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

NEITHERTHEISSUANCEANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICHTHESESECURITIESARECONVERTIBLEHAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATESECURITIESLAWS.THESECURITIESMAYNOT BEOFFEREDFORSALE,SOLD,TRANSFERRED ORASSIGNED(I) IN THEABSENCE OF(A)ANEFFECTIVEREGISTRATIONSTATEMENTFOR THESECURITIESUNDER THESECURITIES ACT OF1933,ASAMENDED, OR(B)ANOPINION OFCOUNSEL(WHICHCOUNSELSHALLBESELECTEDBYTHEHOLDER),INAGENERALLYACCEPTABLEFORM,THATREGISTRATION ISNOTREQUIREDUNDERSAIDACT OR(II)UNLESS SOLDPURSUANTTORULE144ORRULE144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING, THESECURITIESMAY BEPLEDGED INCONNECTIONWITHABONAFIDEMARGINACCOUNTOROTHERLOANORFINANCINGARRANGEMENTSECUREDBYTHESECURITIES.

PrincipalAmount:$32,500.00	Issue Date: January 8,2014
PurchasePrice:$32,500.00

CONVERTIBLEPROMISSORYNOTE

FORVALUERECEIVED,CO-SIGNER,INC.,aNevadacorporation(hereinaftercalledthe“Borrower”),herebypromisestopaytotheorderofASHERENTERPRISES,INC.,aDelawarecorporation,orregisteredassigns(the“Holder”)thesumof$32,500.00togetherwithanyinterestassetforthherein,onOctober10,2014(the“MaturityDate”),andtopayinterestontheunpaidprincipalbalancehereofat therate ofeightpercent(8%) (the“InterestRate”)perannumfromthedatehereof(the“IssueDate”)untilthesamebecomesdueandpayable,whetherat maturity oruponacceleration orbyprepaymentor otherwise.This Notemay notbe prepaid inwhole or inpartexceptasotherwise explicitlysetforthherein. Any amount ofprincipal orinterest on thisNote which is notpaid when dueshall bearinterestat the rate of twentytwopercent (22%) per annumfrom the due datethereof until thesame is paid(“DefaultInterest”).Interestshall commenceaccruing on thedate thatthe Noteis fully paidandshall be computedon thebasisof a 365-dayyearandtheactual number ofdayselapsed.Allpaymentsdue hereunder(to the extent notconverted intocommonstock, $0.001parvalue pershare(the“CommonStock”)inaccordancewiththetermshereof)shallbemadeinlawfulmoneyoftheUnitedStates ofAmerica.AllpaymentsshallbemadeatsuchaddressastheHoldershallhereaftergivetotheBorrowerbywrittennoticemadeinaccordance withtheprovisionsofthisNote. Wheneveranyamountexpressed to be duebytheterms of thisNote is due onanydaywhich is not abusinessday,thesameshallinsteadbedueonthenextsucceedingdaywhichisabusinessdayand,inthecase ofanyinterestpaymentdatewhich is not thedate onwhich thisNote ispaid infull, the extensionof the duedatethereofshall not be takenintoaccountfor purposesofdeterminingtheamount ofinterest dueonsuch date.As used in thisNote, theterm “businessday”shall mean anydayother than aSaturday, Sunday or aday onwhichcommercial banks in thecityofNewYork,New Yorkareauthorized orrequiredbylaw orexecutive order toremainclosed.Eachcapitalizedtermusedherein,and nototherwisedefined,shallhave themeaningascribedthereto inthatcertainSecuritiesPurchaseAgreement datedthe datehereof, pursuant towhichthisNotewasoriginallyissued(the “Purchase Agreement”).

ThisNoteisfreefromalltaxes,liens,claimsandencumbranceswithrespecttotheissuethereofandshallnotbesubjecttopreemptiverightsorothersimilarrightsofshareholdersoftheBorrowerandwill not impose personal liabilityupon the holder thereof.

The followingterms shall applyto thisNote:

ARTICLEI.CONVERSION RIGHTS

1.1ConversionRight.TheHoldershallhavetherightfromtimetotime,andatanytimeduringtheperiodbeginningonthedatewhichisonehundredeighty(180)daysfollowingthedateofthisNoteandendingonthelaterof:(i)theMaturityDateand(ii)thedate ofpayment of the DefaultAmount(asdefined inArticle III)pursuanttoSection1.6(a) orArticle III,each inrespect of theremainingoutstandingprincipalamount of thisNotetoconvertall or any part of theoutstandingand unpaidprincipalamount of thisNoteinto fullypaidand non-assessableshares of CommonStock,assuchCommonStockexists ontheIssueDate, or anysharesofcapitalstockorothersecuritiesoftheBorrowerintowhichsuchCommonStockshallhereafter bechanged orreclassifiedat the conversionprice(the“ConversionPrice”)determinedasprovidedherein(a“Conversion”);provided,however,that in no eventshall theHolderbeentitled toconvert any portion of thisNote in excess ofthatportion of thisNote uponconversion ofwhich the sum of (1) the number ofshares of CommonStockbeneficiallyowned by theHolderanditsaffiliates(otherthanshares of CommonStockwhich may bedeemed beneficiallyownedthrough the ownership of the unconvertedportion of theNotes or theunexercised orunconvertedportion of anyother securityof theBorrower subject to alimitation onconversion orexerciseanalogous to thelimitationscontainedherein)and(2)thenumberofshares of CommonStockissuable upon theconversion of theportion of thisNotewithrespect to which thedetermination ofthisproviso isbeing made,wouldresult inbeneficialownership by theHolderand itsaffiliates ofmorethan 9.99% of theoutstandingshares of CommonStock.Forpurposes of the proviso to theimmediately preceding sentence,beneficialownershipshall bedeterminedinaccordancewithSection13(d) of theSecuritiesExchange Act of 1934,asamended(the“ExchangeAct”),andRegulations13D-Gthereunder,exceptasotherwiseprovided inclause (1) ofsuchproviso,provided,further,however,that thelimitations onconversionmay bewaivedby theHolder upon,attheelectionof theHolder,notlessthan61days’priornotice to theBorrower,and the provisions of theconversionlimitationshallcontinue to apply untilsuch 61st day(orsuch laterdate,asdetermined by theHolder,as may bespecified insuchnotice ofwaiver).The number of shares of CommonStock to beissued uponeachconversion of thisNoteshall bedetermined by dividing theConversionAmount(asdefinedbelow) by theapplicableConversionPricethenineffectonthedatespecifiedinthenotice ofconversion, in theformattachedheretoas Exhibit A(the“NoticeofConversion”),delivered to theBorrower by the Holder inaccordancewithSection 1.4below; providedthat theNotice ofConversion issubmitted byfacsimile ore-mail(or byothermeans resulting in, or reasonablyexpected toresult in,notice) to theBorrowerbefore 6:00 p.m.,NewYork,NewYork time onsuchconversiondate (the“Conversion Date”).Theterm“ConversionAmount”means,withrespecttoanyconversionof thisNote,the sumof(1) theprincipalamountof thisNote tobeconverted insuchconversionplus(2)at theHolder’s option,accruedandunpaidinterest, ifany, onsuchprincipal amountat theinterestratesprovidedinthisNote totheConversionDate,plus(3)at theHolder’s option,DefaultInterest, if any, on theamountsreferredto in theimmediatelyprecedingclauses(1) and/or(2)plus(4)at theHolder’s option, any amountsowed to theHolderpursuant toSections 1.3and1.4(g) hereof.

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1.2Conversion Price.

(a)CalculationofConversionPrice. Theconversionprice (the“ConversionPrice”)shallequaltheVariableConversionPrice(asdefinedherein)(subjecttoequitableadjustmentsforstocksplits,stockdividendsorrightsofferings bytheBorrowerrelatingtotheBorrower’ssecuritiesor thesecuritiesofany subsidiary of theBorrower,combinations,recapitalization,reclassifications,extraordinarydistributionsandsimilarevents).The"VariableConversionPrice" shallmean58%multipliedby theMarketPrice(asdefinedherein)(representing adiscountrateof42%).“MarketPrice”meanstheaverageofthelowestthree(3)TradingPrices(asdefinedbelow)fortheCommonStockduringtheten(10)Trading Dayperiodending onthelatestcompleteTrading DaypriortotheConversionDate. “TradingPrice”means,forany securityasofany date, theclosing bid priceon theOver-the-CounterBulletinBoard, orapplicabletradingmarket(the“OTCBB”)asreportedbyareliablereportingservice(“ReportingService”)designatedby theHolder(i.e.Bloomberg)or, if theOTCBBis nottheprincipal tradingmarketfor suchsecurity, theclosing bid priceofsuch security on theprincipalsecurities exchange or tradingmarketwheresuch security is listed ortraded or, if noclosingbidpriceofsuch security isavailableinanyof theforegoingmanners, theaverageof theclosingbidprices ofanymarketmakersforsuch security thatarelistedinthe“pinksheets”by theNationalQuotation Bureau,Inc.If theTradingPricecannot becalculatedforsuch security onsuchdate inthemannerprovidedabove, theTradingPriceshallbethefairmarketvalueas mutuallydeterminedby theBorrowerand theholders of amajority ininterest of theNotes beingconverted forwhich thecalculation of theTradingPrice isrequired in order todetermine theConversionPriceofsuchNotes.“Trading Day”shallmeananydayonwhichtheCommonStockistradableforanyperiodontheOTCBB,or ontheprincipalsecuritiesexchange or othersecuritiesmarket onwhich theCommonStock isthenbeingtraded.

(b)ConversionPriceDuringMajorAnnouncements.NotwithstandinganythingcontainedinSection1.2(a)tothecontrary,intheeventtheBorrower(i)makesapublicannouncementthatitintendstoconsolidateormergewithanyothercorporation(otherthanamerger inwhich theBorrower is thesurviving orcontinuing corporationand itscapitalstock isunchanged) orsell ortransferall orsubstantiallyall of theassets of theBorrower or(ii)anyperson,groupor entity (including theBorrower) publiclyannounces a tenderoffer topurchase 50% ormore of theBorrower’s CommonStock(oranyothertakeover scheme)(the date of theannouncementreferred to inclause(i)or(ii)ishereinafterreferredtoasthe“AnnouncementDate”),then the ConversionPriceshall,effective upon theAnnouncementDateandcontinuingthrough theAdjusted ConversionPrice TerminationDate(asdefinedbelow), beequal to thelowerof (x)theConversionPricewhichwould havebeenapplicablefor aConversion occurring ontheAnnouncementDateand(y)theConversionPricethatwouldotherwisebeineffect.Fromandafter theAdjustedConversionPriceTerminationDate, theConversionPriceshall bedeterminedassetforth in thisSection1.2(a).Forpurposeshereof,“AdjustedConversionPriceTerminationDate” shallmean,withrespect 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 orabandonment of theproposedtransaction or tender offer(ortakeover scheme)whichcaused this Section1.2(b)tobecome operative.

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1.3AuthorizedShares.TheBorrowercovenantsthatduringtheperiodtheconversionrightexists,theBorrowerwillreservefromitsauthorizedandunissuedCommonStockasufficientnumberofshares,freefrompreemptiverights,toprovidefortheissuanceofCommonStock upon the fullconversion ofthis Note issuedpursuant to thePurchaseAgreement.TheBorrowerisrequiredatalltimestohaveauthorizedandreservedfivetimesthe numberofsharesthat isactuallyissuable uponfull conversion of theNote(based ontheConversionPrice of theNotes ineffect from time totime)(the“ReservedAmount”). TheReservedAmountshall beincreasedfrom timeto time inaccordance with theBorrower’s obligationshereunder.TheBorrowerrepresentsthat uponissuance, suchshareswill bedulyand validlyissued, fullypaidandnon-assessable.Inaddition, iftheBorrowershall issue anysecurities ormake any changeto itscapitalstructurewhichwouldchange thenumber ofshares of CommonStock intowhich theNotesshallbeconvertibleatthethencurrentConversionPrice,theBorrowershallatthesame timemakeproperprovisionsothatthereafterthereshallbeasufficientnumberofsharesofCommonStockauthorizedandreserved,free frompreemptiverights, forconversion of theoutstandingNotes.TheBorrower(i)acknowledgesthat ithas irrevocablyinstructed itstransferagenttoissuecertificatesfortheCommonStockissuableuponconversionofthisNote,and agreesthatitsissuance of thisNoteshallconstitutefull authorityto itsofficersandagentswhoarechargedwith the dutyof executing stockcertificates toexecuteand issue the necessarycertificatesforsharesofCommonStockinaccordancewiththetermsandconditionsofthisNote.

If,atanytimetheBorrowerdoesnotmaintaintheReservedAmountitwillbeconsideredanEvent of DefaultunderSection 3.2 ofthe Note.

1.4 Method of Conversion.

(a)MechanicsofConversion.SubjecttoSection1.1,thisNotemaybeconverted bytheHolderinwholeorinpartatany timefromtimetotimeaftertheIssueDate, by

(A)submittingtotheBorroweraNoticeofConversion(byfacsimile,e-mailorotherreasonablemeansofcommunicationdispatchedontheConversionDatepriorto6:00p.m.,NewYork,NewYorktime)and(B)subjecttoSection1.4(b),surrenderingthisNoteattheprincipalofficeoftheBorrower.

(b)SurrenderofNoteUponConversion.Notwithstandinganythingtothecontrarysetforthherein,uponconversionofthisNoteinaccordancewiththetermshereof,theHoldershallnotberequiredtophysicallysurrender thisNote totheBorrowerunlesstheentireunpaidprincipalamount of thisNote is soconverted.The Holder and theBorrowershallmaintainrecords showing the principalamount soconvertedand thedates of suchconversions orshall usesuchothermethod,reasonably satisfactory totheHolderandtheBorrower,soas not torequirephysical surrenderofthisNoteuponeachsuchconversion.In theevent of any disputeordiscrepancy,suchrecords oftheBorrowershall,primafacie,becontrollinganddeterminative in theabsence ofmanifesterror.Notwithstanding theforegoing, ifany portion of thisNote isconvertedasaforesaid,theHoldermaynottransfer thisNoteunlesstheHolderfirstphysicallysurrenders thisNote totheBorrower,whereupon theBorrowerwillforthwith issueanddeliver upon theorderoftheHolderanewNoteofliketenor,registeredas theHolder(uponpaymentby theHolderofanyapplicable transfer taxes) mayrequest,representing in theaggregate theremainingunpaidprincipalamount ofthisNote.The Holderandanyassignee,byacceptanceof thisNote,acknowledgeandagreethat,byreasonoftheprovisionsofthisparagraph,followingconversionofaportionofthisNote,theunpaidandunconvertedprincipalamountof thisNoterepresented by thisNotemaybe lessthan theamountstated on the face hereof.

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(c)PaymentofTaxes.TheBorrowershallnotberequiredtopayanytaxwhichmaybepayableinrespectofanytransferinvolvedintheissueanddeliveryofsharesof CommonStock orothersecurities or property onconversionofthis Note in anameotherthanthatofthe Holder(orinstreetname),andtheBorrowershallnot berequiredtoissue ordeliver anysuchsharesorothersecuritiesorpropertyunlessanduntilthepersonorpersons(otherthan theHolder or thecustodian inwhosestreetnamesuchshares are to beheldfor theHolder’saccount)requestingtheissuancethereofshallhavepaidtotheBorrowertheamountofany suchtax or shallhave established to the satisfaction ofthe Borrowerthatsuch taxhasbeenpaid.

(d)DeliveryofCommonStockUponConversion.UponreceiptbytheBorrowerfromtheHolderofafacsimiletransmissionore-mail(orotherreasonablemeansofcommunication)ofaNoticeofConversionmeeting therequirementsforconversionasprovided in thisSection 1.4, theBorrowershall issueand deliver orcause tobe issuedanddelivered to or upon theorderof the Holdercertificates for the CommonStockissuable uponsuchconversionwithinthree(3) businessdays aftersuch receipt(the“Deadline”)(and, solely in thecase ofconversionoftheentireunpaidprincipalamounthereof,surrenderofthisNote)in accordancewith the termshereof andthe Purchase Agreement.

(e)ObligationofBorrowertoDeliverCommonStock.UponreceiptbytheBorrowerofaNoticeofConversion,theHoldershallbedeemedtobetheholderofrecordoftheCommonStockissuableuponsuchconversion,theoutstandingprincipalamountandtheamount ofaccruedand unpaidinterest on thisNoteshall bereduced toreflectsuchconversion,and,unless theBorrowerdefaults on itsobligations under thisArticle I,allrightswithrespect to theportion of thisNotebeing soconverted shallforthwithterminate except theright toreceive the CommonStock orothersecurities,cash orotherassets,ashereinprovided, onsuchconversion.Ifthe Holdershall havegiven aNoticeofConversion asprovidedherein, theBorrower’sobligation to issueand deliver thecertificates for CommonStockshall beabsoluteandunconditional,irrespective of theabsence of any actionby theHolder toenforce the same, anywaiver orconsentwithrespect toany provisionthereof, the recovery ofanyjudgmentagainstany personor any action toenforce the same,anyfailure or delay in theenforcement of any otherobligationoftheBorrowertotheholderofrecord,or anysetoff,counterclaim,recoupment,limitationortermination,oranybreachorallegedbreachbytheHolderofanyobligationtotheBorrower,andirrespective ofany othercircumstance whichmightotherwise limitsuchobligationof theBorrowertothe Holderinconnectionwithsuchconversion. TheConversionDatespecified in theNotice ofConversionshall be theConversionDate so longas theNotice of Conversion isreceivedby theBorrowerbefore 6:00 p.m.,NewYork, NewYorktime, onsuchdate.

(f)DeliveryofCommonStockbyElectronicTransfer.InlieuofdeliveringphysicalcertificatesrepresentingtheCommonStockissuableuponconversion,providedtheBorrower isparticipatingintheDepository Trust Company(“DTC”)FastAutomatedSecuritiesTransfer(“FAST”)program,uponrequestof theHolderanditscompliancewith the provisionscontained in Section 1.1and in this Section 1.4, theBorrowershall use itsbestefforts tocause itstransferagent toelectronically transmit theCommonStockissuableuponconversiontotheHolderbycrediting theaccount ofHolder’sPrimeBrokerwithDTCthrough itsDepositWithdrawalAgent Commission(“DWAC”) system.

