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EXHIBIT 10.1
 
 
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  IT MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
 
CROWDGATHER, INC.
 
CONVERTIBLE PROMISSORY NOTE
 

$200,000.00 
Woodland Hills, California
Dated as of September 25, 2008

 
CrowdGather, Inc., a Nevada corporation (the “Company”), for value received,
hereby promises to pay to __________________, or its registered assigns
(“Holder”), the sum of Two Hundred Thousand Dollars ($200,000.00) on the terms
and conditions set forth hereinafter.  Payment for all amounts due hereunder
shall be made by mail to the registered address of Holder.

The following is a statement of the rights of Holder of this Note and the
conditions to which this Note is subject, and to which Holder hereof, by the
acceptance of this Note, agrees:

1.           Maturity; Partial Prepayment.  The principal hereof and any unpaid
accrued interest hereon, as set forth below, shall be due and payable on the
earlier to occur of:  (i) September 25, 2009 (“Maturity Date”); and (ii) when
declared due and payable by Holder upon the occurrence of an Event of Default
(as defined below).
 
2.           Interest.  The Company shall pay interest at the rate of the lower
of (i) 10 percent per annum; or (ii) the maximum allowable rate under applicable
laws (such rate, the “Interest Rate”) on the principal of this Note outstanding
during the period beginning on the date of this Note and ending on the date that
the principal amount of this Note is repaid in full.  Interest shall be
calculated on the basis of a 360-day year for the actual number of days
elapsed.  Interest accruing on this Note shall be due and payable at the
Maturity Date or upon the occurrence of an Event of Default.  The Company shall
pay the interest due on this Note by delivering to Holder cash equal to the
outstanding principal amount of the Note plus any due and unpaid interest.  If
there occurs an acceleration or prepayment of the Note prior to the Maturity
Date in accordance with the terms hereof, all interest due and payable at such
time on the principal amount due shall be paid in full.  All payments hereunder
are to be applied first to reasonable costs and fees referred to herein, second
to the payment of accrued interest, and the remaining balance to the payment of
principal.

3.           Events of Default.  If any of the events specified in this Section
3 shall occur (herein individually referred to as an “Event of Default”), Holder
may, so long as such condition exists, declare the entire principal and unpaid
accrued interest hereon immediately due and payable, by notice in writing to the
Company:
 
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(a)           Default in the payment of the principal or unpaid accrued interest
of this Note when due and payable; or

(b)           The institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to institution of bankruptcy or
insolvency proceedings against it or the filing by it of a petition or answer or
consent seeking reorganization or release under the Federal Bankruptcy Act, or
any other applicable Federal or state law, or the consent by it to the filing of
any such petition or the appointment of a receiver, liquidator, assignee,
trustee or other similar official of the Company, or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the taking of corporate action by the Company in furtherance of any such
action; or

(c)           If, within 60 calendar days after the commencement of an action
against the Company, without the consent or acquiescence of the Company (and
service of process in connection therewith on the Company) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or all orders or proceedings
thereunder affecting the operations or the business of the Company stayed, or if
the stay of any such order or proceeding shall thereafter be set aside, or if,
within 60 calendar days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated.

4.           Holder’s Rights Upon Event of Default.  Upon the occurrence and
continuance of any Event of Default, Holder in its sole and absolute discretion
shall have the right to:

(i)            convert all of the principal amount and unpaid accrued interest
attributable to this Note into shares of Common Stock at a conversion price of
the lower of (i) $1.50 per share (ii) the price per share of the Company’s next
transaction or series of related transactions in which the Company sells equity
securities and in which the gross proceeds to the Company equal or exceed
$2,000,000 (the “Next Equity Financing”); or
 
(ii)           declare all unpaid interest and principal immediately due and
payable and exercise all other legal rights in connection therewith.

