Document:

Exhibit 10.1

 

 

ETHANOL MARKETING AND SERVICES AGREEMENT:

Western Plains
Energy, LLC

 

This Agreement is made
and entered into this 24th day of November, 2008, (“Effective Date”) by and between
Western Plains Energy, LLC having an
address of or near 3022 County Rd. 18, Oakley, Kansas 67748 (hereinafter
referred to as “Owner”), and Ethanol Products, LLC d/b/a
POET Ethanol Products having an address of 9530 East 37th
Street North, Wichita, Kansas 67226 (hereinafter referred to as “Marketer”).

 

RECITALS:

 

A.                                    The
Owner desires to utilize the services of a marketer to market Owner’s fuel
grade ethanol (hereinafter referred to as “Ethanol”) from its plant sited near 3022
County Rd. 18, Oakley, KS (the “Plant”).

 

B.                                    Marketer
is in the business of marketing Ethanol in the United States.

 

C.                                    The
parties desire to enter into and execute this Agreement for the purpose of
setting forth agreed upon terms and conditions.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and agreements set
forth herein, the parties agree as follows:

 

1.                                       Marketing
Rights.  Owner gives Marketer
exclusive rights to market all of Owner’s Ethanol produced from its Plant.

 

2.                                       Term
of Agreement.  The initial term of
this agreement will be five (5) years beginning on February 1, 2009 (the
“Commencement Date”).  This Agreement
renews automatically for additional five (5) year periods, at the end of
the initial period and at the end of any subsequent five (5) year renewal
period, unless terminated by either party. 
Either party may terminate this Agreement at the end of the initial
period or at the end of any five (5) year renewal period by giving to the
other party ninety (90) days’ written notice of termination prior to the end of
the then current period.  Within fifteen
(15) days of receipt of written notice of termination by either party, Marketer
will provide Owner with a quantity per month of Ethanol for up to one (1) year
from termination that will be needed to fulfill sales contracts in existence at
the time of termination and copies of said sales contracts.  Owner agrees that all such existing sales contracts
disclosed in the fifteen (15) day period will be fulfilled, and that the terms
of this Agreement will remain in effect for all such Ethanol.

 

3.                                       Marketing
Services Provided.  Marketer will
provide to Owner the following marketing services:

 

a.                                       Marketing.  Marketer will effect the sale of Owner’s
Ethanol with a good faith effort to achieve the available market prices.

 

b.                                      Scheduling.  Marketer will be responsible for scheduling
all shipments of Owner’s Ethanol. 
Marketer will provide to Owner a shipping order, and Owner will provide
a combined shipping schedule as stated in Section 8 below.

 

1

 

c.                                       Leased
Storage.  If it is deemed necessary
by Marketer to market Owner’s Ethanol through storage facilities, Owner will
pay all commercially reasonable lease and throughput costs associated with such
leases.

 

d.                                      Freight
and Transportation.  Marketer will
arrange for all freight and transportation services, including rail equipment,
for delivery of Owner’s Ethanol.  Except
as otherwise provided herein, Owner will reimburse Marketer for all commercially
reasonable freight, transportation services and throughput costs incurred by
Marketer.

 

e.                                       Customer
Creditworthiness.  Marketer will make
reasonable efforts to review the creditworthiness of Owner’s Ethanol customers.
Marketer will then recommend to Owner which, if any, Ethanol customers Marketer
believes should be accepted. Owner will have the right to reject sales to any Ethanol
customers.  Marketer will not sell
Ethanol to any customer rejected by Owner.

 

f.                                         Accounts
Receivable.  Owner will retain the
risk of non-payment by Owner’s Ethanol customers.  Marketer will make reasonable efforts to
collect any of Owner’s past due accounts. 
However, Marketer will not be required to initiate litigation to collect
delinquent accounts.  Upon receipt of
written consent from Owner, Marketer shall be authorized to turn over to
collection agencies a delinquent account unless Owner determines that Owner
will assume responsibility for collecting the account.  Any reasonable collection agency fees
resulting from the collection process will be borne by Owner.  All accounts receivable losses arising from
the marketing of Owner’s Ethanol are Owner’s sole responsibility.

 

g.                                      Title
and Risk of Loss.  Marketer will take
title to Owner’s Ethanol at Owner’s Plant as Ethanol passes the flange
connecting the delivering and receiving apparatus of the parties.  Notwithstanding the transfer of title as set
forth herein, and except when any of the following occurs due to Marketer’s
negligence or willful and wanton conduct, Owner agrees to defend, indemnify and
hold harmless Marketer from the risk of loss of Owner’s Ethanol, risk of
penalty due to late or non-delivery, risk of non-compliant quality and
condition of Owner’s Ethanol, and risk of non-collection with respect to the sale
of Owner’s Ethanol to Ethanol customers. 
Acceptance of Owner’s Ethanol by Ethanol Customers under applicable laws
will not occur until Owner’s Ethanol has been accepted by the Ethanol customers
at the time of delivery.

 

h.                                      Transaction
Processing.  Marketer will be
responsible for invoicing all of Owner’s Ethanol marketed, receiving payments
from customers, and paying freight and/or storage when necessary.  Owner will be responsible for furnishing
Marketer a report by 10:00 AM each workday of the previous day’s
shipments.  Marketer will send to Owner’s
Ethanol customers invoices the same day as the report is received.

 

i.                                          Remittance
of Payment.  Each week a payment will
be made to Owner by Marketer for all Ethanol invoiced thirteen to nineteen
(13-19) days prior to said date that has been paid by Owner’s customers.  This payment will be adjusted for all
freight, transportation services, storage costs, throughput costs, Services Fees,
costs incurred due to a Regulatory Change or Change in Customer Requirements,
taxes, and when applicable, an adjustment for value-added as stated in Section 7
below.  Following Owner’s receipt of five
days’ advance notice of Marketer’s intention to complete an offset against
payments due Owner, Marketer in good faith has the right to set off against
payments due Owner hereunder any and all amounts owed by Owner to Marketer for
any liabilities outside the normal course of business.  Adjustments within the normal course of
business will be adjusted without prior written notice as they occur.

 

j.                                          Insurance.  Marketer will insure Owner’s Ethanol, at
Marketer’s sole cost, upon transfer of title of Owner’s Ethanol to Marketer, as
set forth in Section 3.g.  The
insurance will be in the form of a marine cargo insurance policy that will name
Owner as an additional insured, and will provide for payment of proceeds
directly to Owner to the extent Owner still has any risk of loss.  The amount of the policy, the deductible, and
the other terms and conditions of the policy

 

2

 

will be commercially
reasonable, but will be at an amount that covers (at a minimum) a total loss of
the Ethanol during transit to the Ethanol customers, less the deductible.  Upon issuance of such policy, Marketer will
cause Marketer’s insurance agent to issue to Owner a certificate of insurance
verifying that such insurance policy is in full force and effect.

 

4.                                       Administrative
Services Provided.  Marketer will
provide to Owner the following Administrative Services:

 

a.                                       Distribution
Services.  Marketer will be
responsible for an on-going program to conduct carrier audits and will be
responsible for carrier selection and dispatching, freight rate bundling and
distribution optimization.

 

b.                                      Transaction
Processing.  Marketer will be
responsible for Ethanol licensing, monitoring and state compliance reporting,
state surety bonding, tax collection, remittance and reporting, purchase and
sales acknowledgments, late payment collections, and electronic funds transfer
services.

 

c.                                       Inventory
Management.  Marketer will be
responsible for monitoring future Ethanol stock levels projected for Owner’s Plant
to facilitate the marketing program established by Marketer for the sale of
Owner’s Ethanol.

 

d.                                      Proprietary
Software.  Marketer will install and
maintain a proprietary software system to handle linked transaction processing
and necessary data access to Ethanol marketing and sales information.