(g)FailuretoDeliverCommonStockPriortoDeadline.WithoutinanywaylimitingtheHolder’sright topursueotherremedies,includingactualdamages and/orequitablerelief,thepartiesagreethatifdeliveryoftheCommonStockissuableuponconversionof thisNote is notdelivered by theDeadline (otherthan afailure due to thecircumstancesdescribedinSection 1.3above, whichfailure shall begoverned bysuchSection) theBorrowershall payto the Holder $2,000per dayin cash,foreach daybeyond theDeadlinethat theBorrowerfailstodeliversuchCommonStock.SuchcashamountshallbepaidtoHolderby thefifth day of the monthfollowing the month inwhich ithasaccruedor,at the option of theHolder(bywrittennotice to theBorrower bythefirst dayof the monthfollowing the month inwhich ithasaccrued),shallbe addedtotheprincipalamountofthisNote,inwhicheventinterestshallaccruethereoninaccordancewiththetermsof thisNoteandsuchadditionalprincipalamountshall beconvertible into CommonStock inaccordancewith theterms of thisNote.TheBorroweragreesthat theright toconvert is avaluable right to theHolder.The damagesresultingfrom afailure,attempt tofrustrate,interferencewithsuchconversionrightaredifficult if not impossible toqualify.Accordingly the partiesacknowledgethat theliquidateddamagesprovisioncontained in thisSection1.4(g)arejustified.

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1.5ConcerningtheShares. ThesharesofCommonStockissuableuponconversionofthisNotemaynotbesoldortransferredunless(i)suchsharesaresoldpursuanttoaneffectiveregistrationstatementundertheAct or(ii)theBorroweroritstransferagentshallhave beenfurnishedwithan opinion ofcounsel(which opinionshall be inform,substanceandscope customaryfor opinions ofcounsel incomparabletransactions) to theeffectthat theshares tobesoldortransferredmay besoldortransferredpursuanttoanexemptionfromsuchregistration or(iii) suchsharesare soldortransferredpursuant to Rule 144under theAct(or asuccessorrule)(“Rule 144”)or(iv)suchsharesaretransferredtoan“affiliate”(asdefinedin Rule 144) of theBorrowerwhoagreestosellorotherwisetransfer thesharesonly inaccordancewith thisSection 1.5andwho isanAccreditedInvestor(asdefined in thePurchaseAgreement).Exceptasotherwiseprovided in thePurchaseAgreement(andsubject to theremovalprovisionssetforthbelow),untilsuchtimeasthesharesofCommonStockissuableuponconversionofthisNotehavebeenregisteredunder theActorotherwisemaybe sold pursuant to Rule 144without anyrestrictionas to thenumber ofsecuritiesas of aparticulardatethat canthen beimmediately sold,eachcertificateforsharesofCommonStockissuableuponconversionofthisNotethathas notbeen soincluded inaneffectiveregistrationstatement orthathas notbeen soldpursuant toaneffectiveregistrationstatementoranexemptionthatpermitsremovalof thelegend,shallbear a legend substantially in the followingform,asappropriate:

“NEITHERTHEISSUANCEANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICHTHESESECURITIESAREEXERCISABLEHAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATESECURITIESLAWS. THESECURITIESMAYNOT BEOFFERED FORSALE,SOLD,TRANSFERRED ORASSIGNED(I)IN THEABSENCEOF(A)ANEFFECTIVEREGISTRATIONSTATEMENTFOR THESECURITIESUNDER THESECURITIESACTOF 1933,ASAMENDED, OR(B)ANOPINIONOFCOUNSEL(WHICHCOUNSELSHALL BESELECTEDBYTHEHOLDER), IN AGENERALLYACCEPTABLEFORM,THATREGISTRATION ISNOTREQUIREDUNDERSAIDACT OR (II)UNLESSSOLDPURSUANTTORULE 144 ORRULE 144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING,THESECURITIESMAY BEPLEDGED INCONNECTIONWITH A BONAFIDEMARGINACCOUNTOROTHERLOAN ORFINANCINGARRANGEMENTSECURED BYTHESECURITIES.”

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ThelegendsetforthaboveshallberemovedandtheBorrowershallissuetotheHolderanewcertificatethereforefreeofanytransferlegendif(i)theBorroweroritstransferagentshallhavereceivedanopinionofcounsel,inform,substanceandscopecustomaryfor opinions ofcounsel incomparable transactions, to theeffectthat a public sale ortransferofsuch CommonStock may bemade withoutregistrationundertheAct, which opinionshall be acceptedby theCompany sothatthesale ortransferiseffectedor(ii)inthecaseofthe CommonStockissuable uponconversion of thisNote, such security isregisteredforsaleby the Holder underaneffectiveregistrationstatementfiledunder the Act orotherwisemaybe soldpursuant to Rule144withoutany restrictionas to thenumber ofsecuritiesas of a particulardatethat canthen beimmediately sold. In theeventthat theCompanydoes notaccept the opinion ofcounselprovidedby theBuyerwithrespecttothetransferofSecuritiespursuant toanexemptionfrom registration,suchas Rule 144 orRegulation S,at theDeadline, itwill beconsideredanEventofDefault pursuant toSection 3.2 ofthe Note.

1.6 Effect of CertainEvents.

(a)EffectofMerger,Consolidation,Etc.AttheoptionoftheHolder,thesale,conveyanceordispositionofallorsubstantiallyalloftheassetsoftheBorrower,theeffectuationby theBorrowerof atransactionorseries ofrelatedtransactions inwhichmorethan 50% of the votingpower of theBorrower is disposedof,or the consolidation,merger orotherbusinesscombination of theBorrowerwith or into anyotherPerson (asdefined below) orPersons when theBorrower is not thesurvivorshalleither:(i) be deemed to bean Event ofDefault(asdefinedinArticle III)pursuanttowhichtheBorrowershallberequiredtopaytotheHolderuponthe consummationofandasaconditiontosuchtransactionanamountequaltotheDefaultAmount(asdefined inArticle III) or(ii) betreatedpursuant toSection1.6(b)hereof.“Person”shallmeananyindividual,corporation,limitedliabilitycompany,partnership,association,trust or otherentity ororganization.

(b)AdjustmentDuetoMerger,Consolidation,Etc.If,atanytimewhenthisNoteisissuedandoutstandingandpriortoconversionofalloftheNotes,thereshallbeanymerger,consolidation,exchangeofshares,recapitalization,reorganization,orothersimilarevent,asa result of whichshares of CommonStock of theBorrower shall bechanged into thesame or adifferentnumber ofshares ofanotherclass orclasses of stock orsecurities of theBorrower or anotherentity, or incase of anysale orconveyance ofall or substantiallyall of theassets of theBorrowerotherthan inconnectionwith aplan ofcompleteliquidation of theBorrower,thentheHolderofthisNoteshallthereafterhavetherighttoreceiveuponconversion ofthisNote,uponthe basisanduponthetermsandconditionsspecifiedhereinandinlieuofthesharesof CommonStock immediatelytheretoforeissuable upon conversion,suchstock,securitiesorassetswhichtheHolderwouldhavebeenentitledtoreceiveinsuchtransactionhad thisNotebeen converted infull immediately prior tosuchtransaction (withoutregard toanylimitations onconversionsetforthherein),andinanysuchcaseappropriateprovisionsshall bemadewithrespect totherightsandinterestsof theHolderof thisNote totheendthat theprovisionshereof(including,withoutlimitation,provisionsforadjustment of theConversionPriceand of the number ofsharesissuable uponconversion of theNote) shallthereafter beapplicable,as nearlyas maybepracticable inrelation toany securities orassetsthereafterdeliverableupontheconversionhereof. TheBorrowershallnotaffectanytransactiondescribed in thisSection1.6(b)unless(a) itfirstgives,to the extentpracticable, thirty(30)dayspriorwrittennotice(but inany eventatleastfifteen (15)days priorwrittennotice) of therecord date ofthespecial meeting ofshareholders to approve, orifthereis nosuchrecord date, theconsummationof, suchmerger, consolidation,exchangeofshares,recapitalization,reorganization orother similarevent orsale of assets(during which time theHoldershall beentitledtoconvert thisNote)and(b) the resultingsuccessor oracquiring entity(if not theBorrower)assumes bywritteninstrument theobligations of thisSection1.6(b).The aboveprovisionsshallsimilarly apply tosuccessive consolidations,mergers, sales,transfers or shareexchanges.

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(c)AdjustmentDuetoDistribution.IftheBorrowershalldeclareormakeanydistributionofitsassets(orrightstoacquireitsassets)toholdersofCommonStockasadividend,stockrepurchase,bywayofreturnofcapitalorotherwise(includinganydividendordistribution to theBorrower’sshareholders incash orshares (or rights toacquireshares)ofcapitalstock of asubsidiary(i.e., aspin-off))(a“Distribution”),then theHolder ofthisNoteshall beentitled, upon anyconversion of thisNoteafter the date ofrecord fordeterminingshareholdersentitled to suchDistribution, to receivethe amountof suchassetswhichwould havebeenpayable to theHolderwithrespect to theshares of CommonStockissuable uponsuchconversionhadsuch Holderbeen the holder of suchshares of CommonStock on therecorddateforthe determination of shareholdersentitled tosuchDistribution.

