Document:

Exhibit 10.8

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is made effective on February 7, 2014 (“Effective Date”), by and between Q2 Software, Inc., a Delaware corporation (“Company”) and Adam D. Anderson (“Executive”).

 

The parties agree as follows:

 

1.                                      Employment.  Company agrees to continue to employ Executive, and Executive agrees to accept such continuing employment on the terms and conditions set forth herein.

 

2.                                      Duties.

 

2.1                               Position.  Executive is employed as Company’s Executive Vice President, and Chief Technology Officer and shall have the duties and responsibilities assigned by Company’s Chief Executive Officer.  Executive shall perform faithfully and diligently all duties assigned to Executive.  Company reserves the right to modify Executive’s position and duties at any time in its sole and absolute discretion.

 

2.2                               Best Efforts/Full-time.  During this Agreement, Executive will (A) expend Executive’s best efforts on behalf of Company, and will abide by all policies and decisions made by Company, as well as all applicable federal, state and local laws, regulations or ordinances; (B) act in the best interest of Company at all times; and (C) devote Executive’s full business time and efforts to the performance of Executive’s assigned duties for Company.

 

3.                                      Compensation.

 

3.1                               Base Salary.  As compensation for Executive’s performance of Executive’s duties hereunder, Company shall pay to Executive an initial Base Salary of $20,833 per month ($250,000 per year), to be paid in accordance with Company’s regular payroll cycle, less required deductions for federal withholding tax, social security and all other employment taxes and payroll deductions.  In the event Executive’s employment under this Agreement is terminated by either party, for any reason, Executive will earn the Base Salary prorated to the date of termination.

 

3.2                               Incentive Compensation.  Executive may be eligible to receive an annual bonus of up to $125,000, on such terms and subject to such conditions as may be decided from time to time by the Company.  Executive must be employed by the Company at the time of the bonus payout in order to be eligible for the annual bonus.  The Company reserves the right to vary or terminate any bonus scheme in place from time to time, on a prospective basis.  Company shall pay out the annual bonus, if any, within 60 days following the end of the year in which the bonus is earned.

 

3.3                               Customary Fringe Benefits.  Executive will be eligible for all customary and usual fringe benefits generally available to Executives of Company, subject to the terms and conditions of Company’s benefit plan documents.  Executive shall be entitled to Paid Time Off benefits (“PTO”) subject to the terms and conditions of the Company’s PTO policy.

 

4.                                      At-Will Employment.  Executive’s employment with Company is at-will and not for any specified period and may be terminated at any time, with or without Cause (as defined below) or advance notice, by either Executive or Company, although subject to the provisions of Sections 5 through 7 below.  No representative of Company, other than the Company’s Board of Directors, has the authority to alter

 

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the at-will employment relationship.  Any change to the at-will employment relationship must be by specific, written agreement signed by Executive and the Company’s Board of Directors.  Nothing in this Agreement is intended to or should be construed to contradict, modify or alter this at-will relationship.

 

5.                                      Termination.  The termination provisions of this Agreement regarding the parties’ respective obligations in the event Executive’s engagement is terminated are intended to be exclusive and in lieu of any other rights to which Executive may otherwise be entitled by law, in equity, or otherwise.  This Agreement, and Executive’s engagement hereunder, may be terminated at any time after the Effective Date, as follows:

 

5.1                               Termination by Mutual Consent.  This Agreement may be terminated at any time by the written mutual consent of Company and Executive.

 

5.2                               Termination by Company For Cause.  This Agreement may be terminated by Company at any time for Cause.  For purposes of this Agreement, “Cause” is defined as: (a) acts or omissions constituting gross negligence, recklessness or willful misconduct on the part of Executive with respect to Executive’s obligations or otherwise relating to the business of Company; (b) Executive’s material breach of this Agreement or Company’s Employee Innovations and Proprietary Rights Assignment Agreement (the “EIPRA”);  (c) Executive’s conviction or entry of a plea of nolo contendere for fraud, misappropriation or embezzlement, or any felony or crime of moral turpitude; (d) Executive’s willful neglect of duties as determined in the sole and exclusive discretion of the Company; (e) Executive is cited by the Company’s Chief Executive Officer, in writing, at least two (2) times during any 12-month period for unsatisfactory performance; (f) Executive’s failure to perform the essential functions of Executive’s position, with or without reasonable accommodation, due to a mental or physical disability; or (g) Executive’s death.

 

5.3                               Termination by Company Without Cause.  This Agreement may be terminated by Company, without Cause, with or without notice, by the delivery to Executive of written notice of termination.

 

5.4                               Resignation by Executive.  Executive shall have the right to terminate his employment hereunder by providing the Company with a notice of termination at least thirty (30) days prior to such termination.

 

6.                                      Payments Upon Termination.  Upon termination of employment for any reason, Executive shall receive payment of his Base Salary, pro-rated to the date of termination, as well as any other accrued, but unpaid benefits (collectively the “Accrued Compensation”).  Accrued Compensation will be paid in a lump sum on the date required under applicable law.  Except as expressly stated in this Agreement, all other employment related obligations of Company to Executive shall be automatically terminated and completely extinguished with the termination of Executive’s employment.

 

7.                                      Severance.

 

7.1                               Severance Payment.  In the event Company terminates Executive’s employment without Cause, Company shall provide Executive with a Severance Payment equivalent to six (6) months of Executive’s then Base Salary, payable in equal installments over a six (6) month period, with the first installment payment made on the first payday occurring 30 days after the termination date and the remaining installments made on the following Company paydays.  The Company’s obligation to pay and Executive’s right to receive the Severance Payment shall cease in the event of Executive’s breach of any of his obligations under this Agreement or the EIPRA.  The Company’s obligation to provide Executive with the Severance Payment is conditioned precedent upon Executive’s execution of a full general release

 

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in a form acceptable to the Company and such release has become effective in accordance with its terms prior to the 30th day following the termination date.  For the sake of clarity, Executive shall not be eligible to receive severance in connection with any other form of termination, other than a termination without Cause.

 

7.2                               Application of Section 409A.

 

(a)                                 Notwithstanding anything set forth in this Agreement to the contrary, no amount payable pursuant to this Agreement which constitutes a “deferral of compensation” within the meaning of the Treasury Regulations issued pursuant to Section 409A (the “Section 409A Regulations”) of the Internal Revenue Code of 1986, as amended (the “Code”) shall be paid unless and until Executive has incurred a “separation from service” within the meaning of the Section 409A Regulations.  Furthermore, to the extent that Executive is a “specified Executive” within the meaning of the Section 409A Regulations as of the date of Executive’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Executive’s separation from service shall be paid to Executive before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of Executive’s separation from service or, if earlier, the date of Executive’s death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.

 

(b)                                 The Company intends that income provided to Executive pursuant to this Agreement will not be subject to taxation under Section 409A of the Code.  The provisions of this Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the Code.  However, the Company does not guarantee any particular tax effect for income provided to Executive pursuant to this Agreement.  In any event, except for the Company’s responsibility to withhold applicable income and employment taxes from compensation paid or provided to Executive, the Company shall not be responsible for the payment of any applicable taxes on compensation paid or provided to Executive pursuant to this Agreement.

 

(c)                                  Notwithstanding anything herein to the contrary, the reimbursement of expenses or in-kind benefits provided pursuant to this Agreement shall be subject to the following conditions: (1) the expenses eligible for reimbursement or in-kind benefits in one taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year; (2) the reimbursement of eligible expenses or in-kind benefits shall be made promptly, subject to the Company’s applicable policies, but in no event later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

(d)                                 For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

8.                                      Business Expenses.  Executive will be reimbursed for all reasonable, out-of-pocket business expenses incurred in the performance of Executive’s duties on behalf of Company.  To obtain reimbursement, expenses must be submitted promptly with appropriate supporting documentation in accordance with Company’s policies.

 

9.                                      No Conflict of Interest.  During Executive’s employment with Company and at all times Executive is receiving Severance Payments pursuant to this Agreement,  Executive must not engage in any work, paid or unpaid, that creates an actual conflict of interest with Company.  Such work shall include, but is not limited to, directly or indirectly competing with Company in any way, or acting as an officer, director, Executive, consultant, stockholder, volunteer, lender, or agent of any business enterprise

 

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of the same nature as, or which is in direct competition with, the business in which Company is now engaged or in which Company becomes engaged during Executive’s employment with Company, as may be determined by Company in its sole discretion.  If Company believes such a conflict exists during the term of this Agreement, Company may ask Executive to choose to discontinue the other work or resign employment with Company.  In addition, Executive agrees not to refer any client or potential client of Company to competitors of Company, without obtaining Company’s prior written consent, during Executive’s employment and any period of time Executive is receiving Severance Payments pursuant to this Agreement.

 

10.                               Confidentiality and Proprietary Rights.  Executive agrees to continue to abide by the EIPRA and any nondisclosure or other policies or obligations of Executive to Company or other affiliated entities, each which EIPRA and other policies and obligations is incorporated herein by reference.

 

11.                               Injunctive Relief.  Executive acknowledges that Executive’s breach of the covenants contained in Sections 9-10 (collectively “Covenants”) would cause irreparable injury to Company and agrees that in the event of any such breach, Company shall be entitled to seek temporary, preliminary and permanent injunctive relief without the necessity of proving actual damages or posting any bond or other security.

 

12.                               No Violation of Rights of Third Parties.  During Executive’s employment with Company, Executive will not (a) breach any agreement to keep in confidence any confidential or proprietary information, knowledge or data acquired by Executive prior to Executive’s employment with Company or (b) disclose to Company, or use or induce Company to use, any confidential or proprietary information or material belonging to any previous employer or any other third party.  Executive is not currently a party, and will not become a party, to any other agreement that is in conflict, or will prevent Executive from complying, with this Agreement.

 

13.                               General Provisions.

 

13.1                        Successors and Assigns.  The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company.  Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.

 

13.2                        Waiver.  Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

 

13.3                        Severability.  In the event any provision of this Agreement is found to be unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law.  If a deemed modification is not satisfactory in the judgment of such court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

 

13.4                        Interpretation; Construction.  The headings set forth in this Agreement are for convenience only and shall not be used in interpreting this Agreement.  This Agreement has been drafted by legal counsel representing Company, but Executive has participated in the negotiation of its terms.  Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Agreement and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

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13.5                        Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the United States and the State of Texas.  Each party consents to the jurisdiction and venue of the state or federal courts in Travis County, Texas, if applicable, in any action, suit, or proceeding arising out of or relating to this Agreement.

 

13.6                        Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated:  (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy, facsimile, or e-mail transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt.  Notice shall be sent to the addresses set forth below, or such other address as either party may specify in writing.

 

13.7                        Third Party Beneficiary.  The parties agree that Q2 Holdings, Inc. (“Q2H”) shall be a third party beneficiary to his Agreement, but Q2H shall have no duties or obligations under this Agreement.

 

13.8                        Survival.  Sections 9 (“No Conflict of Interest”), 10 (“Confidentiality and Proprietary Rights”), 11 (“Injunctive Relief”), 12 (“No Violation of Rights of Third Parties”), 13 (“General Provisions”) and 14 (“Entire Agreement”) of this Agreement shall survive Executive’s employment by Company.

 

14.                                                                               Entire Agreement.  This Agreement, and the EIPRA constitute the entire among the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral.  This agreement may be amended or modified only with the written consent of Executive, the Company.  No oral waiver, amendment or modification will be effective under any circumstances whatsoever and any such oral waiver, amendment or modification will be null and void.

 

[Signature page follows.]

 

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THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

 

 

	
Dated:   
    	
02/07/2014
    	
 
    	
/s/   Adam D. Anderson
    
	
 
    	
Adam   D. Anderson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Q2   Software, Inc.
    
	
 
    	
 
    
	
Dated:   
    	
2/07/2014
    	
 
    	
By:
    	
/s/   Matt Flake
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Matt   Flake
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   
    	
CEO
    
						

 

SIGNATURE PAGE TO EMPLOYMENT AGREEMENTEXHIBIT 10.17
                      FORM OF CONVERTIBLE PROMISSORY NOTE
<PAGE>

EXHIBIT 10.17
                           CONVERTIBLE PROMISSORY NOTE
                                    $250,000

FOR VALUE RECEIVED,  WARP 9, INC., a NEVADA  corporation,  (the "Borrower") with
approximately  105,790,195  shares  of  common  stock  issued  and  outstanding,
promises to pay to _______________,  a __________ CORPORATION,  or its assignees
(the  "Lender")  the  Principal  Sum along with the  Interest and any other fees
according to the terms herein (this "Note"). This Note shall become effective on
JANUARY 5, 2015 (the "Effective Date").

The Principal Sum is TWO HUNDRED FIFTY THOUSAND DOLLARS  ($250,000) plus accrued
and unpaid  interest.  The  Consideration  is TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000)  payable  by wire.  The  Lender  shall pay  THIRTY  THOUSAND  DOLLARS
($30,000)  of the  Consideration  upon  execution  of this  Note  (the  "Initial
Consideration").  The Lender may pay additional Consideration to the Borrower in
such amounts as the Lender may choose in its sole  discretion  (the  "Additional
Consideration").  The  Principal  Sum  due to  the  Lender,  and  as  referenced
hereinafter,   shall  be  the   Initial   Consideration   plus  any   Additional
Consideration  actually  paid by the  Lender  such  that  the  Borrower  is only
required to repay the amount  funded and the  Borrower is not  required to repay
any  unfunded  portion of this Note,  nor shall any  interest or other rights or
remedies granted herein extend to any unfunded portion of this Note.

1. MATURITY  DATE.  The Maturity Date is EIGHTEEN (18) MONTHS from the Effective
Date of each payment of Consideration (the "Maturity Date") and is the date upon
which the  Principal  Sum of this Note and unpaid  interest  and fees (the "Note
Amount") shall be due and payable.

2. INTEREST.  This Note shall bear interest at the rate of TEN PERCENT (10%) per
year.

3.  CONVERSION.  The Lender has the right, at any time after the Effective Date,
at its election,  to convert all or part of the Note Amount into shares of fully
paid and  non-assessable  shares of common  stock of the  Borrower  (the "Common
Stock").  The conversion price (the  "Conversion  Price") shall be the lesser of
(a) $0.015 per share of Common  Stock or (b) FIFTY  PERCENT  (50%) of the lowest
trade price of Common Stock recorded on any trade day after the Effective  Date,
or (c) the  lowest  effective  price per share  granted  to any person or entity
after the  Effective  Date to  acquire  Common  Stock,  or  adjust,  whether  by
operation  of  purchase  price  adjustment,   settlement  agreements,   exchange
agreements,  reset provision,  floating conversion or otherwise, any outstanding
warrant,  option or other right to acquire  Common Stock or  outstanding  Common
Stock equivalents (the "Conversion  Price").  The conversion formula shall be as
follows:   Number  of  shares  receivable  upon  conversion  equals  the  dollar
conversion  amount  divided by the Conversion  Price.  A conversion  notice (the
"Conversion  Notice") may be delivered to Borrower by method of Lender's  choice
(including but not limited to email,  facsimile,  mail,  overnight  courier,  or
personal  delivery),  and all  conversions  shall be  cashless  and not  require
further payment from the Lender.  If no objection is delivered from the Borrower
to the Lender,  with  respect to any  variable or  calculation  reflected in the
Conversion  Notice  within 24 hours of delivery of the  Conversion  Notice,  the
Borrower shall have been  thereafter  deemed to have  irrevocably  confirmed and
irrevocably ratified such notice of conversion and waived any objection thereto.
The Borrower shall deliver the shares of Common Stock from any conversion to the
Lender (in any name  directed by the Lender)  within three (3) business  days of
Conversion  Notice  delivery.  After  receiving the Initial  Consideration,  the
Borrower agrees to begin a good faith effort to apply and cause the approval for

                                      -1-
<PAGE>

participation in the Depository Trust Company ("DTC") Fast Automated  Securities
Transfer ("FAST") program. Subject to FAST approval by the DTC, and upon request
of the  Lender  and  provided  that the  shares to be issued  are  eligible  for
transfer  under  Rule  144 of  the  Securities  Act of  1933,  as  amended  (the
"Securities  Act"), or are effectively  registered under the Securities Act, the
Borrower shall cause its transfer agent to electronically issue the Common Stock
issuable  upon  conversion  to the Lender  through  the DTC Direct  Registration
System ("DRS").  The Conversion Price shall be 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.

4. CONVERSION DELAYS. If Borrower fails to deliver shares in accordance with the
timeframe  stated in SECTION 3, the Lender,  at any time prior to selling all of
those shares,  may rescind any portion,  in whole or in part, of that particular
conversion  attributable to the unsold shares and have the rescinded  conversion
amount  returned  to the  Principal  Sum with the  rescinded  conversion  shares
returned to the Borrower  (under the Lender's  and the  Borrower's  expectations
that any returned  conversion  amounts  shall tack back to the original  date of
this Note). In addition,  for each conversion,  in the event that shares are not
delivered by the fourth  business day  (inclusive of the day of  conversion),  a
penalty  of  $1,500  per day  shall be  assessed  for each day  after  the third
business day  (inclusive of the day of the  conversion)  until share delivery is
made;  and such penalty  shall be added to the Principal Sum of this Note (under
the Lender's and the Borrower's expectations that any penalty amounts shall tack
back to the original date of this Note  consistent  with  applicable  securities
laws). If the Borrower is unable to deliver shares under this provision,  due to
an insufficient  number of authorized and unissued shares available,  the Lender
agrees  not to force the  Borrower  to issue the  shares or  trigger an Event of
Default,  provided that the Borrower takes  immediate  steps necessary to obtain
the appropriate approval from shareholders and/or the board of directors,  where
applicable,  to  increase  the  number  of  authorized  shares  to  satisfy  the
Conversion Notice.

5.  LIMITATION  OF  CONVERSIONS.  In no event  shall the Lender 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 Lender and its affiliates (other than shares of Common
Stock  which may be deemed  beneficially  owned  through  the  ownership  of the
unconverted  portion of this Note 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  herein) and (2) the number of
shares of Common Stock  issuable upon the conversion of the portion of this Note
with respect to which the  determination  of this  proviso is being made,  would
result in  beneficial  ownership by the Lender and its  affiliates  of more than
4.99% of the outstanding  shares of Common Stock. For purposes of the proviso of
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 Lender upon, at the election of
the  Lender,  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 Lender,  as may be specified in
such notice of waiver).

                                      -2-
<PAGE>

6.  PAYMENT.  The Borrower may not prepay this Note prior to the Maturity  Date.
Within six (6) days prior to the Maturity  Date,  Borrower  shall provide Lender
with a written notice to pay the Note Amount on the Maturity Date.  Within three
(3) days of  receiving  written  notice,  the Lender  shall  elect to either (a)
accept  payment of the Note  Amount or (b)  convert  any part of the Note Amount
into shares of Common  Stock.  If the Lender  elects to convert part of the Note
Amount into shares of Common  Stock,  then the Borrower  shall pay the remaining
balance of the Note Amount by the Maturity Date.

7.  PIGGYBACK  REGISTRATION  RIGHTS.  The  Borrower  shall  include  on the next
registration  statement  the Borrower  files with the SEC (or on the  subsequent
registration  statement if such registration  statement is withdrawn) all shares
of Common  Stock  issuable  upon  conversion  of this Note unless such shares of
Common Stock are eligible for resale under Rule 144,  excluding S-8 registration
statements  for employee  stock grant and option  plans.  Failure to do so shall
result in  liquidated  damages of TWENTY FIVE PERCENT  (25%) of the  outstanding
principal  balance of this Note being  immediately due and payable to the Lender
at its  election in the form of cash  payment or addition to the balance of this
Note.

8. LENDER'S  REPRESENTATIONS.  The Lender hereby  represents and warrants to the
Borrower that (i) it is an "accredited investor" as such term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act, (ii) it understands
that  this  Note  and  the  shares  of  Common   Stock   underlying   this  Note
(collectively,  the "Securities")  have not been registered under the Securities
Act by reason of a claimed  exemption under the provisions of the Securities Act
that  depends,  in  part,  upon  the  Lender's  investment  intention;  in  this
connection,  the Lender hereby  represents  that it is purchasing the Securities
for the  Lender's  own  account  for  investment  and not with a view toward the
distribution to others;  provided,  that Lender may syndicate  participations in
the  Securities  among  a  limited  number  of  participants  who all  meet  the
suitability  standards of an "accredited  investor" as defined in Rule 501(a) of
Regulation  D of the  Securities  Act and will share  among  themselves  and the
Lender an economic  interest in the  Securities  on a pari passu,  pass  through
basis  with  investment  intent,  such  that  the  availability  of the  private
placement  exemption for the issuance of the Note under Rule 506 of Regulation D
of the  Securities  Act is preserved,  (iii) the Lender,  if an entity,  further
represents  that it was not formed for the purpose of purchasing the Securities,
(iv)  the  Lender  acknowledges  that  the  issuance  of this  Note has not been
reviewed by the United States Securities and Exchange Commission (the "SEC") nor
any state regulatory authority since the issuance of this Note is intended to be
exempt from the registration  requirements of Section 4(2) of the Securities Act
and Rule  506 of  Regulation  D, and (v) the  Lender  acknowledges  receipt  and
careful  review of this Note,  the  Borrower's  filings with the SEC  (including
without  limitation,  any risk factors  included in the  Borrower's  most recent
Annual  Report  on Form  10-K),  and any  documents  which  may have  been  made
available upon request as reflected  therein,  and hereby represents that it has
been furnished by the Borrower with all information regarding the Borrower,  the
terms and  conditions of the purchase and any  additional  information  that the
Lender has requested or desired to know,  and has been afforded the  opportunity
to ask questions of and receive answers from duly  authorized  officers or other
representatives  of the  Borrower  concerning  the  Borrower  and the  terms and
conditions of the purchase.

9. BORROWER'S REPRESENTATIONS.  The Borrower is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full power and  authority  to own,  lease,  license and use its  properties  and
assets  and to carry  out the  business  in which it  proposes  to  engage.  The

                                      -3-
<PAGE>

Borrower has the requisite corporate power and authority to execute, deliver and
perform  its  obligations  under this Note and to issue and sell this Note.  All
necessary  proceedings  of the Borrower  have been duly taken to  authorize  the
execution,  delivery,  and  performance of this Note. When this Note is executed
and delivered by the Borrower,  it will constitute the legal,  valid and binding
obligation of the Borrower  enforceable  against the Borrower in accordance with
their terms,  except as such enforceability may be limited by general principles
of equity or to applicable bankruptcy, insolvency,  reorganization,  moratorium,
liquidation  and other  similar laws  relating to, or affecting  generally,  the
enforcement of applicable creditors' rights and remedies.

10.  DEFAULT.  The  following  are  events of default  under this Note:  (i) the
Borrower  shall fail to pay any  principal  under this Note when due and payable
(or payable by  conversion)  thereunder;  or (ii) the Borrower shall fail to pay
any  interest  or any other  amount  under  this Note when due and  payable  (or
payable by conversion) thereunder; or (iii) a receiver, trustee or other similar
official  shall be appointed  over the Borrower or a material part of its assets
and such appointment shall remain  uncontested for twenty (20) days or shall not
be dismissed or discharged  within sixty (60) days;  or (iv) the Borrower  shall
become  insolvent or generally  fails to pay, or admits in writing its inability
to pay, its debts as they become due,  subject to applicable  grace periods,  if
any;  or (v) the  Borrower  shall make a general  assignment  for the benefit of
creditors;  or (vi) the  Borrower  shall  file a petition  for relief  under any
bankruptcy,  insolvency  or  similar  law  (domestic  or  foreign);  or (vii) an
involuntary  proceeding  shall be commenced or filed  against the  Borrower;  or
(viii) the Borrower  shall lose its status as "DTC  Eligible" or the  Borrower's
shareholders  shall lose the  ability to deposit  (either  electronically  or by
physical  certificates,  or otherwise)  shares into the DTC System;  or (ix) the
Borrower shall become delinquent in its filing requirements as a fully-reporting
issuer  registered  with the SEC; or (x) the  Borrower  shall  commit a material
breach of any of its covenants, representations or warranties in this Note.

11.  REMEDIES.  In the  event of any  default,  the  Note  Amount  shall  become
immediately  due and payable at the  Mandatory  Default  Amount.  The  Mandatory
Default Amount shall be 110% of the Note Amount.  Commencing five (5) days after
the occurrence of any event of default that results in the eventual acceleration
of this Note, the interest rate on the Mandatory  Default Amount shall accrue at
a default  interest  rate equal to the lesser of ten percent  (10%) per annum or
the  maximum  rate  permitted  under  applicable  law. In  connection  with such
acceleration  described  herein,  the Lender need not provide,  and the Borrower
hereby waives, any presentment, demand, protest or other notice of any kind, and
the Lender may  immediately  and without  expiration of any grace period enforce
any and  all of its  rights  and  remedies  hereunder  and  all  other  remedies
available to it under  applicable  law.  While the Mandatory  Default  Amount is
outstanding and default  interest is accruing,  the Lender shall have all rights
as a holder of this Note  until such time as the Lender  receives  full  payment
pursuant to this paragraph, or has converted all the remaining Mandatory Default
Amount and any other  outstanding  fees and interest into Common Stock under the
terms of this  Note.  In the  event of any  default  and at the  request  of the
Lender,  the  Borrower  shall  file a  registration  statement  with  the SEC to
register all shares of Common Stock  issuable upon  conversion of this Note that
are otherwise not eligible to have their  restrictive  transfer  legend  removed
under Rule 144 of the Securities Act.  Nothing herein shall limit Lender's right
to pursue  any other  remedies  available  to it at law or in equity  including,
without  limitation,  a decree of specific  performance and/or injunctive relief
with  respect  to  the  Borrower's   failure  to  timely  deliver   certificates
representing  shares of Common  Stock upon  conversion  of this Note as required
pursuant to the terms hereof.

                                      -4-
<PAGE>

12. NO SHORTING. Lender agrees that so long as this Note from Borrower to Lender
remains outstanding,  the Lender shall not enter into or effect "short sales" of
the Common Stock or hedging  transaction which establishes a short position with
respect to the Common  Stock of the  Borrower.  The  Borrower  acknowledges  and
agrees that upon  delivery  of a  Conversion  Notice by the  Lender,  the Lender
immediately  owns the shares of Common Stock described in the Conversion  Notice
and any sale of those shares issuable under such Conversion  Notice would not be
considered short sales.

13.  ASSIGNABILITY.  The Borrower  may not assign this Note.  This Note shall be
binding upon the Borrower and its  successors  and shall inure to the benefit of
the Lender and its successors and assigns and may be assigned by the Lender,  in
whole or in part, to anyone of its choosing without Borrower's  approval subject
to  applicable   securities  laws.   Lender  covenants  not  to  engage  in  any
unregistered public distribution of the Note when making any assignments.

14. GOVERNING LAW. This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of NEVADA, without regard to the conflict
of laws principles thereof. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of NEVADA or in the federal  courts located in CLARK COUNTY,
in the State of NEVADA.  Both parties and the individuals signing this Agreement
agree to submit to the jurisdiction of such courts.

15.  DELIVERY  OF  PROCESS BY THE  LENDER TO THE  BORROWER.  In the event of any
action or proceeding by the Lender against the Borrower,  and only by the Lender
against the Borrower,  service of copies of summons and/or  complaint and/or any
other process  which may be served in any such action or proceeding  may be made
by the Lender via U.S. Mail,  overnight  delivery  service such as FedEx or UPS,
email, fax, or process server,  or by mailing or otherwise  delivering a copy of
such process to the Borrower at its last known attorney as set forth in its most
recent SEC filing.

16. ATTORNEY FEES. In the event any attorney is employed by either party to this
Note  with  regard  to any  legal  or  equitable  action,  arbitration  or other
proceeding  brought by such party for the enforcement of this Note or because of
an alleged dispute,  breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding shall be
entitled to recover from the other party  reasonable  attorneys'  fees and other
costs and expenses  incurred,  including but not limited to post judgment costs,
in addition to any other relief to which the prevailing party may be entitled.

17. TRANSFER AGENT INSTRUCTIONS.  In the event that an opinion of counsel,  such
as but not limited to a Rule 144  opinion,  is needed for any matter  related to
this Note or the Common  Stock the Lender has the right to have any such opinion
provided by its counsel.  If the Lender chooses to have its counsel provide such
opinion,  then the Lender shall provide the Borrower with written notice. Within
three (3) business days of receiving written notice, the Borrower shall instruct
its transfer agent to rely upon opinions from the Lender's counsel. A penalty of
$1,500  per day shall be  assessed  for each day after  the third  business  day

                                      -5-
<PAGE>

(inclusive of the day of request) until the reliance instruction is delivered to
the transfer agent. If the Lender requests that the Borrower's  counsel issue an
opinion,  then the Borrower  shall cause the issuance of the  requested  opinion
within  three (3)  business  days. A penalty of $1,500 per day shall be assessed
for each day after the third  business  day  (inclusive  of the day of  request)
until the requested opinion is delivered. The Lender and the Borrower agree that
all penalty  amounts  shall be added to the Principal Sum of this Note and shall
tack back to the Effective Date of this Note, with respect to the holding period
under Rule 144. In the event that the Borrower  proposes to replace its transfer
agent,  the  Borrower  shall  provide,  prior  to the  effective  date  of  such
replacement,  a fully executed  Irrevocable  Transfer Agent Reliance Letter in a
form as initially delivered pursuant to this Note. The Borrower warrants that it
will not direct its  transfer  agent not to  transfer or delay,  impair,  and/or
hinder its transfer  agent in  transferring  (or  issuing)(electronically  or in
certificated form) any certificate for the Securities to be issued to the Lender
and it will not fail to remove (or direct  its  transfer  agent not to remove or
impair,  delay,  and/or hinder its transfer agent from removing) any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any
certificate  for the  Securities  when  required  by  this  Note.  The  Borrower
acknowledges  that  a  breach  by it of its  obligations  hereunder  will  cause
irreparable  harm to the  Lender by  vitiating  the  intent  and  purpose of the
transactions  contemplated hereby.  Accordingly,  the Borrower acknowledges that
the  remedy  at law for a  breach  of its  obligations  under  this  Note may be
inadequate  and  agrees,  in the event of a breach or  threatened  breach by the
Borrower of these provisions,  that the Lender shall be entitled, in addition to
all other  available  remedies,  to an  injunction  restraining  any  breach and
requiring immediate transfer, without the necessity of showing economic loss and
without any bond or other security being required.

18.  RESERVATION OF SHARES.  At all times during which this Note is convertible,
the Borrower  shall  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.

19. DISCLOSURE OF MATERIAL  NON-PUBLIC  INFORMATION.  The Borrower agrees not to
disclose any material  non-public  information to the Lender at any time. If the
Borrower  inadvertently  discloses any material  non-public  information  to the
Lender,  then the Borrower shall promptly  publicly disclose that information by
filing a Form 8-K with the SEC and by any  other  means  necessary  to make that
information known to the public.

20. PUBLIC DISCLOSURE. The Lender and the Borrower agree not to issue any public
statement with respect to the Lender's  investment or proposed investment in the
Borrower or the terms of any  agreement  or covenant  without the other  party's
prior  written  consent,  except  such  disclosures  as  may be  required  under
applicable law or under any applicable order,  rule or regulation.  The Borrower
agrees to reference  Lender only as "an  accredited  investor" and attach only a
form copy this Note in any of the  Borrower's  filings with the  Securities  and
Exchange Commission or any other public filings, except such full disclosures as
may be required  under  applicable law or under any  applicable  order,  rule or
regulation.

21. NOTICES.  Any notice required or permitted hereunder  (including  Conversion
Notices) must be in writing and either personally  served,  sent by facsimile or
email  transmission,  or sent by  overnight  courier.  Notices  shall be  deemed
effectively  delivered at the time of transmission if by facsimile or email, and
if by overnight courier the business day after such notice is deposited with the
courier service for delivery.

                                      -6-
<PAGE>

IN WITNESS  WHEREOF,  the authorized  agents of the Borrower and the Lender have
caused this Note to be duly executed as of the Effective Date.

WARP 9, INC. (the "Borrower")

By
  -------------------------------
     Andrew Van Noy
     Chief Executive Officer

                          (the "Lender")
--------------------------

By
  -------------------------------

  -------------------------------
     Chief Executive Officer

                                      -7-

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