Cross Click Media (XCLK) 10-K 2014 FY Annual 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:$25,000.00	Issue Date: September 02, 2014
PurchasePrice:$25,000.00

CONVERTIBLEPROMISSORYNOTE

FORVALUERECEIVED,CROSSCLICK MEDIA, INC.,a California corporation(hereinaftercalledthe“Borrower”),herebypromisestopaytotheorderofARGENT OFFSET, LLC,aNewYorkcorporation,orregisteredassigns(the“Holder”)the sumof $25,000.00togetherwith anyinterestassetforthherein,on March 01,2015(the“MaturityDate”),andtopayinterest ontheunpaidprincipalbalance hereofatthe rate ofeightpercent(24%)(the “InterestRate”)perannumfrom thedatehereof (the“Issue Date”) until thesamebecomes dueandpayable,whetherat maturity oruponacceleration orbyprepayment or 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 (30%) per annumfrom the due datethereof until thesame is paid(“DefaultInterest”).Interestshallcommenceaccruing on thedate that the Noteis fully paidandshall be computed on thebasisof a 365-dayyearandtheactual number ofdayselapsed.Allpaymentsdue hereunder(to the extent notconverted intocommon stock, $0.001parvalue pershare(the“CommonStock”) inaccordancewith thetermshereof)shall bemade inlawful money oftheUnited States ofAmerica.Allpaymentsshall bemadeatsuchaddressas theHolder shallhereaftergive to theBorrower bywrittennoticemadeinaccordance withtheprovisionsofthisNote. Wheneveranyamountexpressedtobe duebythetermsof thisNote isdue onanydaywhichisnotabusinessday, thesameshall instead be dueon thenextsucceedingday which is a businessdayand, in thecase ofanyinterestpaymentdatewhich is not thedate onwhich thisNote ispaid infull,extensionof the duedatethereofshall not be takenintoaccountfor purposesofdeterminingtheamountofinterestdueonsuchdate.AsusedinthisNote,theterm“businessday”shallmean anydayother than aSaturday, Sundayoraday onwhichcommercialbanks in thecityofNewYork,New Yorkareauthorized orrequired bylaw orexecutive order toremainclosed.

1 

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

The followingterms shall applyto thisNote:

ARTICLEI.CONVERSION RIGHTS

1.1ConversionRight. TheHoldershallhavetherightfromtimetotime,andatanytimeduringtheperiodbeginningonthedate whichisonehundredeighty(180)days followingthedateofthisNote andendingonthelater of:(i)theMaturityDateand(ii)thedate ofpaymentof the DefaultAmount(as defined inArticle 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, thatin no eventshall theHolder beentitled toconvert any 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 4.99% of theoutstanding shares of 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 onsuchconversion date (the“ConversionDate”).Theterm“Conversion Amount”means,withrespecttoanyconversionof thisNote,the sumof(1) theprincipalamountof thisNotetobeconvertedinsuchconversionplus(2) at theHolder’s option,accrued andunpaidinterest,ifany, onsuch principal amountat theinterestratesprovidedinthisNotetotheConversion Date,plus (3)at theHolder’soption,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.

2 

1.2ConversionPrice.

(a)CalculationofConversionPrice.Theconversionprice(the“ConversionPrice”)shallequaltheVariableConversionPrice(asdefinedherein)(subjecttoequitableadjustmentsforstocksplits,stockdividendsorrightsofferings bytheBorrowerrelatingto theBorrower’ssecurities or thesecurities ofany 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 Day priortotheConversionDate.“TradingPrice”means,forany securityasofany date,theclosingbidpriceon theOver-the-CounterBulletinBoard, orapplicable tradingmarket(the“OTCBB”)asreportedby areliable reportingservice(“ReportingService”)designatedby theHolder(i.e.Bloomberg)or, if theOTCBBis nottheprincipal tradingmarketfor suchsecurity, theclosing bid priceofsuch security on theprincipalsecurities exchangeor tradingmarketwheresuch security is listed ortraded or, ifnoclosingbidpriceofsuch security isavailableinanyof theforegoingmanners, theaverageof theclosingbidprices ofanymarketmakersforsuch security that arelistedin the“pinksheets”by theNationalQuotation Bureau,Inc.If theTradingPricecannot becalculatedforsuch security onsuchdateinthemannerprovidedabove, 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,group or entity (including theBorrower) publiclyannouncesa 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 bedeterminedassetforthinthisSection1.2(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)tobecomeoperative.

3 

1.3 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.