(d)AdjustmentDuetoDilutiveIssuance.If,atanytimewhenanyNotesareissuedandoutstanding,theBorrowerissuesorsells,orinaccordancewiththisSection1.6(d)hereofisdeemedtohaveissuedorsold,anysharesofCommonStockfornoconsiderationorforaconsiderationper share (beforededuction ofreasonableexpensesorcommissions orunderwritingdiscountsorallowancesinconnectiontherewith)lessthantheConversionPriceineffect on thedate ofsuchissuance(ordeemedissuance) ofsuchshares of CommonStock(a“DilutiveIssuance”),thenimmediatelyupontheDilutiveIssuance,the ConversionPricewill bereduced to theamountoftheconsideration persharereceivedbytheBorrowerin suchDilutiveIssuance.

TheBorrowershallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorgrantsanywarrants,rightsoroptions(notincludingemployeestockoptionplans),whetherornotimmediatelyexercisable,tosubscribeforortopurchase CommonStock orothersecuritiesconvertibleintoorexchangeableforCommonStock(“ConvertibleSecurities”)(such warrants,rightsand optionstopurchaseCommonStock orConvertibleSecuritiesarehereinafterreferred toas“Options”)and theprice pershare forwhich CommonStock isissuable upon theexercise ofsuchOptions islessthan theConversionPricethen ineffect, then theConversionPriceshall beequal to suchprice pershare.Forpurposes of the precedingsentence, the“price per share forwhich CommonStock isissuable upon theexerciseof suchOptions” isdeterminedby dividing(i) the totalamount, ifany,received orreceivableby theBorrowerasconsiderationfor the issuanceorgrantingofallsuchOptions, plus theminimumaggregateamount ofadditionalconsideration, ifany,payable to theBorrowerupon the exercise ofallsuchOptions, plus, in thecaseofConvertibleSecuritiesissuable upon the exercise ofsuchOptions, the minimumaggregateamount ofadditionalconsiderationpayable upon theconversion orexchange thereofat the timesuchConvertibleSecuritiesfirst becomeconvertible or exchangeable,by(ii) the maximumtotalnumber ofshares of CommonStockissuable upon theexercise ofallsuchOptions(assumingfullconversion ofConvertibleSecurities, ifapplicable).Nofurtheradjustment to theConversionPricewill bemadeupon the actualissuanceof such CommonStock upon the exerciseof suchOptions orupon the conversion orexchangeof Convertible Securitiesissuableuponexerciseof suchOptions.

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Additionally,theBorrowershallbedeemedtohaveissuedorsoldsharesofCommonStockiftheBorrowerinanymannerissuesorsellsanyConvertibleSecurities,whether ornotimmediatelyconvertible(otherthanwhere thesameareissuableupontheexercise ofOptions), and the price per shareforwhich CommonStock isissuable upon suchconversionorexchangeislessthanthe ConversionPricethen ineffect,thenthe ConversionPriceshall beequal to suchprice pershare.For thepurposes of the precedingsentence, the“price per shareforwhich CommonStock isissuable uponsuchconversion orexchange” isdeterminedby dividing(i) thetotalamount, ifany,receivedor receivableby theBorrowerasconsiderationfor the issuance or sale ofallsuchConvertibleSecurities, plus theminimumaggregateamount of additionalconsideration, ifany,payable to theBorrower upon theconversion orexchangethereofat the timesuchConvertibleSecurities firstbecomeconvertible orexchangeable,by(ii) the maximumtotalnumber ofshares of CommonStockissuable upontheconversionorexchangeofallsuchConvertibleSecurities.NofurtheradjustmenttotheConversionPricewillbemadeupontheactualissuanceofsuchCommonStockuponconversion or exchangeofsuchConvertible Securities.

(e)PurchaseRights.If,atanytimewhenanyNotesareissuedandoutstanding,theBorrowerissuesanyconvertiblesecuritiesorrightstopurchasestock,warrants,securitiesorotherproperty(the“PurchaseRights”)proratatotherecordholdersofanyclassofCommonStock,thentheHolder of thisNotewillbeentitledtoacquire,uponthetermsapplicabletosuchPurchaseRights,theaggregatePurchaseRightswhichsuchHoldercouldhaveacquired ifsuchHolderhadheld thenumber ofshares of CommonStockacquirable uponcompleteconversion of thisNote(withoutregard to anylimitations onconversioncontainedherein) immediatelybefore thedate onwhich a recordistakenfor the grant,issuanceorsale ofsuchPurchaseRightsor, if nosuchrecord istaken, thedateas ofwhich therecordholders of CommonStockareto be determinedforthegrant,issueor saleof such Purchase Rights.

(f)NoticeofAdjustments.UpontheoccurrenceofeachadjustmentorreadjustmentoftheConversionPriceasaresultoftheeventsdescribedinthisSection1.6,theBorrower,atitsexpense,shallpromptlycomputesuchadjustmentorreadjustmentandprepareandfurnish to theHolder acertificate settingforthsuchadjustment orreadjustmentand showing indetail thefacts uponwhichsuchadjustment orreadjustment isbased.TheBorrowershall, upon thewrittenrequestat any time of theHolder,furnish tosuch Holder a likecertificatesettingforth(i)suchadjustmentorreadjustment,(ii)theConversionPriceatthetimeineffectand(iii)thenumberofsharesofCommonStockandtheamount,ifany, ofothersecuritiesor propertywhichat thetime would be received uponconversion oftheNote.

1.7TradingMarketLimitations. UnlesspermittedbytheapplicablerulesandregulationsoftheprincipalsecuritiesmarketonwhichtheCommonStockisthenlistedortraded,innoeventshall theBorrower issue uponconversionoforotherwisepursuant tothisNoteand the other Notesissuedpursuant to thePurchaseAgreement morethan the maximumnumber ofsharesof CommonStockthattheBorrowercanissue pursuanttoanyrule of theprincipalUnitedStatessecuritiesmarket on which theCommonStock isthentraded (the “MaximumShareAmount”),whichshall be9.99%ofthetotalsharesoutstanding on theClosingDate (asdefined in the PurchaseAgreement), subject toequitableadjustmentfrom time to timeforstock splits,stockdividends,combinations,capitalreorganizationsandsimilareventsrelating to the CommonStockoccurringafter thedatehereof.Once the MaximumShareAmounthasbeenissued, if theBorrower fails toeliminate anyprohibitionsunderapplicablelawor therulesorregulations ofany stockexchange,interdealerquotationsystem orotherself-regulatoryorganizationwithjurisdictionovertheBorrower or anyofitssecurities on theBorrower’s ability toissuesharesof CommonStockinexcessofthe MaximumShare Amount,inlieuofanyfurtherright toconvert thisNote, thiswill beconsideredanEvent ofDefaultunderSection 3.3 ofthe Note.

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1.8StatusasShareholder. UponsubmissionofaNoticeofConversionbyaHolder,(i)thesharescoveredthereby(otherthantheshares,ifany,whichcannotbeissuedbecausetheirissuancewouldexceedsuchHolder’sallocatedportion oftheReservedAmount or MaximumShareAmount)shall bedeemedconverted intoshares ofCommonStockand(ii) theHolder’srightsasaHolder ofsuchconvertedportionof thisNoteshallceaseandterminate,exceptingonly therighttoreceivecertificatesforsuchsharesofCommonStockandtoanyremediesprovided herein orotherwiseavailableatlaw or in equity to suchHolderbecause of afailure by theBorrower to complywith theterms of thisNote.Notwithstanding theforegoing, if aHolderhas notreceivedcertificatesforallshares of CommonStockprior to thetenth(10th)business dayafter theexpiration of theDeadlinewithrespect to a conversion of anyportion of thisNotefor anyreason,then(unless theHolderotherwiseelects toretain itsstatusas a holder of CommonStock by sonotifying theBorrower) theHolder shallregaintherights of aHolder ofthisNotewithrespect tosuchunconverted portions of thisNoteand theBorrowershall,as soonaspracticable,returnsuchunconverted Note to theHolder or, if theNote has not beensurrendered,adjust itsrecords toreflect thatsuchportion of thisNotehas notbeenconverted. Inallcases, theHolder shallretainall of itsrightsandremedies(including,withoutlimitation,(i) theright to receiveConversionDefaultPaymentspursuant toSection 1.3 to the extentrequired therebyforsuch ConversionDefaultand any subsequentConversion Defaultand(ii)theright tohave theConversionPricewithrespect tosubsequentconversionsdetermined inaccordancewithSection 1.3) fortheBorrower’sfailuretoconvert thisNote.