 

e.                                       Denaturant
Supply.  Marketer has the right to
supply denaturant to Owner’s Ethanol Plant subject to terms, conditions, and
pricing as are mutually agreed to by Marketer and Owner.

 

5.                                       Marketing
and Administrative Service Fee.  Owner
will pay Marketer a fee for the Marketing and Administrative Services rendered
by Marketer hereunder.  The fee (the “Services
Fee”) will be one percent (1%) of the Net-back sales price per gallon of
denatured Ethanol as produced by Owner’s Plant. 
Net-back sales price is defined as the price actually paid and collected
per gallon of denatured Ethanol, minus all freight and transportation costs,
any applicable owned storage fees, leased storage fees, through-put fees, any
terminalling fees, and taxes imposed by a governmental authority, except for
sales, use of similar taxes imposed upon the net profits of marketer or the
Services Fees.

 

6.                                       Marketer’s
Purchase of Ethanol.  Marketer may
purchase for its own account all or a portion of Owner’s Ethanol at a price to
be agreed upon by the parties at the time of the purchase.

 

7.                                       Value-Added
Opportunities.  Marketer and Owner
mutually recognize that on occasion Marketer will be able to develop a sale
opportunity for Owner’s Ethanol that is above the market value for sales
typically completed on a spot market or contract rollover basis (a “value-added
transaction”).  Examples of value-added
transactions include the building of new markets, time exchanges, location exchanges,
rack pricing, and negotiation of spread differentials.  The parties acknowledge that new value-added
opportunities not yet known to the parties are expected to be developed by
Marketer in the future.  Owner and
Marketer acknowledge that for value-added transactions, the Services Fee is
insufficient to compensate Marketer for additional income and profits generated
for Owner.  Therefore, Owner and Marketer
agree to share the additional margin generated from value-added transactions at
the ratio of 50% for Owner and 50% for Marketer.  The additional margin will be calculated
based on the difference in the sales price of the value-added transaction at
Owner’s Plant (net of transportation cost) and the sales price of a typical
market transaction (net of transportation cost) for a similar time period.

 

In order to
facilitate the completion of value-added transactions, which opportunities occur
and disappear quickly within the market, Owner agrees to identify
representatives of Owner with authority to approve value-added
transactions.  Marketer will, upon
identification of a value-added transaction 

 

3

 

opportunity, present
to any one of Owner’s representatives the value-added transaction, including
the details of said value-added transaction, for consideration.  Owner has complete and sole discretion to
accept or reject the value-added transaction. 
If agreed upon by Owner’s representative, Marketer will confirm in
writing to Owner’s representative the agreement of the parties regarding the
value-added transaction.  In this case,
Marketer will complete the value-added transaction in accordance with the
agreement of the parties.  If Owner’s
representative declines to participate in the value-added transaction, then
Marketer will not complete the value-added transaction for Owner’s account.

 

8.                                       Reporting.  Marketer will provide Owner with the
following reports on a schedule described below during the term of this
Agreement:

 

	
  Shipping Orders

  	
   

  	
  Daily

  
	
  Market Information

  	
   

  	
  Weekly

  
	
  Sales Summary

  	
   

  	
  Monthly

  

 

Owner will provide Marketer with the following reports
on a schedule described below during the term of this Agreement:

 

	
  Daily Production

  	
   

  	
  Daily

  
	
  Combined
  Shipping Schedule

  	
   

  	
  Daily

  

 

In addition to the
aforementioned reports, Owner will timely inform Marketer of daily inventories,
Plant shutdowns, daily production projections, and any other information
requested by Marketer in order for Marketer to perform Marketer’s services under
this Agreement.

 

9.                                       Discontinuation
of Production.  In the event that
Owner desires to discontinue or reduce the production of Owner’s Ethanol, Owner
will notify Marketer 180 days in advance of Owner’s decision in order that all
contract commitments made by Marketer for Owner may be met.  If less than 180 days notice of
discontinuance or reduction of production is provided to Marketer, or if
unforeseen circumstances cause Owner to cease or reduce production at its Plant,
Owner grants Marketer the power to buy in ethanol short falls for Owner’s account
on unfilled contracts, and any associated losses will be reimbursed by Owner to
Marketer.