(c)PaymentofTaxes.TheBorrowershallnotberequiredtopayanytaxwhichmaybepayableinrespectofanytransferinvolvedintheissueanddeliveryofsharesof CommonStock orothersecurities or property onconversionofthis Note in anameotherthanthatofthe Holder(orinstreetname),andtheBorrowershallnot berequiredtoissue ordeliver anysuch sharesorothersecuritiesorpropertyunlessanduntilthepersonorpersons(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

inthisSection1.3,theBorrowershallissueanddeliverorcausetobeissuedanddeliveredtoorupontheorderoftheHoldercertificatesfortheCommonStockissuableuponsuchconversionwithinthree(3)businessdaysaftersuchreceipt(the“Deadline”)(and,solely inthecase ofconversion of theentireunpaidprincipalamounthereof, surrender of thisNote) in accordancewith the termshereof and the Purchase Agreement.

(e)ObligationofBorrowertoDeliverCommonStock.UponreceiptbytheBorrowerofaNoticeofConversion,theHoldershallbedeemedtobetheholderofrecordoftheCommonStockissuableuponsuchconversion,theoutstandingprincipalamountandthe

4 

amountofaccruedandunpaidinterestonthisNoteshallbereducedtoreflectsuchconversion,and,unlesstheBorrowerdefaultsonitsobligationsunderthisArticleI,allrightswithrespecttotheportionofthisNotebeingsoconvertedshallforthwithterminateexcepttherighttoreceivethe CommonStock orothersecurities,cash orother assets,ashereinprovided, onsuchconversion. If the Holdershall havegiven aNotice of Conversion asprovidedherein, theBorrower’sobligation to issueand deliverthecertificates forCommonStockshall beabsoluteandunconditional,irrespectiveoftheabsenceofanyactionbytheHoldertoenforcethesame, anywaiver orconsentwithrespect to any provisionthereof, the recovery of anyjudgmentagainst anyperson or anyaction toenforce the same, anyfailure or delayin theenforcement of any otherobligation of theBorrower to theholder ofrecord, or anysetoff,counterclaim,recoupment,limitation ortermination, or anybreach orallegedbreach by theHolder of anyobligation to theBorrower,andirrespective of any othercircumstance whichmightotherwise limitsuchobligation of theBorrower to the Holder inconnectionwith suchconversion. TheConversionDatespecifiedintheNoticeofConversionshallbetheConversionDatesolongas theNoticeofConversion isreceived bytheBorrowerbefore6:00 p.m.,NewYork, NewYorktime, onsuchdate.

(f)DeliveryofCommonStockbyElectronicTransfer.InlieuofdeliveringphysicalcertificatesrepresentingtheCommonStockissuableuponconversion,providedtheBorrower isparticipatinginthe Depository Trust Company(“DTC”)FastAutomatedSecuritiesTransfer(“FAST”)program,uponrequestof theHolderanditscompliancewith the provisionscontained in Section 1.1and in this Section 1.3, theBorrowershall use itsbestefforts tocause itstransferagent toelectronically transmit theCommonStockissuable uponconversiontotheHolderbycrediting theaccount ofHolder’sPrimeBrokerwithDTCthrough itsDepositWithdrawalAgent Commission(“DWAC”) system.

(g)FailuretoDeliverCommonStockPriortoDeadline.WithoutinanywaylimitingtheHolder’sright topursueotherremedies, includingactualdamages and/orequitablerelief,thepartiesagreethatifdeliveryoftheCommonStockissuableuponconversionof thisNote is notdelivered by theDeadline theBorrowershall payto the Holder $1,000per dayin cash,foreach daybeyond theDeadlinethat theBorrowerfailstodeliversuchCommonStock.Suchcash amountshallbepaidtoHolderby 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 toconvertis avaluable right to theHolder.The damagesresultingfrom afailure,attempt tofrustrate,interferencewithsuchconversionrightaredifficult if not impossible toqualify.Accordingly the partiesacknowledgethat theliquidateddamagesprovisioncontained in thisSection1.4(g)arejustified.

1.4ConcerningtheShares.ThesharesofCommonStockissuableuponconversionofthisNotemaynotbesoldortransferredunless(i)suchsharesaresoldpursuanttoaneffectiveregistrationstatementundertheAct or(ii)theBorroweroritstransferagentshallhave beenfurnishedwithan opinion ofcounsel(which opinionshall be inform,substanceandscope customaryfor opinions ofcounsel incomparabletransactions) to theeffectthat theshares tobesoldortransferredmay besoldortransferredpursuanttoanexemptionfromsuchregistration or

5 

(iii) suchsharesaresoldortransferredpursuanttoRule144undertheAct(orasuccessorrule)(“Rule144”)or(iv)suchsharesaretransferredtoan“affiliate”(asdefinedinRule144)oftheBorrowerwhoagreestosellorotherwisetransferthesharesonly inaccordancewith thisSection 1.5andwho isanAccreditedInvestor(asdefinedin thePurchaseAgreement).Exceptasotherwiseprovided in thePurchaseAgreement(andsubject to theremovalprovisionssetforthbelow), until such timeas theshares of CommonStockissuableuponconversionofthisNotehavebeenregisteredunder theActorotherwisemay be sold pursuant to Rule 144without anyrestrictionas to thenumber ofsecuritiesas of aparticulardatethat canthen beimmediately sold,eachcertificateforsharesof CommonStockissuable upon conversion of thisNote thathas notbeen soincluded inaneffectiveregistrationstatement orthathas notbeensoldpursuant toaneffectiveregistrationstatementoran exemptionthatpermitsremoval ofthelegend,shall bear a legend substantially in the followingform,asappropriate:

“NEITHERTHEISSUANCEANDSALEOFTHESECURITIESREPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICH THESESECURITIESAREEXERCISABLE HAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,AS AMENDED,ORAPPLICABLE STATESECURITIESLAWS.THESECURITIESMAY NOTBEOFFERED FORSALE, SOLD,TRANSFERRED ORASSIGNED(I) IN THEABSENCEOF(A) ANEFFECTIVEREGISTRATION STATEMENT FOR THESECURITIESUNDER THESECURITIESACTOF 1933,ASAMENDED, OR(B)ANOPINIONOFCOUNSEL(WHICHCOUNSEL SHALL BESELECTEDBY THEHOLDER),IN AGENERALLYACCEPTABLEFORM, THATREGISTRATION ISNOT REQUIREDUNDERSAIDACTOR (II)UNLESSSOLDPURSUANTTORULE 144 ORRULE144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING,THESECURITIESMAYBEPLEDGED INCONNECTION WITH A BONAFIDEMARGINACCOUNTOR OTHER LOANORFINANCING ARRANGEMENTSECURED BYTHE SECURITIES.”

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 ofcounselprovided by the Holderwithrespect to thetransfer ofSecurities pursuant toan exemptionfromregistration,suchas Rule 144 orRegulation S,at theDeadline, itwill beconsideredanEventofDefaultpursuant toSection 3.2 ofthe Note.

1.5 Effect of CertainEvents.

(a)EffectofMerger,Consolidation,Etc.AttheoptionoftheHolder,thesale,conveyanceordispositionofallorsubstantiallyalloftheassetsoftheBorrower,theeffectuationby theBorrowerof atransactionorseries ofrelatedtransactions inwhichmorethan

6 

50%ofthevotingpoweroftheBorrowerisdisposedof,ortheconsolidation,mergerorotherbusinesscombinationoftheBorrowerwithorintoanyotherPerson(asdefinedbelow)orPersonswhentheBorrower isnotthesurvivorshalleither:(i) be deemedtobeanEventofDefault(asdefined inArticle III) pursuant towhich theBorrowershall berequired to pay to theHolder upon the consummation ofandas acondition tosuchtransaction anamountequal to theDefaultAmount(asdefinedinArticle III) or(ii) betreatedpursuant toSection1.6(b)hereof.“Person”shallmeananyindividual, corporation,limitedliabilitycompany,partnership,association,trust or 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 classorclasses 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, securitiesorassets whichtheHolder wouldhavebeen entitledtoreceiveinsuch transactionhad this Note been converted in full immediately prior to such transaction (without regard toany limitations onconversionset forthherein), andinany suchcase appropriate provisions shall be made with respect to the rights and interests of the Holderofthis Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as maybe practicable in relation toany securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives,to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of thespecial meeting ofshareholders to approve, orif thereis no such record date, the consummation of, such merger, consolidation, exchangeof shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

(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.

7 

(d)AdjustmentDuetoDilutiveIssuance.If,atanytimewhenanyNotesareissuedandoutstanding,theBorrowerissuesorsells,orinaccordancewiththisSection1.6(d)hereofisdeemedtohaveissuedorsold,anysharesofCommonStockfornoconsiderationorforaconsiderationper share (beforededuction ofreasonableexpenses orcommissions 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 orothersecuritiesconvertibleintoorexchangeableforCommon

Stock(“ConvertibleSecurities”)(suchwarrants,rightsandoptionstopurchaseCommonStockorConvertibleSecuritiesarehereinafterreferredtoas“Options”)andthepricepershareforwhichCommonStockisissuableupontheexerciseofsuchOptionsislessthantheConversionPricethenineffect,thentheConversionPriceshallbeequaltosuchpricepershare.Forpurposes of the precedingsentence, the“price per share forwhich CommonStock isissuable upon theexercise of suchOptions” isdetermined by dividing(i) the totalamount, ifany,received orreceivable bytheBorrowerasconsiderationfor the issuanceorgrantingofallsuchOptions,plustheminimumaggregateamountofadditionalconsideration,ifany,payabletotheBorrowerupon theexerciseofallsuchOptions, plus, in thecaseofConvertibleSecuritiesissuable upon the exercise ofsuchOptions, the minimumaggregateamount ofadditionalconsiderationpayable upon theconversionorexchange 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 exercise of suchOptions orupon the conversion orexchangeof Convertible Securitiesissuableuponexerciseof suchOptions.