1.9Prepayment.NotwithstandinganythingtothecontrarycontainedinthisNote,atanytimeduringtheperiodbeginningontheIssueDateandendingonthedatewhichisthirty(30)daysfollowingtheissuedate,theBorrowershallhavetheright,exercisableonnotlessthanthree(3)TradingDayspriorwrittennoticetotheHolderoftheNotetoprepay theoutstandingNote(principalandaccruedinterest), infull,inaccordancewiththisSection1.9.Anynoticeofprepaymenthereunder(an“OptionalPrepaymentNotice”)shallbedeliveredtotheHolderoftheNoteat itsregisteredaddressesandshallstate: (1)that theBorrower isexercising itsright to prepaytheNote,and(2) thedate ofprepaymentwhichshall be notmorethanthree(3)TradingDaysfromthedateoftheOptionalPrepaymentNotice.Onthedatefixedforprepayment(the“OptionalPrepaymentDate”), theBorrower shallmakepayment of theOptionalPrepaymentAmount(asdefined below) to or upon the order of theHolderasspecified by theHolder inwriting to theBorroweratleast one(1)business dayprior to theOptionalPrepaymentDate. If theBorrowerexercises itsright to prepay the Note, theBorrower shallmakepayment to theHolder ofanamountincash(the“OptionalPrepaymentAmount”)equalto110%,multipliedby the sumof:(w)the thenoutstandingprincipalamount ofthisNoteplus(x) accruedandunpaidinterest on theunpaidprincipalamount of thisNote to theOptionalPrepaymentDateplus(y)DefaultInterest,ifany, ontheamountsreferred toinclauses(w)and(x)plus(z)anyamountsowed to theHolder pursuant toSections 1.3and1.4(g)hereof. If theBorrowerdeliversanOptionalPrepaymentNoticeandfailstopay theOptionalPrepaymentAmountdue tothe Holder of theNotewithintwo(2)businessdaysfollowingtheOptionalPrepaymentDate,theBorrowershallforever forfeit itsright to prepay the Notepursuant to thisSection 1.9.

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NotwithstandinganythingtothecontrarycontainedinthisNote,atanytimeduringtheperiodbeginningonthedatewhichisthirty-one(31)daysfollowingtheissuedateandendingonthedate whichis sixty(60)days followingthe issuedate,theBorrowershallhave theright,exercisable onnotlessthanthree (3)TradingDayspriorwrittennotice totheHolder of theNote toprepay the outstandingNote(principaland accruedinterest), infull, inaccordancewith thisSection 1.9.AnyOptionalPrepaymentNoticeshall bedelivered to theHolder of theNoteatitsregisteredaddressesandshallstate:(1)thattheBorrower isexercising itsrightto prepay theNote,and(2) thedate ofprepaymentwhichshall be notmorethanthree(3)TradingDaysfromthedateoftheOptionalPrepaymentNotice.OntheOptionalPrepaymentDate,theBorrower shallmake paymentof theSecondOptionalPrepaymentAmount(asdefinedbelow)to orupontheorderoftheHolderasspecifiedby theHolderinwritingtotheBorroweratleast on(1)business dayprior to theOptionalPrepaymentDate.If theBorrowerexercises itsright to prepay theNote, theBorrowershallmakepayment to theHolder ofanamount incash(the“SecondOptionalPrepaymentAmount”) equalto115%,multipliedby the sumof:(w) thethenoutstandingprincipal amount of thisNoteplus(x) accruedandunpaidinterest on theunpaidprincipalamountof thisNote to theOptionalPrepaymentDateplus(y)DefaultInterest,ifany, on theamountsreferred to inclauses(w)and (x)plus(z) anyamountsowed to theHolderpursuanttoSections1.3and1.4(g) hereof. If theBorrowerdeliversanOptionalPrepaymentNoticeandfailstopay theSecondOptionalPrepaymentAmountdue totheHolderof theNotewithintwo(2)businessdaysfollowing the OptionalPrepaymentDate,theBorrowershallforever forfeit itsright toprepay theNotepursuant to thisSection 1.9.

NotwithstandinganythingtothecontrarycontainedinthisNote,atanytimeduringtheperiodbeginningonthedatewhichissixty-one(61)daysfollowingtheissuedateandending onthedatewhichis ninety(90)daysfollowing the issuedate,theBorrowershallhave theright,exercisable on notlessthan three(3)TradingDayspriorwritten notice to theHolder of theNote to prepay theoutstanding Note(principalandaccruedinterest), infull, inaccordancewiththisSection1.9. AnyOptionalPrepaymentNoticeshallbedeliveredtotheHolder of theNoteat itsregisteredaddressesandshallstate:(1)that theBorrower isexercising itsrighttoprepay theNote,and(2)thedateofprepaymentwhichshallbenotmorethanthree

(3)TradingDays from the dateofthe OptionalPrepaymentNotice.On the OptionalPrepaymentDate,theBorrowershallmakepaymentoftheThirdOptionalPrepaymentAmount(asdefinedbelow)to orupontheorderofthe Holderas specifiedbytheHolderin writingto theBorrower atleastone(1)businessday prior totheOptionalPrepaymentDate. If theBorrowerexercises itsrighttoprepaytheNote, theBorrowershall makepaymenttotheHolderofanamountincash(the“ThirdOptionalPrepaymentAmount”) equal to120%,multiplied by the sumof:(w) thethenoutstandingprincipalamountofthisNoteplus(x) accruedandunpaidinterestontheunpaidprincipalamountof thisNote totheOptionalPrepaymentDateplus(y)DefaultInterest,ifany, on theamountsreferred to inclauses(w)and (x)plus(z) anyamountsowed to theHolderpursuant toSections 1.3and 1.4(g) hereof. If theBorrowerdeliversanOptionalPrepayment Noticeandfails topaytheThirdOptionalPrepaymentAmount due to theHolder of theNotewithintwo(2)businessdaysfollowing theOptionalPrepaymentDate, theBorrowershallforever forfeit itsright toprepaytheNotepursuant to thisSection 1.9.

Notwithstandinganytothecontrarystatedelsewhereherein,atanytimeduringtheperiodbeginningonthedatethatisninety-one(91)dayfrom theissuedateandendingonehundredtwenty(120)daysfollowingthe issuedate,theBorrowershallhave theright,exercisable on notless thanthree(3)Trading Dayspriorwritten notice to theHolder of theNote toprepaytheoutstandingNote(principalandaccruedinterest),infull,inaccordancewiththisSection 1.9.Any OptionalPrepaymentNotice shall bedelivered to the Holder of theNoteat itsregisteredaddressesandshallstate:(1) that theBorrower isexercising itsright to prepaytheNote,and(2) thedate ofprepaymentwhichshallbe notmorethanthree (3)TradingDaysfrom thedateof theOptionalPrepaymentNotice.OntheOptionalPrepaymentDate,theBorrowershallmakepaymentof theFourthOptionalPrepaymentAmount(asdefinedbelow) toor upon theorderof theHolder asspecifiedbytheHolderinwritingtotheBorroweratleast one(1)business daypriorto theOptionalPrepaymentDate. IftheBorrowerexercises itsright toprepay theNote, theBorrowershallmakepayment to theHolderofanamount incash(the“FourthOptionalPrepayment Amount”)equal to125%,multipliedbythe sumof:(w) thethenoutstandingprincipal amount of thisNoteplus(x) accruedandunpaidinterest on theunpaidprincipalamountofthisNotetotheOptionalPrepaymentDateplus(y)DefaultInterest,ifany, on theamountsreferred to inclauses(w)and (x)plus(z) anyamountsowed to theHolderpursuant toSections 1.3and 1.4(g) hereof. If theBorrowerdeliversanOptionalPrepaymentNoticeandfailstopaytheFourthOptionalPrepaymentAmountdue totheHolder of theNotewithintwo(2)businessdays following theOptionalPrepaymentDate, theBorrowershallforever forfeit itsright to prepay theNotepursuant to thisSection 1.9.

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Notwithstandinganytothecontrarystatedelsewhereherein,atanytimeduringtheperiodbeginningonthedatethatisonehundredtwenty-one(121)dayfromtheissuedateandendingonehundredfifty(150)daysfollowingtheissuedate,theBorrowershallhavetheright,exercisableonnotlessthanthree(3)TradingDayspriorwrittennoticetotheHolderoftheNote to prepay the outstandingNote(principal andaccruedinterest), infull, inaccordancewith thisSection1.9.Any OptionalPrepaymentNoticeshallbedeliveredtothe HolderoftheNoteat itsregisteredaddresses andshallstate:(1)that theBorrower isexercising itsright to prepay theNote,and(2) thedate ofprepaymentwhich shall be notmorethan three (3)TradingDaysfrom thedateoftheOptionalPrepaymentNotice.OntheOptionalPrepaymentDate,theBorrowershallmakepayment of theFifthOptionalPrepaymentAmount(as definedbelow) to or upon theorderoftheHolderasspecifiedby theHolderinwriting to theBorroweratleast one(1)business dayprior to the OptionalPrepaymentDate. If theBorrowerexercises itsright to prepaytheNote, theBorrowershallmakepayment to the Holder ofanamount in cash(the“FifthOptionalPrepaymentAmount”)equal to130%,multipliedby the sum of: (w)thethen outstandingprincipalamountof thisNoteplus(x) accruedand unpaidinterest on theunpaidprincipalamount of thisNote totheOptionalPrepaymentDateplus(y)DefaultInterest, ifany, on theamountsreferred to inclauses(w)and (x)plus(z) anyamountsowed to theHolderpursuant toSections 1.3and 1.4(g) hereof. IftheBorrower deliversanOptional PrepaymentNotice and fails topay theFifthOptionalPrepaymentAmount due to theHolder of theNotewithintwo(2)businessdaysfollowing theOptionalPrepaymentDate, theBorrowershallforeverforfeit itsright to prepay the Notepursuant to thisSection 1.9.

