Unassociated Document


    SENIOR SECURED PROMISSORY
NOTE

     

    
      	
              $250,000

            	
              December
      23, 2009

            


    

     

    FOR VALUE RECEIVED, the
undersigned, City Language
Exchange Incorporated, a Delaware corporation (the “Maker”), hereby
promises to pay to the order of Vision Opportunity Master Fund,
Ltd., a Cayman Islands company (the “Payee”), the
principal sum of Two Hundred Fifty Thousand ($250,000) Dollars, together with
interest on the outstanding principal balance hereunder accrued from the date
hereof (a) at the rate of eight (8%) percent per annum in respect of all periods
during which no Event of Default (as such term is hereinafter defined) is
continuing, and (b) at the rate of sixteen (16%) percent per annum in respect of
all periods during which any Event of Default is continuing.  All
payments of principal and/or interest shall be paid as set forth below, and each
such payment shall be made in lawful money of the United States of America by
ordinary check payable to the order of the Payee at c/o Vision Capital Advisors,
LLC, 20 West 55th Street,
5th
Floor, New York, New York 10019, or such other address as the Payee may
designate in writing from time to time.  Notwithstanding any provision
to the contrary contained in this Note, the outstanding balance of this Note
shall be credited, in exchange for the cancellation of this Note, against the
aggregate amount of the investment to be made by the Payee to the Maker at the
closing of the proposed reverse public offering financing.

    


    1.           Payments of Principal and
Interest.

     

    (a)           The
principal and interest under this Note shall be payable on
June 30, 2010.  Any additional interest arising from the
imposition of the default rate of interest shall be payable on
demand.

     

    (b)           In
the event that any scheduled payment date hereunder is a day on which banks in
the State of New York are required or authorized to be closed, then the payment
that would be due on such day shall instead be due and payable on the next day
which is not such a non-banking day, with additional interest for such delay at
the rate then in effect hereunder.

     

    2.           Prepayment.                                The
Maker shall have the right to prepay, without penalty, at any time or times
after the date hereof, all or any portion of the outstanding principal balance
of this Note, together with interest on the principal amount prepaid accrued to
the date of prepayment.  In the event of any partial prepayment
pursuant to this paragraph 2, such prepayment shall be allocated first to unpaid
accrued interest and then to unpaid principal.

     

    3.           Security.  The
payment of this Note is secured pursuant to a security agreement of even date
herewith (the “Security
Agreement”).

     

    4.           Seniority.  The
payment of this Note is a senior obligation of the Maker.

     

    5.           Events of
Default.   The following are Events of Default
hereunder:

     

    (a)           Any
failure by the Maker to pay when due all or any principal or interest
hereunder;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           The
occurrence of any default under the Security Agreement and such default shall
continue for a period of five (5) business days;

     

    (c)           If
the Maker (i) admits in writing its inability to pay generally its debts as
they mature, or (ii) makes a general assignment for the benefit of
creditors, or (iii) is adjudicated a bankrupt or insolvent, or
(iv) files a voluntary petition in bankruptcy, or (v) takes advantage,
as against its creditors, of any bankruptcy law or statute of the United States
of America or any state or subdivision thereof now or hereafter in effect, or
(vi) has a petition or proceeding filed against it under any provision of
any bankruptcy or insolvency law or statute of the United States of America or
any state or subdivision thereof, which petition or proceeding is not dismissed
within sixty (60) days after the date of the commencement thereof,
(vii) has a receiver, liquidator, trustee, custodian, conservator,
sequestrator or other such person appointed by any court to take charge of its
affairs or assets or business and such appointment is not vacated or discharged
within sixty (60) days thereafter, or (viii) takes any action in
furtherance of any of the foregoing; or

     

    (d)           Any
liquidation, dissolution or winding up of the Maker or its
business.

     

    6.           Remedies on
Default.  If any Event of Default shall occur and be
continuing, the holder hereof shall, in addition to any and all other available
rights and remedies, have the right, at its option (except for an Event of
Default under paragraph 5(c) above, the occurrence of which shall automatically
effect acceleration hereunder), (a) to declare the entire unpaid principal
balance of this Note, together with all accrued interest hereunder, to be
immediately due and payable, and (b) to pursue any and all available remedies
for the collection of such principal and interest, including but not limited to
the exercise of all rights and remedies against the Maker, and/or any collateral
given or pledged as security for the payment of this Note under the Security
Agreement.

     

    7.           Certain
Waivers.  Except as otherwise expressly provided in this Note,
the Maker hereby waives diligence, demand, presentment for payment, protest,
dishonor, nonpayment, default, and notice of any and all of the
foregoing.  All amounts payable under this Note shall be payable
without relief under any applicable valuation and appraisement
laws.  The Maker hereby expressly agrees that this Note, or any
payment hereunder, may be extended, modified or subordinated (by forbearance or
otherwise) from time to time, without in any way affecting the liability of the
Maker.  The Maker hereby further waives the benefit of any exemption
or any insolvency laws, and consents that the Payee may release or surrender,
exchange or substitute any personal property or other collateral security now or
hereafter held as security for the payment of this Note under the Security
Agreement.

     

    8.           Waivers and Amendments;
Assignment.  Neither any provision of this Note nor any
performance hereunder may be amended or waived orally, but only by an agreement
in writing and signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.  The Maker may not assign
any of its obligations hereunder without the prior written consent of the
Payee.

     

    9.           Cumulative
Remedies.  No right or remedy conferred upon the Payee under
this Note is intended to be exclusive of any other right or remedy contained
herein or in any instrument or document delivered in connection herewith, and
every such right or remedy shall be cumulative and shall be in addition to every
other such right or remedy contained herein and/or now or hereafter existing at
law or in equity or otherwise.

     

    
      
         

      

      
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    10.           Waivers; Course of
Dealing.  No course of dealing between the Maker and the Payee,
or any failure or delay on the part of the Payee in exercising any rights or
remedies, or any single or partial exercise of any rights or remedies, shall
operate as a waiver or preclude the exercise of any other rights or remedies
available to the Payee.

     

    11.           Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial.  This Note shall be deemed
to be a contract made under the laws of the State of New York and shall be
governed by, and construed in accordance with, the laws of the State of New
York.  The Maker hereby irrevocably consents to the jurisdiction of
all courts (state and federal) sitting in the State of New York in connection
with any claim, action or proceeding relating to or for the collection or
enforcement of this Note, and hereby waives any defense of forum non conveniens or other
such claim or defense in respect of the lodging of any such claim, action or
proceeding in any such court.  THE MAKER HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY CLAIM, ACTION OR PROCEEDING RELATING TO OR FOR THE
COLLECTION OR ENFORCEMENT OF THIS NOTE.

     

    12.           Collection
Costs.  In the event that the Payee shall, after the occurrence
of an Event of Default, turn this Note over to an attorney for collection, the
Maker shall further be liable for and shall pay to the Payee all collection
costs and expenses incurred by the Payee, including reasonable attorneys’ fees
and expenses; and the Payee may take judgment for all such amounts in addition
to all other sums due hereunder.

     

    13.           Public
Disclosure.  The Maker and the Payee shall consult with each
other in issuing any press releases with respect to the transactions
contemplated hereby.

     

    
    

    
      
        	 	      
                CITY
      LANGUAGE EXCHANGE INCORPORATED

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Jonathan
      White	 
	 	 	      
                Jonathan
      White

              	 
	 	 	      
                President
      and Chief Executive Officer

              	 
	 	 	 	 


      

    

     

     

     

    
      
         

      

      
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