 

10.                                 Liability.  Any and all liability related to Owner’s
Ethanol, including but not limited to Ethanol quality and condition, the timely
delivery of Ethanol, and the handling, transportation, storage and release of Owner’s
Ethanol into the environment, will remain Owner’s sole responsibility, except
to the extent provided in Section 12, or to the extent such liability is
to be insured against at Marketer’s expense pursuant to Section 3.j.  Owner’s Ethanol will be delivered free from
lawful security interests, liens, taxes, encumbrances and claims of third
parties.

 

11.                                 Indemnification
of Marketer.  Owner must indemnify,
hold harmless and defend Marketer, and its officers, directors, employees and
agents from and against any and all claims, actions, damages, liabilities and
expenses, including but not limited to, attorneys’ and other professional fees,
in connection with loss of life, personal injury and/or damage to property of
third parties, arising from or out of Marketer’s services provided under the
terms and conditions of this Agreement, for Owner’s breach of this Agreement, and
the handling, transportation, storage and release of Owner’s Ethanol into the
environment, except that Owner will not indemnify, hold harmless and defend
Marketer from (i) the negligent or willful or wanton conduct of Marketer
and its officers, directors, employees and agents, (ii) any act beyond the
scope of the Marketer’s services to be rendered under the terms and conditions
of this Agreement, (iii) Marketer’s violation of laws, regulations,
ordinances and/or court orders; and (iv) any liability otherwise covered
by insurance

 

12.                                 Indemnification
of Owner.  Marketer must indemnify,
hold harmless and defend Owner, and its officers, employees and agents from and
against any and all claims, actions, damages, liabilities and expenses,
including, but not limited to, attorneys’ and other professional fees, in
connection with Marketers’ breach of this Agreement and, in connection with
loss of life, personal injury and/or damage to

 

4

 

property of third
parties arising from or out of (i) the negligent or willful or wanton
conduct of Marketer and its officers, directors, employees and agents, (ii) any
act beyond the scope of Marketer’s services to be rendered under the terms and
conditions of this Agreement, and (iii) Marketer’s violation of laws,
regulations, ordinances and/or court orders.

 

13.                                 Insurance.  Marketer will furnish Owner with an insurance
certificate verifying that Marketer maintains commercial general liability
insurance in an amount not less than $5,000,000.

 

14.                                 Waiver
of Subrogation.  Notwithstanding any
other provision of this Agreement to the contrary, neither Owner nor Marketer
will be liable to the other for any business interruption, loss or damage to
property of the other, or injury to or death of persons arising from the
marketing, sale, storage and transportation of Owner’s Ethanol, whether or not
caused by the negligence of Owner, Marketer, or their respective employees,
agents or contractors.  This waiver will
apply only to the extent that such business interruption, loss or damage to
property, or injury to or death of persons is covered by insurance, regardless
of whether such insurance is payable to or protects Owner or Marketer, or
both.  Nothing in this Section 14
may be construed to impose any other or greater liability upon either Owner or
Marketer than would have existed in the absence of this Section 14.  Owner and Marketer shall cause each insurance
policy obtained by them in relation to the services hereunder to provide that
the insurance company waives all right of recovery by way of subrogation
against the other in connection with any damages covered by said policies.  This waiver will be in effect only so long as
the applicable insurance policies contain a clause to the effect that this
waiver will not affect the rights of the insured to recover under such policies.  Such clauses must be obtained by the parties
whenever possible.

 

15.                                 Taxes.  Owner will be solely responsible for payment
of all taxes and charges, now or hereafter imposed (whether by federal, state,
municipal or other public authority), by reason of this Agreement or its
performance, including but not limited to, sales or use taxes, but excluding
any income tax imposed upon Marketer’s net profits.  Marketer may deduct from the proceeds of
sales of Owner’s Ethanol an amount equal to any taxes imposed as set forth
herein, and Marketer will remit to the appropriate government entity the taxes
owed.  All taxes and charges paid on
Owner’s account will be disclosed to Owner.

 

16.                                 Entire
Agreement and Amendment.  This
Agreement and the sales confirmations contain the entire agreement between the
parties.  No oral statements,
representations or prior written matter not contained in this Agreement shall
be binding upon the parties with respect to the subject matter hereof.  In the event of a conflict of terms between a
sales confirmation and this Agreement, the terms of this Agreement will
control.  In the event that Marketer
revises terms of the sales confirmation form which are not normally subject to
change (except the “Detail” grid), Marketer will use commercially reasonable
efforts to bring to Owner’s attention the revised terms set forth in the sales
confirmation form.  Except for the sales
confirmations, this Agreement will not be amended or modified in any manner
except by a writing executed by both parties that specifically references
amending this Agreement.

 

17.                                 Confidential
Nature of Agreement.  Marketer and
Owner agree to keep all sales, prices, inventory positions, and the details of
this Agreement, the sales confirmations, other documents and details of the
transactions strictly confidential.

 

18.                                 Assignment.  This Agreement may not be assigned by either
party, except to an affiliate controlled by or in control of said party (“Affiliate”),
without the written consent of the other party. 
To the extent this Agreement is assigned to an Affiliate, such
assignment shall only be effective if written notice of such assignment is
given to the non-assigning party within 30 days of such assignment.

 

19.                                 Governing
Law.  This Agreement will be
governed, construed and enforced under the laws of the State of Kansas.

 

20.                                 Force
Majeure.  Marketer will not be liable
to Owner for its failure to deliver services hereunder, and Owner will not be
liable to Marketer for its failure to produce Owner’s Ethanol, when such failure
is due to the failure of processing equipment, fires, floods, storms, weather
conditions, strikes, lock 

 

5

 

outs, other
industrial disturbance, riots, legal interference, governmental action or
regulation, acts of terrorism, acts of God or public enemy, or, without
limitation by enumeration, any other cause beyond Marketer’s or Owner’s
reasonable control; provided Marketer or Owner must promptly and diligently
take such action as may be necessary and practicable under the then existing
circumstances to remove the cause of failure and resume delivery of services or
Owner’s Ethanol.  The party seeking to
invoke this provision must provide notice within 48 hours or such other time as
is reasonable under the circumstances. 
The party must further notify the other party as to the time when the
force majeure condition is no longer in effect.

 

21.                                 Regulatory
Changes and Changes in Customer Requirements.  In the event that at any time subsequent to
the Effective Date there occurs a Regulatory Change or any Change in Customer
Requirements which increases the cost to Marketer of providing the services set
forth herein, and if Marketer so elects by notice to Owner, then Owner must
reimburse Marketer for the additional costs incurred as a result of the
Regulatory Change or Change in Customer Requirements.  A “Regulatory Change” means any change after
the Effective Date in any applicable statute, law, code, determination, rule,
regulation, decree, injunction, franchise, permit, certificate, license,
ordinance, standard or control of any governmental authority.  By way of example, a Regulatory Change would
include increased reporting requirements of government authorities for the marketing,
sale, transportation or storage of ethanol. 
A “Change in Customer Requirements” means any change after the Effective
Date in any requirement for the purchase, delivery, transportation, storage,
testing, reporting or insuring of ethanol. 
By way of example, a Change in Customer Requirements would include a
customer imposing upon Marketer a requirement that Marketer use a specific
software package in order for Marketer to market ethanol to the customer.

 

22.                                 Conflicts
of Interest.  Owner recognizes and
acknowledges that members with an ownership interest in Marketer or their
Affiliates also hold ownership interests in other ethanol production facilities
for which Marketer provides the same or similar services as are provided for
Owner under the terms of this Agreement. 
Marketer agrees that it will provide services to Owner hereunder in the
same or similar method as services are provided to other ethanol production
facilities so as not to favor the other ethanol production facilities over
Owner.

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement on the date and year
first above written.

 

	
  OWNER:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MARKETER:

  
	
  Western Plains Energy, LLC

  	
   

  	
  ETHANOL
  PRODUCTS, LLC D/B/A

  
	
   

  	
   

  	
   

  	
  POET
  ETHANOL PRODUCTS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven R. McNinch

  	
   

  	
  By:

  	
  /s/ Robert K. Casper

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Steven R. McNinch

  	
   

  	
  Name:

  	
  Robert K. Casper

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  CEO/General Manager

  	
   

  	
  Its:

  	
  President

  
						

 

6ex_10-1.htm

    
      

      

      Exhibit 10.1

     

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

       

      CROWDGATHER,
INC.

      CONVERTIBLE
PROMISSORY NOTE

       

      
        	$110,000.00	
                Woodland Hills,
      California

              

      

      Dated as
of December 3, 2008

      

      CrowdGather, Inc., a Nevada corporation
(the “Company”), for value
received, hereby promises to pay to __________________, or its registered
assigns (“Holder”), the sum of
One Hundred Ten Thousand Dollars ($110,000.00) on the terms and conditions set
forth hereinafter.  Payment for all amounts due hereunder shall be
made by mail to the registered address of Holder.

      

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

      

      1.           
 Maturity;
Partial Prepayment.  The principal hereof and any unpaid
accrued interest hereon, as set forth below, shall be due and payable on the
earlier to occur of:  (i) December 3, 2009 (“Maturity Date”); and
(ii) when declared due and payable by Holder upon the occurrence of an Event of
Default (as defined below).

      

       

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

      

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

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (a)           Default
in the payment of the principal or unpaid accrued interest of this Note when due
and payable; or

      

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

      

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

      

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

      

      (i)           convert
all of the principal amount and unpaid accrued interest attributable to this
Note into shares of Common Stock at a conversion price the lower of (i) $1.40
per share (ii) the price per share of the Company’s next transaction or series
of related transactions in which the Company sells equity securities and in
which the gross proceeds to the Company equal or exceed $2,000,000 (the “Next Equity
Financing”); or

      

      (ii)           declare
all unpaid interest and principal immediately due and payable and exercise all
other legal rights in connection therewith.

      

      5.           Conversion; Optional
Reinvestment.

      

      (a)           Optional
Conversion.  Holder may elect at its sole discretion to convert
the outstanding principal balance and unpaid accrued interest on this Note into
shares of Common Stock at any time.  The number of shares of Common
Stock to be issued upon such conversion shall be equal to the quotient obtained
by dividing (a) the outstanding principal and unpaid accrued interest due on
this Note on the date of conversion, by (b) the conversion price of the lower of
(i) $1.40 per share or (ii) the price per share of the Next Equity Financing
(“Conversion Price”). The Common Stock received by Holder pursuant to the
conversion of the Note shall be referred to as the “Conversion
Shares.”

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      (b)           Identical
Terms.  The Common Stock, as the case may be, received by
Holder pursuant to the conversion of the Note hereunder shall have identical
rights, preferences and privileges as those shares received by investors
currently holding or subscribing for Common Stock, as applicable.

      

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

      

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

      

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

      

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

      

      (i)           any
taking by the Company of a record of holders of any class of securities of the
Company for the purpose of determining holders thereof who are entitled to
receive any dividend (other than a cash dividend payable out of earned surplus
at the same rate as that of the last such cash dividend theretofore paid) or
other distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right; or

      

       

      (ii)           any
capital reorganization of the Company, any reclassification or recapitalization
of the capital stock of the Company or any transfer of all or substantially all
of the assets of the Company to any other person or any consolidation or merger
involving the Company; or

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (iii)           any
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;

      

      the
Company will mail to Holder at least 20 calendar days prior to the earliest date
specified therein, a notice specifying:

      

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

      

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

      

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

      

      6.         
   Prepayment.  Upon
5 calendar days’ prior written notice to Holder, the Company may at any time
prepay in whole or in part, the principal sum, plus accrued interest to date of
such prepayment, of this Note; provided that, after the date of such notice and
prior to the proposed prepayment date, Holder may elect to convert such amounts
to the issued securities of the Company at the Conversion Price in accordance
with the terms of Section 5.

      

       

                
    7.          
  Subscription
Rights.  So long as this Note is outstanding, Holder shall have
the right to participate in any offering of the Company’s securities on the same
terms and conditions as the other subscribers to such offering.

      

      8.         
  Representations and
Warranties. The Company hereby represents and warrants:

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

       

      (a)           Due Organization and
Qualification.  The Company is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted.  The Company is in no
violation or default of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents.  The Company is duly qualified to conduct business and is
in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
this Note, (ii) a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company, or
(iii) a material adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under the Note (any of (i),
(ii) or (iii), a “Material Adverse
Effect”) and to the Company’s knowledge no proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.

       

      (b)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by the
Note and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of the Note by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, its board of directors or its shareholders in
connection therewith.  The Note has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.

       

      (c)           No
Conflicts.  The execution, delivery and performance of the Note
by the Company, the issuance and sale of the securities and the consummation by
the Company of the other transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate any provision of the Company’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.

       

      (d)           Litigation.  There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of the
Note or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect.  Neither the Company,
nor any director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      9.           Successors and Assigns;
Assignment.  Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties
hereto.  Nothing in this Note, express or implied, is intended to
confer upon any party, other than the parties hereto and their successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Note, except as expressly provided herein.  The Company may not
assign this Note or any of the rights or obligations referenced herein without
the prior written consent of Holder.

       

      10.           Waiver and
Amendment.  Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and Holder.

      

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

      

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

      

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

      

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

      

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

      

      16.           Heading;
References.  All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note.  Except
as otherwise indicated, all references herein to Sections refer to Sections
hereof.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      IN WITNESS WHEREOF, the
Company has caused this Note to be issued as of the date first written
above.

       

      
        
          	 	 	CrowdGather,
      Inc.	 
	 	 	 	 	 
	
                   

                	 	By	
                   

                	 
	
                   

                	 	
                  Name:

                  Its:

                	
                  Sanjay
      Sabnani

                  President

                	 
	 	 	
                   

                  20300
      Ventura Blvd., Suite 330

                  
                    Woodland
      Hills, CA 91364

                  

                	 

        

      

       

      
        
          	Holder: 	
                   

                	 	 	
                   

                	 
	Address: 	
                   

                	 	 	
                   

                	 
	 	
                   

                	 	 	
                   

                	 

        

      

      
        
          	Telephone: 	
                   

                	 	 	
                   

                	 
	Facsimile: 	
                   

                	 	 	
                   

                	 

        

      

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
      

       

      NOTICE OF
CONVERSION

      (To be
Signed Only Upon Conversion of Note)

      

       

      To
CrowdGather, Inc.:

      

      The
undersigned, holder of the $110,000 Convertible Note of CrowdGather, Inc., due
_______________ (the “Note”), hereby agrees to surrender the Note for conversion
into ________________shares of Common Stock of CrowdGather, Inc., to the extent
of ________________________ dollars ($____________) unpaid principal amount of
the Note, and________________________ dollars ($____________) unpaid accrued
interest under the Note and requests that the certificates for such shares be
issued in the name of, and delivered to,
________________________________________________, whose address is
_________________________________________________________.  Conversion
should be effected as of ___________________.

      

      Dated:                                                      .

      

      
        
          	
                   

                	
                   

                	 	 
	 	 	

                  (signature
      must conform in all respects to name

                  of
      holder as specified on the face of the Note)

                	 
	 	 	 	 
	 	 	

                  Address:

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