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.

8 

(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 of

suchPurchaseRightsor,ifnosuchrecordistaken,thedateasofwhichtherecordholdersofCommonStockareto 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.The Borrowershall, 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.

1.6TradingMarketLimitations.UnlesspermittedbytheapplicablerulesandregulationsoftheprincipalsecuritiesmarketonwhichtheCommonStockisthenlistedortraded,inno eventshall theBorrower issue uponconversion oforotherwisepursuant tothisNoteandthe other Notesissuedpursuantto thePurchaseAgreement morethanthe maximumnumber ofsharesof CommonStockthattheBorrowercanissue pursuanttoanyrule of theprincipal UnitedStatessecuritiesmarket on which theCommonStock isthentraded (the “MaximumShareAmount”),whichshall be4.99%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 therules orregulations 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.

1.7StatusasShareholder.UponsubmissionofaNoticeofConversionbyaHolder,(i)thesharescoveredthereby(otherthantheshares,ifany,whichcannotbeissuedbecause theirissuance wouldexceedsuchHolder’sallocatedportion of theReservedAmount 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

9 

thisNoteforanyreason, then(unlesstheHolderotherwiseelectstoretainitsstatusasaholderofCommonStockbysonotifying theBorrower)theHoldershallregaintherightsofaHolderof thisNotewithrespecttosuchunconvertedportionsofthisNote andtheBorrower shall,assoonaspracticable,returnsuch unconverted Noteto theHolder or, if theNote has not beensurrendered,adjustitsrecordstoreflectthatsuchportionofthisNote has notbeenconverted.Inall cases, theHolder shallretainall of itsrightsand remedies(including, withoutlimitation, (i) theright to receiveConversion DefaultPaymentspursuant toSection 1.3 to the extentrequired therebyforsuchConversionDefaultandanysubsequentConversionDefaultand(ii) therighttohavetheConversionPrice withrespecttosubsequentconversionsdeterminedinaccordancewithSection 1.3) fortheBorrower’sfailuretoconvertthisNote.

1.8Prepayment.NotwithstandinganythingtothecontrarycontainedinthisNote,atanytimeduringtheperiodbeginningontheIssue Dateandendingonthedatewhichisthirty(30) days followingtheIssue Date, theBorrowershall havethe right,exercisableon notlessthanthree(3) TradingDayspriorwrittennoticeto theHolderoftheNoteto prepay theoutstandingNote (principalandaccrued interest), infull,inaccordancewiththisSection1.9.Anynoticeofprepaymenthereunder(an“OptionalPrepaymentNotice”)shall bedelivered to theHolderof theNoteat itsregistered addressesandshallstate:(1)thattheBorrower isexercisingitsright to prepay theNote, and(2) thedateofprepaymentwhich shall be notmorethanthree (3)TradingDaysfromthedateoftheOptionalPrepaymentNotice. On thedatefixedforprepayment (the“OptionalPrepaymentDate”), theBorrower shallmake payment of theOptionalPrepaymentAmount(asdefinedbelow) to or upon the order of theHolderas specifiedby theHolder inwritingto theBorroweratleastone(1)business dayprior to theOptionalPrepayment Date.If theBorrowerexercises itsright to prepay the Note, theBorrower shallmakepayment to theHolderofanamountin cash(the“OptionalPrepayment Amount”)equalto110%,multipliedbythe sumof:(w)the thenoutstandingprincipal amount of thisNoteplus(x) accruedandunpaidintereston theunpaidprincipalamountof thisNote to theOptionalPrepaymentDateplus(y)Default Interest, ifany, on theamountsreferred to inclauses (w)and (x)plus(z)anyamountsowed to theHolderpursuant toSections 1.3and1.4(g)hereof. If theBorrower deliversanOptionalPrepaymentNoticeand fails topaytheOptionalPrepaymentAmount dueto theHolder of theNotewithintwo(2)businessdaysfollowing theOptionalPrepaymentDate,theBorrowershallforever forfeit itsright to prepay the Notepursuant to thisSection 1.9.