Notwithstandinganytothecontrarystatedelsewhereherein,atanytimeduringtheperiodbeginningonthedatethatisonehundredfifty-one(151)dayfromtheissuedateandending onehundredeighty(180)days following theissuedate, theBorrowershallhavetheright,exercisable on notless thanthree(3)Trading Dayspriorwritten notice to theHolder of theNote toprepay theoutstandingNote(principalandaccruedinterest),infull,inaccordancewiththisSection1.9.Any OptionalPrepaymentNotice shallbedeliveredtothe Holder of theNoteatitsregisteredaddressesandshallstate:(1) that theBorrower isexercising itsright to prepaytheNote,and(2)thedateofprepaymentwhichshallbenotmorethanthree(3)TradingDaysfrom thedateof theOptionalPrepaymentNotice.OntheOptionalPrepaymentDate,theBorrowershallmakepayment of the SixthOptionalPrepaymentAmount(as definedbelow) to or upon theorderoftheHolderasspecified by theHolderinwriting to theBorroweratleast one(1)business dayprior to the OptionalPrepaymentDate.If theBorrowerexercises itsright to prepaytheNote,theBorrowershallmakepaymenttothe Holder ofanamountincash(the “SixthOptionalPrepaymentAmount”)equal to135%,multiplied by the sum of: (w)thethen outstandingprincipalamountof thisNoteplus(x) accruedand unpaidinterest on theunpaidprincipalamount of thisNote totheOptionalPrepaymentDateplus(y)DefaultInterest, ifany, on theamountsreferredtoinclauses(w)and (x)plus(z) anyamountsowedtotheHolderpursuanttoSections 1.3and1.4(g) hereof. IftheBorrower deliversanOptional PrepaymentNotice and fails topay the SixthOptionalPrepaymentAmount due to theHolderof theNotewithintwo(2)businessdaysfollowing theOptionalPrepaymentDate, theBorrowershallforeverforfeit itsright to prepay the Notepursuant to thisSection 1.9.

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Aftertheexpirationofonehundredeighty(180)followingthedateoftheNote,the Borrowershallhavenoright of prepayment. 

ARTICLEII.CERTAIN COVENANTS

2.1DistributionsonCapitalStock.Solongas theBorrowershallhaveanyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swrittenconsent(a)pay,declareorsetapartforsuchpayment,anydividendorotherdistribution(whetherincash,propertyorothersecurities)onsharesof capitalstockotherthandividends onsharesofCommonStock solely in theform ofadditionalshares of CommonStock or(b) directly or indirectly orthroughany subsidiarymakeany otherpayment ordistribution inrespect of itscapitalstockexceptfor distributionspursuant toanyshareholders’ rightsplanwhich isapproved by amajority ofthe Borrower’sdisinteresteddirectors.

2.2RestrictiononStockRepurchases.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnotwithouttheHolder’swrittenconsentredeem,repurchaseorotherwiseacquire(whetherforcashorinexchangeforpropertyorothersecurities or otherwise)inany onetransaction orseries ofrelatedtransactionsanysharesofcapitalstock of the Borroweror anywarrants,rights oroptions topurchaseor acquireany suchshares.

2.3Borrowings.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,create,incur,assumeguarantee,endorse, contingentlyagree topurchase orotherwise becomeliable upontheobligationofany person,firm,partnership,jointventure or corporation,exceptby theendorsement ofnegotiableinstrumentsfordeposit orcollection, orsufferto exist any liability forborrowedmoney, except(a)borrowingsinexistenceorcommittedonthedatehereofandofwhichtheBorrowerhasinformedHolderinwritingpriortothedatehereof,(b)indebtednesstotradecreditors orfinancial institutionsincurred in theordinarycourse ofbusiness or(c)borrowings, the proceeds of whichshall be used to repay thisNote.

2.4SaleofAssets.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,sell,leaseorotherwisedisposeofanysignificantportionofitsassets outsidetheordinary courseofbusiness.Anyconsent to thedisposition of anyassetsmaybe conditioned on aspecifieduse of theproceeds of disposition.

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2.5AdvancesandLoans.SolongastheBorrowershallhaveanyobligationunderthisNote,theBorrowershallnot,withouttheHolder’swrittenconsent,lendmoney,givecreditormakeadvancestoanyperson,firm,jointventureorcorporation,including,withoutlimitation,officers,directors,employees,subsidiariesandaffiliates of theBorrower,exceptloans,credits oradvances(a) inexistence or committed on thedatehereofandwhich theBorrower hasinformedHolder inwritingpriortothedatehereof,(b)made inthe ordinarycourseof businessor(c)not inexcess of$100,000.

ARTICLEIII.EVENTSOFDEFAULT

If anyofthefollowing events of default (each,an“Event of Default”)shalloccur:

3.1FailuretoPayPrincipalorInterest.TheBorrowerfailstopaytheprincipalhereoforinterestthereonwhendueonthisNote,whetheratmaturity,uponaccelerationorotherwise.

3.2ConversionandtheShares.TheBorrowerfailstoissuesharesofCommonStocktotheHolder(orannouncesorthreatensinwritingthatitwillnothonoritsobligationtodoso) uponexercise by theHolder of theconversionrightsof theHolderinaccordancewiththetermsof thisNote,failstotransfer or cause itstransferagenttotransfer(issue) (electronically or incertificatedform) anycertificateforshares of CommonStockissued to theHolder uponconversion of orotherwisepursuant to thisNoteasandwhen required by thisNote, theBorrowerdirects itstransferagent not totransferordelays,impairs,and/orhinders itstransferagent intransferring(orissuing) (electronically or incertificated form) anycertificate forshares of CommonStock to beissued to theHolderuponconversion of orotherwisepursuant to thisNoteasandwhen required by thisNote, orfails toremove(ordirects itstransfer agent not toremove orimpairs,delays, and/orhinders itstransferagentfromremoving)anyrestrictivelegend (or towithdraw any stoptransfer instructions inrespect thereof) on anycertificatefor anysharesofCommonStockissuedtotheHolderuponconversionoforotherwisepursuanttothisNoteasandwhen required by thisNote(or makes anywritten announcement,statement orthreatthat itdoes notintend tohonor theobligationsdescribed in this paragraph)andanysuchfailureshallcontinueuncured(or anywrittenannouncement,statement orthreat not to honor itsobligationsshallnotberescindedinwriting)forthree(3)businessdaysaftertheHoldershallhavedelivereda NoticeofConversion. Itisanobligationof theBorrower toremaincurrentin itsobligations to itstransfer agent. Itshall bean event ofdefault of thisNote, if aconversion of thisNote isdelayed,hinderedorfrustrateddue to abalanceowedby theBorrower toitstransferagent. Ifat the option of theHolder, theHolderadvances anyfunds to theBorrower’stransferagent in order toprocessaconversion,suchadvancedfundsshall bepaid by theBorrower totheHolder within fortyeight(48) hours of a demand from the Holder.

3.3BreachofCovenants.TheBorrowerbreachesanymaterialcovenantorothermaterialtermorconditioncontainedinthisNoteandanycollateraldocumentsincludingbutnotlimitedtothePurchaseAgreementandsuchbreachcontinuesforaperiodoften(10)daysafterwrittennotice thereofto the Borrower from the Holder.

3.4BreachofRepresentationsandWarranties.AnyrepresentationorwarrantyoftheBorrowermadehereinorinanyagreement,statementorcertificategiveninwritingpursuantheretoorinconnectionherewith(including,withoutlimitation,thePurchaseAgreement),shallbefalse or misleadingin anymaterialrespect whenmadeand thebreach ofwhichhas(orwith the passageoftime willhave)a materialadverse effect on the rights oftheHolder withrespect to thisNoteorthe PurchaseAgreement.

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3.5ReceiverorTrustee.TheBorroweroranysubsidiaryoftheBorrowershallmakeanassignmentforthebenefitofcreditors,orapplyfororconsenttotheappointmentofareceiverortrusteeforitorforasubstantialpartofitspropertyorbusiness, orsuch areceiverortrustee shallotherwisebeappointed.

3.6Judgments.Anymoneyjudgment,writorsimilarprocessshallbeenteredorfiledagainsttheBorroweroranysubsidiaryoftheBorroweror anyofitspropertyorotherassetsformorethan$50,000,andshallremainunvacated,unbondedorunstayedforaperiodoftwenty(20)daysunlessotherwiseconsentedtobytheHolder,whichconsentwill not be unreasonablywithheld.