5.           Conversion; Optional Reinvestment.

(a)           Optional Conversion.  Holder may elect at its sole discretion to
convert the outstanding principal balance and unpaid accrued interest on this
Note into shares of Common Stock at any time.  The number of shares of Common
Stock to be issued upon such conversion shall be equal to the quotient obtained
by dividing (a) the outstanding principal and unpaid accrued interest due on
this Note on the date of conversion, by (b) the conversion price of the lower of
(i) $1.50 per share or (ii) the price per share of the Next Equity Financing
(“Conversion Price”). The Common Stock received by Holder pursuant to the
conversion of the Note shall be referred to as the “Conversion Shares.”
 
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(b)           Identical Terms.  The Common Stock, as the case may be, received
by Holder pursuant to the conversion of the Note hereunder shall have identical
rights, preferences and privileges as those shares received by investors
currently holding or subscribing for Common Stock, as applicable.

(c)           Conversion Procedure.  If this Note is to be converted, written
notice shall be delivered by Holder to the Company, at its address set forth on
the signature page hereto, notifying the Company of the conversion to be
effected, specifying the principal amount of the Note to be converted, the
amount of accrued interest to be converted, and a statement of commitment to
surrender to the Company, in the manner and at the place designated, the
Note.  Holder will surrender this Note within 10 business days after receiving
the Conversion Shares hereunder.  Promptly upon receipt of this Note, the
Company will issue a new note on the same terms as provided herein for any
amount of this Note not being converted.

(d)           Delivery of Stock Certificates.  As promptly as practicable after
the conversion of this Note but in no event later than 15 calendar days after
the date of delivery of the notice to the Company under Section 5(c), the
Company at its expense will issue and deliver to Holder a certificate or
certificates for the number of full shares of the Common Stock issuable upon
such conversion.  Upon conversion of the Note, the Company shall take all such
actions as are necessary in order to insure that the Conversion Shares issuable
with respect to such conversion shall be validly issued, fully paid and
nonassessable.

(e)           Mechanics and Effect of Conversion.  No fractional shares of
Common Stock shall be issued upon conversion of this Note.  In lieu of the
Company issuing any fractional shares to Holder upon the conversion of this
Note, the Company shall pay to Holder the amount of outstanding principal and
interest that is not so converted, such payment to be in the form as provided
below.  Upon conversion of this Note, the Company shall be forever released from
all of its obligations and liabilities under this Note (to the extent of the
amounts converted), except that the Company shall be obligated to pay Holder,
within 10 business days after the date of such conversion, any interest accrued
and unpaid or unconverted to and including the date of such conversion, and no
more.

(f)           Notices of Record Date, etc.  In the event of:

(i)           any taking by the Company of a record of holders of any class of
securities of the Company for the purpose of determining holders thereof who are
entitled to receive any dividend (other than a cash dividend payable out of
earned surplus at the same rate as that of the last such cash dividend
theretofore paid) or other distribution, or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or
 
(ii)           any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all of the assets of the Company to any other person or any
consolidation or merger involving the Company; or
 
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(iii)           any voluntary or involuntary dissolution, liquidation or
winding-up of the Company; the Company will mail to Holder at least 20 calendar
days prior to the earliest date specified therein, a notice specifying:

(A)           The date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and the amount and character of such
dividend, distribution or right; and

(B)           The date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding-up is
expected to become effective and the record date for determining stockholders
entitled to vote thereon.

(g)           Reservation of Stock Issuable Upon Conversion.  The Company shall,
before the conversion of this Note into Common Stock pursuant to the terms set
forth herein, increase the number of authorized but unissued shares of Common
Stock as necessary, and at all times reserve and keep available out of such duly
authorized but unissued shares of Common Stock, such number of its duly
authorized Common Stock as shall be sufficient to effect the conversion of the
Note pursuant to the terms set forth herein.  If at any relevant time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the entire outstanding principal amount of this Note,
in addition to such other remedies as shall be available to Holder, the Company
will use its best efforts to forthwith take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.