Notwithstanding anythingtothecontrarycontainedinthisNote, atanytimeduringtheperiodbeginningonthedatewhichisthirty-one(31) daysfollowingtheIssueDateand endingon thedatewhich is sixty(60)days followingtheIssue Date, the Borrower shallhavetheright,exercisable on notlessthanthree(3)TradingDaysprior writtennotice to theHolder of theNote toprepaythe outstandingNote(principalandaccruedinterest),infull, inaccordancewiththisSection1.9.Any OptionalPrepayment NoticeshallbedeliveredtotheHolderoftheNoteatitsregisteredaddressesand shallstate:(1)thattheBorrowerisexercising itsrightto prepay theNote,and (2) thedate ofprepaymentwhichshall be notmore thanthree(3)Trading Daysfrom thedateoftheOptional PrepaymentNotice.OntheOptionalPrepaymentDate,theBorrower shallmake payment of theSecondOptionalPrepaymentAmount(asdefinedbelow)to or upon theorder of theHolderasspecified by theHolderinwriting to theBorrowerat least one(1)business dayprior to theOptionalPrepayment Date.If theBorrowerexercisesitsright to prepay theNote, theBorrowershallmake payment to theHolder ofanamountincash(the“Second OptionalPrepaymentAmount”) equal to115%,multiplied by the sumof:(w) thethen

10 

outstandingprincipalamountofthisNoteplus(x) accruedandunpaidinterestontheunpaidprincipalamountofthisNotetotheOptionalPrepaymentDateplus(y)DefaultInterest,ifany,ontheamountsreferredtoinclauses(w)and(x)plus (z)anyamountsowedtotheHolderpursuant toSections 1.3and 1.4(g) hereof. If theBorrowerdeliversanOptionalPrepaymentNoticeandfailstopay theSecondOptionalPrepaymentAmountduetotheHolderoftheNotewithintwo(2)businessdays following the OptionalPrepaymentDate, theBorrowershallforever forfeit itsright to prepay theNotepursuant to thisSection 1.9.

NotwithstandinganythingtothecontrarycontainedinthisNote,atanytimeduringtheperiodbeginningonthedatewhichissixty-one(61)daysfollowingtheIssueDateandendingonthedatewhichisninety(90)daysfollowingtheIssueDate,theBorrowershallhave theright,exercisable on notlessthan three(3)TradingDayspriorwritten notice to theHolder of theNote to prepay theoutstanding Note(principalandaccruedinterest), infull, inaccordancewith thisSection 1.9. Any OptionalPrepayment Noticeshall bedelivered to theHolder 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.

Notwithstandinganytothecontrarystated elsewhereherein,atanytimeduringtheperiodbeginningonthedatethatisninety-one(91)dayfromtheIssueDate andendingonehundredtwenty(120)daysfollowing theIssueDate,theBorrowershallhave theright,exercisableon notless thanthree(3) Trading Dayspriorwritten notice to theHolder of theNote toprepay theoutstandingNote(principal andaccruedinterest),infull,inaccordancewiththisSection1.9.AnyOptionalPrepaymentNotice shallbedeliveredtothe Holder of theNoteatitsregisteredaddressesand shallstate:(1) that theBorrowerisexercising itsright to prepay theNote,and (2)thedateofprepaymentwhichshallbenotmorethanthree(3)Trading Daysfrom thedateof theOptionalPrepaymentNotice. OntheOptionalPrepaymentDate,theBorrower shallmake paymentof the FourthOptionalPrepaymentAmount (asdefinedbelow) toor upon theorderof the Holder as specifiedby theHolderin writingto the Borrower at least one (1) business day priorto theOptional Prepayment Date. IftheBorrower exercises its right to prepay the Note, the Borrower shall make payment to the Holderofan amount in cash (the “Fourth Optional Prepayment Amount”) equal to 125%, multipliedby the sum of: (w) the then outstanding principal amount of this Noteplus(x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Dateplus(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x)plus(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment

11 

NoticeandfailstopaytheFourthOptionalPrepaymentAmountduetotheHolderoftheNotewithintwo(2)businessdaysfollowing theOptionalPrepaymentDate,theBorrowershallforever forfeit itsright toprepaytheNotepursuant to thisSection 1.9.

Notwithstandinganytothecontrarystatedelsewhereherein,atanytimeduringtheperiodbeginningonthedatethatisonehundredtwenty-one(121)dayfromtheIssueDateandendingonehundredfifty(150)daysfollowingtheIssueDate,theBorrowershallhavetheright,exercisableon notlessthanthree(3)TradingDayspriorwrittennoticeto theHolderof theNote to prepay the outstandingNote(principal andaccruedinterest), infull, inaccordancewith thisSection 1.9. Any OptionalPrepaymentNoticeshall bedelivered to the 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(asdefinedbelow) to or upon theorderoftheHolderas specified by 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%,multiplied by 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 1.3and1.4(g) hereof. IftheBorrower deliversanOptional PrepaymentNotice and fails topay theFifth OptionalPrepaymentAmount due to theHolder of theNotewithintwo(2)businessdaysfollowing theOptionalPrepaymentDate, theBorrowershallforeverforfeit itsright to prepay the Notepursuant to thisSection 1.9.