3.7Bankruptcy. Bankruptcy, insolvency, reorganizationorliquidationproceedingsorotherproceedings,voluntaryorinvoluntary,forreliefunderanybankruptcylaworanylawforthereliefofdebtorsshall beinstitutedbyoragainst theBorroweroranysubsidiaryofthe Borrower.

3.8DelistingofCommonStock. TheBorrower shallfail to maintain thelistingoftheCommonStockonatleastoneoftheOTCBBoranequivalentreplacementexchange,theNasdaqNationalMarket,theNasdaqSmallCapMarket,theNewYorkStockExchange,ortheAmericanStockExchange.

3.9FailuretoComplywiththeExchangeAct.TheBorrowershallfailtocomplywiththereportingrequirementsoftheExchangeAct;and/ortheBorrowershallceasetobesubject to the reportingrequirements ofthe ExchangeAct.

3.10Liquidation.Anydissolution,liquidation,orwindingupofBorroweroranysubstantialportion ofitsbusiness.

3.11Cessation of Operations.AnycessationofoperationsbyBorrowerorBorroweradmitsitisotherwisegenerallyunabletopayitsdebtsassuchdebtsbecomedue,provided,however,thatanydisclosureoftheBorrower’sabilityto continue as a“goingconcern”shall not be anadmissionthat the Borrowercannotpayitsdebtsas theybecome due.

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

3.13FinancialStatementRestatement. Therestatementofanyfinancialstatementsfiledby theBorrowerwiththeSECforany dateorperiodfromtwoyearspriortotheIssueDateofthisNoteanduntilthisNoteisnolongeroutstanding, iftheresultofsuchrestatementwould,bycomparisontotheunrestatedfinancialstatement, haveconstitutedamaterialadverseeffect on therights of theHolderwithrespect to thisNote or thePurchaseAgreement.

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3.14ReverseSplits.TheBorrowereffectuatesareversesplitofitsCommonStockwithouttwenty(20) days prior writtennoticeto the Holder.

3.15Replacement ofTransferAgent.In theeventthat the Borrower proposes toreplaceitstransferagent,theBorrowerfailstoprovide,priortotheeffectivedateofsuchreplacement,afullyexecutedIrrevocableTransferAgentInstructionsinaformasinitiallydeliveredpursuant tothePurchaseAgreement (including but notlimitedtotheprovisiontoirrevocably reserveshares of CommonStock intheReservedAmount)signedby thesuccessortransfer agent toBorrower and theBorrower.

3.16Cross-Default.NotwithstandinganythingtothecontrarycontainedinthisNoteortheotherrelatedorcompaniondocuments,abreachordefaultbytheBorrowerofanycovenantorothertermorconditioncontainedin anyoftheOtherAgreements,after thepassage of allapplicablenoticeandcureorgraceperiods,shall,at theoption oftheHolder, beconsidered adefault under thisNoteand the Other Agreements, inwhichevent theHoldershall beentitled(but in noevent required) to applyallrightsandremediesof the Holder under the terms of thisNoteandtheOtherAgreementsbyreasonofadefaultundersaidOtherAgreementorhereunder.“OtherAgreements”means,collectively,allagreementsandinstrumentsbetween,among orby:(1) theBorrower,and, orfor thebenefitof,(2)theHolderandanyaffiliate of theHolder,including,withoutlimitation,promissorynotes; provided,however, the term“OtherAgreements”shall not include therelated or companiondocumentsto thisNote.Each of theloantransactionswill becross-defaultedwitheachotherloan transactionandwithallother existingandfuture debtof Borrowerto the Holder.

UpontheoccurrenceandduringthecontinuationofanyEventofDefaultspecifiedinSection3.1(solelywithrespecttofailuretopaytheprincipalhereoforinterestthereonwhendueattheMaturityDate),theNoteshallbecomeimmediatelydueandpayableandtheBorrowershallpay totheHolder, infullsatisfactionof itsobligationshereunder,anamountequaltotheDefault Sum(asdefinedherein). UPONTHEOCCURRENCEANDDURING THECONTINUATION OFANYEVENT OFDEFAULTSPECIFIED INSECTION 3.2,THENOTESHALLBECOMEIMMEDIATELYDUEANDPAYABLE ANDTHEBORROWERSHALL PAYTO THEHOLDER,INFULLSATISFACTION OF ITSOBLIGATIONSHEREUNDER,ANAMOUNT EQUALTO:(Y) THEDEFAULTSUM(ASDEFINED HEREIN);MULTIPLIEDBY(Z)TWO(2).Upontheoccurrenceand during thecontinuationof anyEvent ofDefaultspecified inSections 3.1 (solelywithrespect to failure topay theprincipalhereof orinterest thereonwhen due on this Note upon aTradingMarketPrepaymentEvent pursuanttoSection1.7oruponacceleration),3.3, 3.4,3.6,3.8, 3.9,3.11, 3.12,3.13,3.14,and/or3.15exercisablethroughthedelivery ofwrittennotice totheBorrowerbysuchHolders(the“DefaultNotice”),and upon theoccurrence ofanEvent of Defaultspecified theremainingsections ofArticlesIII (otherthanfailure topay theprincipal hereof orinterestthereonat the MaturityDatespecified inSection 3,1hereof), theNoteshallbecomeimmediately dueandpayableandtheBorrowershallpaytotheHolder, infullsatisfactionofitsobligationshereunder,anamountequaltothegreater of(i) 150%timesthesumof(w) thethenoutstandingprincipalamount of thisNoteplus(x)accruedandunpaidinterest on theunpaidprincipalamount of thisNotetothedateofpayment(the“MandatoryPrepaymentDate”)plus(y)DefaultInterest,ifany, on theamountsreferredto inclauses(w)and/or(x)plus(z) anyamountsowed to theHolderpursuant toSections 1.3and1.4(g) hereof(thethenoutstandingprincipalamount of thisNote to thedateofpaymentplustheamounts referred to inclauses (x),(y)and (z)shall collectively beknownas the“DefaultSum”) or(ii) the“parity value” of theDefault Sum to beprepaid,where parityvaluemeans (a) thehighestnumberofshares of CommonStockissuable uponconversion of orotherwisepursuant tosuch Default Sum inaccordancewithArticle I,treating the TradingDay immediately precedingthe MandatoryPrepaymentDateas the“ConversionDate”forpurposes ofdetermining thelowestapplicable ConversionPrice,unless theDefaultEventarisesasaresultof abreach inrespectof aspecific ConversionDate inwhichcase suchConversionDateshall be the ConversionDate),multipliedby(b) thehighest ClosingPricefor the CommonStockduring theperiodbeginning onthedate offirstoccurrenceoftheEvent ofDefaultandending onedayprior to the MandatoryPrepaymentDate(the“DefaultAmount”)andallotheramountspayable hereundershallimmediately become dueandpayable,allwithoutdemand,presentment ornotice,all ofwhich hereby are expresslywaived,togetherwithallcosts,including,withoutlimitation,legalfeesandexpenses, ofcollection, and theHoldershall beentitled toexercise allother rightsandremediesavailable atlaworinequity.

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IftheBorrowerfailstopaytheDefaultAmountwithinfive(5)businessdaysofwrittennoticethatsuchamountisdueandpayable,thentheHoldershallhavetherightatanytime,solongastheBorrowerremainsindefault(andso longandtotheextentthattherearesufficientauthorizedshares),torequire theBorrower,uponwrittennotice,toimmediatelyissue,inlieuof theDefaultAmount, thenumber ofsharesof CommonStock of theBorrowerequal to theDefaultAmountdividedby theConversionPricethen ineffect.

ARTICLEIV.MISCELLANEOUS

4.1FailureorIndulgenceNotWaiver. NofailureordelayonthepartoftheHolderintheexerciseofanypower,rightorprivilegehereundershalloperateasawaiverthereof,norshallanysingleorpartialexerciseofanysuchpower,right or privilege precludeother orfurther exercisethereof or ofanyotherright, power orprivileges.Allrightsandremediesexistinghereunderarecumulativeto,andnotexclusiveof,anyrightsorremediesotherwise available.

4.2Notices. Allnotices,demands,requests,consents,approvals,andothercommunicationsrequiredorpermittedhereundershallbeinwritingand,unlessotherwisespecifiedherein,shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,return receiptrequested,postageprepaid,(iii)delivered byreputable aircourierservicewithchargesprepaid,or(iv)transmittedbyhanddelivery, telegram, or facsimile,addressedas setforthbelowortosuchotheraddressassuchparty shallhavespecifiedmostrecentlybywrittennotice.Anynotice orothercommunicationrequiredorpermittedtobegivenhereundershallbedeemedeffective (a) uponhand deliveryor delivery byfacsimile,withaccurateconfirmationgeneratedbythe transmittingfacsimilemachine,attheaddressornumberdesignatedbelow(ifdelivered on a businessday duringnormal businesshourswhere such noticeis to bereceived),or thefirstbusinessdayfollowingsuchdelivery(ifdeliveredotherthanonabusinessdayduringnormalbusinesshourswheresuch notice is to bereceived) or(b) on thesecondbusinessdayfollowing thedate ofmailingbyexpresscourierservice, fully prepaid,addressed tosuchaddress,or uponactualreceipt ofsuchmailing,whichevershallfirstoccur.Theaddressesforsuchcommunicationsshallbe:

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Ifto the Borrower, to:

CO-SIGNER,INC.

8275 S.Eastern Avenue– Suite 200-661LasVegas,NV89123

Attn:KURTISA.KRAMARENKO,ChiefExecutive Officer

Facsimile:

With acopybyfaxonlyto(which copyshall notconstitute notice):

KyleenCane

Cane•Clark LLP

3273E.WarmSprings Rd.LasVegas,NV89120

Ifto the Holder:

ASHERENTERPRISES,INC.

1Linden Pl., Suite207GreatNeck, NY. 11021Attn:CurtKramer,Presidentfacsimile:516-498-989

With acopybyfaxonlyto(which copyshall notconstitute notice):\

NaidichWurman Birnbaum &Maday,LLP

80CuttermillRoad,Suite410GreatNeck, NY11021

Attn:Bernard S.Feldman,Esq.facsimile:516-466-3555

4.3Amendments.ThisNoteandanyprovisionhereofmayonlybeamendedbyaninstrumentinwritingsignedbytheBorrowerandtheHolder. Theterm“Note”andallreferencethereto,asusedthroughout thisinstrument,shallmeanthisinstrument(andtheotherNotesissuedpursuanttothePurchaseAgreement)asoriginallyexecuted,or iflateramendedorsupplemented,thenas soamended or supplemented.

4.4Assignability. ThisNoteshallbebindingupontheBorroweranditssuccessorsandassigns,andshallinuretobethebenefitoftheHolderanditssuccessorsandassigns.Eachtransferee of thisNote must bean“accredited investor” (asdefined in Rule 501(a) of the 1933Act).Notwithstandinganything in thisNote to the contrary, thisNote may bepledgedascollateral inconnectionwith abonafidemargin account orotherlendingarrangement.

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

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4.6  ��GoverningLaw.ThisNoteshallbegovernedbyandconstruedinaccordancewiththelawsoftheStateofNewYorkwithoutregardtoprinciplesofconflictsoflaws.Anyactionbroughtbyeither partyagainst theother concerningthetransactionscontemplatedbythisNoteshallbebroughtonlyinthestatecourtsofNewYorkorinthefederalcourtslocatedinthestateand countyofNassau.Theparties tothisNote herebyirrevocablywaive anyobjectiontojurisdictionandvenue of any actioninstitutedhereunderandshall notassert any defense based onlackofjurisdictionorvenueorbaseduponforumnonconveniens.TheBorrowerandHolderwaivetrialbyjury.Theprevailing partyshall beentitled torecover from theother party itsreasonableattorney's feesandcosts. In the eventthat any provision of thisNote or anyotheragreementdeliveredinconnectionherewithisinvalidorunenforceableunder anyapplicablestatute orrule of law, thensuch provisionshall bedeemedinoperative to the extentthat it mayconflicttherewithand shall bedeemed modified toconformwithsuchstatute orrule oflaw. Anysuchprovisionwhichmay prove invalidorunenforceableunderanylawshall notaffect the validity orenforceabilityof anyother provision of anyagreement.Each partyherebyirrevocablywaives personalservice ofprocess andconsents toprocess beingserved in anysuit,action orproceeding inconnectionwith thisAgreement or any otherTransactionDocument bymailing a copy thereof viaregistered orcertifiedmail orovernight delivery(withevidence ofdelivery) tosuchpartyat theaddressineffectfornoticestoitunder thisAgreementandagreesthatsuchserviceshallconstitutegoodandsufficientservice of processandnoticethereof.Nothingcontained hereinshall bedeemed tolimit in anyway anyright toserveprocess in anyother manner permitted bylaw.

4.7CertainAmounts.WheneverpursuanttothisNotetheBorrowerisrequiredtopayanamountinexcessoftheoutstandingprincipalamount(ortheportionthereofrequiredtobepaidatthattime)plusaccruedandunpaidinterestplusDefaultInterestonsuchinterest,theBorrowerand the Holderagree that theactualdamages to theHolderfrom thereceipt ofcashpayment on thisNote may bedifficult todetermineand theamount to be sopaidby theBorrowerrepresentsstipulateddamagesand not a penaltyand isintended tocompensate theHolder inpartfor lossof the opportunity toconvertthisNoteandtoearnareturnfromthesale ofshares of CommonStockacquired uponconversion of this Noteat aprice inexcess of thepricepaidforsuch sharespursuant to thisNote.TheBorrowerand the Holder herebyagreethatsuchamount ofstipulateddamages is not plainlydisproportionate to the possible loss to theHolderfrom thereceipt of acashpaymentwithout the opportunity toconvert thisNote intoshares ofCommonStock.

4.8PurchaseAgreement.ByitsacceptanceofthisNote,eachpartyagreestobeboundbytheapplicableterms ofthe Purchase Agreement.

4.9NoticeofCorporateEvents.Exceptasotherwiseprovidedbelow,theHolderofthisNoteshallhavenorightsasaHolderofCommonStockunlessandonly totheextentthatitconvertsthisNoteintoCommonStock.TheBorrowershallprovidetheHolderwithpriornotification of any meetingof theBorrower’sshareholders(andcopies of proxymaterialsand otherinformation sent toshareholders). In the event ofanytakingby theBorrower of arecord of itsshareholdersfor thepurpose of determiningshareholderswho areentitled toreceivepayment ofanydividend orotherdistribution,anyright tosubscribefor,purchaseorotherwiseacquire(including by wayof merger, consolidation,reclassification orrecapitalization)any share ofanyclass or any othersecurities orproperty, ortoreceive any otherright, orforthepurposeofdeterminingshareholderswhoareentitledtovote inconnectionwithanyproposedsale,leaseorconveyance ofall or substantiallyall of theassets of theBorrower oranyproposed liquidation,dissolution or winding up of the Borrower,the Borrower shallmaila noticeto the Holder , at least twenty (20) days prior to the record date specified therein (or thirty (30)days prior to the consummationofthe transactionor event, whichever isearlier),ofthedate on which any such record is to be takenfor the purpose of such dividend , distribution,rightor other event, and a brief statement regarding the amount and character ofsuch dividend,distribution, right or other event to the extent knownat such time.TheBorrower shallmake a public announcement ofany event requiring notification to theHolder hereunder substantiallysimultaneously with the notification tothe Holder inaccordancewith thetermsof thisSection4.9.

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4.10Remedies. TheBorroweracknowledgesthatabreachbyitofitsobligationshereunderwillcauseirreparableharmtothe Holder, by vitiatingthe intent and purpose of the transaction contemplated hereby. Accordingly, the Borroweracknowledgesthat the remedy at law for a breach of its obligation s underthis Note will be inadequateandagrees,in the event of abreachorthreatenedbreach by the Borrower of the provisions of this Note, thatthe Holder shallbeentitled , inaddition to all other available remediesat law or in equity, andin additionto the penalties assessable herein , to an injunction or injunctions restraining, preventing or curinganybreach of this Note andtoenforce specificallythe terms andprovisionsthereof, withoutthe necessity ofshowing economic loss andwithoutany bond or other security beingrequired.

INWITNESSWHEREOF,BorrowerhascausedthisNotetobesignedinitsnamebyitsduly authorized officerthisJanuary 8, 2014.

CO-SIGNER, INC.

By:/s/ Kurtis A. Kramarenko

Kurtis A. Kramarenko

ChiefExecutiveOfficer

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EXHIBITA

NOTICE OFCONVERSION

Theundersignedherebyelectstoconvert$______________principalamountoftheNote(definedbelow)intothatnumberofsharesofCommonStocktobeissuedpursuanttotheconversionoftheNote(“CommonStock”)assetforthbelow,ofCO-SIGNER,INC.,aNevadacorporation(the“Borrower”)accordingto theconditions of theconvertible note of theBorrower datedas of January8, 2014(the“Note”),as of thedatewrittenbelow. Nofeewill becharged to theHolderfor anyconversion,exceptfor transfertaxes, if any.

BoxCheckedas toapplicable instructions:

[]TheBorrowershallelectronicallytransmittheCommonStockissuablepursuanttothisNoticeofConversiontotheaccountoftheundersignedoritsnomineewithDTCthroughitsDepositWithdrawalAgentCommissionsystem(“DWACTransfer”).

Nameof DTCPrimeBroker:AccountNumber:

[]TheundersignedherebyrequeststhattheBorrowerissueacertificateorcertificatesforthenumberofsharesofCommonStocksetforthbelow(whichnumbersarebasedontheHolder’scalculationattachedhereto)inthename(s)specified immediately belowor, ifadditional spaceisnecessary, onanattachmenthereto:

ASHERENTERPRISES,INC.

1Linden Pl., Suite207GreatNeck, NY. 11021

Attention:CertificateDelivery(516) 498-9890

DateofConversion:

Applicable ConversionPrice:

Numberof Shares ofCommonStock to beIssued

Pursuant toConversion ofthe Notes:Amount of PrincipalBalanceDue remaining

UndertheNote afterthisconversion:

ASHERENTERPRISES,INC.

By:

Name:CurtKramer

Title:President

Date:

1Linden Pl., Suite207GreatNeck, NY. 11021

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