaybelessthan theamountstated on the face hereof.

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(b)    PaymentofTaxes. TheBorrower shallnot berequiredtopayanytaxwhichmaybepayableinrespectofanytransferinvolvedintheissueanddeliveryofsharesofCommonStock orother securities or property onconversionofthis Note in anameotherthanthatofthe Holder(orinstreetname), andtheBorrower shallnot berequiredtoissue ordeliver anysuch sharesorothersecuritiesorpropertyunlessanduntilthepersonorpersons(otherthan theHolder or thecustodian inwhosestreetname suchshares are to beheldfortheHolder’saccount)requestingtheissuancethereofshallhave paidtotheBorrowertheamountofany suchtax or shallhave established to the satisfaction oftheBorrowerthatsuch taxhas beenpaid.

(c)    DeliveryofCommonStockUponConversion. UponreceiptbytheBorrowerfromtheHolderofafacsimiletransmissionore-mail (orotherreasonablemeansofcommunication)ofaNoticeofConversionmeeting therequirementsforconversion asprovided in thisSection1.4, theBorrowershall issueand deliver orcausetobe issuedanddeliveredto or upon theorderof the Holdercertificates for the CommonStockissuableuponsuchconversionwithin three(3) businessdays aftersuch receipt(the“Deadline”) (and, solely in thecase ofconversionoftheentire unpaidprincipalamount hereof,surrenderofthisNote)in accordancewith the termshereof andthe Purchase Agreement.

(d)    ObligationofBorrowertoDeliverCommonStock. UponreceiptbytheBorrowerofaNoticeofConversion,theHoldershallbedeemedtobetheholderofrecordoftheCommonStockissuableuponsuchconversion,theoutstandingprincipalamountandtheamount ofaccruedandunpaidinterest on thisNoteshall bereduced toreflect suchconversion,and,unlesstheBorrowerdefaults on itsobligations under thisArticle I,all rightswithrespect to theportionof thisNotebeing soconvertedshallforthwithterminate except theright toreceive the CommonStockorothersecurities,cashorotherassets,as hereinprovided, onsuchconversion.Ifthe Holdershallhavegiven aNoticeofConversion asprovidedherein,theBorrower’sobligation to issueand deliver thecertificates for CommonStockshall beabsolute andunconditional,irrespective of theabsence of any actionby theHoldertoenforce the same, anywaiver orconsentwith respect toany provisionthereof, the recovery ofanyjudgment againstany personor any action toenforce the same,anyfailureor delay in theenforcement of any otherobligationoftheBorrowertotheholderofrecord,or anysetoff,counterclaim,recoupment,limitationortermination,oranybreachorallegedbreachbytheHolderofanyobligationtotheBorrower,and irrespective ofany othercircumstancewhichmightotherwiselimitsuchobligationof theBorrowertothe Holderinconnection withsuchconversion.TheConversionDatespecifiedin theNotice ofConversionshallbe theConversionDate so longas theNotice of Conversion isreceivedby theBorrowerbefore6:00 p.m.,NewYork, NewYork time, onsuchdate.

(e)    DeliveryofCommonStockbyElectronicTransfer.Inlieuofdeliveringphysical certificatesrepresentingtheCommonStock issuableuponconversion, providedtheBorrowerisparticipatingintheDepository Trust Company(“DTC”)FastAutomated SecuritiesTransfer(“FAST”) program,uponrequestof theHolderanditscompliancewith the provisionscontained in Section 1.1and in this Section 1.4, theBorrowershall use itsbestefforts tocause itstransferagent toelectronically transmit theCommonStockissuableuponconversiontotheHolderbycrediting theaccountofHolder’sPrime BrokerwithDTC through itsDepositWithdrawalAgent Commission(“DWAC”) system.

(f)     FailuretoDeliverCommonStock PriortoDeadline.WithoutinanywaylimitingtheHolder’sright topursueotherremedies,includingactualdamagesand/orequitablerelief,thepartiesagreethatifdeliveryoftheCommonStock issuableuponconversionof thisNote is notdelivered by theDeadline (otherthan afailuredue to thecircumstancesdescribedinSection 1.3above,whichfailure shall begovernedbysuchSection)theBorrowershallpayto the Holder $2,000per day in cash,foreach daybeyond theDeadlinethattheBorrowerfailstodeliver suchCommonStock. SuchcashamountshallbepaidtoHolderby thefifth day of the monthfollowingthe month inwhich ithasaccrued or,at the option of theHolder(bywrittennoticeto theBorrower bythefirstdayof the monthfollowing the month inwhich ithasaccrued),shallbe addedtotheprincipalamountofthisNote,inwhicheventinterestshallaccrue thereoninaccordance withthetermsof thisNoteand suchadditionalprincipalamount shall beconvertible into CommonStockinaccordancewith thetermsof thisNote.TheBorrower agreesthat theright toconvertis avaluable right to theHolder. The damagesresultingfrom afailure,attempt tofrustrate, interferencewithsuchconversion rightaredifficult if not impossible toqualify.Accordinglythe partiesacknowledgethattheliquidateddamagesprovision contained in thisSection1.4(g)arejustified.

1.4   ConcerningtheShares. The sharesofCommonStock issuableuponconversionofthisNotemaynotbesoldortransferred unless(i)suchsharesaresoldpursuanttoaneffectiveregistration statementundertheAct or(ii)theBorroweroritstransferagentshallhavebeenfurnishedwithanopinion ofcounsel(whichopinionshall be inform,substance andscope customaryforopinions ofcounsel incomparable transactions)to theeffectthat thesharestobesoldortransferredmay besoldortransferredpursuanttoanexemptionfromsuchregistrationor(iii) suchsharesaresoldortransferredpursuantto Rule 144under theAct(orasuccessorrule)(“Rule 144”)or(iv)such sharesaretransferredtoan“affiliate”(asdefinedin Rule 144) of theBorrowerwhoagreestosellorotherwise transfer thesharesonly inaccordancewiththisSection 1.5and who isanAccreditedInvestor (as defined in thePurchaseAgreement). Exceptasotherwiseprovidedin thePurchaseAgreement(and subject to theremovalprovisionssetforth below),untilsuchtimeasthesharesofCommonStock issuableuponconversionofthisNotehave beenregisteredunder theActorotherwisemaybe sold pursuant to Rule 144without anyrestrictionas to thenumberofsecuritiesas of aparticular datethat canthen beimmediatelysold,eachcertificateforsharesofCommonStockissuableuponconversionofthisNotethathas notbeensoincluded inaneffective registrationstatement orthathas notbeen soldpursuanttoaneffective registrationstatementoranexemptionthatpermits removalof thelegend, shallbear a legend substantially in the followingform,as appropriate:

“NEITHERTHEISSUANCE ANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATE NORTHESECURITIES INTOWHICHTHESESECURITIES AREEXERCISABLEHAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,AS AMENDED,ORAPPLICABLE STATESECURITIESLAWS. THESECURITIES MAYNOT BEOFFERED FORSALE, SOLD,TRANSFERRED ORASSIGNED(I) IN THEABSENCEOF (A)ANEFFECTIVEREGISTRATION STATEMENTFOR THESECURITIESUNDER THESECURITIESACTOF 1933,ASAMENDED,OR(B)ANOPINION OFCOUNSEL(WHICH COUNSELSHALL BESELECTEDBYTHEHOLDER), IN AGENERALLYACCEPTABLE FORM,THATREGISTRATION ISNOT REQUIREDUNDERSAIDACTOR (II)UNLESSSOLDPURSUANTTORULE 144 ORRULE144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING,THESECURITIESMAYBEPLEDGED INCONNECTION WITH A BONAFIDEMARGINACCOUNTOROTHERLOANORFINANCINGARRANGEMENTSECUREDBYTHESECURITIES.”