6.           Prepayment.  Upon 5 calendar days’ prior written notice to Holder,
the Company may at any time prepay in whole or in part, the principal sum, plus
accrued interest to date of such prepayment, of this Note; provided that, after
the date of such notice and prior to the proposed prepayment date, Holder may
elect to convert such amounts to the issued securities of the Company at the
Conversion Price in accordance with the terms of Section 5.
 
7.           Subscription Rights.  So long as this Note is outstanding, Holder
shall have the right to participate in any offering of the Company’s securities
on the same terms and conditions as the other subscribers to such offering.

8.           Representations and Warranties. The Company hereby represents and
warrants:
 
(a)           Due Organization and Qualification.  The Company is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.  The
Company is in no violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents.  The Company is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
this Note, (ii) a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company, or
(iii) a material adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under the Note (any of (i),
(ii) or (iii), a “Material Adverse Effect”) and to the Company’s knowledge no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.
 
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(b)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by the Note and otherwise to carry out its obligations hereunder
and thereunder.  The execution and delivery of the Note by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, its board of directors or its shareholders in
connection therewith.  The Note has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms hereof
and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
 
(c)           No Conflicts.  The execution, delivery and performance of the Note
by the Company, the issuance and sale of the securities and the consummation by
the Company of the other transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate any provision of the Company’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.
 
(d)           Litigation.  There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of the
Note or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect.  Neither the Company, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty.
 
9.           Successors and Assigns; Assignment.  Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.  Nothing in this Note, express or implied, is intended to
confer upon any party, other than the parties hereto and their successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Note, except as expressly provided herein.  The Company may not assign this
Note or any of the rights or obligations referenced herein without the prior
written consent of Holder.
 
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10.           Waiver and Amendment.  Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and Holder.

11.           Waiver of Notice.  The Company hereby waives notice, presentment,
demand, protest and notice of dishonor.

12.           Treatment of Note.  To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with Federal, state or local tax authorities.

13.           Notices.  Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if sent by nationally recognized courier
service or mailed by registered or certified mail, postage prepaid, to the
respective addresses of the parties as set forth on the signature page hereof or
if sent by facsimile to the respective facsimile numbers of the parties set
forth on the signature page hereof.  Any party hereto may by notice so given
change its address for future notice hereunder.  Notice shall conclusively be
deemed to have been given and received when personally delivered or 3 business
days after deposited in the mail or one business day after sent by courier or
upon confirmation of facsimile delivery in the manner set forth above.

14.           No Stockholder Rights.  Nothing contained in this Note shall be
construed as conferring upon Holder or any other person the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company; and no dividends or
interest shall be payable or accrued in respect of this Note or the interest
represented hereby or the securities into which this Note is convertible
hereunder until, and only to the extent that, this Note shall have been
converted.

15.           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of California, excluding that body of
law relating to conflict of laws.

16.           Heading; References.  All headings used herein are used for
convenience only and shall not be used to construe or interpret this
Note.  Except as otherwise indicated, all references herein to Sections refer to
Sections hereof.
 
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date
first written above.
 

 
CrowdGather, Inc.,
a Nevada corporation
         
 
By:
      Its:
Sanjay Sabnani
President
 

Name of Holder: 
 
   
 
  Address: 
 
   
 
   
 
   
 
              Telephone:           Facsimile:                       

 
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NOTICE OF CONVERSION
(To be Signed Only Upon Conversion of Note)

 
To CrowdGather, Inc.:

The undersigned, holder of the $200,000 Convertible Note of CrowdGather, Inc.,
due _______________ (the “Note”), hereby agrees to surrender the Note for
conversion into ________________shares of Common Stock of CrowdGather, Inc., to
the extent of ________________________ dollars ($____________) unpaid principal
amount of the Note, and________________________ dollars ($____________) unpaid
accrued interest under the Note and requests that the certificates for such
shares be issued in the name of, and delivered to,
________________________________________________, whose address is
_________________________________________________________.  Conversion should be
effected as of ___________________.

Dated:                                                      .

 
 
       
(signature must conform in all respects to name
of holder as specified on the face of the Note)
              Address: