EXHIBIT 10.1









NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.


 


 


            Principal Amount: $100,000.00                                             Issue
Date:June 5, 2015


            Purchase Price: $100,000.00


 


CONVERTIBLE PROMISSORY
NOTE


 


FOR VALUE RECEIVED, CROWDGATHER, INC.,
a Nevada corporation (hereinafter called the "Borrower"), hereby
promises to pay to the order of Vinay Holdings, or registered assigns
(the "Holder") the sum of $100,000.00 together with any interest as set forth
herein, on November 1, 2015 (the "Maturity Date"), and to pay interest on the
unpaid principal balance hereof at the rate of eight percent (8%) (the "Interest
Rate") per annum from the date hereof (the "Issue Date") until the same becomes
due and payable, whether at maturity or upon acceleration or by prepayment or
otherwise. This Note may not be prepaid in whole or in part except as otherwise
explicitly set forth herein. Any amount of principal or interest on this Note
which is not paid when due shall bear interest at the rate of eighteen percent
(18%) per annum from the due date thereof until the same is paid ("Default
Interest"). Interest shall commence accruing on the date that the Note is fully
paid and shall be computed on the basis of a 365-day year and the actual number
of days elapsed. All payments due hereunder (to the extent not converted into
common stock, $0.001 par value per share (the "Common Stock") in accordance with
the terms hereof) shall be made in lawful money of the United States of America.
All payments shall be made at such address as the Holder shall hereafter give to
the Borrower by written notice made in accordance with the provisions of this
Note. Whenever any amount expressed to be due by the terms of this Note is due
on any day which is not a business day, the same shall instead be due on the
next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of interest due on such date. As used in this Note,
the term "business day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the city of Los Angeles, California are
authorized or required by law or executive order to remain closed. Each
capitalized term used herein, and not otherwise defined, shall have the meaning
ascribed thereto in that certain Securities 




1







Purchase
Agreement dated the date hereof, pursuant to which this Note was originally
issued (the "Purchase Agreement").




This Note is free from
all taxes, liens, claims and encumbrances with respect to the issue thereof and
shall not be subject to preemptive rights or other similar rights of shareholders
of the Borrower and will not impose personal liability upon the holder thereof.





The following terms
shall apply to this Note:




I.                   
Article I.           CONVERSION
RIGHTS




                              1.1  Conversion
Right. The Holder shall have the right from time to time, and at any time
during the period beginning on the date which is one hundred eighty (180) days
following the date of this Note and ending on the later of: (i) the Maturity
Date and (ii) the date of payment of the Default Amount (as defined in Article
III) pursuant to Section 1.6(a) or Article III, each in respect of the
remaining outstanding principal amount of this Note to convert all or any part
of the outstanding and unpaid principal amount of this Note into fully paid and
non- assessable shares of Common Stock, as such Common Stock exists on the
Issue Date, or any shares of capital stock or other securities of the Borrower
into which such Common Stock shall hereafter be changed or reclassified at the
conversion price (the "Conversion Price") determined as provided
herein (a "Conversion"); provided, however, that in no
event shall the Holder be entitled to convert any portion of this Note in
excess of that portion of this Note upon conversion of which the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates (other than share of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Notes or the
unexercised or unconverted portion of any other security of the Borrower
subject to a limitation on conversion or exercise analogous to the limitations
contained here); and (2) the number of shares of Common Stock issuable upon the
conversion of the portion of this Note of this Note with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Regulations 13D-G thereunder,
except as otherwise provided in clause (1) of such proviso, provided,
further, however, that the limitations on conversion may be waived by the
Holder upon, at the election of the Holder, not less than 61 days' prior notice
to the Borrower, and the provisions of the conversion limitation shall continue
to apply until such 61st day (or such later date, as determined by the Holder,
as may be specified in such notice of waiver). The number of shares of Common
Stock to be issued upon each conversion of this Note shall be determined by
dividing the Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of conversion, in the
form attached hereto as Exhibit A (the "Notice of Conversion"),
delivered to the Borrower by the Holder in accordance with Section 1.4 below;
provided that the Notice of Conversion is submitted by facsimile or e-mail (or
by other means resulting in, or reasonably expected to result in, notice) to the
Borrower before 6:00 p.m., Los Angeles, California time on such conversion date
(the "Conversion Date"). The term "Conversion Amount"
means, with respect to any conversion of this Note, the  




2









sum of (1) the
principal amount of this Note to be converted in such conversion plus
(2) at the Holder's option, accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Note to the Conversion
Date, plus (3) at the Holder's option, Default Interest, if any, on the
amounts referred to in the immediately preceding clauses (1) and/or (2) plus
(4) at the Holder's option, any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof.




 




1.2       Conversion
Price.




                                          (a)  Calculation
of Conversion Price. The conversion price (the "Conversion Price")
shall equal the Variable Conversion Price (as defined herein) (subject to
equitable adjustments for stock splits, stock dividends or rights offerings by
the Borrower relating to the Borrower's securities or the securities of any
subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The "Variable Conversion
Price" shall mean 61% multiplied by the Market Price (as defined herein)
(representing a discount rate of 39%). "Market Price" means the
average of the lowest three (3) Trading Prices (as defined below) for the
Common Stock during the ten (10) Trading Day period ending on the latest
complete Trading Day prior to the Conversion Date. "Trading Price"
means, for any security as of any date, the closing bid price on the
Over-the-Counter Bulletin Board, OTCQB Pink Sheets electronic quotation system
or applicable trading market (the "OTC") as reported by a reliable
reporting service ("Reporting Service") designated by the Holder
(i.e. Bloomberg) or, if the OTC is not the principal trading market for such
security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no
closing bid price of such security is available in any of the foregoing
manners, the average of the closing bid prices of any market makers for such
security that are listed in the "pink sheets." If the Trading Price
cannot be calculated for such security on such date in the manner provided
above, the Trading Price shall be the fair market value as mutually determined
by the Borrower and the holders of a majority in interest of the Notes being
converted for which the calculation of the Trading Price is required in order
to determine the Conversion Price of such Notes. "Trading Day" shall
mean any day on which the Common Stock is tradable for any period on the OTC,
or on the principal securities exchange or other securities market on which the
Common Stock is then being traded. 




                                          (b)  Conversion
Price During Major Announcements. Notwithstanding anything contained in
Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public
announcement that it intends to consolidate or merge with any other corporation
(other than a merger in which the Borrower is the surviving or continuing
corporation and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Borrower or (ii) any person, group or
entity (including the Borrower) publicly announces a tender offer to purchase
50% or more of the Borrower's Common Stock (or any other takeover scheme) (the
date of the announcement referred to in clause (i) or (ii) is hereinafter
referred to as the "Announcement Date"), then the Conversion Price
shall, effective upon the Announcement Date and continuing through the Adjusted
Conversion Price Termination Date (as defined below), be equal to the lower of
(x) the Conversion Price which would have been applicable for a Conversion
occurring on the Announcement Date and (y) the Conversion Price that would
otherwise be in effect. From and after the Adjusted Conversion Price
Termination Date, the Conversion Price shall be determined as set forth in this
Section 1.2(a). For purposes hereof,  




3









"Adjusted Conversion Price
Termination Date" shall mean, with respect to any proposed transaction or
tender offer (or takeover scheme) for which a public announcement as
contemplated by this Section 1.2(b) has been made, the date upon which the
Borrower (in the case of clause (i) above) or the person, group or entity (in
the case of clause (ii) above) consummates or publicly announces the
termination or abandonment of the proposed transaction or tender offer (or
takeover scheme) which caused this Section 1.2(b) to become operative.




                              1.3  Authorized
Shares. The Borrower covenants that during the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares, free from preemptive rights, to provide for the
issuance of Common Stock upon the full conversion of this Note issued pursuant
to the Purchase Agreement. The Borrower is required at all times to have
authorized and reserved five times the number of shares that is actually
issuable upon full conversion of the Note (based on the Conversion Price of the
Notes in effect from time to time)(the "Reserved Amount"). The
Reserved Amount shall be increased from time to time in accordance with the
Borrower's obligations hereunder. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. In
addition, if the Borrower shall issue any securities or make any change to its
capital structure which would change the number of shares of Common Stock into
which the Notes shall be convertible at the then current Conversion Price, the
Borrower shall at the same time make proper provision so that thereafter there
shall be a sufficient number of shares of Common Stock authorized and reserved,
free from preemptive rights, for conversion of the outstanding Notes. The
Borrower (i) acknowledges that it has irrevocably instructed its transfer agent
to issue certificates for the Common Stock issuable upon conversion of this
Note, and (ii) agrees that its issuance of this Note shall constitute full
authority to its officers and agents who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares
of Common Stock in accordance with the terms and conditions of this Note.




If, at any time the
Borrower does not maintain the Reserved Amount it will be considered an Event
of Default under Section 3.2 of the Note.




                              1.4 Method of
Conversion.




                                          (a)  Mechanics
of Conversion. Subject to Section 1.1, this Note may be converted by the
Holder in whole or in part at any time from time to time after the Issue Date,
by (A) submitting to the Borrower a Notice of Conversion (by facsimile,
e-mail or other reasonable means of communication dispatched on the Conversion
Date prior to 6:00 p.m., Los Angeles, California time) and (B) subject to
Section 1.4(b), surrendering this Note at the principal office of the Borrower.





                                          (b)  Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth
herein, upon conversion of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to the Borrower
unless the entire unpaid principal amount of this Note is so converted. The
Holder and the Borrower shall maintain records showing the principal amount so
converted and the dates of such conversions or shall use such other method,
reasonably satisfactory to the Holder and the Borrower, so as not to require
physical surrender of this Note upon each such conversion. In the event of any
dispute or discrepancy, such records of the Borrower shall, prima facie,
be controlling and determinative in the absence of manifest error. 




4









Notwithstanding the foregoing,
if any portion of this Note is converted as aforesaid, the Holder may not
transfer this Note unless the Holder first physically surrenders this Note to
the Borrower, whereupon the Borrower will forthwith issue and deliver upon the
order of the Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may request,
representing in the aggregate the remaining unpaid principal amount of this
Note. The Holder and any assignee, by acceptance of this Note, acknowledge and
agree that, by reason of the provisions of this paragraph, following conversion
of a portion of this Note, the unpaid and unconverted principal amount of this
Note represented by this Note may be less than the amount stated on the face
hereof.




                                          (c)  Payment
of Taxes. The Borrower shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock or other securities or property on conversion of this Note in a
name other than that of the Holder (or in street name), and the Borrower shall
not be required to issue or deliver any such shares or other securities or
property unless and until the person or persons (other than the Holder or the
custodian in whose street name such shares are to be held for the Holder's
account) requesting the issuance thereof shall have paid to the Borrower the
amount of any such tax or shall have established to the satisfaction of the
Borrower that such tax has been paid.




                                          (d)  Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the
Holder of a facsimile transmission or e-mail (or other reasonable means of
communication) of a Notice of Conversion meeting the requirements for
conversion as provided in this Section 1.4, the Borrower shall issue and
deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three
(3) business days after such receipt (the "Deadline") (and, solely in
the case of conversion of the entire unpaid principal amount hereof, surrender
of this Note) in accordance with the terms hereof and the Purchase Agreement.




                                          (e)  Obligation
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a
Notice of Conversion, the Holder shall be deemed to be the holder of record of
the Common Stock issuable upon such conversion, the outstanding principal
amount and the amount of accrued and unpaid interest on this Note shall be
reduced to reflect such conversion, and, unless the Borrower defaults on its
obligations under this Article I, all rights with respect to the portion of
this Note being so converted shall forthwith terminate except the right to
receive the Common Stock or other securities, cash or other assets, as herein
provided, on such conversion. If the Holder shall have given a Notice of
Conversion as provided herein, the Borrower's obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional,
irrespective of the absence of any action by the Holder to enforce the same,
any waiver or consent with respect to any provision thereof, the recovery of
any judgment against any person or any action to enforce the same, any failure
or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder of any obligation to the Borrower,
and irrespective of any other circumstance which might otherwise limit such
obligation of the 




5









Borrower to the Holder in
connection with such conversion. The Conversion Date specified in the Notice of
Conversion shall be the Conversion Date so long as the Notice of Conversion is
received by the Borrower before 6:00 p.m., Los Angeles, California time, on such
date.




                                          (f)   Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical
certificates representing the Common Stock issuable upon conversion, provided
the Borrower is participating in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer ("FAST") program, upon request of
the Holder and its compliance with the provisions contained in Section 1.1 and
in this Section 1.4, the Borrower shall use its best efforts to cause its
transfer agent to electronically transmit the Common Stock issuable upon
conversion to the Holder by crediting the account of Holder's Prime Broker with
DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.




                                          (g)  Failure
to Deliver Common Stock Prior to Deadline. Without in any way limiting the
Holder's right to pursue other remedies, including actual damages and/or
equitable relief, the parties agree that if delivery of the Common Stock
issuable upon conversion of this Note is not delivered by the Deadline (other
than a failure due to the circumstances described in Section 1.3 above, which
failure shall be governed by such Section) the Borrower shall pay to the Holder
$2,000 per day in cash, for each day beyond the Deadline that the Borrower
fails to deliver such Common Stock. Such cash amount shall be paid to Holder by
the fifth day of the month following the month in which it has accrued or, at
the option of the Holder (by written notice to the Borrower by the first day of
the month following the month in which it has accrued), shall be added to the
principal amount of this Note, in which event interest shall accrue thereon in
accordance with the terms of this Note and such additional principal amount
shall be convertible into Common Stock in accordance with the terms of this Note.
The Borrower agrees that the right to convert is a valuable right to the
Holder. The damages resulting from a failure, attempt to frustrate,
interference with such conversion right are difficult if not impossible to
qualify. Accordingly the parties acknowledge that the liquidated damages
provision contained in this Section 1.4(g) are justified.




                              1.5  Concerning
the Shares. The shares of Common Stock issuable upon conversion of this
Note may not be sold or transferred unless (i) such shares are sold pursuant to
an effective registration statement under the Act or (ii) the Borrower or its
transfer agent shall have been furnished with an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration or (iii) such shares are sold or transferred pursuant to Rule
144 under the Act (or a successor rule) ("Rule 144") or (iv) such
shares are transferred to an "affiliate" (as defined in Rule 144) of
the Borrower who agrees to sell or otherwise transfer the shares only in
accordance with this Section 1.5 and who is an Accredited Investor (as defined
in the Purchase Agreement). Except as otherwise provided in the Purchase
Agreement (and subject to the removal provisions set forth below), until such
time as the shares of Common Stock issuable upon conversion of this Note have
been registered under the Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, each certificate for shares of Common Stock
issuable upon conversion of this Note that has not been so included in an
effective registration statement or that has not been sold pursuant to an
effective registration statement or an exemption that permits removal of the 




6









legend, shall bear a legend
substantially in the following form, as appropriate:




 




"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."




The legend set forth
above shall be removed and the Borrower shall issue to the Holder a new
certificate therefore free of any transfer legend if (i) the Borrower or its
transfer agent shall have received an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions, to the
effect that a public sale or transfer of such Common Stock may be made without
registration under the Act, which opinion shall be accepted by the Company so
that the sale or transfer is effected or (ii) in the case of the Common Stock
issuable upon conversion of this Note, such security is registered for sale by
the Holder under an effective registration statement filed under the Act or otherwise
may be sold pursuant to Rule 144 without any restriction as to the number of
securities as of a particular date that can then be immediately sold. In the
event that the Company does not accept the opinion of counsel provided by the
Holder with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline, it will be
considered an Event of Default pursuant to Section 3.2 of the Note.




                              1.6 Effect of
Certain Events.




                                          (a)  Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale,
conveyance or disposition of all or substantially all of the assets of the
Borrower, the effectuation by the Borrower of a transaction or series of
related transactions in which more than 50% of the voting power of the Borrower
is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when
the Borrower is not the survivor shall either: (i) be deemed to be an Event of
Default (as defined in Article III) pursuant to which the Borrower shall be
required to pay to the Holder upon the consummation of and as a condition to
such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. "Person"
shall mean any individual, corporation, limited liability company, partnership,
association, trust or other entity or organization.




7









                                          (b)  Adjustment Due
to Merger, Consolidation, Etc. Except in connection with a restructuring or
repurchasing of the outstanding the Series B Preferred Stock, if, at any time
when this Note is issued and outstanding and prior to conversion of all of the
Notes, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock of the Borrower shall be changed into the same or a
different number of shares of another class or classes of stock or securities
of the Borrower or another entity, or in case of any sale or conveyance of all
or substantially all of the assets of the Borrower other than in connection
with a plan of complete liquidation of the Borrower, then the Holder of this
Note shall thereafter have the right to receive upon conversion of this Note,
upon the basis and upon the terms and conditions specified herein and in lieu
of the shares of Common Stock immediately theretofore issuable upon conversion,
such stock, securities or assets which the Holder would have been entitled to
receive in such transaction had this Note been converted in full immediately
prior to such transaction (without regard to any limitations on conversion set
forth herein), and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holder of this 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 may be practicable in
relation to any 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 fifteen
(1530) days prior written notice (but in any event at least fifteen seven (715)
days prior written notice) of the record date of the special meeting of
shareholders to approve, or if there is no such record date, the consummation
of, such merger, consolidation, exchange of 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)  Adjustment
Due to Distribution. If the Borrower shall declare or make any distribution
of its assets (or rights to acquire its assets) to holders of Common Stock as a
dividend, stock repurchase, by way of return of capital or otherwise (including
any dividend or distribution to the Borrower's shareholders in cash or shares
(or rights to acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a "Distribution"), then the Holder of this Note shall be
entitled, upon any conversion of this Note after the date of record for determining
shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares
of Common Stock issuable upon such conversion had such Holder been the holder
of such shares of Common Stock on the record date for the determination of
shareholders entitled to such Distribution.




                                          (d)  Adjustment
Due to Dilutive Issuance. If, at any time when any Notes are issued and
outstanding, the Borrower issues or sells, or in accordance with this Section
1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for
no consideration or for a consideration per share (before deduction of
reasonable expenses or commissions or underwriting discounts or allowances in
connection therewith) less than the Conversion Price in effect 




8









on the date of such issuance (or
deemed issuance) of such shares of Common Stock (a "Dilutive Issuance"), then
immediately upon the Dilutive Issuance, the Conversion Price will be reduced to
the amount of the consideration per share received by the Borrower in such
Dilutive Issuance.




The Borrower shall be
deemed to have issued or sold shares of Common Stock if the Borrower in any
manner issues or grants any warrants, rights or options (not including employee
stock option plans), whether or not immediately exercisable, to subscribe for
or to purchase Common Stock or other securities convertible into or
exchangeable for Common Stock ("Convertible Securities") (such
warrants, rights and options to purchase Common Stock or Convertible Securities
are hereinafter referred to as "Options") and the price per share for
which Common Stock is issuable upon the exercise of such Options is less than
the Conversion Price then in effect, then the Conversion Price shall be equal
to such price per share. For purposes of the preceding sentence, the "price
per share for which Common Stock is issuable upon the exercise of such Options"
is determined by dividing (i) the total amount, if any, received or receivable
by the Borrower as consideration for the issuance or granting of all such
Options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Borrower upon the exercise of all such Options, plus, in the
case of Convertible Securities issuable upon the exercise of such Options, the
minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total number of shares
of Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment to
the Conversion Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.




Additionally, the
Borrower shall be deemed to have issued or sold shares of Common Stock if the
Borrower in any manner issues or sells any Convertible Securities, whether or
not immediately convertible (other than where the same are issuable upon the
exercise of Options), and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Conversion Price
then in effect, then the Conversion Price shall be equal to such price per
share. For the purposes of the preceding sentence, the "price per share
for which Common Stock is issuable upon such conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Borrower as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Borrower upon the conversion or exchange thereof at the
time such Convertible Securities first become convertible or exchangeable, by
(ii) the maximum total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No further adjustment
to the Conversion Price will be made upon the actual issuance of such Common
Stock upon conversion or exchange of such Convertible Securities.




                                          (e)  Purchase
Rights. If, at any time when any Notes are issued and outstanding, the
Borrower issues any convertible securities or rights to purchase stock,
warrants, securities or other property (the "Purchase Rights") pro rata to the
record holders of any class of Common Stock, then the Holder of this Note will
be entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such Holder could have acquired if such Holder
had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (without regard to any limitations on conversion 




9









contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.




                                          (f)   Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of
the Conversion Price as a result of the events described in this Section 1.6,
the Borrower, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to the Holder a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Borrower shall, upon the written
request at any time of the Holder, furnish to such Holder a like certificate
setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at
the time in effect and (iii) the number of shares of Common Stock and the
amount, if any, of other securities or property which at the time would be
received upon conversion of the Note.




                              1.7 Trading
Market Limitations. Unless permitted by the applicable rules and
regulations of the principal securities market on which the Common Stock is
then listed or traded, in no event shall the Borrower issue upon conversion of
or otherwise pursuant to this Note and the other Notes issued pursuant to the
Purchase Agreement more than the maximum number of shares of Common Stock that
the Borrower can issue pursuant to any rule of the principal United States
securities market on which the Common Stock is then traded (the "Maximum
Share Amount"), which shall be 4.99% of the total shares outstanding on
the Closing Date (as defined in the Purchase Agreement), subject to equitable
adjustment from time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the Common Stock
occurring after the date hereof. Once the Maximum Share Amount has been issued,
if the Borrower fails to eliminate any prohibitions under applicable law or the
rules or regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization with jurisdiction over the Borrower or any
of its securities on the Borrower's ability to issue shares of Common Stock in
excess of the Maximum Share Amount, in lieu of any further right to convert
this Note, this will be considered an Event of Default under Section 3.3 of the
Note.




                              1.8 Status as
Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the
shares covered thereby (other than the shares, if any, which cannot be issued
because their issuance would exceed such Holder's allocated portion of the
Reserved Amount or Maximum Share Amount) shall be deemed converted into shares
of Common Stock and (ii) the Holder's rights as a Holder of such converted
portion of this Note shall cease and terminate, excepting only the right to
receive certificates for such shares of Common Stock and to any remedies
provided herein or otherwise available at law or in equity to such Holder
because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding
the foregoing, if a Holder has not received certificates for all shares of
Common Stock prior to the tenth (10th) business day after the expiration of the
Deadline with respect to a conversion of any portion of this Note for any reason,
then (unless the Holder otherwise elects to retain its status as a holder of
Common Stock by so notifying the Borrower) the Holder shall regain the rights
of a Holder of this Note with respect to such unconverted portions of this Note
and the Borrower shall, as soon as practicable, return such unconverted Note to
the Holder or, if the Note has not been surrendered, adjust its records to
reflect that such portion of this Note has not been converted. In all cases,
the Holder shall retain all of its  




10









rights and remedies (including, without
limitation, (i) the right to receive Conversion Default Payments pursuant to
Section 1.3 to the extent required thereby for such Conversion Default and any
subsequent Conversion Default and (ii) the right to have the Conversion Price
with respect to subsequent conversions determined in accordance with Section
1.3) for the Borrower's failure to convert this Note.




                              1.9 Prepayment.
Notwithstanding anything to the contrary contained in this Note, at any time
during the periods set forth on the table immediately following this paragraph
(the "Prepayment Periods"), the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the
Holder of the Note to prepay the outstanding Note (principal and accrued
interest), in full, in accordance with this Section 1.9. Any notice of
prepayment hereunder (an "Optional Prepayment Notice") shall be
delivered to the Holder of the Note at its registered addresses and shall
state: (1) that the Borrower is exercising its right to prepay the Note, and
(2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the date fixed for
prepayment (the "Optional Prepayment Date"), the Borrower shall make
payment of the Optional Prepayment Amount (as defined below) to Holder, or upon
the order of the Holder as specified by the Holder in writing to the Borrower,
at least one (1) business day prior to the Optional Prepayment Date. If the
Borrower exercises its right to prepay the Note, the Borrower shall make
payment to the Holder of an amount in cash (the "Optional Prepayment
Amount") equal to the percentage ("Prepayment Percentage") as
set forth in the table immediately following this paragraph opposite the
applicable Prepayment Period, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note to the Optional
Prepayment Date plus (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 Notice and fails to pay the Optional Prepayment Amount due
to the Holder of the Note within two (2) business days following the Optional
Prepayment Date, the Borrower shall forever forfeit its right to prepay the
Note pursuant to this Section 1.9.    




	
  Prepayment Period

  	
  Prepayment Percentage

  
	
  1.                                                                             
  The
  period beginning on the Issue Date and ending on the date which is thirty
  (30) days following the Issue Date.

  	
  110%

  
	
  2.        The period beginning on the date
  which is thirty-one (31) days following the Issue Date and ending on the date
  which is sixty (60) days following the Issue Date

  	
  115%

  





11













	
  3.        The period beginning on the date
  which is sixty-one (61) days following the Issue Date and ending on the date
  which is ninety (90) days following the Issue Date

  	
  120%

  
	
  4.        The period beginning on the date
  that is ninety-one (91) day from the Issue Date and ending one hundred twenty
  (120) days following the Issue Date

  	
  125%

  
	
  5.        The period beginning on the date
  that is one hundred twenty-one (121) day from the Issue Date and ending one
  hundred fifty (150) days following the Issue Date

  	
  130%

  
	
  6.        The period beginning on the date
  that is one hundred fifty-one (151) day from the Issue Date and ending one
  hundred eighty (180) days following the Issue Date

  	
  135%

  





After the expiration of one hundred eighty (180)
days following the Issue Date, the Borrower shall have no right of prepayment.






Article II.         
CERTAIN COVENANTS




                              2.1 Distributions
on Capital Stock. Except for dividends or distributions payable to the
holders of Series B Preferred Stock, so long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder's written
consent (a) pay, declare or set apart for such payment, any dividend or other
distribution (whether in cash, property or other securities) on shares of
capital stock other than dividends on shares of Common Stock solely in the form
of additional shares of Common Stock or (b) directly or indirectly or through
any subsidiary make any other payment or distribution in respect of its capital
stock except for distributions pursuant to any shareholders' rights plan which
is approved by a majority of the Borrower's disinterested directors.




                              2.2 Restriction
on Stock Repurchases. Except for redeeming or repurchasing shares of Series
B Preferred Stock, so long as the Borrower shall have any obligation under this
Note, the Borrower shall not without the Holder's written consent redeem,
repurchase or otherwise acquire (whether for cash or in exchange for property
or other securities or otherwise) in any one transaction or series of related
transactions any shares of capital stock of the Borrower or any warrants,
rights or options to purchase or acquire any such shares.




12









 




                              2.3 Borrowings.
So long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder's written consent, (a) create, incur, assume
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any other person, firm, partnership, joint venture or
corporation, except by the endorsement of negotiable instruments for deposit or
collection, or (b) suffer to exist any liability for borrowed money, except any
borrowings that does not render the Borrower a "Shell" company as
defined in Rule 12b-2 under the Securities Exchange Act of 1934So long as the
Borrower shall have any obligation under this Note, the Borrower shall not,
without the Holder's written consent, create, incur, assume guarantee, endorse,
contingently agree to purchase or otherwise become liable upon the obligation
of any person, firm, partnership, joint venture or corporation, except by the
endorsement of negotiable instruments for deposit or collection, or suffer to
exist any liability for borrowed money, except (a) borrowings in existence or
committed on the date hereof and of which the Borrower has informed Holder in
writing prior to the date hereof, (b) indebtedness to trade creditors or
financial institutions incurred in the ordinary course of business or (c)
borrowings, the proceeds of which shall be used to repay this Note.




                              2.4 Sale of
Assets. So long as the Borrower shall have any obligation under this Note,
the Borrower shall not, without the Holder's written consent, sell, lease or
otherwise dispose of any significant portion of its assets outside the ordinary
course of business except when any sale, lease or disposition is done for fair
consideration and does not render the Borrower a "Shell" company as
defined in Rule 12b-2 under the Securities Exchange Act of 1934. Any consent to
the disposition of any assets may be conditioned on a specified use of the
proceeds of disposition So long as the Borrower shall have any obligation under
this Note, the Borrower shall not, without the Holder's written consent, sell,
lease or otherwise dispose of any significant portion of its assets outside the
ordinary course of business. Any consent to the disposition of any assets may
be conditioned on a specified use of the proceeds of disposition.




                              2.5 Advances
and Loans. So long as the Borrower shall have any obligation under this
Note, the Borrower shall not, without the Holder's written consent, lend money,
give credit or make advances to any person, firm, joint venture or corporation,
including, without limitation, officers, directors, employees, subsidiaries and
affiliates of the Borrower, except loans, credits or advances (a) in existence
or committed on the date hereof and which the Borrower has informed Holder in
writing prior to the date hereof, (b) made in the ordinary course of business
or (c) not in excess of $100,000.




            Article III.       
EVENTS OF DEFAULT




If any of the following
events of default (each, an "Event of Default") shall occur:




                              3.1 Failure to
Pay Principal or Interest. The Borrower fails to pay the principal hereof
or interest thereon when due on this Note, whether at maturity, upon
acceleration or otherwise.




                              3.2 Conversion
and the Shares. The Borrower fails to issue shares of Common Stock to the
Holder (or announces or threatens in writing that it will not honor its
obligation to do so) upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Note, fails to transfer or cause its
transfer agent to transfer (issue) (electronically or in certificated form) any
certificate for shares of Common Stock issued to the Holder upon conversion of 




13









or otherwise pursuant to this
Note as and when required by this Note, the Borrower directs its transfer agent
not to transfer or delays, impairs, and/or hinders its transfer agent in
transferring (or issuing) (electronically or in certificated form) any
certificate for shares of Common Stock to be issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this
Note, or fails to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any shares of Common Stock issued to the Holder
upon conversion of or otherwise pursuant to this Note as and when required by
this Note (or makes any written announcement, statement or threat that it does
not intend to honor the obligations described in this paragraph) and any such
failure shall continue uncured (or any written announcement, statement or threat
not to honor its obligations shall not be rescinded in writing) for three (3)
business days after the Holder shall have delivered a Notice of Conversion. It
is an obligation of the Borrower to remain current in its obligations to its
transfer agent. It shall be an event of default of this Note, if a conversion of
this Note is delayed, hindered or frustrated due to a balance owed by the
Borrower to its transfer agent. If at the option of the Holder, the Holder
advances any funds to the Borrower's transfer agent in order to process a
conversion, such advanced funds shall be paid by the Borrower to the Holder
within forty eight (48) hours of a demand from the Holder.




                              3.3 Breach of
Covenants. The Borrower breaches any material covenant or other material
term or condition contained in this Note and any collateral documents including
but not limited to the Purchase Agreement and such breach continues for a
period of ten (10) days after written notice thereof to the Borrower from the
Holder.




                              3.4 Breach of
Representations and Warranties. Any representation or warranty of the
Borrower made herein or in any agreement, statement or certificate given in
writing pursuant hereto or in connection herewith (including, without
limitation, the Purchase Agreement), shall be false or misleading in any
material respect when made and the breach of which has (or with the passage of
time will have) a material adverse effect on the rights of the Holder with
respect to this Note or the Purchase Agreement.




                              3.5 Receiver or
Trustee. The Borrower or any subsidiary of the Borrower shall make an
assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be
appointed.




                              3.6 Judgments.
Any money judgment, writ or similar process shall be entered or filed against
the Borrower or any subsidiary of the Borrower or any of its property or other
assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder,
which consent will not be unreasonably withheld.




                              3.7 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief 




14









under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against the Borrower or
any subsidiary of the Borrower.




                              3.8 Delisting
of Common Stock. The Borrower shall fail to maintain the listing of the
Common Stock on at least one of the OTC (which specifically includes the Pink
Sheets electronic quotation system) or an equivalent replacement exchange, the
Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock
Exchange, or the American Stock Exchange.




                              3.9 Failure to
Comply with the Exchange Act. The Borrower shall fail to comply with the
reporting requirements of the Exchange Act; and/or the Borrower shall cease to
be subject to the reporting requirements of the Exchange Act.




                              3.10           Liquidation.      Any
dissolution, liquidation, or winding up of Borrower or any substantial portion
of its business.




                              3.11           Cessation
of Operations.           Any cessation of operations by Borrower or Borrower
admits it is otherwise generally unable to pay its debts as such debts become
due, provided, however, that any disclosure of the Borrower's ability to
continue as a "going concern" shall not be an admission that the
Borrower cannot pay its debts as they become due.




                              3.12           Maintenance
of Assets. The failure by Borrower to maintain any material intellectual
property rights, personal, real property or other assets which are necessary to
conduct its business (whether now or in the future).




                              3.13           Financial
Statement Restatement.          The restatement of any financial statements
filed by the Borrower with the SEC for any date or period from two years prior
to the Issue Date of this Note and until this Note is no longer outstanding, if
the result of such restatement would, by comparison to the unrestated financial
statement, have constituted a material adverse effect on the rights of the
Holder with respect to this Note or the Purchase Agreement.




                              3.14           Reverse
Splits.              The Borrower effectuates a reverse split of its Common
Stock without twenty (20) days prior written notice to the Holder.




                        3.15     Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its
transfer agent, the Borrower fails to provide, prior to the effective date of
such replacement, a fully executed Irrevocable Transfer Agent Instructions in a
form as initially delivered pursuant to the Purchase Agreement (including but
not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Borrower and the
Borrower.




3.16     Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other
related or companion documents, a breach or default by the Borrower of any
covenant or other term or condition contained in any of the Other Agreements,
after the passage of all applicable notice and cure or 




15









grace periods, shall, at the
option of the Holder, be considered a default under this Note and the Other
Agreements, in which event the Holder shall be entitled (but in no event
required) to apply all rights and remedies of the Holder under the terms of this
Note and the Other Agreements by reason of a default under said Other Agreement
or hereunder. "Other Agreements" means, collectively, all agreements and
instruments between, among or by: (1) the Borrower, and, or for the benefit of,
(2) the Holder and any affiliate of the Holder, including, without limitation,
promissory notes; provided, however, the term "Other Agreements" shall not
include the related or companion documents to this Note. Each of the loan
transactions will be cross-defaulted with each other loan transaction and with
all other existing and future debt of Borrower to the Holder.


Upon the occurrence and
during the continuation of any Event of Default specified in Section 3.1
(solely with respect to failure to pay the principal hereof or interest thereon
when due at the Maturity Date), the Note shall become immediately due and
payable and the Borrower shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON
THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN
SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER
SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN
AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO
(2). Upon the occurrence and during the continuation of any Event of Default specified
in Sections 3.1 (solely with respect to failure to pay the principal hereof or
interest thereon when due on this Note upon a Trading Market Prepayment Event
pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11,
3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written
notice to the Borrower by such Holders (the "Default Notice"), and
upon the occurrence of an Event of Default specified the remaining sections of
Articles III (other than failure to pay the principal hereof or interest
thereon at the Maturity Date specified in Section 3.1 hereof), the Note shall
become immediately due and payable and the Borrower shall pay to the Holder, in
full satisfaction of its obligations hereunder, an amount equal to the greater
of (i) 150% times the sum of (w) the then outstanding principal
amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal amount of this Note to the date of payment (the "Mandatory
Prepayment Date") plus (y) Default Interest, if any, on the amounts
referred to in clauses (w) and/or (x) plus (z) any amounts owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding
principal amount of this Note to the date of payment plus the amounts
referred to in clauses (x), (y) and (z) shall collectively be known as the "Default
Sum") or (ii) the "parity value" of the Default Sum to be
prepaid, where parity value means (a) the highest number of shares of Common
Stock issuable upon conversion of or otherwise pursuant to such Default Sum in
accordance with Article I, treating the Trading Day immediately preceding the
Mandatory Prepayment Date as the "Conversion Date" for purposes of
determining the lowest applicable Conversion Price, unless the Default Event
arises as a result of a breach in respect of a specific Conversion Date in
which case such Conversion Date shall be the Conversion Date), multiplied by
(b) the highest Closing Price for the Common Stock during the period beginning
on the date of first occurrence of the Event of Default and ending one day prior
to the 




16







Mandatory
Prepayment Date (the "Default Amount") and all other amounts payable hereunder
shall immediately become due and payable, all without demand, presentment or
notice, all of which hereby are expressly waived, together with all costs,
including, without limitation, legal fees and expenses, of collection, and the
Holder shall be entitled to exercise all other rights and remedies available at
law or in equity. 




If the Borrower fails to
pay the Default Amount within five (5) business days of written notice that
such amount is due and payable, then the Holder shall have the right at any
time, so long as the Borrower remains in default (and so long and to the extent
that there are sufficient authorized shares), to require the Borrower, upon
written notice, to immediately issue, in lieu of the Default Amount, the number
of shares of Common Stock of the Borrower equal to the Default Amount divided
by the Conversion Price then in effect.




            Article IV.        MISCELLANEOUS




                              4.1 Failure or
Indulgence Not Waiver. No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.




                              4.2 Notices.
All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: 




If to the Borrower, to: 


CROWDGATHER,
INC.


20300
  Ventura Boulevard
- Suite 330


Woodland
  Hills, CA 91364


Attn: Sanjay Sabnani, Chief Executive Officer


facsimile:





 17     







 With a copy by fax only to (which copy shall
not constitute notice):


                        [enter name of law firm]


Attn: [attorney name]


[enter address line 1]


[enter city, state, zip]


facsimile: [enter fax number]




         If to the Holder:


                        Vinay Holdings 


P.O.
  Box 983 Victoria


Mahe,
Republic of Seychelles


       


                              4.3 Amendments.
This Note and any provision hereof may only be amended by an instrument in
writing signed by the Borrower and the Holder. The term "Note" and
all reference thereto, as used throughout this instrument, shall mean this
instrument (and the other Notes issued pursuant to the Purchase Agreement) as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.




                              4.4 Assignability.
This Note shall be binding upon the Borrower and its successors and assigns,
and shall inure to be the benefit of the Holder and its successors and assigns.
Each transferee of this Note must be an "accredited investor" (as
defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note
to the contrary, this Note may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement.




                              4.5 Cost of
Collection. If default is made in the payment of this Note, the Borrower
shall pay the Holder hereof costs of collection, including reasonable attorneys'
fees.




                              4.6 Governing
Law. This Note shall be governed by and construed in accordance with the
laws of the State of Nevada without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the transactions
contemplated by this Note shall be brought only in the state courts of Nevada
or in the federal courts located in the state and county of Clark. The parties
to this Note hereby irrevocably waive any objection to jurisdiction and venue
of any action instituted hereunder and shall not assert any defense based on
lack of jurisdiction or venue or based upon forum non conveniens. The
Borrower and Holder waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Note or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.  Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to 




18









such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.




                              4.7 Certain
Amounts. Whenever pursuant to this Note the Borrower is required to pay an
amount in excess of the outstanding principal amount (or the portion thereof
required to be paid at that time) plus accrued and unpaid interest plus Default
Interest on such interest, the Borrower and the Holder agree that the actual
damages to the Holder from the receipt of cash payment on this Note may be
difficult to determine and the amount to be so paid by the Borrower represents
stipulated damages and not a penalty and is intended to compensate the Holder
in part for loss of the opportunity to convert this Note and to earn a return
from the sale of shares of Common Stock acquired upon conversion of this Note
at a price in excess of the price paid for such shares pursuant to this Note. The
Borrower and the Holder hereby agree that such amount of stipulated damages is
not plainly disproportionate to the possible loss to the Holder from the
receipt of a cash payment without the opportunity to convert this Note into
shares of Common Stock.




                              4.8 Purchase
Agreement. By its acceptance of this Note, each party agrees to be bound by
the applicable terms of the Purchase Agreement.




                              4.9 Notice of
Corporate Events. Except as otherwise provided below, the Holder of this
Note shall have no rights as a Holder of Common Stock unless and only to the
extent that it converts this Note into Common Stock. The Borrower shall provide
the Holder with prior notification of any meeting of the Borrower's
shareholders (and copies of proxy materials and other information sent to
shareholders). Except for payment of dividends or distributions or events
related to the Series B Preferred Stock, in the event of any taking by the
Borrower of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation, reclassification or
recapitalization) any share of any class or any other securities or property,
or to receive any other right, or for the purpose of determining shareholders
who are entitled to vote in connection with any proposed sale, lease or
conveyance of all or substantially all of the assets of the Borrower or any
proposed liquidation, dissolution or winding up of the Borrower, the Borrower
shall mail a notice to the Holder, at least twenty ten (120) days prior to the
record date specified therein (or thirty twenty (230) days prior to the
consummation of the transaction or event, whichever is earlier), of the date on
which any such record is to be taken for the purpose of such dividend,
distribution, right or other event, and a brief statement regarding the amount
and character of such dividend, distribution, right or other event to the
extent known at such time. The Borrower shall make a public announcement of any
event requiring notification to the Holder hereunder substantially
simultaneously with the notification to the Holder in accordance with the terms
of this Section 4.9.




                              4.10           Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder, by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Borrower acknowledges that the
remedy at law for a breach of its obligations under this Note will be inadequate
and agrees, in the event of a breach or threatened breach by the Borrower of the
provisions of this Note, that the 




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Holder shall be entitled, in
addition to all other available remedies at law or in equity, and in addition to
the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Note and to enforce specifically the
terms and provisions thereof, without the necessity of showing economic loss and
without any bond or other security being required.




IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized
officer this June 5, 2015.






CROWDGATHER, INC.




/s/ Sanjay Sabnani


____________________________


by: Sanjay Sabnani


 


 


 


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EXHIBIT A
-- NOTICE OF CONVERSION 




The undersigned hereby elects to convert
$_________________ principal amount of the Note (defined below) into
that number of shares of Common Stock to be issued pursuant to the conversion
of the Note ("Common Stock") as set forth below, of CROWDGATHER,
INC., a Nevada corporation (the "Borrower") according to the
conditions of the convertible note of the Borrower dated as of June 5, 2015
(the "Note"), as of the date written below. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any. 




Box
Checked as to applicable instructions:




[
]         The Borrower shall electronically transmit the Common Stock issuable
pursuant to this Notice of Conversion to the account of the undersigned or its
nominee with DTC through its Deposit Withdrawal Agent Commission system ("DWAC
Transfer").




Name of DTC
Prime Broker:  


Account
Number: 




[
]         The undersigned hereby requests that the Borrower issue a certificate
or certificates for the number of shares of Common Stock set forth below (which
numbers are based on the Holder's calculation attached hereto) in the name(s)
specified immediately below or, if additional space is necessary, on an
attachment hereto:




TBD


 


Date of
Conversion:                                                  _____________


Applicable
Conversion Price:                              $____________


Number of
Shares of Common Stock to be Issued 


 Pursuant to
Conversion of the Notes:                ______________


Amount of
Principal Balance Due remaining


 Under the
Note after this conversion:          ______________






HOLDER






____________________________






 

 


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