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The legendsetforthaboveshallberemovedandtheBorrowershallissuetotheHolderanewcertificate thereforefreeofanytransferlegendif(i)theBorroweroritstransfer agentshallhavereceivedanopinionofcounsel,inform,substance andscopecustomaryfor opinions ofcounsel incomparable transactions, to theeffectthat a public sale ortransferofsuch CommonStock may bemade withoutregistrationundertheAct, which opinionshall be acceptedby theCompany sothatthesaleortransferiseffectedor(ii)inthecaseofthe CommonStock issuable uponconversion of thisNote,such security isregisteredforsaleby the Holder underan effectiveregistrationstatementfiledunder the Act orotherwisemaybe soldpursuantto Rule144withoutanyrestrictionas to thenumber ofsecuritiesas of a particulardate that canthen beimmediately sold. In theeventthat theCompany does notaccept the opinion ofcounsel providedby theBuyer withrespecttothetransferofSecuritiespursuant toanexemptionfrom registration,such as Rule 144 orRegulation S,at theDeadline, itwill beconsidered anEventofDefaultpursuant toSection 3.2 oftheNote.

1.5 EffectofCertain Events.

(a)    EffectofMerger,Consolidation,Etc. Atthe optionoftheHolder,thesale,conveyanceordispositionofallorsubstantiallyalloftheassetsoftheBorrower,theeffectuationby theBorrowerof atransactionorseries ofrelatedtransactions inwhichmorethan 50% of the votingpower of theBorrower is disposedof,or the consolidation,merger orotherbusinesscombinationof theBorrowerwith or into anyotherPerson(asdefined below) orPersons when theBorrower is not thesurvivorshall either:(i) be deemed to bean Event ofDefault(as definedinArticleIII)pursuanttowhichtheBorrowershallberequiredtopaytotheHolderuponthe consummationofand asaconditiontosuchtransactionanamountequaltotheDefaultAmount (asdefined inArticle III) or(ii) betreatedpursuanttoSection1.6(b)hereof. “Person”shallmeananyindividual,corporation,limitedliabilitycompany,partnership,association,trustor otherentity ororganization.

(b)    AdjustmentDuetoMerger, Consolidation,Etc.If,atanytimewhenthisNoteisissuedand outstandingandpriortoconversionofalloftheNotes,there shallbeanymerger,consolidation, exchangeofshares, recapitalization,reorganization,orothersimilarevent,asa result of whichshares of CommonStockof theBorrower shall bechangedinto thesame or adifferentnumber ofshares ofanother class orclasses of stock orsecuritiesof theBorrower or anotherentity, or incase of anysaleorconveyance ofall or substantiallyall of theassetsof theBorrowerotherthaninconnectionwith aplanofcompleteliquidation of theBorrower,thentheHolderofthisNoteshallthereafterhavetherighttoreceiveuponconversion ofthisNote,uponthe basisanduponthetermsandconditionsspecified hereinandinlieuofthesharesof CommonStock immediatelytheretofore issuable upon conversion,suchstock, securitiesorassetswhichtheHolderwouldhavebeenentitledtoreceiveinsuchtransaction had thisNotebeen converted infull immediately prior tosuchtransaction(withoutregard toanylimitationsonconversionsetforthherein),andinanysuchcaseappropriateprovisionsshallbemadewithrespect totherights andinterestsof theHolderof thisNote totheendthattheprovisionshereof(including, withoutlimitation,provisionsforadjustment of theConversion Priceand of the number ofsharesissuable uponconversion of theNote) shallthereafter beapplicable, as nearlyas maybepracticableinrelation toany securities orassetsthereafterdeliverableupontheconversion hereof. TheBorrowershallnotaffectanytransactiondescribed in thisSection1.6(b) unless(a) itfirstgives,to the extentpracticable, thirty(30)daysprior writtennotice(but inanyeventatleastfifteen(15)days priorwrittennotice)of therecord date of thespecialmeeting ofshareholdersto approve, orifthereis nosuchrecorddate, theconsummationof, suchmerger, consolidation,exchangeofshares,recapitalization, reorganizationorothersimilarevent orsaleof assets(duringwhich time theHolder shallbeentitled toconvert thisNote)and (b) the resultingsuccessororacquiring entity(if not theBorrower)assumesbywritten instrument theobligations of thisSection 1.6(b).The aboveprovisionsshallsimilarlyapply tosuccessiveconsolidations,mergers, sales,transfersor shareexchanges.

(c)    AdjustmentDuetoDistribution.IftheBorrowershall declareormakeanydistributionofitsassets (orrightstoacquireitsassets)toholdersofCommonStock asadividend, stockrepurchase,bywayofreturnofcapitalorotherwise(includinganydividendordistribution to theBorrower’s shareholders incash orshares (or rights toacquireshares)ofcapital stock of asubsidiary(i.e.,aspin-off))(a “Distribution”),then theHolder ofthisNote shall beentitled, upon anyconversionof thisNoteafter the date ofrecord fordeterminingshareholders entitled to suchDistribution, to receivethe amountof suchassetswhichwouldhavebeenpayable to theHolder withrespect to theshares of CommonStockissuable uponsuch conversionhadsuch Holderbeenthe holder of suchshares of CommonStockon therecorddateforthe determination of shareholdersentitled tosuchDistribution.

(d)    AdjustmentDuetoDilutive Issuance.If,atanytimewhenanyNotesare issuedandoutstanding,theBorrowerissuesorsells,orinaccordancewiththisSection1.6(d)hereofisdeemedtohaveissuedorsold,anysharesofCommonStockfornoconsiderationorforaconsideration per share (beforededuction ofreasonable expensesorcommissions orunderwriting discountsorallowancesinconnectiontherewith)lessthantheConversionPriceineffecton thedate ofsuchissuance (ordeemedissuance) ofsuch shares of CommonStock(a“Dilutive Issuance”),thenimmediatelyupontheDilutive Issuance,the ConversionPrice will bereduced to theamountoftheconsideration persharereceivedbytheBorrowerin suchDilutive Issuance.

The BorrowershallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorgrantsanywarrants, rightsoroptions(notincluding employeestockoptionplans),whetherornotimmediatelyexercisable,tosubscribeforortopurchase CommonStockorothersecurities convertibleintoorexchangeableforCommonStock(“Convertible Securities”)(such warrants,rightsandoptionstopurchaseCommonStock orConvertible Securitiesarehereinafterreferredtoas“Options”)and theprice pershareforwhich CommonStock isissuableupon theexercise ofsuchOptionsislessthan theConversion Pricethen ineffect, then theConversionPriceshallbeequal to suchprice pershare. Forpurposes of the precedingsentence,the“price per share forwhichCommonStock isissuable upon theexerciseof suchOptions”isdeterminedby dividing(i)the totalamount, ifany,receivedorreceivableby theBorroweras considerationfor the issuanceorgrantingofall suchOptions, plus theminimumaggregateamount ofadditional consideration, ifany,payable to theBorrowerupon the exercise ofallsuchOptions,plus, in thecaseofConvertible Securitiesissuable upon the exercise ofsuch Options, the minimumaggregateamountofadditionalconsiderationpayableupon theconversion orexchange thereofat the timesuchConvertible Securitiesfirst becomeconvertibleor exchangeable,by(ii)the maximumtotalnumber ofsharesof CommonStockissuable upon theexercise ofallsuch Options(assumingfullconversionofConvertibleSecurities, ifapplicable).Nofurther adjustment to theConversionPricewill bemadeupon the actualissuanceof such CommonStock upon the exerciseof suchOptions orupon the conversion orexchangeof Convertible Securitiesissuableuponexerciseof suchOptions.

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Additionally,theBorrower shallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorsellsanyConvertible Securities,whether ornotimmediatelyconvertible(otherthanwhere thesameareissuableupontheexerciseofOptions), and the price per sharefor which CommonStock isissuable upon suchconversionorexchangeislessthanthe ConversionPricethen ineffect,thenthe ConversionPriceshall beequal to suchprice pershare.For thepurposes of the precedingsentence,the“price per shareforwhich CommonStock isissuableuponsuchconversion orexchange”isdeterminedbydividing(i) thetotalamount,ifany,receivedorreceivableby theBorroweras considerationfor the issuance or sale ofall suchConvertibleSecurities, plus theminimumaggregateamountof additionalconsideration, ifany, payable to theBorrower upon theconversionorexchangethereof at the timesuchConvertible Securities firstbecomeconvertibleorexchangeable,by(ii)the maximumtotalnumber ofsharesof CommonStockissuable upon theconversionorexchangeofallsuchConvertibleSecurities.No furtheradjustmenttotheConversionPricewillbemadeupontheactualissuanceofsuchCommonStockuponconversion or exchangeofsuchConvertible Securities.

(e)    PurchaseRights.If,atanytimewhenanyNotesareissued andoutstanding,theBorrowerissuesanyconvertiblesecuritiesorrightstopurchasestock,warrants, securitiesorotherproperty(the“PurchaseRights”) proratatotherecord holdersofanyclassofCommonStock,thenthe Holder of thisNotewillbeentitledtoacquire,uponthetermsapplicabletosuchPurchaseRights,theaggregatePurchase RightswhichsuchHolder couldhaveacquiredifsuchHolder hadheld thenumber ofsharesof CommonStockacquirable uponcompleteconversion of thisNote (withoutregard to anylimitations onconversioncontainedherein)immediatelybefore thedateonwhich a recordistakenfor the grant,issuanceorsale ofsuch PurchaseRightsor, if nosuch record istaken, thedateasofwhich therecordholdersof CommonStockareto be determinedforthegrant,issueor saleof such Purchase Rights.

(f)     NoticeofAdjustments. Upontheoccurrenceofeach adjustmentorreadjustmentoftheConversion Priceasaresultoftheevents describedinthisSection1.6,theBorrower, atitsexpense,shallpromptlycomputesuchadjustmentorreadjustmentand prepareandfurnish to theHolderacertificate settingforthsuch adjustment orreadjustmentand showing indetail thefacts uponwhich suchadjustment orreadjustment isbased.TheBorrower shall, upon thewrittenrequestat any time of theHolder,furnishtosuch Holder a likecertificatesettingforth (i)suchadjustmentorreadjustment,(ii)theConversionPrice atthetimeineffectand (iii)thenumberofsharesofCommonStock andtheamount,ifany, ofothersecuritiesor propertywhichat thetime would be received uponconversionoftheNote.

1.6   TradingMarket Limitations. Unless permittedbytheapplicable rulesandregulationsoftheprincipalsecuritiesmarketonwhichtheCommonStockisthenlistedortraded,innoeventshalltheBorrower issue uponconversionoforotherwisepursuanttothisNoteandthe other Notesissuedpursuant to thePurchaseAgreement morethanthe maximumnumber ofsharesof CommonStockthattheBorrower canissue pursuantto anyruleof theprincipalUnitedStates securitiesmarket on which theCommonStock isthentraded(the “MaximumShareAmount”), whichshall be9.99%ofthetotal sharesoutstanding on theClosingDate (asdefined in the PurchaseAgreement),subject toequitableadjustmentfrom time to timeforstock splits,stockdividends, combinations,capitalreorganizations andsimilarevents relating to the CommonStockoccurring after thedatehereof.Once the MaximumShareAmounthasbeenissued,if theBorrower fails toeliminate anyprohibitionsunderapplicable lawor therules

orregulationsofany stockexchange, interdealerquotationsystemorotherself-regulatory organizationwithjurisdictionovertheBorroweror anyofitssecuritiesontheBorrower’sabilitytoissuesharesofCommonStockinexcessoftheMaximumShareAmount,inlieuofanyfurtherrighttoconvert thisNote,thiswill beconsideredanEventofDefaultunder Section3.3 ofthe Note.

1.7   Statusas Shareholder. Uponsubmissionof aNoticeofConversionbyaHolder, (i)theshares coveredthereby(otherthantheshares,ifany,whichcannotbeissuedbecausetheirissuancewouldexceed suchHolder’sallocatedportion oftheReservedAmount or MaximumShare Amount)shall bedeemedconvertedintoshares ofCommonStock and(ii) theHolder’srightsasaHolder ofsuchconvertedportionof thisNoteshallcease andterminate,exceptingonly therighttoreceivecertificatesforsuchsharesofCommonStockandtoanyremediesprovided herein orotherwiseavailableat law or in equity to suchHolderbecauseof afailure by theBorrower to complywith theterms of thisNote. Notwithstanding theforegoing, if aHolder has notreceivedcertificatesforallsharesof CommonStockprior to thetenth(10th)businessdayafter theexpiration of theDeadlinewithrespectto a conversion of anyportion of thisNote for anyreason,then(unlesstheHolderotherwiseelectstoretain itsstatusasa holder of CommonStock by sonotifyingtheBorrower) theHolder shallregain therightsof aHolderofthisNotewith respect tosuchunconverted portions of thisNoteand theBorrower shall,as soonaspracticable, returnsuchunconverted Note to theHolder or, if theNote has not beensurrendered,adjust itsrecordstoreflect thatsuchportionof thisNotehas notbeen converted. Inallcases, theHolder shallretainallof itsrightsandremedies (including,withoutlimitation,(i) theright to receiveConversion DefaultPaymentspursuant toSection 1.3 to the extentrequired therebyforsuchConversionDefaultand any subsequentConversion Defaultand(ii)theright tohave theConversionPrice withrespect tosubsequentconversions determined inaccordancewithSection 1.3) fortheBorrower’s failuretoconvertthisNote.

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1.8   Prepayment.NotwithstandinganythingtothecontrarycontainedinthisNote, atanytimeduringtheperiodbeginningontheIssue Dateandendingonthedate whichisthirty(30)daysfollowingtheissuedate,theBorrowershallhavetheright,exercisableonnotlessthanthree (3)TradingDaysprior writtennoticetotheHolderoftheNotetoprepay theoutstanding Note(principalandaccruedinterest), infull,inaccordancewiththisSection1.9.Anynoticeofprepayment hereunder(an“Optional PrepaymentNotice”)shallbedeliveredtotheHolderoftheNoteatitsregisteredaddressesand shallstate: (1)that theBorrowerisexercising itsright to prepay theNote,and (2) thedate ofprepaymentwhichshallbe notmorethanthree (3)TradingDaysfromthedateoftheOptional PrepaymentNotice.Onthedatefixedforprepayment(the “OptionalPrepaymentDate”),theBorrower shallmakepaymentof theOptionalPrepaymentAmount (asdefined below) to or upon the order of theHolder asspecified by theHolder inwriting to theBorroweratleast one(1) business dayprior to theOptionalPrepaymentDate. If theBorrower exercises itsright to prepay the Note, theBorrowershallmakepayment to theHolderofanamountincash(the “OptionalPrepaymentAmount”)equalto110%,multipliedby the sumof:(w)the thenoutstandingprincipalamount ofthisNoteplus(x) accruedandunpaid interest on theunpaidprincipalamount of thisNote to theOptional PrepaymentDateplus(y)Default Interest,ifany,ontheamounts referred toinclauses (w)and(x)plus(z)anyamounts owed to theHolder pursuant toSections1.3and1.4(g)hereof.If theBorrowerdeliversan OptionalPrepaymentNoticeandfailstopay theOptional PrepaymentAmountdue tothe Holder of theNotewithin two(2)businessdaysfollowingtheOptionalPrepayment Date,theBorrower shallforever forfeit itsright to prepay the Notepursuant to thisSection1.9.

Notwithstanding anythingto thecontrarycontainedinthisNote, atanytimeduringtheperiodbeginningonthedatewhichisthirty-one(31)daysfollowingtheissuedateand endingonthedatewhichis sixty(60)days followingthe issuedate,theBorrowershall have theright,exercisableonnotless thanthree (3)Trading DayspriorwrittennoticetotheHolder of theNotetoprepay the outstandingNote(principaland accruedinterest),infull, inaccordancewiththisSection 1.9.Any OptionalPrepaymentNoticeshallbedelivered to theHolder of theNoteatitsregisteredaddressesand shallstate:(1)thattheBorrowerisexercising itsrightto prepay theNote,and (2) thedate ofprepaymentwhichshall be notmore thanthree(3)Trading DaysfromthedateoftheOptional PrepaymentNotice.OntheOptionalPrepayment Date,theBorrower shallmake paymentof theSecond OptionalPrepaymentAmount(asdefinedbelow)to orupontheorderoftheHolderasspecifiedby theHolderinwritingtotheBorroweratleast one(1) business dayprior to theOptionalPrepaymentDate.If theBorrowerexercises itsright to prepay theNote, theBorrower shallmakepayment to theHolderofanamount incash (the“SecondOptional PrepaymentAmount”) equal to115%,multipliedby the sumof:(w)thethenoutstandingprincipalamount of thisNoteplus(x) accruedandunpaidintereston theunpaidprincipalamountof thisNote to theOptionalPrepaymentDateplus(y)Default Interest,ifany,on theamountsreferred to inclauses(w)and(x)plus(z) anyamountsowedto theHolderpursuanttoSections1.3and1.4(g) hereof. If theBorrowerdeliversan OptionalPrepaymentNotice andfailstopay theSecondOptionalPrepayment Amountdue totheHolderof theNotewithintwo(2) businessdaysfollowing the OptionalPrepaymentDate,theBorrowershallforever forfeit itsright toprepay the Notepursuant to thisSection 1.9.

Notwithstanding anythingto thecontrarycontainedinthisNote, atanytimeduringtheperiodbeginningonthedatewhichissixty-one(61) daysfollowingtheissuedateand ending onthedatewhichis ninety(90)daysfollowingthe issuedate,theBorrower shallhave theright,exercisableon notlessthan three(3) TradingDayspriorwrittennotice to theHolder of theNote to prepay theoutstanding Note(principalandaccruedinterest),infull, inaccordancewiththisSection1.9. AnyOptionalPrepaymentNoticeshallbedeliveredtotheHolder of theNote at itsregisteredaddressesand shallstate:(1)thattheBorrower isexercising itsrighttoprepay theNote,and(2)thedateofprepaymentwhichshallbenotmore thanthree (3)TradingDaysfrom the dateofthe OptionalPrepaymentNotice. On the OptionalPrepaymentDate,theBorrowershall makepaymentofthe ThirdOptional PrepaymentAmount(asdefined below)to orupon theorderofthe Holderas specifiedby theHolderin writing to theBorrower atleast one(1) businessday prior totheOptional PrepaymentDate.If theBorrower exercises itsrighttoprepay theNote,theBorrowershallmake paymenttotheHolderofanamountincash(the “ThirdOptionalPrepaymentAmount”) equal to120%, multipliedby the sumof:(w)thethenoutstandingprincipal amount ofthisNoteplus(x) accruedandunpaidintereston theunpaidprincipal amount of thisNote to theOptional PrepaymentDateplus(y)Default Interest, ifany,on theamountsreferred to inclauses(w)and(x)plus(z) anyamountsowed to theHolderpursuanttoSections 1.3and 1.4(g) hereof. If theBorrowerdeliversan OptionalPrepaymentNoticeand fails topaytheThird OptionalPrepaymentAmount due to theHolder of theNotewithin two(2)business days following theOptionalPrepayment Date, theBorrowershallforever forfeit itsrightto prepay theNotepursuant to thisSection 1.9.

Notwithstandinganytothecontrarystatedelsewhereherein, atanytimeduringtheperiodbeginningonthedatethatisninety-one(91)dayfromtheissuedateandendingonehundredtwenty(120)days followingtheissuedate,theBorrowershall havetheright, exercisable on notless thanthree(3)Trading Daysprior written notice to theHolder of theNotetoprepay theoutstandingNote(principalandaccruedinterest),infull,inaccordancewiththis Section1.9.AnyOptionalPrepaymentNotice shallbedeliveredtothe Holder of theNoteatitsregisteredaddressesand shallstate:(1) that theBorrowerisexercising itsright to prepay theNote,and (2)thedateofprepaymentwhichshallbenotmorethanthree(3)Trading Daysfrom thedateoftheOptional PrepaymentNotice.OntheOptionalPrepaymentDate,theBorrowershall make paymentof theFourthOptionalPrepayment Amount(asdefined below) toor upon theorderof theHolderasspecifiedbytheHolderinwritingtotheBorroweratleastone(1)business daypriorto theOptionalPrepayment Date.IftheBorrowerexercisesitsright toprepay theNote,theBorrowershallmake payment to theHolderofan amount incash(the“Fourth OptionalPrepayment Amount”)equalto125%,multipliedby thesumof: (w) thethenoutstandingprincipalamount of thisNoteplus(x) accruedandunpaidintereston theunpaidprincipalamountof thisNote to theOptionalPrepaymentDateplus(y) DefaultInterest, ifany, on theamountsreferred to inclauses (w)and (x)plus(z) anyamounts owed to theHolderpursuant toSections 1.3and 1.4(g) hereof.If theBorrowerdeliversan OptionalPrepaymentNoticeandfailstopay theFourth OptionalPrepaymentAmountdue totheHolder of theNotewithin two(2)business days following theOptionalPrepayment Date, theBorrowershallforever forfeit itsrightto prepay theNotepursuant to thisSection 1.9.

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Notwithstandinganytothecontrarystatedelsewhereherein, atanytimeduringtheperiodbeginningonthedatethatisonehundredtwenty-one (121)day fromtheissuedateandendingone hundredfifty(150)daysfollowingthe issuedate,theBorrowershallhavetheright,exercisableon notlessthanthree (3)TradingDaysprior writtennoticeto theHolderoftheNoteto prepay the outstandingNote(principalandaccruedinterest), infull,inaccordancewith thisSection1.9. Any OptionalPrepaymentNotice shall bedelivered to the HolderoftheNoteatitsregisteredaddresses andshallstate:(1) that theBorrower isexercising itsright to prepay theNote,and (2) thedate ofprepaymentwhichshall be notmorethan three (3)TradingDaysfromthedateof theOptionalPrepayment Notice.OntheOptional PrepaymentDate,theBorrowershall makepayment of theFifthOptional PrepaymentAmount(asdefined below) to or upon theorderoftheHolderasspecified by theHolderinwriting to theBorroweratleastone(1)businessdayprior to theOptionalPrepaymentDate. If theBorrowerexercises itsrightto prepaytheNote, theBorrower shallmakepayment to the Holder ofanamount in cash(the “FifthOptionalPrepaymentAmount”)equal to130%, multiplied by the sum of: (w)thethenoutstandingprincipalamountof thisNoteplus(x) accruedand unpaidinterest on theunpaidprincipalamountof thisNote totheOptional PrepaymentDateplus(y)Default Interest, ifany, on theamountsreferred to inclauses(w) and(x)plus(z) anyamounts owed to theHolderpursuant toSections 1.3and1.4(g) hereof. IftheBorrower deliversanOptional PrepaymentNotice and fails topay theFifth OptionalPrepaymentAmount due to theHolder of theNotewithin two(2)businessdays following theOptionalPrepaymentDate, theBorrowershall foreverforfeit itsright to prepay the Notepursuantto thisSection 1.9.

Notwithstandinganytothecontrarystatedelsewhereherein, atanytimeduringtheperiodbeginningonthedatethatisonehundredfifty-one(151)dayfromtheissuedate andending onehundredeighty(180)daysfollowing theissuedate,theBorrowershallhavetheright,exercisableonnotless thanthree(3) TradingDayspriorwrittennotice totheHolderoftheNotetoprepay theoutstandingNote(principal andaccruedinterest),infull,inaccordancewiththisSection1.9.AnyOptionalPrepaymentNotice shallbedelivered tothe Holderof theNoteatitsregisteredaddressesand shallstate:(1) that theBorrowerisexercising itsright to prepay theNote,and(2)thedate ofprepaymentwhichshall be notmorethan three (3)TradingDaysfromthedateof theOptionalPrepayment Notice.OntheOptional PrepaymentDate,theBorrowershall makepayment ofthe SixthOptionalPrepayment Amount (asdefinedbelow)toorupontheorderoftheHolderasspecifiedbytheHolderinwriting to theBorroweratleast one(1) business dayprior to the OptionalPrepayment Date. If theBorrowerexercises itsright to prepaytheNote,theBorrowershall makepaymenttothe Holderofan amountincash(the “SixthOptional PrepaymentAmount”)equalto135%,multipliedbythe sum of: (w)thethen outstandingprincipalamountofthisNoteplus(x) accruedand unpaidinterest on theunpaid principalamount of thisNote totheOptionalPrepayment Dateplus(y)Default Interest, ifany,on theamountsreferred to inclauses(w)and(x)plus(z) anyamountsowed to theHolderpursuanttoSections 1.3and1.4(g) hereof.IftheBorrower deliversanOptionalPrepaymentNotice and fails topay the SixthOptionalPrepaymentAmountdue to theHolderof theNote withintwo(2)business daysfollowing theOptionalPrepayment Date, theBorrowershallforever forfeit itsright to prepay the Note pursuant to thisSection 1.9.

Aftertheexpirationofonehundredeighty(180)followingthedateoftheNote,the Borrowershallhavenoright of prepayment.

ARTICLEII.CERTAIN COVENANTS

2.1   DistributionsonCapital Stock.So longas theBorrowershallhaveanyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swrittenconsent (a)pay,declareorsetapartfor suchpayment,anydividendorotherdistribution(whetherincash,propertyorothersecurities)onsharesofcapitalstockotherthandividends onsharesofCommonStock solely in theform ofadditionalshares of CommonStockor(b) directly or indirectly orthroughany subsidiarymakeanyotherpayment ordistribution inrespect of itscapitalstock exceptfor distributionspursuant toanyshareholders’ rightsplanwhich isapprovedby amajority ofthe Borrower’sdisinteresteddirectors.

2.2   RestrictiononStock Repurchases.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swritten consentredeem,repurchaseorotherwiseacquire(whetherforcashorinexchange forpropertyorothersecuritiesor otherwise)inany onetransaction orseriesofrelatedtransactionsanysharesofcapital stock of the Borroweroranywarrants,rightsoroptions topurchaseoracquireany suchshares.

2.3   Borrowings.SolongastheBorrower shallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent, create,incur,assumeguarantee, endorse, contingentlyagree topurchaseorotherwise becomeliable upon theobligationofanyperson,firm,partnership,jointventureor corporation,exceptbytheendorsement ofnegotiableinstruments fordeposit orcollection, orsufferto exist any liability forborrowedmoney, except (a)borrowingsinexistenceorcommittedonthedate hereofandofwhichtheBorrower hasinformedHolderinwritingpriortothedatehereof,(b)indebtednesstotrade creditors orfinancial institutionsincurredin theordinarycourse ofbusinessor(c)borrowings, the proceeds of whichshall be used to repay thisNote.

2.4   SaleofAssets.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,sell,leaseorotherwisedisposeofanysignificantportionofitsassetsoutsidetheordinary courseofbusiness.Anyconsentto thedisposition of anyassetsmaybe conditioned on aspecifieduse of theproceeds of disposition.

2.5   Advancesand Loans.So longastheBorrowershall haveanyobligationunderthisNote,theBorrowershallnot,withoutthe Holder’swrittenconsent,lendmoney,give creditormakeadvancestoanyperson,firm,jointventureorcorporation,including, withoutlimitation,officers,directors,employees,subsidiaries andaffiliates of theBorrower,exceptloans,creditsoradvances(a) inexistenceor committed on thedatehereofandwhich theBorrowerhasinformedHolder inwritingpriortothedate hereof,(b)made inthe ordinarycourseof businessor(c)not inexcess of$100,000.

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ARTICLEIII.EVENTSOFDEFAULT

Ifanyofthefollowing events of default (each,an“Eventof Default”)shalloccur:

3.1   FailuretoPayPrincipalorInterest.TheBorrowerfailstopaytheprincipalhereoforinterestthereon whendueonthisNote,whetherat maturity,uponaccelerationorotherwise.

3.2   ConversionandtheShares.TheBorrowerfailstoissuesharesofCommonStocktotheHolder (orannouncesorthreatensinwritingthatitwillnothonoritsobligationtodoso) uponexercise by theHolder of theconversionrightsof theHolderinaccordancewiththetermsof thisNote,fails totransfer or cause itstransferagenttotransfer(issue)(electronically or incertificated form) anycertificate forshares of CommonStockissuedto theHolder uponconversion of orotherwisepursuant to thisNote asandwhenrequired by thisNote, theBorrower directs itstransferagent not totransferordelays, impairs,and/orhinders itstransfer agent intransferring(orissuing)(electronically or incertificated form) anycertificate forshares of CommonStock to beissued to theHolder uponconversion of orotherwisepursuant to thisNoteas andwhen required by thisNote, orfails toremove(or directs itstransfer agent not toremoveorimpairs,delays,and/orhinders itstransferagentfromremoving)anyrestrictivelegend(or towithdraw any stoptransfer instructions inrespect thereof) on anycertificate for anysharesofCommonStock issuedtotheHolderuponconversionoforotherwisepursuanttothisNote asandwhen required by thisNote(or makes anywrittenannouncement,statement orthreatthat itdoes notintendtohonor theobligationsdescribedin this paragraph)andanysuchfailure shallcontinueuncured(oranywrittenannouncement,statementorthreat not to honor itsobligations shallnotberescindedinwriting)forthree(3)business daysaftertheHoldershallhavedelivereda NoticeofConversion. Itisanobligationof theBorrower toremain currentin itsobligations to itstransfer agent. Itshall beanevent ofdefault of thisNote, if aconversion of thisNoteisdelayed,hinderedorfrustrateddue to abalanceowedby theBorrower toitstransferagent. Ifatthe option of theHolder, theHolder advances anyfunds to theBorrower’s transferagent in order toprocessaconversion,suchadvancedfundsshall bepaid by theBorrowertotheHolder within fortyeight (48) hours of a demand from the Holder.

3.3   BreachofCovenants. TheBorrowerbreachesanymaterialcovenantorother materialtermorconditioncontainedinthisNote andanycollateraldocumentsincludingbutnotlimitedtothePurchase Agreementandsuchbreachcontinuesforaperiodoften(10) daysafterwrittennotice thereofto theBorrower from the Holder.

3.4   BreachofRepresentations andWarranties.AnyrepresentationorwarrantyoftheBorrowermadehereinorinanyagreement,statementorcertificategiveninwritingpursuantheretoorinconnection herewith(including,withoutlimitation,thePurchaseAgreement),shallbefalse or misleadingin anymaterial respect whenmadeand thebreachofwhichhas(or with the passageoftime willhave)a materialadverse effect on the rights oftheHolder withrespect to thisNoteorthe PurchaseAgreement.

3.5   ReceiverorTrustee.TheBorroweroranysubsidiaryoftheBorrowershallmakeanassignment forthebenefitofcreditors,orapplyfororconsenttotheappointmentofareceiverortrusteeforitorforasubstantialpartofitspropertyorbusiness, orsuchareceiverortrustee shallotherwisebeappointed.

3.6   Judgments.Anymoneyjudgment,writorsimilar processshallbeenteredorfiledagainsttheBorroweroranysubsidiaryoftheBorroweror anyofitspropertyorotherassets formorethan$50,000,andshallremainunvacated,unbondedorunstayedforaperiodoftwenty(20)days unlessotherwiseconsentedtobytheHolder,whichconsentwill not be unreasonablywithheld.

3.7   Bankruptcy. Bankruptcy, insolvency, reorganizationorliquidation proceedingsorotherproceedings,voluntaryorinvoluntary,for reliefunderanybankruptcylaworanylawforthereliefofdebtorsshallbeinstitutedbyoragainst theBorroweroranysubsidiaryofthe Borrower.

3.8   DelistingofCommonStock.TheBorrower shallfailto maintain thelistingoftheCommonStockonatleastoneoftheOTCBBoran equivalentreplacementexchange,theNasdaqNational Market,theNasdaq SmallCapMarket,theNewYorkStockExchange,ortheAmerican StockExchange.

3.9   FailuretoComplywiththeExchangeAct.TheBorrowershall failtocomplywiththereportingrequirementsoftheExchangeAct; and/ortheBorrower shallceasetobesubjectto the reportingrequirementsofthe ExchangeAct.

3.10       Liquidation.Any dissolution,liquidation,orwindingupofBorroweroranysubstantial portion ofitsbusiness.

3.11       Cessation of Operations.AnycessationofoperationsbyBorrowerorBorroweradmitsitisotherwisegenerallyunabletopayitsdebtsas suchdebtsbecomedue,provided,however,thatanydisclosureoftheBorrower’sabilityto continue as a“goingconcern”shallnot be anadmissionthatthe Borrowercannotpayitsdebtsastheybecome due.

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3.12       Maintenanceof Assets. ThefailurebyBorrowertomaintainanymaterialintellectualpropertyrights,personal, realpropertyorotherassets which arenecessarytoconduct itsbusiness(whethernoworin thefuture).

3.13       FinancialStatement Restatement. Therestatementofanyfinancial statementsfiledby theBorrower withtheSECforany dateorperiodfromtwoyears priortotheIssueDateofthisNote anduntilthisNoteisnolongeroutstanding, iftheresultofsuchrestatementwould,bycomparisontotheunrestatedfinancialstatement, have constitutedamaterialadverse effect on therights of theHolderwithrespect to thisNoteor thePurchaseAgreement.

3.14           ReverseSplits.TheBorrower effectuatesareversesplitofitsCommonStockwithout twenty(20) days prior writtennoticeto the Holder.

3.15           Replacement ofTransfer Agent.In theevent that the Borrower proposes toreplaceitstransferagent,theBorrower failstoprovide, priortotheeffectivedateofsuch replacement,afullyexecutedIrrevocableTransferAgentInstructionsinaform asinitiallydeliveredpursuant tothePurchaseAgreement(including but notlimitedto theprovisiontoirrevocablyreserveshares of CommonStock intheReservedAmount) signedby thesuccessortransfer agent toBorrower and theBorrower.

3.16           Cross-Default.Notwithstanding anythingtothecontrarycontainedinthisNoteortheother relatedorcompaniondocuments,abreachordefaultbytheBorrowerofanycovenantorothertermorcondition containedin anyoftheOtherAgreements, after thepassage of allapplicablenoticeandcureorgraceperiods,shall,at theoption oftheHolder,beconsidered adefaultunder thisNoteand the Other Agreements, inwhichevent theHolder shall beentitled(butin noevent required) to applyall rightsandremediesof the Holder under the terms of thisNote andtheOtherAgreementsbyreasonofadefaultundersaid OtherAgreementorhereunder.“Other Agreements”means,collectively, allagreementsandinstruments between,among orby:(1)theBorrower,and, orforthebenefitof,(2)theHolderandanyaffiliateof theHolder,including,without limitation,promissorynotes; provided,however, the term“OtherAgreements”shall not include therelated or companiondocuments to thisNote. Each of theloantransactions will becross-defaultedwitheachotherloantransactionandwithall other existingandfuture debtof Borrowerto the Holder.

UpontheoccurrenceandduringthecontinuationofanyEventofDefaultspecifiedinSection3.1(solelywith respecttofailuretopaytheprincipalhereoforinterestthereonwhendueattheMaturityDate),theNoteshallbecomeimmediatelydueandpayableandtheBorrowershallpaytotheHolder, infullsatisfactionof itsobligationshereunder,anamountequaltotheDefaultSum(asdefinedherein).UPONTHEOCCURRENCEAND DURING THECONTINUATION OFANYEVENT OFDEFAULTSPECIFIEDINSECTION 3.2,THENOTESHALLBECOME IMMEDIATELYDUEANDPAYABLE ANDTHEBORROWERSHALL PAYTOTHEHOLDER,INFULL SATISFACTION OF ITSOBLIGATIONSHEREUNDER, ANAMOUNT EQUALTO:(Y)THEDEFAULTSUM(AS DEFINED HEREIN); MULTIPLIEDBY (Z)TWO(2). Upontheoccurrence and during thecontinuationof any Event of Default specified in Sections 3.1 (solely with respect to failure topay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuanttoSection 1.7orupon acceleration),3.3, 3.4,3.6, 3.8, 3.9,3.11, 3.12,3.13,3.14, and/or 3. 15 exercisable through the delivery of written notice to the Borrowerbysuch Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure topaythe principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payableand theBorrowershall pay tothe Holder, infullsatisfactionof its obligationshereunder, an amount equal to the greater of (i) 150%timesthesumof (w) the then outstanding principal amount of this Noteplus(x) accrued and unpaid interest on the unpaid principal amount of this Noteto thedateofpayment (the “Mandatory PrepaymentDate”)plus(y)Default Interest,if any, on the amounts referred to in clauses (w) and/or (x)plus(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the dateofpaymentplusthe amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest numberof shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date),multipliedby(b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrenceof the Event of Default and ending oneday prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or inequity.

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IftheBorrower failstopaytheDefaultAmountwithin five(5)businessdaysofwritten noticethatsuchamountisdueand payable,thentheHoldershallhavetherightatanytime,solongastheBorrowerremainsindefault(andso longandtotheextentthat therearesufficientauthorizedshares),torequiretheBorrower,uponwrittennotice,toimmediatelyissue,inlieuof theDefault Amount, thenumber ofsharesof CommonStock of theBorrower equal to theDefaultAmountdividedby theConversionPricethen ineffect.

ARTICLEIV.MISCELLANEOUS

4.1   FailureorIndulgenceNotWaiver. No failureordelayonthepartoftheHolderintheexerciseofanypower, rightorprivilegehereundershalloperateasawaiverthereof,norshallanysingleorpartialexerciseofanysuchpower,right or privilege precludeother orfurtherexercisethereof or ofanyotherright, power orprivileges. Allrightsandremediesexistinghereunderarecumulativeto,andnotexclusiveof,anyrightsorremediesotherwise available.

4.2   Notices. Allnotices, demands,requests,consents,approvals, andothercommunications requiredorpermitted hereundershallbeinwriting and,unlessotherwise specifiedherein,shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,returnreceiptrequested,postageprepaid, (iii)delivered byreputable aircourierservicewith chargesprepaid,or(iv) transmittedbyhanddelivery, telegram,or facsimile,addressedassetforthbelowortosuchotheraddressas suchparty shallhave specifiedmostrecentlybywrittennotice.Anynotice orothercommunicationrequiredorpermittedtobegivenhereundershallbedeemedeffective (a) uponhanddeliveryor delivery byfacsimile,withaccurateconfirmation generatedbythe transmittingfacsimilemachine, attheaddressornumberdesignatedbelow(ifdelivered on a businessday duringnormal businesshourswhere such noticeis to bereceived),orthefirstbusinessdayfollowingsuchdelivery(if deliveredotherthanonabusinessdayduringnormal businesshourswheresuchnotice is to bereceived) or(b) on thesecondbusinessdayfollowing thedate ofmailingbyexpress courierservice, fully prepaid,addressedtosuchaddress,or uponactualreceiptofsuchmailing, whichevershallfirstoccur. Theaddressesforsuch communicationsshallbe:

Ifto the Borrower, to:

CO-SIGNER,INC.

6250MountainVista Street -Suite C-1Henderson,NV89014

Attn: DARRENM.MAGOT,Chief Executive Officer

facsimile:

With acopybyfaxonlyto(whichcopyshall notconstitute notice):

Kyleen Cane Cane•ClarkLLP

3273E.WarmSpringsRd.LasVegas,NV89120

Ifto the Holder:

ASHER ENTERPRISES,INC.

1Linden Pl., Suite207GreatNeck, NY. 11021

Attn:CurtKramer, President

facsimile:516-498-9894

With acopybyfaxonlyto(whichcopyshall notconstitute notice):

NaidichWurman Birnbaum &Maday,LLP

80CuttermillRoad,Suite410GreatNeck,NY11021

Attn: Bernard S.Feldman,Esq.

facsimile: 516-466-3555

4.3   Amendments.This Noteandanyprovisionhereofmayonly beamendedbyan instrumentinwritingsignedbytheBorrowerandtheHolder. Theterm “Note”andallreferencethereto, asusedthroughoutthisinstrument,shallmeanthisinstrument(andtheotherNotesissuedpursuanttothePurchaseAgreement) asoriginallyexecuted,or iflateramendedorsupplemented,thenassoamended or supplemented.

4.4   Assignability. ThisNoteshallbebindingupontheBorrower anditssuccessors and assigns,andshallinuretobethebenefitoftheHolderanditssuccessorsand assigns.Eachtransferee of thisNote must bean“accreditedinvestor” (asdefined in Rule501(a)of the 1933Act).Notwithstandinganything in thisNote to the contrary, thisNote may bepledgedascollateralinconnectionwith abonafidemargin account orother lendingarrangement.

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4.5   Cost ofCollection.Ifdefault ismadein thepayment ofthisNote,theBorrowershallpaytheHolder hereof costs ofcollection,includingreasonable attorneys’ fees.

4.6   GoverningLaw.ThisNote shallbegovernedbyand construedinaccordance withthelawsoftheStateofNewYorkwithoutregardtoprinciplesofconflictsoflaws.Anyactionbroughtbyeitherpartyagainst theotherconcerningthetransactionscontemplatedbythisNoteshallbebroughtonlyinthestatecourtsofNewYorkorinthefederal courtslocatedinthestateandcountyofNassau.The parties tothisNoteherebyirrevocablywaive anyobjectiontojurisdictionand venue of any actioninstitutedhereunder andshall notassert any defensebased onlackofjurisdictionorvenueorbaseduponforumnonconveniens.TheBorrowerandHolder waivetrialbyjury.Theprevailing partyshall beentitled torecover from theotherparty itsreasonableattorney's feesandcosts. In the eventthatany provision of thisNote or anyother agreementdeliveredinconnectionherewithisinvalidorunenforceableunder anyapplicable statute orrule of law, thensuch provisionshall bedeemedinoperativeto the extentthat it mayconflicttherewithand shall bedeemedmodified toconformwithsuch statute orrule oflaw. Anysuchprovisionwhichmay prove invalidorunenforceableunderanylawshallnotaffect the validity orenforceabilityof anyother provision of anyagreement. Each partyherebyirrevocablywaives personalservice ofprocessandconsents toprocess beingserved in anysuit,actionorproceeding inconnectionwiththisAgreement or any otherTransaction Document bymailing a copy thereof viaregisteredorcertifiedmail orovernightdelivery(withevidence ofdelivery)tosuchpartyat theaddressineffectfornoticestoitunderthisAgreementand agreesthatsuchservice shallconstitutegoodand sufficientservice of processandnoticethereof.Nothing contained hereinshall bedeemed tolimit in anyway anyrighttoserveprocess in anyother manner permitted bylaw.

4.7   CertainAmounts. WheneverpursuanttothisNotetheBorrowerisrequiredtopayanamountinexcessoftheoutstanding principalamount(ortheportionthereof requiredtobepaidat thattime)plusaccrued andunpaidinterestplusDefaultInterestonsuchinterest,theBorrowerand the Holderagree thattheactualdamages to theHolderfrom thereceiptofcashpayment on thisNotemay bedifficult todetermineand theamount to be sopaidby theBorrowerrepresents stipulateddamagesand not a penaltyand isintended tocompensatetheHolder inpartfor lossof the opportunity toconvertthisNoteandtoearnareturnfromthesale ofshares of CommonStockacquired uponconversionof this Noteat aprice inexcessof thepricepaidfor such sharespursuant to thisNote.TheBorrowerandthe Holder herebyagreethat suchamount ofstipulateddamagesis not plainlydisproportionate to the possible loss to theHolder from thereceipt of acashpayment without the opportunity toconvert thisNoteintoshares ofCommonStock.

4.8   PurchaseAgreement.ByitsacceptanceofthisNote, eachpartyagreestobeboundbytheapplicableterms ofthe Purchase Agreement.

4.9   NoticeofCorporateEvents.Except asotherwiseprovidedbelow,theHolderofthisNoteshallhavenorights asaHolderofCommonStockunless andonly totheextentthatitconvertsthisNoteintoCommonStock.The BorrowershallprovidetheHolderwith priornotification of any meetingof theBorrower’sshareholders(and copies of proxymaterialsand other information sent toshareholders). In the event ofanytakingby theBorrower of arecordof itsshareholdersfor thepurposeof determiningshareholderswho areentitled toreceivepaymentofanydividendorotherdistribution,any right tosubscribefor,purchaseorotherwiseacquire(including by wayof merger, consolidation,reclassification orrecapitalization)any share ofanyclass or any othersecurities orproperty, ortoreceiveany otherright,orforthepurposeofdeterminingshareholders whoareentitledtovote inconnection withanyproposedsale,leaseorconveyance ofallor substantiallyall of theassetsof theBorrower oranyproposed liquidation,dissolution orwinding up of theBorrower,theBorrowershallmailanotice to theHolder,at least twenty(20) days prior to therecord datespecifiedtherein(orthirty(30)dayspriorto theconsummation of thetransactionorevent,whichever isearlier),of the date onwhichanysuch record istobe takenfor thepurposeofsuchdividend,distribution,rightorotherevent,andabriefstatement regarding theamountandcharacterofsuchdividend, distribution,right or othereventtotheextentknownat suchtime.The Borrowershallmakeapublicannouncementofanyevent requiringnotification to theHolderhereunder substantially simultaneouslywith thenotificationto the Holderinaccordance with the terms ofthisSection4.9.

4.10           Remedies. TheBorrower acknowledgesthatabreachbyitofitsobligations hereunderwillcause irreparableharmtotheHolder,byvitiatingtheintentandpurposeof the transactioncontemplatedhereby. Accordingly, theBorroweracknowledges that theremedyatlawforabreachofitsobligations underthisNote will beinadequateandagrees,in the eventofabreach orthreatened breach by theBorroweroftheprovisions ofthisNote,thattheHoldershallbeentitled,inadditiontoallotheravailable remediesatlaworinequity,andinaddition to thepenaltiesassessableherein, toan injunction orinjunctionsrestraining, preventing or curinganybreachof thisNoteandtoenforcespecifically the terms andprovisionsthereof,withoutthenecessityofshowing economiclossandwithoutanybondorothersecuritybeingrequired.

INWITNESSWHEREOF,BorrowerhascausedthisNotetobesignedinitsnameby itsdulyauthorizedofficerthisNovember25, 2013.

CO-SIGNER, INC.

By:/s/ Darren M. Magot

DARRENM.MAGOT

Chief Executive Officer

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EXHIBITANOTICE OFCONVERSION

The undersignedherebyelectstoconvert$principal amountoftheNote(definedbelow)intothat numberofsharesofCommonStocktobeissued pursuanttotheconversionoftheNote(“CommonStock”) assetforthbelow,ofCO-SIGNER,INC.,aNevadacorporation (the“Borrower”)accordingto theconditions of theconvertible note of theBorrowerdatedas ofNovember25,2013(the “Note”),as ofthedate writtenbelow.No feewill be charged to theHolderforanyconversion, exceptfor transfertaxes, if any.

Box Checkedas toapplicable instructions:

[ ]TheBorrowershall electronicallytransmittheCommonStock issuablepursuanttothisNoticeofConversiontotheaccountoftheundersignedoritsnominee withDTCthroughitsDepositWithdrawal AgentCommissionsystem(“DWACTransfer”).

Nameof DTCPrime Broker:AccountNumber:

[ ]TheundersignedherebyrequeststhattheBorrowerissueacertificateorcertificatesforthenumberofsharesofCommonStocksetforthbelow(whichnumbers arebasedontheHolder’s calculationattachedhereto)inthename(s)specifiedimmediately belowor, ifadditionalspaceisnecessary, onan attachmenthereto:

ASHER ENTERPRISES,INC.

1Linden Pl., Suite207

GreatNeck, NY. 11021

Attention: CertificateDelivery(516) 498-9890

DateofConversion:

Applicable ConversionPrice:

Numberof Shares ofCommonStockto beIssued

PursuanttoConversion ofthe Notes:

Amountof PrincipalBalanceDue remaining

UndertheNote afterthisconversion:

ASHER ENTERPRISES,INC.

By:

Name: CurtKramer

Title:President

Date:

1Linden Pl., Suite207

GreatNeck, NY. 11021

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