Notwithstandinganytothecontrarystatedelsewhereherein,atanytimeduringtheperiodbeginningonthedatethatisonehundredfifty-one(151)dayfromtheIssueDateandending one hundred eighty(180)days following theIssueDate, theBorrowershallhave theright,exercisableonnotlessthanthree(3)TradingDayspriorwrittennoticetotheHolderoftheNote to prepaythe outstandingNote(principal andaccruedinterest),infull, inaccordancewith thisSection1.9.Any OptionalPrepaymentNoticeshallbedeliveredtothe HolderoftheNoteat itsregisteredaddresses andshallstate:(1)that theBorrower isexercising itsright to prepaythe

Note,and(2)thedateofprepaymentwhichshallbenotmorethanthree(3)TradingDaysfromthedateoftheOptionalPrepaymentNotice.OntheOptionalPrepaymentDate,theBorrowershallmakepaymentof theSixthOptionalPrepaymentAmount(asdefinedbelow) to or upon theorderoftheHolderasspecified by theHolderinwriting to theBorrower atleast one(1)businessdayprior to the OptionalPrepaymentDate.If theBorrowerexercises itsright to prepay theNote, theBorrowershallmakepayment to the Holder ofanamount in cash(the “SixthOptionalPrepaymentAmount”)equal to135%,multiplied by the sum of: (w) thethen outstandingprincipalamount of 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 failsto pay the SixthOptionalPrepaymentAmount due to theHolder of theNotewithintwo(2)businessdaysfollowing theOptionalPrepaymentDate, theBorrowershallforeverforfeit itsright to prepay the Notepursuant to thisSection 1.9.

12 

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 theformofadditionalshares 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 Borroweroranywarrants,rightsoroptions 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)borrowingsinexistenceorcommittedonthedatehereofandof

whichtheBorrowerhasinformedHolderinwritingpriortothedatehereof,(b)indebtednesstotradecreditorsorfinancialinstitutionsincurredintheordinarycourseofbusinessor(c)borrowings, the proceedsof whichshall be used torepaythisNote.

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

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 thedatehereofand which 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:

13 

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 CommonStock issued 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)andanysuchfailure shallcontinueuncured(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.

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

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

3.5ReceiverorTrustee.TheBorroweroranysubsidiaryoftheBorrowershallmakeanassignmentforthebenefitofcreditors,orapplyfororconsenttotheappointmentofareceiverortrusteeforitorforasubstantialpartofitspropertyorbusiness, orsuch areceiverortrustee shallotherwisebeappointed.

3.6Judgments.Anymoneyjudgment,writorsimilarprocessshallbeenteredorfiledagainsttheBorroweroranysubsidiaryoftheBorroweror anyofitspropertyorotherassets formorethan$50,000,andshallremainunvacated,unbondedorunstayedforaperiodoftwenty(20) daysunlessotherwise consented tobytheHolder,which consentwillnotbeunreasonablywithheld.

14 

3.7 Bankruptcy.Bankruptcy,insolvency,reorganizationor liquidationproceedingsorotherproceedings,voluntaryorinvoluntary,forreliefunderanybankruptcylaworanylawforthereliefofdebtorsshall beinstitutedbyoragainst theBorroweroranysubsidiary ofthe 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 dateorperiodfromtwoyearspriortotheIssueDateofthisNoteanduntilthisNoteis nolongeroutstanding, iftheresultofsuchrestatementwould,bycomparisontotheunrestatedfinancialstatement,haveconstitutedamaterial adverseeffect on therights of theHolderwithrespect to thisNote or thePurchaseAgreement.

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 thesuccessortransferagent toBorrower and theBorrower.

3.16Cross-Default.NotwithstandinganythingtothecontrarycontainedinthisNoteortheotherrelatedorcompaniondocuments,abreachordefaultbytheBorrowerofanycovenantorothertermorconditioncontainedin anyoftheOtherAgreements,after thepassage of allapplicablenoticeandcureorgraceperiods,shall,at theoption oftheHolder, beconsidered a

15 

defaultunderthisNoteandtheOtherAgreements,inwhicheventtheHoldershallbeentitled(butinnoeventrequired)toapplyallrightsandremediesoftheHolderunderthetermsofthisNoteandtheOtherAgreements byreasonofadefaultundersaidOtherAgreementorhereunder.“OtherAgreements”means,collectively,allagreementsandinstrumentsbetween,amongorby:(1)theBorrower,and,orforthebenefitof,(2)theHolderandanyaffiliateoftheHolder,including,withoutlimitation,promissorynotes; provided,however, the term“OtherAgreements”shall not include therelated or companiondocuments to thisNote.Each of theloantransactionswill becross-defaultedwitheachotherloan transactionandwithallother 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).Upontheoccurrenceand during thecontinuationofanyEvent ofDefaultspecifiedinSections 3.1 (solelywithrespect to failure topay theprincipal hereof 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 ofanEventof Defaultspecified theremainingsections ofArticlesIII(otherthanfailure topaytheprincipal hereof orinterest thereonat the MaturityDate specified inSection 3,1hereof), theNoteshallbecome immediately dueandpayableandtheBorrowershallpaytotheHolder, infull satisfactionofits obligationshereunder,an amountequaltothegreater of(i)150%timesthesumof(w) thethenoutstandingprincipalamountof thisNoteplus(x)accrued andunpaidinterest on theunpaid principalamount of thisNotetothedateofpayment(the“MandatoryPrepaymentDate”)plus(y)Default Interest,ifany,on theamountsreferredto inclauses(w)and/or(x)plus(z) anyamountsowed to theHolder pursuant toSections 1.3and1.4(g) hereof(thethen outstandingprincipalamount of thisNote to thedateofpaymentplustheamountsreferred to inclauses (x),(y) and (z)shall collectively beknown as the“DefaultSum”) or(ii) the“parity value” of theDefault Sum to beprepaid,whereparityvaluemeans (a) thehighest numberofshares of CommonStock issuable uponconversion of orotherwise pursuant tosuch Default Sum inaccordance withArticle I,treating the TradingDay immediately precedingthe MandatoryPrepaymentDateas the“ConversionDate”forpurposes ofdetermining thelowestapplicable ConversionPrice, unless theDefaultEventarises asaresultof abreach inrespectof aspecific ConversionDate inwhichcase suchConversionDateshall be the ConversionDate),multipliedby(b) thehighestClosingPricefor the CommonStockduringtheperiodbeginningonthedate offirst occurrenceoftheEventofDefaultandending onedayprior to the MandatoryPrepaymentDate(the“Default Amount”)andallother amountspayable hereundershallimmediately become dueandpayable, allwithoutdemand,presentmentornotice,all ofwhichhereby are expresslywaived,together withallcosts, 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.

16 

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.Allrightsandremediesexistinghereunder arecumulativeto,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 setforth belowortosuchotheraddressassuchparty shallhavespecifiedmostrecentlybywrittennotice.Anynotice orothercommunicationrequiredorpermittedtobegivenhereundershallbedeemedeffective (a) uponhanddeliveryor 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:

Ifto the Borrower, to:

CROSSCLICK MEDIA, INC.

8275 SouthEastern Avenue, Suite 200-661

LasVegas,NV89123

Attn: Gary R. Gottlieb, Corporate Secretary

Email: gary@crossclickmedia.com

Ifto the Holder:

ARGENT OFFSET, LLC

1320 Juneberry Place

Oxnard CA 93036

Attn: Rick Narveson, Managing Member

e-mail:argenoffset@gmail.com

17 

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

4.4Assignability.ThisNoteshallbebindingupontheBorroweranditssuccessorsandassigns,andshallinuretobethebenefitoftheHolderanditssuccessorsandassigns.Eachtransferee of thisNote must bean“accredited investor” (asdefined in Rule501(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.

4.6GoverningLaw.ThisNote shallbegovernedbyand construedinaccordance withthelawsoftheStateofNewYorkwithoutregardtoprinciplesofconflictsoflaws.Anyactionbroughtbyeitherpartyagainst theotherconcerningthetransactionscontemplatedbythisNoteshallbebroughtonlyinthestatecourtsofNewYorkorinthefederal courtslocatedinthestateandcountyofNassau.The parties tothisNoteherebyirrevocablywaive anyobjectiontojurisdictionand venue of any actioninstitutedhereunder andshall notassert any defense based onlackofjurisdictionorvenueorbaseduponforumnonconveniens.TheBorrowerandHolder waivetrial byjury. Theprevailingpartyshall beentitled torecoverfrom theother party itsreasonable attorney's feesandcosts. In the eventthat any provision of thisNote or anyotheragreementdeliveredinconnectionherewith isinvalidorunenforceableunder anyapplicable statuteorrule of law, thensuch provisionshall bedeemedinoperativeto the extentthat it mayconflicttherewithand shall bedeemedmodified toconformwithsuch statute orrule oflaw. Anysuch provisionwhichmay prove invalid orunenforceableunderany lawshallnotaffect the validity orenforceabilityof anyother provision of anyagreement. Each partyherebyirrevocablywaivespersonalservice ofprocess andconsents toprocess beingservedin anysuit,action orproceedinginconnectionwith thisAgreementor any otherTransactionDocument bymailing a copy thereof viaregistered orcertifiedmail orovernightdelivery(withevidence ofdelivery)tosuchpartyat theaddressineffectfornoticestoitunderthisAgreementand agreesthatsuchservice shallconstitutegoodand sufficientservice of processandnoticethereof.Nothing contained hereinshall bedeemed tolimit in any way anyrighttoserve process in anyother manner permitted bylaw.

4.7CertainAmounts. WheneverpursuanttothisNotetheBorrowerisrequiredtopayanamountinexcessoftheoutstandingprincipalamount (ortheportion thereofrequiredtobepaid atthattime)plus accruedandunpaidinterestplusDefaultInterestonsuchinterest,theBorrowerandthe Holderagreethat theactual damages to theHolderfrom thereceipt ofcashpaymenton thisNote may bedifficult todetermineand theamountto be sopaidby theBorrower representsstipulateddamagesand not a penaltyand isintendedtocompensate theHolder 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.

18 

4.8PurchaseAgreement.ByitsacceptanceofthisNote,eachpartyagreestobeboundbytheapplicableterms ofthe Purchase Agreement.

4.9NoticeofCorporateEvents.Exceptasotherwiseprovidedbelow,theHolderofthisNoteshallhavenorightsasaHolderofCommonStockunlessandonly totheextentthatitconvertsthisNoteintoCommonStock.TheBorrowershallprovidetheHolderwithpriornotification of any meetingof theBorrower’sshareholders(andcopies of proxymaterialsandotherinformation 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, orforthepurposeof

determiningshareholderswhoareentitledtovoteinconnectionwithanyproposedsale,leaseorconveyanceofallorsubstantiallyalloftheassetsoftheBorroweroranyproposedliquidation,dissolutionorwinding upof theBorrower,theBorrowershallmailanotice totheHolder,atleast twenty(20) days prior to therecorddatespecifiedtherein(or thirty(30)daysprior to theconsummation of thetransaction orevent,whichever isearlier), of the date onwhichanysuchrecord is to be takenfor thepurposeofsuch dividend,distribution,right orotherevent,and abriefstatementregardingtheamountandcharacter ofsuchdividend,distribution,rightor otherevent tothe extentknownatsuchtime.TheBorrowershallmakea publicannouncementofanyeventrequiringnotificationtotheHolderhereundersubstantiallysimultaneouslywiththenotification to the Holderinaccordancewith the terms ofthisSection 4.9.

4.10Remedies.TheBorroweracknowledgesthatabreachbyitofitsobligationshereunderwillcauseirreparableharmtotheHolder,byvitiatingtheintentandpurpose of the transactioncontemplatedhereby.Accordingly, theBorroweracknowledgesthat theremedyatlawforabreachofitsobligationsunderthisNotewill beinadequateandagrees,in the eventofabreach orthreatenedbreach by theBorroweroftheprovisions ofthisNote,that theHoldershallbeentitled,inadditiontoallotheravailableremediesatlaworinequity,andinaddition to thepenaltiesassessableherein, toaninjunction orinjunctionsrestraining,preventing or curinganybreach of thisNoteand toenforcespecifically the terms andprovisionsthereof,withoutthenecessityofshowing economiclossandwithoutanybondorothersecuritybeingrequired.

INWITNESSWHEREOF,BorrowerhascausedthisNotetobesignedinitsnameby itsdulyauthorizedofficerthis September 02, 2014.

CROSSCLICK MEDIA, INC.

By: ________________________________

Gary R. Gottlieb

Corporate Secretary

19 

EXHIBITA --NOTICEOF CONVERSION

Theundersignedherebyelectstoconvert$principalamountoftheNote(definedbelow)intothatnumberofsharesofCommonStocktobeissuedpursuanttotheconversionoftheNote(“CommonStock”)assetforthbelow,ofCROSSCLICK MEDIA, INC.,aNevadacorporation(the“Borrower”)accordingtotheconditionsoftheconvertible noteoftheBorrowerdatedas of September 02,2014(the“Note”),asofthedatewrittenbelow.NofeewillbechargedtotheHolderfor anyconversion,exceptfortransfertaxes, ifany.

BoxChecked astoapplicableinstructions:

[]       TheBorrowershallelectronicallytransmittheCommonStockissuablepursuanttothisNoticeofConversiontotheaccountoftheundersignedoritsnomineewithDTC throughitsDepositWithdrawalAgentCommissionsystem(“DWAC Transfer”).

Name ofDTCPrimeBroker:AccountNumber:

[]   TheundersignedherebyrequeststhattheBorrowerissueacertificateorcertificatesforthenumberofsharesofCommonStocksetforthbelow(whichnumbersarebasedontheHolder’scalculationattachedhereto)inthename(s)specifiedimmediatelybelow or,ifadditionalspaceisnecessary, on anattachmenthereto:

ARGENT OFFSET, LLC

1320 Juneberry

Oxnard, CA 93036

Attention:CertificateDelivery

e-mail: argentoffset@gmail.com

DateofConversion: _____________________________

ApplicableConversionPrice:$_____________________________

NumberofSharesof Common Stockto beIssued Pursuant to Conversionofthe Notes: _____________________________

AmountofPrincipalBalanceDueremaining

Under the Noteafter thisconversion: _______________________

ARGENT OFFSET, LLC

By: _____________________________

Name:Rick Narveson

Title: Managing Member

Date: