Document:

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

 

	Principal Amount: $32,500.00	Issue Date: January 8, 2014 
	Purchase Price: $32,500.00	

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED,
CO-SIGNER, INC.,
a Nevada
corporation (hereinafter
called the
“Borrower”), hereby
promises to
pay to
the order
of ASHER
ENTERPRISES, INC.,
a Delaware
corporation, or
registered assigns
(the “Holder”)
the sum of
$32,500.00 together
with any interest
as set
forth herein,
on October
10, 2014 (the
“Maturity Date”),
and to
pay interest
on the unpaid principal
balance hereof at
the rate of eight percent
(8%) (the “Interest Rate”)
per annum
from the
date hereof
(the “Issue
Date”) until the
same becomes
due and
payable, whether
at maturity or upon acceleration
or by prepayment
or otherwise. This Note
may not be prepaid in whole
or in part except as
otherwise explicitly set forth
herein. Any amount of principal or interest
on this Note which is not paid when due
shall bear interest at
the rate of twenty two percent (22%)
per annum from the due date thereof until
the same is paid (“Default Interest”).
Interest shall commence
accruing on the date
that the Note is fully paid and
shall be computed
on the basis of a 365-day
year and the actual
number of days elapsed.
All payments
due hereunder (to the extent not converted
into common stock, $0.001 par
value per share (the
“Common Stock”)
in accordance
with the
terms hereof)
shall be
made in
lawful money
of the United
States of America.
All payments
shall be
made at
such address
as the
Holder shall
hereafter give
to the Borrower by
written notice
made in accordance
with the provisions
of this Note.
Whenever any amount expressed
to be due by the terms
of this Note is due on any
day which is not a business
day, the
same shall
instead be due
on the next
succeeding day
which is a
business day
and, in
the case of any interest
payment date which
is not the date on which this Note
is paid in full, the extension
of the due date thereof shall
not be taken into account
for purposes of determining
the amount of interest
due on such date. As
used in this Note, the term “business
day” shall mean any day
other than a Saturday, Sunday or a day
on which commercial banks in the city
of New York,
New York are authorized
or required by law
or executive order to remain closed.
Each capitalized term
used herein, and
not otherwise defined, shall
have the meaning
ascribed thereto in
that certain
Securities Purchase Agreement
dated the date hereof, pursuant to
which this
Note was originally
issued (the
“Purchase Agreement”).

    	 

    	 

    

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

 

The following
terms shall apply to this Note:

 

ARTICLE
I. CONVERSION
RIGHTS

 

1.1   
 Conversion
Right.
The Holder
shall have
the right from
time to time,
and at
any time during
the period beginning
on the date
which is
one hundred
eighty (180)
days following
the date
of this Note
and ending
on the later
of: (i)
the Maturity Date
and (ii)
the date of payment
of the Default Amount (as defined
in Article III) pursuant to Section
1.6(a) or Article III, each
in respect of the remaining
outstanding principal amount of
this Note to convert
all or any part of the outstanding
and unpaid principal amount
of this Note into fully paid
and non- assessable shares
of Common Stock, as such
Common Stock exists
on the Issue Date,
or any shares of
capital stock
or other
securities of
the Borrower
into which
such Common
Stock shall
hereafter be changed or reclassified
at the conversion price (the
“Conversion Price”) determined
as provided herein
(a “Conversion”); provided,
however, that in no event shall
the Holder be entitled to convert
any portion of this Note in excess of that
portion of this Note upon conversion
of which the sum of (1) the number of shares
of Common Stock beneficially owned
by the Holder and
its affiliates (other than
shares of Common Stock which
may be deemed beneficially owned through
the ownership of the unconverted portion of the Notes
or the unexercised or unconverted portion
of any other security
of the Borrower subject to a limitation
on conversion or exercise
analogous to the limitations
contained 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 Holder
and its affiliates of more
than 9.99% of the outstanding shares
of Common Stock. For purposes
of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined
in accordance with
Section 13(d)
of the Securities Exchange
Act of 1934, as amended
(the “Exchange Act”),
and Regulations
13D-G thereunder, except
as otherwise
provided in clause (1) of such
proviso, provided, further,
however, that the limitations
on conversion may be waived
by the Holder upon, at
the election of the Holder,
not less
than 61 days’
prior notice to the Borrower,
and the provisions of the conversion
limitation shall continue
to apply until such 61st day (or such
later date, as determined
by the Holder, as may be specified
in such notice of waiver).
The number of shares of Common Stock
to be issued upon each
conversion of this Note shall
be determined by dividing the Conversion
Amount (as defined
below) by the applicable Conversion
Price then
in effect
on the date specified
in the notice of conversion,
in the form attached
hereto as Exhibit A (the
“Notice of Conversion”),
delivered to the Borrower by the Holder
in accordance with Section
1.4 below; provided that the Notice
of Conversion is submitted by facsimile
or e-mail (or by
other means resulting in, or reasonably
expected to result in, notice)
to the Borrower before 6:00 p.m., New
York, New York
time on such conversion date
(the “Conversion Date”). The
term “Conversion Amount”
means, with respect
to any conversion
of this Note,
the sum of (1) the principal
amount of this Note
to be converted
in such conversion plus (2)
at the Holder’s option, accrued
and unpaid
interest, if any, on
such principal
amount at the interest rates
provided in this
Note to the
Conversion Date,
plus (3) at the Holder’s
option, Default Interest, if any, on
the amounts referred
to in the immediately preceding
clauses (1) and/or (2)
plus (4) at the Holder’s
option, any amounts owed to the Holder
pursuant to Sections 1.3 and
1.4(g) hereof.

    	2

    	 

    

		1.2Conversion	Price.

 

(a)    
Calculation 
of  Conversion  Price.
The conversion price (the
“Conversion Price”)
shall equal
the Variable
Conversion Price
(as defined
herein) (subject
to equitable
adjustments for
stock splits,
stock dividends
or rights
offerings by
the  Borrower
relating to
the Borrower’s
securities or the securities
of any subsidiary of the Borrower,
combinations, recapitalization, reclassifications,
extraordinary distributions and
similar events). The
"Variable Conversion
Price" shall mean
58% multiplied
by the Market
Price (as
defined herein)
(representing a discount rate
of 42%). “Market
Price” means
the average of
the lowest three
(3) Trading Prices
(as defined
below) for the
Common Stock
during the ten
(10) Trading Day
period ending on the
latest complete
Trading Day prior
to the Conversion
Date. “Trading Price”
means, for any security as
of any
date, the closing bid price
on the Over-the-Counter Bulletin
Board, or applicable
trading market (the
“OTCBB”) as reported
by a
reliable reporting service
(“Reporting Service”)
designated by the Holder
(i.e. Bloomberg) or,
if the OTCBB
is not the principal trading market
for such security, the closing
bid price of such security on the principal
securities exchange or trading market
where such security is listed or traded
or, if no closing bid price
of such security is available
in any of the
foregoing manners, the
average of the closing
bid prices of any
market makers for
such security that are listed
in the “pink
sheets” by
the National Quotation
Bureau, Inc. If the
Trading Price
cannot be calculated
for such security on
such date
in the manner
provided above, the Trading
Price shall
be the fair
market value
as mutually determined by
the Borrower and
the holders of a
majority in interest of the Notes
being converted for which the calculation
of the Trading Price is required
in order to determine the Conversion
Price of
such Notes.
“Trading Day” shall
mean any day
on which
the Common Stock
is tradable for
any period
on the OTCBB,
or on the principal
securities exchange or other securities
market on which the
Common Stock is then being
traded.

 

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

 

    	3

    	 

    

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

 

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

 

		1.4	Method of
Conversion.

 

(a)    
Mechanics
of Conversion.
Subject to
Section 1.1,
this Note
may be converted
by the Holder
in whole
or in part
at any
time from
time to time
after the
Issue Date,
by

(A) 
submitting to
the Borrower
a Notice
of Conversion
(by facsimile,
e-mail or
other reasonable
means of
communication dispatched
on the Conversion
Date prior
to 6:00 p.m.,
New York,
New York
time) and
(B) subject to
Section 1.4(b),
surrendering this
Note at
the principal
office of
the Borrower.

 

(b)    
Surrender
of
Note
Upon
Conversion.
Notwithstanding
anything to
the contrary set
forth herein,
upon conversion
of this Note
in accordance
with the
terms hereof,
the Holder shall
not be required
to physically surrender this
Note to the Borrower
unless the entire
unpaid principal amount
of this Note is so converted. The
Holder and the Borrower shall maintain
records showing the principal amount
so converted and the
dates of such conversions
or shall use such
other method,
reasonably satisfactory to the Holder
and the
Borrower, so
as not to require
physical surrender of
this Note upon each such
conversion. In the event
of any dispute or discrepancy,
such records of
the Borrower
shall, prima
facie, be
controlling and
determinative in the absence of
manifest error. Notwithstanding
the foregoing, if any portion of this
Note is converted as
aforesaid, the Holder
may not
transfer this Note
unless the Holder
first physically surrenders
this Note to the
Borrower, whereupon the Borrower
will forthwith issue and
deliver upon the order
of the Holder
a new
Note of
like tenor, registered
as the Holder
(upon payment by
the Holder of any
applicable transfer taxes) may request,
representing in the aggregate the remaining
unpaid principal
amount of this Note.
The Holder and
any assignee,
by acceptance of this
Note, acknowledge
and agree
that, by
reason of the
provisions of
this paragraph,
following conversion of
a portion of
this Note, the
unpaid and
unconverted principal
amount of this
Note represented by this Note
may be less than
the amount stated on the
face hereof.

    	4

    	 

    

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

 

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

 

(e)    
Obligation
of Borrower
to Deliver
Common Stock.
Upon receipt
by the
Borrower of
a Notice
of Conversion,
the Holder
shall be
deemed to
be the holder
of record
of the Common
Stock issuable
upon such
conversion, the
outstanding principal
amount and
the amount of accrued and
unpaid interest on this Note shall
be reduced to reflect such
conversion, and, unless
the Borrower defaults on its obligations
under this Article I, all rights
with respect to the portion
of this Note being so converted
shall forthwith terminate except the
right to receive the Common Stock
or other securities, cash
or other assets, as
herein provided, on such
conversion. If
the Holder shall have given
a Notice of
Conversion as provided herein,
the Borrower’s obligation to issue
and deliver the certificates for Common
Stock shall be absolute
and unconditional, irrespective
of the absence of any action by the Holder
to enforce the same, any waiver or
consent with respect
to any provision thereof, the recovery
of any judgment
against any person or
any action to enforce the same, any failure
or delay in the enforcement of any other obligation
of the Borrower
to the holder
of record,
or any setoff,
counterclaim, recoupment,
limitation or
termination, or
any breach
or alleged
breach by
the Holder of any
obligation to
the Borrower, and
irrespective of any other circumstance
which might otherwise
limit such obligation
of the Borrower to
the Holder in connection
with such
conversion. The Conversion Date
specified in the Notice of Conversion
shall be the Conversion Date
so long as the Notice of Conversion is
received by the Borrower
before 6:00 p.m., New York,
New York time, on such
date.

 

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

 

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

 

    	5

    	 

    

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

 

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

    	6

    	 

    

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

 

		1.6	Effect
of Certain Events.

 

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

 

(b)    
Adjustment
Due
to Merger,
Consolidation, Etc.
If, at
any time
when this
Note is
issued and
outstanding and
prior to
conversion of
all of
the Notes, there
shall be
any merger,
consolidation, exchange
of shares,
recapitalization, reorganization,
or other 
similar event, as
a result of which shares of Common Stock
of the Borrower shall be changed
into the same or a different number
of shares of another class
or classes of stock or securities of
the Borrower or another entity, or in
case of any sale
or conveyance of all or substantially
all of the assets
of the Borrower other than
in connection with a plan
of complete liquidation of the Borrower,
then the
Holder of this
Note shall
thereafter have
the right
to receive
upon conversion of
this Note, upon
the basis and upon
the terms
and conditions specified
herein and
in lieu
of the shares
of Common Stock immediately theretofore
issuable upon conversion, such stock,
securities or assets
which the
Holder would
have been
entitled to
receive in
such transaction
had this Note been
converted in full immediately prior to such
transaction (without regard to any
limitations on conversion
set forth
herein), and
in any such
case appropriate provisions shall
be made with
respect to the rights
and interests
of the Holder of this
Note to the end that
the provisions hereof (including,
without limitation, provisions
for adjustment of the Conversion
Price and of the number of shares
issuable upon conversion of the Note)
shall thereafter be applicable,
as nearly as may be
practicable in relation to any
securities or assets thereafter deliverable
upon the conversion
hereof. The Borrower
shall not affect
any transaction
described in this Section 1.6(b)
unless (a) it first
gives, to the extent practicable,
thirty (30) days prior
written notice (but
in any event at least
fifteen (15) days prior written
notice) of the record date of
the special meeting of
shareholders to approve, or if
there is no such
record date, the consummation of,
such merger, consolidation, exchange
of shares, recapitalization,
reorganization or other similar event
or sale of assets (during which time
the Holder shall be entitled
to convert this Note) and
(b) the resulting successor or acquiring
entity (if not the Borrower) assumes
by written instrument
the obligations of this Section 1.6(b).
The above provisions shall
similarly apply to successive consolidations,
mergers, sales, transfers or share exchanges.

 

    	7

    	 

    

(c)    
Adjustment
Due
to Distribution.
If the
Borrower shall
declare or
make any
distribution of
its assets
(or rights
to acquire
its assets)
to holders
of Common Stock
as a
dividend, stock
repurchase, by
way of return
of capital
or otherwise
(including any dividend
or distribution to the Borrower’s
shareholders in cash or shares
(or rights to acquire shares) of capital
stock of a subsidiary
(i.e., a spin-off))
(a “Distribution”), then
the Holder of
this Note shall be entitled,
upon any conversion of this Note after
the date of record for determining shareholders
entitled to such Distribution,
to receive the amount of
such assets which would
have been payable to the Holder
with respect to the shares
of Common Stock issuable upon such
conversion had such
Holder been the holder of such shares
of Common Stock on the record date
for the determination of
shareholders entitled to such
Distribution.

 

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

 

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

    	8

    	 

    

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

 

(e)    
Purchase 
Rights.
If, at
any time when
any Notes
are issued
and outstanding,
the Borrower
issues any
convertible securities
or rights
to purchase
stock, warrants,
securities or
other property
(the “Purchase
Rights”) pro
rata to
the record
holders of
any class
of Common Stock,
then the
Holder of this Note
will be entitled
to acquire,
upon the terms
applicable to
such Purchase
Rights, the
aggregate Purchase
Rights which
such Holder
could have
acquired if such
Holder had held
the number of shares of Common Stock
acquirable upon complete conversion
of this Note (without regard
to any limitations on conversion contained
herein) immediately before
the date on which a record
is taken for the grant,
issuance or sale
of such Purchase Rights
or, if no such record
is taken, the date as
of which the record holders
of Common Stock are to be
determined for the grant,
issue or sale of
such Purchase Rights.

 

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

 

1.7   
Trading
Market
Limitations.
Unless permitted
by the
applicable rules
and regulations
of the principal
securities market
on which
the Common Stock
is then
listed or
traded, in
no event shall
the Borrower issue upon conversion
of or otherwise pursuant
to this Note and
the other Notes issued pursuant to the
Purchase Agreement more than
the maximum number of shares
of Common Stock
that the Borrower
can issue pursuant
to any rule of the principal
United States securities
market on which the Common Stock
is then traded (the “Maximum Share
Amount”), which shall
be 9.99% of
the total shares
outstanding on the Closing Date
(as defined in the Purchase Agreement),
subject to equitable adjustment from
time to time for stock
splits, stock dividends, combinations,
capital reorganizations and
similar events
relating to the Common Stock occurring
after the date hereof.
Once the Maximum Share Amount
has been issued,
if the Borrower fails to eliminate any
prohibitions under applicable
law or the rules
or regulations of any stock exchange,
interdealer quotation system
or other self-regulatory organization
with jurisdiction over
the Borrower or any of
its securities on the Borrower’s
ability to issue shares
of Common Stock
in excess
of the Maximum Share
Amount, in lieu
of any further
right to convert this Note,
this will be considered an
Event of Default under
Section 3.3 of the
Note.

 

    	9

    	 

    

1.8   
Status
as
Shareholder.
Upon submission
of a Notice
of Conversion
by a Holder,
(i) the
shares covered
thereby (other than
the shares,
if any,
which cannot
be issued
because their
issuance would exceed
such Holder’s allocated
portion of the
Reserved Amount or Maximum Share
Amount) shall be deemed
converted into shares of Common
Stock and (ii)
the Holder’s rights
as a Holder
of such converted
portion of this Note shall
cease and
terminate, excepting
only the right to
receive certificates
for such
shares of
Common Stock
and to
any remedies provided herein or
otherwise available at
law or in equity to such Holder because
of a failure by the Borrower to comply
with the terms of this Note.
Notwithstanding the foregoing, if a Holder
has not received certificates
for all shares
of Common Stock prior to the tenth
(10th) business day after
the expiration of the Deadline with
respect to a conversion of any portion
of this Note for any reason,
then (unless the Holder
otherwise elects to retain
its status as a holder of Common Stock
by so notifying the Borrower) the Holder
shall regain the rights of a Holder
of this Note with
respect to such unconverted
portions of this Note and the Borrower
shall, as soon as
practicable, return such
unconverted Note to the Holder or, if
the Note has not been surrendered, adjust
its records to reflect that such
portion of this Note has
not been converted. In all
cases, the Holder shall retain
all of its rights and
remedies (including, without
limitation, (i) the right
to receive Conversion Default Payments
pursuant to Section 1.3 to the extent
required thereby for
such Conversion Default and
any subsequent Conversion Default and
(ii) the
right to have
the Conversion Price with
respect to subsequent conversions
determined in accordance with
Section 1.3) for the Borrower’s
failure to convert this Note.

 

1.9   
Prepayment.
Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during the
period beginning
on the Issue
Date and
ending on the
date which
is thirty (30)
days following
the issue date,
the Borrower
shall have
the right,
exercisable on
not less
than three
(3) Trading
Days prior
written notice
to the Holder
of the Note
to prepay the outstanding
Note (principal
and accrued
interest), in full,
in accordance
with this
Section 1.9.
Any notice of prepayment
hereunder (an
“Optional Prepayment
Notice”) shall
be delivered
to the Holder
of the Note at
its registered addresses and
shall state: (1) that
the Borrower is exercising its right
to prepay the Note,
and (2) the
date of prepayment
which shall be not more
than three (3)
Trading Days
from the date
of the Optional
Prepayment Notice. On
the date
fixed for
prepayment (the
“Optional Prepayment Date”),
the Borrower shall make payment
of the Optional Prepayment Amount
(as defined below) to or upon the order
of the Holder as specified
by the Holder in writing to the Borrower
at least one (1)
business day prior to the Optional
Prepayment Date. If the Borrower
exercises its right to prepay the Note,
the Borrower shall make payment
to the Holder of an
amount in
cash (the “Optional
Prepayment Amount”) equal
to 110%,
multiplied by the sum of:
(w) the then
outstanding principal
amount of this Note
plus (x) accrued
and unpaid
interest on the unpaid principal
amount of this Note to the Optional
Prepayment Date plus (y) Default
Interest, if
any, on the
amounts referred
to in clauses
(w) and
(x) plus (z) any
amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g)
hereof. If the Borrower delivers
an Optional
Prepayment Notice and
fails to
pay the Optional
Prepayment Amount
due to the Holder of the Note
within two
(2) business days
following the Optional
Prepayment Date,
the Borrower shall
forever forfeit its right to prepay the
Note pursuant to this Section 1.9.

    	10

    	 

    

Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during
the period
beginning on the
date which
is thirty-one
(31) days
following the issue
date and
ending on
the date which is sixty (60)
days following the issue date,
the Borrower shall
have the right,
exercisable on not
less than
three (3) Trading Days
prior written
notice to the Holder
of the Note to prepay the outstanding
Note (principal and
accrued interest), in full, in
accordance with this
Section 1.9. Any
Optional Prepayment Notice
shall be delivered to the Holder
of the Note at
its registered
addresses and
shall state:
(1) that the Borrower
is exercising its right
to prepay the Note, and
(2) the date of prepayment
which shall be not more
than three (3)
Trading Days
from the
date of
the Optional
Prepayment Notice. On
the Optional Prepayment
Date, the Borrower
shall make payment
of the Second Optional
Prepayment Amount
(as defined
below) to or
upon the order
of the Holder
as specified
by the Holder
in writing
to the Borrower
at least on (1)
business day prior to the Optional
Prepayment Date.
If the Borrower exercises its
right to prepay the Note, the Borrower
shall make payment
to the Holder of an amount
in cash (the “Second
Optional Prepayment
Amount”) equal to
115%, multiplied
by the sum of:
(w) the then outstanding
principal amount of this Note plus
(x) accrued and unpaid
interest on the unpaid principal
amount of this
Note to the Optional
Prepayment Date
plus (y) Default
Interest, if
any, on the amounts referred
to in clauses (w) and
(x) plus (z) any amounts owed
to the Holder pursuant
to Sections
1.3 and 1.4(g) hereof. If the Borrower
delivers an Optional
Prepayment Notice and
fails to
pay the Second Optional
Prepayment Amount
due to the Holder
of the Note within
two (2)
business days
following the Optional Prepayment
Date, the Borrower
shall forever forfeit its right
to prepay the Note
pursuant to this Section 1.9.

 

Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during
the period beginning
on the date
which is
sixty-one (61)
days following
the issue date
and ending
on the date which
is ninety (90) days following
the issue date, the Borrower
shall have the right,
exercisable on not less than
three (3) Trading Days
prior written notice to the Holder
of the Note to prepay the outstanding
Note (principal and accrued
interest), in full, in accordance
with this
Section 1.9. Any
Optional Prepayment Notice shall
be delivered to
the Holder of the Note at
its registered addresses and
shall state: (1)
that the Borrower is exercising
its right
to prepay the
Note, and
(2) the
date of
prepayment which
shall be
not more
than three

(3)
Trading Days from the
date of the
Optional Prepayment Notice.
On the Optional Prepayment
Date, the
Borrower shall
make payment
of the Third
Optional Prepayment
Amount (as
defined below)
to or upon the
order of the
Holder as specified by
the Holder in writing
to the Borrower at
least one
(1) business
day prior to the
Optional Prepayment
Date. If the Borrower
exercises its right
to prepay the
Note, the Borrower
shall make payment
to the Holder
of an
amount in
cash (the “Third
Optional Prepayment Amount”)
equal to 120%, multiplied by the sum
of: (w) the then
outstanding principal
amount of
this Note plus
(x) accrued and
unpaid interest
on the unpaid
principal amount
of this Note to the Optional
Prepayment Date
plus (y) Default
Interest, if
any, on the amounts referred
to in clauses (w)
and (x) plus (z) any amounts owed
to the Holder pursuant to Sections
1.3 and 1.4(g) hereof. If the Borrower
delivers an Optional
Prepayment Notice and fails
to pay the Third
Optional Prepayment Amount
due to the Holder of the Note within
two (2)
business days
following the Optional Prepayment
Date, the  Borrower
 shall forever
forfeit its right to prepay
the Note pursuant to this Section
1.9.

 

Notwithstanding
any to
the contrary stated
elsewhere herein,
at any
time during
the period
beginning on the
date that
is ninety-one (91)
day from
the issue date
and ending
one hundred twenty
(120) days
following the issue date,
the Borrower
shall have
the right, exercisable on not less
than three (3) Trading
Days prior written notice to the Holder
of the Note to prepay
the outstanding Note (principal
and accrued
interest), in
full, in accordance
with this Section
1.9. Any Optional Prepayment
Notice shall be delivered to the Holder
of the Note at its registered
addresses and shall
state: (1) that the Borrower
is exercising its right to prepay
the Note, and
(2) the date of
prepayment which
shall be not more
than three (3) Trading
Days from
the date of the
Optional Prepayment
Notice. On
the Optional Prepayment
Date, the
Borrower shall
make payment
of the Fourth Optional
Prepayment Amount
(as defined
below) to or upon the
order of the Holder as specified
by the Holder
in writing to
the Borrower at least
one (1) business day prior
to the Optional Prepayment
Date. If the
Borrower exercises
its right to prepay the Note,
the Borrower shall make
payment to the Holder of
an amount in cash
(the “Fourth Optional
Prepayment Amount”) equal to
125%, multiplied
by the sum of:
(w) the then outstanding
principal amount of this Note plus
(x) accrued and unpaid
interest on the unpaid principal
amount of
this Note to
the Optional
Prepayment Date
plus (y)
Default Interest,
if any, on the amounts
referred to in clauses (w)
and (x) plus (z) any amounts owed
to the Holder pursuant to Sections
1.3 and 1.4(g) hereof. If the Borrower
delivers an Optional
Prepayment Notice and
fails to pay
the Fourth Optional
Prepayment Amount
due to the Holder of the Note
within two (2)
business days following the
Optional Prepayment Date, the
 Borrower 
shall forever forfeit its right
to prepay the Note pursuant to this Section
1.9.

 

    	11

    	 

    

Notwithstanding
any to
the contrary stated
elsewhere herein,
at any
time during
the period
beginning on the
date that
is one hundred
twenty-one (121)
day from the
issue date and
ending one hundred
fifty (150) days
following the issue
date, the
Borrower shall
have the right,
exercisable on
not less
than three
(3) Trading Days
prior written
notice to
the Holder of
the Note to prepay the outstanding Note
(principal and accrued interest),
in full, in accordance with
this Section
1.9. Any Optional Prepayment
Notice shall
be delivered
to the Holder
of the Note
at its registered addresses
and shall state: (1)
that the Borrower is exercising
its right to prepay the Note, and
(2) the date of prepayment
which shall be not more than
three (3) Trading Days from
the date
of the Optional
Prepayment Notice.
On the
Optional Prepayment
Date, the
Borrower shall make
payment of the Fifth Optional
Prepayment Amount (as
defined below) to or upon the order of
the Holder
as specified by
the Holder in writing
to the Borrower
at least one (1)
business day prior to the Optional
Prepayment Date. If the Borrower
exercises its right to prepay
the Note, the Borrower shall
make payment to the Holder of an
amount in cash (the “Fifth
Optional Prepayment Amount”)
equal to 130%, multiplied
by the sum of: (w) the then
outstanding principal amount of
this Note plus (x) accrued and
unpaid interest on the unpaid principal
amount of this Note to the
Optional Prepayment Date
plus (y) Default Interest, if
any, on the amounts referred
to in clauses (w) and
(x) plus (z) any amounts owed
to the Holder pursuant to Sections
1.3 and 1.4(g) hereof. If the
Borrower delivers an Optional
Prepayment Notice and fails to pay the
Fifth Optional Prepayment
Amount due to the Holder of the Note
within two (2)
business days following
the Optional Prepayment Date,
the Borrower shall forever
forfeit its right to prepay the
Note pursuant to this Section
1.9.

 

Notwithstanding
any to
the contrary stated
elsewhere herein,
at any
time during
the period
beginning on
the date
that is
one hundred
fifty-one (151)
day from
the issue date
and ending one
hundred eighty (180)
days following the issue
date, the Borrower
shall have
the right, exercisable
on not less than three (3)
Trading Days prior written
notice to the Holder of the Note to
prepay the outstanding Note (principal
and accrued
interest), in
full, in
accordance with
this Section 1.9. Any
Optional Prepayment
Notice shall be delivered
to the Holder of the Note at
its registered addresses and
shall state: (1)
that the Borrower is exercising its right
to prepay the Note,
and (2)
the date
of prepayment which
shall be not
more than
three (3) Trading
Days from
the date of the
Optional Prepayment
Notice. On
the Optional Prepayment
Date, the
Borrower shall make
payment of the Sixth Optional Prepayment
Amount (as defined below)
to or upon the order of
the Holder
as specified by the
Holder in writing to the
Borrower at least
one (1)
business day prior to the Optional
Prepayment Date.
If the Borrower exercises its
right to prepay the Note,
the Borrower shall make
payment to
the Holder of an amount
in cash (the
“Sixth Optional Prepayment
Amount”) equal to 135%,
multiplied by the sum of: (w) the then
outstanding principal amount of
this Note plus (x) accrued and
unpaid interest on the unpaid principal
amount of this Note to the
Optional Prepayment Date
plus (y) Default Interest, if
any, on the amounts
referred to
in clauses
(w) and (x) plus
(z) any amounts
owed to
the Holder pursuant
to Sections 1.3 and 1.4(g)
hereof. If the Borrower
delivers an Optional Prepayment
Notice and fails to pay the Sixth Optional
Prepayment Amount due to the Holder
of the Note within
two (2) business
days following the Optional
Prepayment Date, the Borrower
shall forever forfeit
its right to prepay the Note
pursuant to this Section 1.9.

 

    	12

    	 

    

After
the expiration
of one
hundred eighty
(180) following
the date
of the Note,
the Borrower shall have
no right of prepayment. 

 

ARTICLE
II.  CERTAIN
COVENANTS

 

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

 

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

 

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

 

2.4   
Sale
of Assets.
So long as
the Borrower
shall have any
obligation under
this Note,
the Borrower
shall not, without
the Holder’s
written consent,
sell, lease
or otherwise
dispose of any
significant portion
of its assets
outside the ordinary course
of business. Any consent
to the disposition of any assets may
be conditioned on a specified
use of the proceeds of disposition.

    	13

    	 

    

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

 

ARTICLE
III.  EVENTS
OF DEFAULT

 

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

 

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

 

3.2   
Conversion
and
the Shares.
The Borrower
fails to
issue shares
of Common Stock
to the Holder
(or announces
or threatens
in writing
that it
will not
honor its obligation
to do so) upon
exercise by the Holder of the
conversion rights
of the Holder in
accordance with
the terms of this
Note, fails
to transfer
or cause its transfer agent
to transfer (issue)
(electronically or in certificated form)
any certificate for shares
of Common Stock issued to the Holder
upon conversion of or otherwise pursuant
to this Note as and
when required by this Note, the
Borrower directs its transfer
agent not to transfer
or delays, impairs, and/or
hinders its transfer agent
in transferring (or issuing)
(electronically or in certificated form) any
certificate for shares of Common
Stock to be issued to the Holder
upon conversion of or otherwise
pursuant to this Note as
and when required by this Note,
or fails to remove (or
directs its transfer agent not to remove
or impairs, delays,
and/or hinders its transfer
agent from removing)
any restrictive legend
(or to withdraw any stop transfer instructions
in respect thereof) on any certificate
for any shares
of Common Stock
issued to
the Holder
upon conversion
of or otherwise
pursuant to this Note
as and when
required by this Note (or makes any written
announcement, statement or threat
that it does not intend
to honor the obligations described
in this paragraph) and any
such failure
shall continue uncured
(or any written announcement,
statement or threat not to honor its
obligations shall
not be rescinded
in writing)
for three
(3) business
days after
the Holder
shall have delivered
a Notice of Conversion. It
is an
obligation of the
Borrower to remain
current in its obligations
to its transfer agent. It shall be an
event of default of this Note, if a conversion
of this Note is
delayed, hindered
or frustrated due to a balance
owed by the Borrower
to its transfer
agent. If at the option of the Holder,
the Holder advances any
funds to the Borrower’s
transfer agent in order to
process a conversion,
such advanced
funds shall
be paid by the Borrower to
the Holder within forty eight
(48) hours of a demand from the
Holder.

 

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

 

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

 

    	14

    	 

    

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

 

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

 

3.7   
Bankruptcy. Bankruptcy, insolvency, reorganization or
liquidation proceedings
or other
proceedings, voluntary
or involuntary,
for relief
under any
bankruptcy law or
any law for
the relief
of debtors shall
be instituted by
or against the Borrower
or any
subsidiary of the
Borrower.

 

3.8   
Delisting
of Common Stock.
The Borrower shall
fail to maintain the listing
of the
Common Stock
on at least
one of the
OTCBB or an
equivalent replacement
exchange, the
Nasdaq National
Market, the
Nasdaq SmallCap
Market, the
New York Stock
Exchange, or
the American Stock
Exchange.

 

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

 

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

 

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

 

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

 

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

    	15

    	 

    

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

 

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

 

3.16           
Cross-Default.
Notwithstanding
anything
to the contrary
contained in
this Note
or the other
related or
companion documents,
a breach
or default
by the
Borrower of
any covenant
or other term
or condition
contained in any
of the Other
Agreements, after
the passage of
all applicable notice and cure
or grace periods,
shall, at the
option of the Holder,
be considered a default
under this Note and the Other Agreements,
in which event the Holder
shall be entitled
(but in no event required) to
apply all rights
and remedies
of the Holder under the terms of this Note
and the
Other Agreements
by reason
of a
default under
said Other
Agreement or
hereunder. “Other Agreements”
means, collectively, all
agreements and instruments
between, among or by:
(1) the Borrower, and,
or for the benefit of,
(2) the Holder
and any
affiliate of the Holder, including,
without limitation, promissory
notes; provided, however, the term “Other
Agreements” shall not include the
related or companion documents to this
Note. Each of the loan
transactions will be cross-defaulted
with each other
loan transaction and with
all other existing and
future debt of
Borrower to the Holder.

 

Upon
the occurrence
and during
the continuation
of any
Event of
Default specified
in Section
3.1 (solely with
respect to
failure to
pay the principal
hereof or
interest thereon
when due
at the
Maturity Date),
the Note
shall become
immediately due and
payable and
the Borrower
shall pay
to the Holder, in
full satisfaction
of its obligations
hereunder, an amount
equal to the Default
Sum (as defined herein).
UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF ANY
EVENT OF DEFAULT SPECIFIED
IN SECTION 3.2, THE
NOTE SHALL BECOME
IMMEDIATELY DUE AND
PAYABLE AND THE
BORROWER SHALL PAY TO
THE HOLDER, IN FULL
SATISFACTION OF ITS OBLIGATIONS HEREUNDER,
AN AMOUNT EQUAL TO:
(Y) THE DEFAULT SUM
(AS DEFINED HEREIN);
MULTIPLIED BY
(Z) TWO (2).
Upon the occurrence
and during the continuation
of any Event of Default
specified in Sections 3.1 (solely with
respect to failure to pay the principal
hereof or interest thereon when
due on this Note upon a Trading Market
Prepayment Event pursuant
to Section
1.7 or upon acceleration),
3.3, 3.4, 3.6, 3.8, 3.9,
3.11, 3.12, 3.13, 3.14, and/or
3. 15 exercisable
through the delivery
of written notice
to the Borrower
by such
Holders (the
“Default Notice”),
and upon the occurrence of an
Event of Default specified the remaining
sections of Articles III
(other than failure to pay
the principal hereof or interest
thereon at
the Maturity Date specified in Section
3,1 hereof), the Note shall
become immediately due and
payable and
the Borrower
shall pay
to the Holder,
in full
satisfaction of
its obligations
hereunder, an
amount equal
to the greater of (i)
150% times the sum
of (w) the then
outstanding principal amount
of this Note plus (x) accrued
and unpaid interest
on the unpaid principal amount
of this Note to
the date
of payment (the
“Mandatory Prepayment
Date”) plus
(y) Default
Interest, if
any, on the amounts referred
to in clauses (w)
and/or (x) plus (z) any amounts
owed to the Holder
pursuant to Sections 1.3 and
1.4(g) hereof (the then
outstanding principal amount
of this Note to the date of
payment plus the amounts referred
to in clauses (x), (y) and
(z) shall collectively be known as
the “Default Sum”) or (ii)
the “parity value” of the Default
Sum to be prepaid, where parity
value means (a) the highest number
of shares of Common Stock
issuable upon conversion of or otherwise
pursuant to such Default Sum in accordance
with Article I, treating
the Trading Day immediately preceding the
Mandatory Prepayment Date
as the “Conversion Date”
for purposes of determining the
lowest applicable Conversion Price,
unless the Default Event
arises as
a result of a breach
in respect
of a specific Conversion Date in
which case such Conversion Date
shall be the Conversion Date), multiplied
by (b) the highest
Closing Price for the Common Stock
during the period
beginning on the date
of first occurrence of
the Event of Default
and ending one day
prior to the Mandatory Prepayment
Date (the “Default
Amount”) and all
other amounts payable
hereunder shall immediately become due
and payable, all
without demand, presentment
or notice, all of which
hereby are expressly waived, together
with all costs,
including, without limitation,
legal fees and
expenses, of collection, and the Holder
shall be entitled to exercise
all other rights and remedies
available at law or
in equity.

 

    	16

    	 

    

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

 

ARTICLE
IV. MISCELLANEOUS

 

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

 

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

 

    	17

    	 

    

If
to the Borrower, to:

 

CO-SIGNER,
INC.

8275 S. Eastern
Avenue – Suite 200-661
Las Vegas,
NV 89123

Attn:
KURTIS A. KRAMARENKO,
Chief Executive Officer

Facsimile:

 

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

Kyleen
Cane

Cane•Clark
LLP

3273 E.
Warm Springs Rd.
Las Vegas,
NV 89120

 

If
to the Holder:

 

ASHER
ENTERPRISES, INC.

1 Linden
Pl., Suite 207 Great
Neck, NY. 11021 Attn:
Curt Kramer, President
facsimile: 516-498-989

 

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

 

Naidich
Wurman Birnbaum & Maday,
LLP

80 Cuttermill
Road, Suite 410
Great Neck, NY
11021

Attn:
Bernard S. Feldman, Esq.
facsimile: 516-466-3555

 

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

 

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

 

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

    	18

    	 

    

4.6   
Governing
Law.
This
Note
shall
be governed
by and
construed in
accordance with
the laws
of the State
of New
York without
regard to
principles of
conflicts of
laws. Any
action brought
by either
party against the other
concerning the transactions
contemplated by
this Note shall
be brought
only in the
state courts of New
York or
in the federal
courts located
in the state and
county of Nassau. The
parties to this
Note hereby irrevocably waive
any objection to jurisdiction
and venue of any action instituted
hereunder and shall
not assert any defense based on lack
of jurisdiction
or venue
or based
upon forum non
conveniens.
The Borrower
and Holder
waive trial by
jury. The prevailing
party shall be entitled to recover
from the other party its reasonable attorney's
fees and costs. In the event that
any provision of this Note or any other
agreement delivered
in connection
herewith is
invalid or unenforceable
under any applicable statute
or rule of law, then such provision shall
be deemed inoperative to the extent that
it may conflict therewith and
shall be deemed modified to conform with
such statute or rule
of law. Any such
provision which
may prove invalid or unenforceable
under any law
shall not affect
the validity or enforceability of any other
provision of any agreement. Each party
hereby irrevocably waives
personal service of process and consents
to process being served
in any suit, action or proceeding
in connection with this Agreement
or any other Transaction Document by
mailing a copy thereof via registered
or certified mail or overnight
delivery (with evidence of delivery)
to such
party at the address
in effect
for notices
to it under
this Agreement and
agrees that such
service shall constitute
good and sufficient
service of process and notice
thereof. Nothing
contained herein shall be deemed
to limit in any way any right
to serve process in any other
manner permitted by law.

 

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

 

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

 

4.9   
Notice
of Corporate
Events. Except
as otherwise
provided below,
the Holder of
this Note
shall have
no rights
as a
Holder of
Common Stock
unless and
only to the extent
that it
converts this
Note into
Common Stock.
The Borrower
shall provide
the Holder
with prior
notification of any meeting of the Borrower’s
shareholders (and copies
of proxy materials and other information
sent to shareholders). In the event of any
taking by the Borrower of a record
of its shareholders for the purpose
of determining shareholders who are entitled
to receive payment of any
dividend or other distribution,
any right to subscribe
for, purchase or
otherwise acquire
(including by way of merger, consolidation,
reclassification or recapitalization)
any share of any class or
any other securities or
property, or to receive
any other right, or
for the
purpose of determining
shareholders who are
entitled to
vote in connection with
any proposed
sale, lease or
conveyance of all or substantially
all of the assets of the Borrower
or any proposed liquidation, dissolution
or winding up of the Borrower, the Borrower shall
mail a notice to the Holder , at
least twenty (20) days prior to the record date specified therein (or thirty (30) days
prior to the consummation of the transaction
or event, whichever is earlier), of
the date on which any such record is to be
taken for the purpose of such dividend , distribution,
right or other event, and a brief statement regarding the amount and character
of such dividend, distribution, right or
other event to the extent known at such time. The
Borrower shall make a public announcement of
any event requiring notification to the Holder hereunder substantially simultaneously
with the notification to the Holder in
accordance with the terms
of this Section 4.9.

 

    	19

    	 

    

4.10Remedies.
The Borrower acknowledges
that a breach
by it
of its
obligation s hereunder
will cause irreparable
harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower
acknowledges that the remedy at law for a breach of its obligation s under
this Note will be inadequate and agrees,
in the event of a breach or
threatened breach by the Borrower of the provisions
of this Note, that the Holder shall be
entitled , in addition to all other available
remedies at law or in equity, and in addition
to the penalties assessable herein , to an injunction or injunctions restraining, preventing or curing
any breach of this Note and to
enforce specifically the terms and provisions
thereof, without the necessity of
showing economic loss and without any
bond or other security being required.

 

IN
WITNESS WHEREOF, Borrower
has caused this
Note to be
signed
in its
name by its
duly authorized officer this
January 8, 2014.

 

CO-SIGNER, INC.

 

 

By: /s/ Kurtis A. Kramarenko

Kurtis A. Kramarenko

Chief Executive
Officer

    	20

    	 

    

EXHIBIT
A

NOTICE
OF CONVERSION

 

The
undersigned hereby
elects to
convert $______________ principal
amount of
the Note
(defined below)
into that
number of
shares of
Common Stock
to be issued
pursuant to
the conversion
of the Note
(“Common Stock”)
as set
forth below,
of CO-SIGNER,
INC., a
Nevada corporation
(the “Borrower”)
according to the conditions of the
convertible note of the Borrower dated
as of January 8, 2014 (the
“Note”), as of the date
written below. No fee
will be charged to the Holder
for any conversion, except for
transfer taxes, if any.

 

Box
Checked as to applicable
instructions:

 

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

 

Name of
DTC Prime Broker:
Account Number:

 

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

 

ASHER ENTERPRISES,
INC.

1 Linden
Pl., Suite 207 Great
Neck, NY. 11021

Attention:
Certificate Delivery (516)
498-9890

 

Date of
Conversion:

Applicable
Conversion Price:

Number of
Shares of Common Stock to be
Issued

Pursuant
to Conversion of the
Notes: Amount of
Principal Balance Due remaining

Under the
Note after this conversion:

 

ASHER
ENTERPRISES, INC.

 

By:

Name:
Curt Kramer

Title: 
President

Date:

1 Linden
Pl., Suite 207 Great
Neck, NY. 11021

    	21SECURITIES
PURCHASE AGREEMENT

 

This
SECURITIES PURCHASE
AGREEMENT (the
“Agreement”), dated
as of
January 8, 2014,
by and
between CO-SIGNER,
INC.,
a Nevada
corporation, with
headquarters located
at 8275 S.
Eastern Avenue
– Suite 200-661,
Las Vegas,
NV 89123 (the
“Company”), and ASHER
ENTERPRISES, INC.,
a Delaware corporation, with
its address at 1 Linden
Place, Suite 207, Great Neck,
NY 11021 (the “Buyer”).

 

WHEREAS:

 

A.                 
The Company
and the Buyer
are executing
and delivering
this Agreement
in reliance
upon the exemption
from securities
registration afforded
by the
rules and
regulations as
promulgated by
the United States Securities
and Exchange Commission (the
“SEC”) under the Securities Act
of 1933, as amended (the
“1933 Act”);

 

B.                 
Buyer desires
to purchase
and the Company
desires to
issue and
sell, upon
the terms
and conditions
set forth
in this Agreement
an 8% convertible
note of
the Company,
in the form
attached hereto
as Exhibit
A, in the
aggregate principal
amount of $32,500.00
(together with any note(s) issued
in replacement thereof
or as a dividend thereon
or otherwise with respect
thereto in accordance
with the terms
thereof, the “Note”),
convertible into shares
of common stock,
$0.001 par value per
share, of the Company (the “Common
Stock”), upon the terms and
subject to the limitations and
conditions set forth in such
Note.

 

C.                 
The Buyer
wishes to
purchase, upon the
terms and
conditions stated in
this Agreement, such
principal amount of
Note as
is set
forth immediately below
its name
on the signature
pages hereto; and

 

NOW
THEREFORE, the
Company and
the Buyer
severally (and not
jointly) hereby
agree as
follows:

 

1.                  
Purchase and Sale of
Note.

 

a.                  
Purchase of
Note. On
the Closing Date
(as defined below),
the Company shall
issue and
sell to
the Buyer
and the
Buyer agrees
to purchase from
the Company such
principal amount
of Note as
is set
forth immediately
below the Buyer’s
name on the signature
pages hereto.

 

b.                  
Form of
Payment.
On the Closing
Date (as
defined below),
(i) the
Buyer shall
pay the
purchase price
for the Note
to be issued
and sold to
it at
the Closing (as
defined below) (the
“Purchase Price”) by wire
transfer of immediately available
funds to the Company,
in accordance with
the Company’s
written wiring
instructions, against
delivery of the Note in the principal
amount equal to the Purchase
Price as is set
forth immediately below the Buyer’s name
on the signature pages hereto,
and (ii) the Company shall deliver
such duly executed Note on behalf
of the Company, to the
Buyer, against delivery of
such Purchase Price.

 

c.                   
Closing Date.
Subject to the
satisfaction (or
written waiver)
of the conditions
thereto set
forth in
Section 6
and Section
7 below,
the date
and time
of the issuance
and sale
of the Note
pursuant to this
Agreement (the
“Closing Date”) shall
be 12:00 noon,
Eastern Standard
Time on or about
January 10, 2014,
or such other
mutually agreed
upon time. The
closing of the transactions contemplated
by this Agreement (the
“Closing”) shall occur on the
Closing Date at such
location as may be agreed to
by the parties.

 

2.                  
Buyer’s Representations
and Warranties. The
 Buyer 
represents  and
warrants to the Company that:

 

a.                  
Investment Purpose.
As of
the date hereof,
the Buyer
is purchasing
the Note
and the
shares of
Common Stock
issuable upon
conversion of
or otherwise
pursuant to
the Note
(including, without
limitation, such
additional shares
of Common Stock,
if any,
as are
issuable (i)
on account
of interest
on the Note,
(ii) as a result
of the events
described in Sections
1.3 and
1.4(g) of
the Note
or (iii) in payment
of the Standard
Liquidated Damages Amount
(as defined
in Section
2(f) below) pursuant
to this Agreement,
such shares
of Common Stock being
collectively referred to herein
as the “Conversion Shares”
and, collectively with the Note,
the “Securities”) for its own
account and not with a present
view towards the public sale
or distribution thereof, except
pursuant to sales
registered or exempted from registration
under the 1933 Act; provided,
however, that by making the representations herein, the Buyer
does not agree to hold any of the Securities
for any minimum or other specific
term and reserves
the right to dispose of the Securities
at any time in accordance with
or pursuant to a registration statement
or an exemption under the
1933 Act.

 

b.                  
Accredited Investor
Status.
The Buyer
is an
“accredited investor”
as that term
is defined in Rule
501(a) of Regulation D (an “Accredited
Investor”).

 

c.                   
Reliance on Exemptions.
The Buyer
understands that the
Securities are
being offered
and sold
to it in
reliance upon
specific exemptions
from the
registration requirements
of United
States federal
and state
securities laws
and that
the Company is
relying upon
the truth
and accuracy
of, and
the Buyer’s
compliance with,
the representations,
warranties, agreements, acknowledgments
and understandings of the Buyer
set forth herein
in order to
determine the
availability of such
exemptions and
the eligibility
of the Buyer
to acquire the
Securities.

    	 

    	 

    

 

d.                  
Information. The
Buyer and
its advisors,
if any, have
been, and
for so
long as
the Note remain
outstanding will
continue to
be, furnished
with all
materials relating
to the business,
finances and
operations of
the Company and
materials relating
to the offer
and sale
of the Securities
which have been
requested by the
Buyer or
its advisors. The
Buyer and its advisors,
if any,
have been, and
for so
long as the Note
remain outstanding
will continue to
be, afforded
the opportunity to ask
questions of the Company.
Notwithstanding the foregoing,
the Company has not
disclosed to the
Buyer any
material nonpublic
information and
will not disclose such
information unless such information
is disclosed to the public prior
to or promptly following such disclosure
to the Buyer. Neither such inquiries
nor any other due diligence investigation
conducted by Buyer
or any of its advisors or
representatives shall modify,
amend or affect Buyer’s
 right to 
rely on  the  Company’s
representations and  warranties
contained  in Section 3 below.
The Buyer understands
that its investment in the Securities
involves a significant degree
of risk.
The Buyer
is not aware of
any facts that
may constitute a
breach of any of the
Company's representations and
warranties made herein.

 

e.                   
Governmental  Review.
The Buyer
understands that no United
States federal
or state
agency or any
other government
or governmental
agency has
passed upon or
made any recommendation
or endorsement of
the Securities.

 

f.                   
Transfer or
Re-sale.
The Buyer
understands that
(i) the sale
or re- sale
of the Securities
has not been
and is not
being registered
under the 1933
Act or
any applicable
state securities laws, and
the Securities may
not be transferred unless (a)
the Securities are sold
pursuant to
an effective registration
statement under the 1933 Act,
(b) the Buyer shall
have delivered to the Company,
at the cost of the Buyer,
an opinion of counsel that shall
be in form, substance and
scope customary for opinions of counsel
in comparable transactions to
the effect that the Securities
to be sold or transferred may be sold or transferred
pursuant to an exemption from
such registration, which
opinion shall be accepted by
the Company, (c) the
Securities are sold or transferred
to an “affiliate”
(as defined in Rule 144
promulgated under the 1933 Act
(or a successor rule) (“Rule
144”)) of the Buyer who
agrees to sell or otherwise
transfer the Securities
only in accordance
with this Section
2(f) and
who is an
Accredited Investor, (d) the
Securities are sold pursuant
to Rule 144, or (e) the Securities
are sold pursuant to Regulation
S under the 1933 Act (or
a successor rule) (“Regulation
S”), and the Buyer shall
have delivered to the Company,
at the cost of the Buyer,
an opinion of counsel that shall
be in form, substance and
scope customary for opinions of counsel
in corporate transactions, which
opinion shall be accepted by
the Company; (ii) any
sale of such Securities made
in reliance on Rule 144
may be
made only in
accordance with
the terms
of said Rule
and further,
if said Rule
is not applicable, any re-sale
of such Securities under circumstances
in which the seller (or
the person through whom
the sale is made) may be
deemed to be an
underwriter (as that term is defined
in the 1933 Act)
may require compliance
with some other
exemption under
the 1933 Act or
the rules and
regulations of the
SEC thereunder;
and (iii)
neither the Company
nor any other person
is under
any obligation to
register such
Securities under
the 1933 Act
or any state securities laws
or to comply with
the terms and conditions of any exemption thereunder
(in each case).
Notwithstanding the foregoing or anything
else contained herein to the contrary,
the Securities may
be pledged as collateral in connection
with a bona fide margin
account or other lending
arrangement.

 

g.                   
Legends. The
Buyer understands that
the Note and, until such
time as the
Conversion Shares
have been registered
under the 1933
Act may
be sold
pursuant to
Rule 144
or Regulation
S without
any restriction
as to
the number
of securities
as of
a particular
date that
can then
be immediately sold, the
Conversion Shares
may bear a restrictive
legend in substantially the following
form (and
a stop-transfer order may be placed
against transfer of the
certificates for such Securities):

 

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

 

The
legend set
forth above
shall be
removed and
the Company shall
issue a certificate
without such
legend to
the holder
of any
Security upon
which it
is stamped,
if, unless
otherwise required
by applicable
state securities laws,
(a) such Security is
registered for
sale under an effective registration
statement filed under the 1933 Act
or otherwise may be sold pursuant
to Rule 144 or Regulation
S without any
restriction as
to the number of securities
as of
a particular date
that can
then be immediately
sold, or (b)
such holder
provides the
Company with an
opinion of counsel, in form,
substance and scope
customary for opinions of counsel in comparable
transactions, to the
effect that
a public sale
or transfer
of such
Security may be made
without registration under
the 1933 Act,
which opinion shall
be accepted
by the Company so that
the sale or transfer
is effected. The Buyer
agrees to sell all Securities,
including those represented by
a certificate(s) from
which the legend
has been removed,
in compliance
with applicable
prospectus delivery requirements,
if any. In
the event that the Company does
not accept the opinion of counsel
provided by the Buyer with
respect to the
transfer of Securities
pursuant to an
exemption from registration,
such as Rule 144 or Regulation S, at
the Deadline, it will
be considered an Event
of Default pursuant to Section
3.2 of the Note.

    	2

    	 

    

 

h.                  
Authorization; Enforcement.
This Agreement
has been
duly and
validly authorized.
This Agreement
has been duly
executed and
delivered on behalf
of the Buyer,
and this Agreement
constitutes a valid
and binding agreement
of the Buyer
enforceable in accordance
with its terms.

 

i.                    
Residency.The Buyer
is a resident
of the
jurisdiction set
forth immediately
below the Buyer’s name
on the signature pages hereto.

 

3.                  
Representations and
Warranties of the Company.
The Company represents and
warrants to the Buyer that:

 

a.                  
Organization and
Qualification. The
Company and
each of
its Subsidiaries
(as defined below),
if any,
is a corporation
duly organized, validly
existing and
in good
standing under the laws
of the jurisdiction
in which
it is incorporated,
with full
power and authority
(corporate and
other) to own,
lease, use and
operate its
properties and
to carry on
its business as and
where now owned, leased, used,
operated and conducted. Schedule
3(a) sets forth a list of all
of the Subsidiaries of the Company and
the jurisdiction in which each
is incorporated. The
Company and
each of
its Subsidiaries
is duly qualified
as a foreign
corporation to do business and is in good standing in every jurisdiction
in which its ownership or use
of property or the
nature of the
business conducted
by it makes
such qualification
necessary except where the failure
to be so qualified
or in good
standing would not have
a Material Adverse
Effect. “Material Adverse
Effect” means any
material adverse
effect on
the business, operations,
assets, financial condition or prospects
of the Company or its Subsidiaries, if any,
taken as a whole,
or on the
transactions contemplated hereby or
by the agreements or
instruments to be entered
into in connection herewith.
“Subsidiaries” means
any corporation or
other organization,
whether incorporated
or unincorporated,
in which
the Company owns,
directly or indirectly, any
equity or other ownership interest.

 

b.                  
Authorization; Enforcement.
(i) The
Company has
all requisite
corporate power
and authority
to enter
into and perform
this Agreement,
the Note
and to
consummate the
transactions contemplated
hereby and
thereby and
to issue the
Securities, in
accordance with the terms hereof
and thereof, (ii) the execution
and delivery of this Agreement,
the Note by the Company and the consummation
by it of the transactions contemplated
hereby and thereby (including
without limitation, the issuance
of the Note and the issuance and
reservation for issuance
of the Conversion Shares issuable
upon conversion or exercise thereof)
have been duly
authorized by
the Company’s Board of
Directors and
no further
consent or authorization of the
Company, its Board of Directors,
or its shareholders is required,
(iii) this Agreement has
been duly executed and
delivered by the Company by
its authorized representative,
and such
authorized representative is
the true and official
representative with authority
to sign this Agreement and
the other documents executed
in connection herewith and
bind the Company
accordingly, and
(iv) this Agreement
constitutes, and
upon execution
and delivery by the Company
of the Note, each of such instruments
will constitute, a legal, valid
and binding obligation
of the Company
enforceable against
the Company in
accordance with
its terms.

 

c.                    
Capitalization. As
of the
date hereof,
the authorized capital
stock of the
Company consists
of: (i)
440,000,000 shares
of Common
Stock, $0.001
par value
per share,
of which
136,111,1202 shares
are issued
and outstanding;
and (ii)
10,000,000 shares
of Preferred Stock,
$0.001 par
value per
share, of which 1,173,041 shares
are issued
and outstanding;
no shares
are reserved for
issuance pursuant to
the Company’s
stock option
plans, no shares are
reserved for issuance pursuant to securities
(other than the Note and
a prior convertible promissory
note in favor of the
Buyer dated November
25, 2103 in the amount of $42,500.00 for
which 6,500,000 shares of Common
Stock are presently reserved)
exercisable for, or convertible
into or exchangeable for shares
of Common Stock and 17,000,000
shares are reserved for
issuance upon conversion of the Note. All
of such outstanding shares
of capital stock
are, or upon issuance will be,
duly authorized, validly issued, fully paid and
non- assessable. No shares
of capital stock
of the Company are subject to
preemptive rights or any other similar
rights of the shareholders of the Company or any
liens or encumbrances imposed
through the actions or failure
to act of the Company. As
of the effective date of this Agreement,
there are no outstanding options,
warrants, scrip, rights to subscribe
for, puts, calls, rights of
first refusal, agreements,
understandings, claims or other
commitments or rights of any character
whatsoever relating to, or securities
or rights convertible into or
exchangeable for any shares
of capital stock
of the Company or any of its Subsidiaries,
or arrangements by which
the Company or any of its Subsidiaries
is or may become bound to issue additional
shares of capital stock
of the Company or
any of its Subsidiaries,
(ii) there are no agreements
or arrangements under which the
Company or any of
its Subsidiaries
is obligated to
register the sale
of any of
its or their
securities under the 1933 Act and
(iii) there are no anti-dilution
or price adjustment provisions
contained in any security issued
by the Company (or in any agreement
providing rights to security holders)
that will be triggered
by the issuance of the Note or
the Conversion Shares. The
Company has furnished to the Buyer
true and correct copies
of the Company’s Certificate
of Incorporation as in effect
on the date hereof (“Certificate
of Incorporation”), the Company’s
By- laws, as
in effect
on the date
hereof (the
“By-laws”), and
the terms
of all
securities convertible
into or exercisable for Common
Stock of the Company and
the material rights of the holders
thereof in respect thereto. The
Company shall provide the Buyer with
a written update of this representation
signed by the Company’s Chief
Executive on behalf of the Company as
of the Closing Date.

 

d.                  
Issuance of
Shares.
The Conversion
Shares are
duly authorized
and reserved
for issuance and,
upon conversion
of the Note
in accordance
with its
respective terms,
will be validly
issued, fully paid
and non-assessable,
and free
from all taxes,
liens, claims
and encumbrances with respect
to the issue thereof and shall
not be subject to preemptive
rights or other similar
rights of shareholders
of the Company and will
not impose personal
liability upon the holder thereof.

 

e.                   
Acknowledgment of
Dilution. The
Company understands
and acknowledges the
potentially dilutive effect
to the Common
Stock upon
the issuance
of the Conversion
Shares upon conversion
of the Note.
The Company further
acknowledges that
its obligation to issue Conversion
Shares upon conversion of
the Note in accordance
with this Agreement, the Note
is absolute and
unconditional regardless of
the dilutive effect that such
issuance may have on the
ownership interests of
other shareholders of the
Company.

    	3

    	 

    

 

f.                   
No Conflicts.
The execution,
delivery and
performance of
this Agreement,
the Note by
the Company and
the consummation by
the Company of
the transactions
contemplated hereby
and thereby
(including, without
limitation, the
issuance and
reservation for
issuance of the Conversion Shares)
will not
(i) conflict
with or result
in a violation
of any provision
of the Certificate of Incorporation
or By-laws, or (ii)
violate or conflict with,
or result in a breach
of any provision of,
or constitute a default
(or an
event which
with notice
or lapse of time or both could
become a default) under,
or give to
others any
rights of
termination, amendment, acceleration
or cancellation of, any
agreement, indenture, patent,
patent license or instrument
to which
the Company or any
of its Subsidiaries
is a party, or
(iii) result
in a violation of any
law, rule, regulation, order,
judgment or decree (including federal
and state securities
laws and
regulations and
regulations of any
self-regulatory organizations
to which
the Company or its securities are
subject) applicable to the Company or
any of its Subsidiaries
or by which any
property or asset of the Company or
any of its Subsidiaries is bound or affected
(except for such conflicts, defaults,
terminations, amendments, accelerations,
cancellations and violations
as would not, individually
or in the aggregate, have a Material
Adverse Effect). Neither
the Company nor any
of its Subsidiaries
is in violation
of its Certificate
of Incorporation, By-laws or
other organizational documents
and neither the Company nor any of
its Subsidiaries is
in default
(and no
event has
occurred which
with notice
or lapse
of time or both
could put
the Company or any of its Subsidiaries
in default) under, and
neither the Company nor any of its Subsidiaries
has taken any
action or failed to take any action
that would give
to others any
rights of termination, amendment,
acceleration or cancellation of,
any agreement, indenture
or instrument to
which the Company
or any
of its Subsidiaries
is a party or by
which any
property or assets of the Company or any
of its Subsidiaries is bound or affected, except
for possible defaults as would
not, individually or in the aggregate, have a Material
Adverse Effect. The businesses
of the Company and its Subsidiaries,
if any, are not being conducted,
and shall not be conducted
so long as
the Buyer owns
any of the
Securities, in
violation of
any law,
ordinance or regulation of any
governmental entity.
Except as specifically
contemplated by this Agreement
and as
required under the
1933 Act and
any applicable
state securities laws,
the Company is not required
to obtain any
consent, authorization
or order
of, or
make any
filing or registration
with, any court,
governmental agency,
regulatory agency,
self regulatory organization or
stock market
or any third party in order for
it to execute, deliver or perform
any of its obligations under
this Agreement, the Note in
accordance with
the terms hereof or
thereof or to
issue and sell
the Note in accordance with the
terms hereof and
to issue the Conversion Shares
upon conversion of the Note.
All consents, authorizations,
orders, filings and
registrations which the Company is required
to obtain
pursuant to the preceding
sentence have been obtained or
effected on or prior
to the date hereof.
The Company is not
in violation
of the listing requirements
of the Over-the- Counter Bulletin
Board (the “OTCBB”)
and does not reasonably anticipate that
the Common Stock will be delisted
by the OTCBB
in the foreseeable future. The
Company and its
Subsidiaries are unaware of any
facts or circumstances which
might give rise
to any of the foregoing.

 

g.                    
SEC Documents;
Financial Statements.
The Company
has timely filed
all reports,
schedules, forms,
statements and
other documents
required to be
filed by
it with
the SEC
pursuant to
the reporting
requirements of
the Securities
Exchange Act
of 1934, as
amended (the “1934 Act”)
(all of the foregoing filed prior
to the date hereof and
all exhibits included therein
and financial statements
and schedules thereto
and documents (other than exhibits
to such documents) incorporated
by reference therein, being hereinafter
referred to herein as the “SEC
Documents”). Upon written
request the Company will deliver to
the Buyer true and
complete copies of
the SEC
Documents, except
for such
exhibits and
incorporated documents. As
of their respective dates,
the SEC Documents
complied in all
material respects
with the requirements of the 1934 Act
and the rules and regulations
of the SEC promulgated thereunder
applicable to the SEC Documents,
and none of the SEC Documents,
at the time they were filed
with the SEC, contained any
untrue statement of a material
fact or omitted to state a material
fact required to
be stated therein
or necessary in order
to make the statements
therein, in light of the circumstances
under which they were
made, not misleading. None
of the statements made in any
such SEC Documents
is, or has been, required to
be amended or updated under applicable
law (except for
such statements
as have been
amended or
updated in subsequent
filings prior the date hereof).
As of their respective
dates, the financial statements
of the Company included in the SEC
Documents complied as
to form in all
material respects with
applicable accounting requirements
and the published
rules and
regulations of the SEC
with respect thereto.
Such financial
statements have
been prepared
in accordance with
United States generally accepted
accounting principles, consistently
applied, during the
periods involved and
fairly present in
all material
respects the consolidated
financial position
of the Company and its
consolidated Subsidiaries as
of the dates thereof
and the consolidated results
of their operations and
cash flows for
the periods then ended
(subject, in the case
of unaudited
statements, to normal year-end
audit adjustments). Except as
set forth in the financial statements
of the Company included in
the SEC
Documents, the
Company has no
liabilities, contingent
or otherwise,
other than
(i) liabilities
incurred in the ordinary
course of business subsequent
to August 31,
2013, and obligations under
contracts and commitments
incurred in the
ordinary course of business
and not required
under generally
accepted accounting principles
to be reflected
in such
financial statements, which,
individually or in the aggregate,
are not material to the financial
condition or operating results
of the Company. The Company is subject
to the reporting requirements of the
1934 Act.

 

h.                  
Absence of
Certain Changes.
Since August 31,
2013, there has
been no
material adverse
change and
no material adverse
development in the
assets, liabilities,
business, properties, operations,
financial condition,
results of operations,
prospects or 1934
Act reporting status
of the Company or any of
its Subsidiaries.

 

i.                    
Absence of
Litigation.
There is no
action, suit,
claim, proceeding,
inquiry or investigation
before or
by any court,
public board,
government agency,
self-regulatory organization
or body pending
or, to
the knowledge
of the Company
or any of
its Subsidiaries, threatened
against or affecting the Company or any of its Subsidiaries,
or their officers or directors
in their capacity as such, that
could have a Material Adverse
Effect. Schedule 3(i) contains a complete
list and summary description
of any pending or, to the knowledge
of the Company, threatened proceeding
against or affecting the Company or
any of its Subsidiaries, without
regard to whether it would have
a Material Adverse Effect.
The Company and its Subsidiaries
are unaware of any facts
or circumstances which might
give rise to any of
the foregoing.

    	4

    	 

    

 

j.                    
Patents, Copyrights,
etc. The
Company and each
of its Subsidiaries
owns or possesses
the requisite
licenses or
rights to
use all
patents, patent
applications, patent
rights, inventions,
know-how, trade
secrets, trademarks,
trademark applications,
service marks, service
names, trade names
and copyrights
(“Intellectual Property”)
necessary to enable it to conduct
its business as now operated
(and, as presently
contemplated to be operated
in the future);
there is
no claim or
action by any person pertaining
to, or proceeding pending,
or to the Company’s knowledge threatened,
which challenges the right of
the Company or of a Subsidiary with respect
to any Intellectual Property
necessary to enable it to conduct
its business as now operated (and,
as presently contemplated to be operated
in the future); to the best of
the Company’s knowledge, the Company’s
or its Subsidiaries’ current
and intended products,
services and
processes do
not infringe
on any Intellectual
Property or other
rights held by
any person; and the Company is
unaware of any facts
or circumstances which
might give rise to any of the
foregoing. The Company and each
of its Subsidiaries have taken
reasonable security measures to protect
the secrecy, confidentiality and
value of their Intellectual
Property.

 

k.                  
No Materially
Adverse Contracts, Etc.
Neither the Company
nor any of
its Subsidiaries
is subject
to any
charter, corporate
or other legal
restriction, or
any judgment,
decree, order, rule
or regulation which
in the judgment of the Company’s
officers has or is expected
in the future to have
a Material Adverse Effect.
Neither the Company nor any of its
Subsidiaries is
a party to any contract
or agreement which in
the judgment of the Company’s officers
has or is expected to have a
Material Adverse Effect.

 

l.                    
Tax Status.
The Company and
each of
its Subsidiaries has
made or
filed all
federal, state
and foreign
income and
all other
tax returns,
reports and
declarations required
by any
jurisdiction to which it is subject
(unless and only
to the extent that
the Company and
each of its
Subsidiaries has
set aside
on its books
provisions reasonably adequate
for the payment
of all
unpaid and
unreported taxes) and
has paid
all taxes and
other governmental assessments
and charges that
are material in amount, shown
or determined to be due on such returns,
reports and declarations, except
those being contested in good
faith and has set
aside on its books provisions reasonably
adequate for the payment of all
taxes for periods subsequent
to the periods to which
such returns,
reports or declarations apply.
There are
no unpaid taxes in any material
amount claimed to be due by the
taxing authority of any
jurisdiction, and the officers
of the Company know of no basis for
any such claim. The
Company has not executed a waiver
with respect to the statute of
limitations relating to
the assessment or collection
of any foreign, federal,
state or local tax. None of the
Company’s tax returns
is presently being audited by
any taxing authority.

 

m.                
Certain Transactions.
Except for
arm’s length
transactions pursuant
to which
the Company or
any of
its Subsidiaries
makes payments
in the ordinary
course of business
upon terms
no less
favorable than
the Company or
any of
its Subsidiaries
could obtain
from third parties and
other than the grant of stock
options disclosed on Schedule 3(c),
none of the officers,
directors, or
employees of
the Company is presently a party
to any
transaction with the Company
or any of
its Subsidiaries (other than
for services as
employees, officers and directors),
including any contract,
agreement or other arrangement
providing for the furnishing
of services to or by, providing
for rental of real or personal
property to or from, or otherwise
requiring payments
to or from any officer,
director or such
employee or, to the knowledge
of the Company, any corporation,
partnership, trust or other entity
in which any officer,
director, or any
such employee has a substantial interest
or is an officer, director,
trustee or partner.

 

n.                  
Disclosure. All
information relating to or
concerning the Company
or any of
its Subsidiaries
set forth in
this Agreement
and provided to
the Buyer pursuant
to Section
2(d) hereof
and otherwise
in connection with
the transactions contemplated
hereby is true
and correct in all material
respects and the Company has
not omitted to state any material
fact necessary in order to make
the statements made herein
or therein, in light
of the circumstances under which
they were made, not misleading.
No event or circumstance has
occurred or exists with respect
to the Company or any of its Subsidiaries
or its or their business,
properties, prospects,
operations or financial conditions,
which, under
applicable law, rule
or regulation, requires
public disclosure or announcement
by the Company but which has
not been so publicly announced or
disclosed (assuming for this purpose
that the Company’s reports
filed under the 1934
Act are being
incorporated into an
effective registration statement
filed by the Company under
the 1933 Act).

 

o.                  
Acknowledgment Regarding
Buyer’ Purchase of
Securities.
The Company acknowledges
and agrees
that the
Buyer is
acting solely in
the capacity of
arm’s length
purchasers with
respect to
this Agreement
and the
transactions contemplated
hereby. The
Company further acknowledges
that the Buyer is not acting
as a financial advisor
or fiduciary of the Company (or
in any similar
capacity) with respect to this
Agreement and the transactions
contemplated hereby and any statement made by
the Buyer or any of its respective
representatives or agents in connection with
this Agreement and the transactions
contemplated hereby is not advice
or a recommendation and
is merely incidental
to the Buyer’ purchase
of the Securities. The
Company further represents to
the Buyer that the Company’s
decision to enter into
this Agreement
has been
based solely on the independent
evaluation of
the Company and its representatives.

 

p.                  
No Integrated
Offering.
Neither the Company,
nor any of
its affiliates,
nor any
person acting
on its or
their behalf,
has directly
or indirectly
made any
offers or sales in any
security or
solicited any offers
to buy any
security under circumstances
that would
require registration
under the 1933 Act
of the issuance
of the Securities
to the Buyer. The issuance
of the Securities to the Buyer
will not be integrated with any other
issuance of the Company’s securities
(past, current or
future) for purposes
of any shareholder approval
provisions applicable to the Company
or its securities.

 

q.                  
No Brokers.
The Company
has taken
no action
which would
give rise
to any
claim by
any person
for brokerage
commissions, transaction
fees or
similar payments
relating to this Agreement or
the transactions contemplated hereby.

 

    	5

    	 

    

r.                    
Permits; Compliance.
The Company and
each of its Subsidiaries is
in possession
of all
franchises, grants,
authorizations, licenses,
permits, easements,
variances, exemptions,
consents, certificates,
approvals and
orders necessary
to own,
lease and
operate its properties
and to carry on
its business
as it is
now being
conducted (collectively,
the “Company Permits”), and
there is no action pending or,
to the knowledge of the Company, threatened
regarding suspension or cancellation
of any of the Company Permits. Neither
the Company nor any of its Subsidiaries
is in conflict with,
or in default
or violation
of, any of
the Company Permits, except
for any such conflicts,
defaults or violations which,
individually or in the aggregate,
would not reasonably
be expected
to have a
Material Adverse
Effect. Since August
31, 2013, neither the Company nor any of its Subsidiaries
has received any notification
with respect to possible conflicts,
defaults or violations of applicable
laws, except for
notices relating to possible conflicts, defaults or
violations, which conflicts,
defaults or violations would
not have a Material Adverse Effect.

 

		s.	Environmental
                                         Matters.

 

(i)                        
There are,
to the
Company’s knowledge,
with respect
to the Company
or any
of its
Subsidiaries or
any predecessor
of the Company,
no past
or present
violations  of 
Environmental  Laws 
(as  defined
 below), 
releases  of 
any  material
 into  the environment,
actions, activities, circumstances,
conditions, events, incidents,
or contractual obligations which
may give rise to any
common law environmental liability
or any liability under the Comprehensive
Environmental Response, Compensation
and Liability Act of 1980 or
similar federal, state,
local or foreign laws and neither
the Company nor any of its Subsidiaries
has received
any notice
with respect
to any
of the foregoing, nor is any
action pending
or, to the Company’s
knowledge, threatened in connection
with any of the foregoing. The
term “Environmental Laws”
means all federal, state,
local or foreign laws relating
to pollution or protection of human health or the environment
(including, without limitation,
ambient air, surface
water, groundwater, land surface
or subsurface
strata), including, without limitation,
laws relating to
emissions, discharges,
releases or threatened
releases of chemicals,
pollutants contaminants, or
toxic or hazardous
substances or
wastes (collectively,
“Hazardous Materials”)
into the environment, or otherwise relating
to the manufacture, processing,
distribution, use, treatment,
storage, disposal, transport
or handling of
Hazardous Materials, as
well as all authorizations,
codes, decrees, demands or demand
letters, injunctions, judgments, licenses,
notices or notice letters, orders,
permits, plans or regulations
issued, entered, promulgated
or approved thereunder.

 

(ii)                      
Other than
those that
are or were
stored, used
or disposed of
in compliance
with applicable
law, no Hazardous
Materials are contained
on or about
any real
property currently owned,
leased or
used by
the Company or
any of
its Subsidiaries,
and no Hazardous
Materials were released
on or about any real
property previously owned, leased or
used by
the Company or any of
its Subsidiaries
during the period
the property was owned,
leased or used by the
Company or any of
its Subsidiaries, except
in the normal course of
the Company’s or any
of its Subsidiaries’ business.

 

(iii)                     
There are
no underground
storage tanks on
or under
any real
property owned,
leased or used
by the
Company or any
of its Subsidiaries
that are not
in compliance with applicable
law.

 

t.                    
Title to
Property.
The Company and
its Subsidiaries
have good
and marketable
title in fee
simple to all
real property and
good and
marketable title
to all
personal property owned by them
which is material to the business
of the Company and its Subsidiaries,
in each case free and
clear of all liens, encumbrances
and defects except
such as are described in Schedule
3(t) or such as
would not have a Material
Adverse Effect. Any real property
and facilities held under
lease by the Company and its Subsidiaries
are held by them under valid,
subsisting and enforceable leases
with such exceptions as
would not have a Material Adverse
Effect.

 

u.                  
Insurance. The
Company and
each of its
Subsidiaries are insured
by insurers
of recognized
financial responsibility against
such losses and
risks and
in such
amounts as management
of the Company believes
to be prudent
and customary
in the businesses in which the
Company and its Subsidiaries are
engaged. Neither the Company nor any
such Subsidiary has any reason
to believe that it will
not be able to renew its existing
insurance coverage as and when
such coverage expires or to obtain
similar coverage from similar
insurers as
may be necessary
to continue its business at
a cost that would
not have a Material Adverse Effect.
Upon written
request the Company will provide
to the Buyer
true and correct
copies of all policies relating
to directors’
and officers’
liability coverage, errors
and omissions coverage, and
commercial general liability coverage.

 

v.                  
Internal Accounting
Controls. The
Company and
each of
its Subsidiaries
maintain a system
of internal
accounting controls
sufficient, in
the judgment
of the Company’s
board of directors,
to provide
reasonable assurance
that (i)
transactions are
executed in accordance
with management’s
general or
specific authorizations,
(ii) transactions
are recorded
as necessary to
permit preparation
of financial
statements in
conformity with generally accepted
accounting principles and to
maintain asset accountability,
(iii) access to assets is permitted
only in accordance
with management’s
general or specific
authorization and (iv) the recorded
accountability for assets is compared
with the existing assets
at reasonable intervals
and appropriate action
is taken with respect to any
differences.

 

w.                 
Foreign Corrupt
Practices. Neither
the Company,
nor any
of its Subsidiaries,
nor any
director, officer,
agent, employee
or other
person acting
on behalf of
the Company or
any Subsidiary has, in the course
of his actions for, or on behalf of,
the Company, used
any corporate
funds for
any unlawful
contribution, gift,
entertainment or
other unlawful expenses
relating to political activity; made any direct
or indirect unlawful payment
to any foreign or domestic
government official or employee
from corporate funds; violated
or is in violation of any
provision of the U.S.
Foreign Corrupt
Practices Act
of 1977, as
amended, or made
any bribe,
rebate, payoff,
influence payment, kickback
or other unlawful payment
to any foreign
or domestic government
official or employee.

    	6

    	 

    

 

x.                  
Solvency. The Company
(after giving
effect to the
transactions contemplated by
this Agreement)
is solvent
(i.e., its
assets have
a fair market
value in
excess of
the amount required to pay
its probable liabilities on its existing
debts as they
become absolute and matured)
and currently the Company has no information that
would lead it to reasonably conclude
that the Company would
not, after giving
effect to the transaction
contemplated by
this Agreement, have the ability to, nor does it intend
to take any
action that would impair
its ability to, pay its debts from
time to time incurred in connection
therewith as such debts
mature. The Company did not receive
a qualified opinion from its
auditors with respect
to its most recent fiscal
year end
and, after
giving effect
to the transactions
contemplated by this
Agreement, does
not anticipate or know of any
basis upon which its auditors might
issue a qualified opinion in respect
of its current fiscal
year.

 

y.                  
No Investment
Company.
The Company is
not, and
upon the issuance
and sale
of the Securities
as contemplated
by this Agreement
will not be
an “investment
company” required
to be registered
under the Investment
Company Act
of 1940 (an
“Investment Company”).
The Company is not controlled by
an Investment Company.

 

z.                   
Breach of
Representations and Warranties
by the
Company.
If the
Company breaches
any of
the representations
or warranties
set forth
in this
Section 3,
and in
addition to any other remedies
available to the Buyer pursuant to this Agreement,
it will be considered an
Event of default under Section
3.4 of the Note.

 

		4.	COVENANTS.

 

a.                  
Best Efforts.
The parties
shall use their
best efforts
to satisfy timely
each of the
conditions described in Section
6 and 7 of this Agreement.

 

b.                  
Form D;
Blue Sky
Laws.
The Company
agrees to
file a
Form D
with respect
to the Securities
as required
under Regulation
D and
to provide a
copy thereof
to the Buyer
promptly after
such filing.
The Company shall,
on or before
the Closing Date, take such action
as the Company shall reasonably determine
is necessary to qualify the Securities
for sale to the Buyer at
the applicable closing pursuant
to this Agreement under applicable
securities or “blue sky”
laws of the states of the United
States (or to obtain
an exemption from such
qualification), and shall
provide evidence of any such
action so taken to
the Buyer on or prior to the Closing
Date.

 

c.                   
Use of
Proceeds.
The Company shall
use the proceeds
for general
working capital purposes.

 

d.                  
Right of
First Refusal.
Unless it shall
have first delivered
to the Buyer,
at least
seventy two (72)
hours prior
to the closing
of such
Future Offering
(as defined
herein), written
notice describing
the proposed Future
Offering, including the
terms and
conditions thereof
and proposed definitive documentation
to be entered into in connection therewith, and
providing the Buyer an option
during the seventy two (72) hour period
following delivery of such notice
to purchase the securities being offered
in the Future Offering on the
same terms as
contemplated by such Future
Offering (the limitations referred
to in this sentence and the preceding
sentence are collectively referred to as
the “Right of First Refusal”)
(and subject to the exceptions
described below), the Company will
not conduct any
equity financing (including debt
with an equity component) (“Future
Offerings”) during the period beginning
on the Closing Date
and ending
twelve (12)
months following
the Closing Date.
In the event
the terms and
conditions of a proposed Future
Offering are amended in any
respect after delivery of the
notice to
the Buyer
concerning the
proposed Future
Offering, the
Company shall
deliver a new notice
to the Buyer describing
the amended terms and
conditions of the proposed Future
Offering and
the Buyer thereafter shall
have an option
during the seventy two
(72) hour period following
delivery of such new notice to
purchase its pro rata share of the securities
being offered on the same terms
as contemplated by such proposed
Future Offering, as amended.
The foregoing sentence shall
apply to successive amendments
to the terms and conditions of any
proposed Future Offering.
The Right of First Refusal
shall not apply to any transaction involving (i)
issuances of securities in a firm
commitment underwritten public offering
(excluding a continuous
offering pursuant to Rule 415
under the 1933
Act) or (ii) issuances
of securities as
consideration for a merger, consolidation
or purchase of assets, or in connection
with any strategic partnership or joint
venture (the primary purpose of
which is not to raise equity
capital), or in connection with
the disposition or acquisition
of a business, product or license
by the Company. The Right
of First Refusal also
shall not apply to the issuance of securities
upon exercise or conversion
of the Company’s options,
warrants or other
convertible securities outstanding
as of the date
hereof or to the grant of additional
options or warrants,
or the issuance of additional
securities, under any
Company stock option
or restricted
stock plan approved by the
shareholders of the Company.

 

e.                   
Expenses. At
the Closing,
the Company shall
reimburse Buyer
for expenses
incurred by
them in connection
with the
negotiation, preparation,
execution, delivery
and performance
of this Agreement
and the other
agreements to be
executed in
connection herewith (“Documents”),
including, without limitation,
reasonable attorneys’ and
consultants’ fees and expenses,
transfer agent fees, fees for
stock quotation services, fees
relating to any amendments or modifications
of the Documents or any consents
or waivers of provisions
in the Documents, fees
for the preparation of opinions
of counsel, escrow fees,
and costs of restructuring the
transactions contemplated by the Documents.
When possible, the Company must pay
these fees
directly, otherwise
the Company must make immediate
payment for reimbursement
to the Buyer for all fees
and expenses immediately upon written
notice by the Buyer or the submission
of an invoice by the Buyer.
The Company’s obligation
with respect to this transaction
is to reimburse Buyer’ expenses
shall be $2,500.

 

f.                   
Financial Information.
Upon written
request the
Company agrees to
send or
make available
the following
reports to
the Buyer
until the Buyer
transfers, assigns,
or sells
all of the Securities:
(i) within ten
(10) days after
the filing with
the SEC, a copy of its Annual
Report on Form
10-K its Quarterly Reports
on Form
10-Q and
any Current
Reports on Form
8-K; (ii) within
one (1)
day after release,
copies of all
press releases
issued by the
Company or any of its Subsidiaries;
and (iii) contemporaneously with
the making available or giving
to the shareholders of the Company,
copies of any notices or other information
the Company makes available
or gives to such shareholders.

    	7

    	 

    

 

		g.	[INTENTIONALLY
                                         DELETED]

 

h.                  
Listing. The Company
shall promptly
secure the listing
of the Conversion
Shares upon each national securities
exchange or automated quotation
system, if any,
upon which
shares of
Common Stock
are then
listed (subject
to official
notice of
issuance) and,
so long as
the Buyer
owns any of the
Securities, shall maintain,
so long as
any other shares
of Common Stock shall be
so listed, such listing
of all Conversion Shares
from time to time issuable upon conversion
of the Note. The Company will
obtain and, so long as the Buyer
owns any of the Securities,
maintain the listing and trading of
its Common Stock on the OTCBB
or any equivalent replacement exchange,
the Nasdaq National Market
(“Nasdaq”), the Nasdaq SmallCap
Market (“Nasdaq
SmallCap”), the
New York
Stock Exchange
(“NYSE”), or
the American Stock Exchange
(“AMEX”) and will
comply in all respects
with the Company’s reporting,
filing and other obligations
under the bylaws or rules of
the Financial Industry Regulatory
Authority (“FINRA”) and
such exchanges, as
applicable. The Company shall promptly provide
to the Buyer
copies of any notices
it receives
from the
OTCBB and
any other exchanges or quotation
systems on which the Common Stock
is then listed regarding
the continued eligibility of
the Common Stock for
listing on such exchanges
and quotation systems.

 

i.                    
Corporate Existence.
So long
as the
Buyer beneficially
owns any
Note, the
Company shall
maintain its
corporate existence
and shall
not sell all
or substantially all
of the Company’s assets, except
in the event of a merger or consolidation
or sale of all or substantially all
of the Company’s
assets, where
the surviving
or successor
entity in such transaction
(i) assumes the Company’s
obligations hereunder and
under the agreements and instruments
entered into in connection herewith
and (ii) is a publicly traded corporation
whose Common Stock is listed
for trading on the OTCBB, Nasdaq,
Nasdaq SmallCap,
NYSE or AMEX.

 

j.                    
No Integration.
The Company
shall not
make any
offers or
sales of
any security
(other than the
Securities) under
circumstances that
would require
registration of the
Securities being
offered or sold
hereunder under
the 1933 Act
or cause the
offering of
the Securities to be integrated
with any
other offering of
securities by the
Company for the
purpose of any stockholder
approval provision applicable to
the Company or its securities.

 

k.                  
Breach of
Covenants. If
the Company breaches
any of
the covenants
set forth
in this Section
4, and
in addition
to any other
remedies available
to the Buyer
pursuant to this
Agreement, it
will be
considered an
event of default
under Section
3.4 of
the Note.

 

l.                    
Failure to Comply
with the 1934 Act.
So long as
the Buyer
beneficially owns
the Note, the
Company shall comply
with the
reporting requirements
of the 1934
Act; and
the Company shall continue
to be subject
to the reporting
requirements of the 1934 Act.

 

m.                
Trading Activities.
Neither the
Buyer nor
its affiliates
has an
open short position in the
common stock of the
Company and the
Buyer agree that it shall not,
and that
it will
cause its
affiliates not
to, engage
in any
short sales
of or hedging
transactions with
respect to the
common stock of the
Company.

 

5.                  
Transfer  Agent
 Instructions.
The Company shall
issue irrevocable
instructions to
its transfer
agent to
issue certificates,
registered in
the name of
the Buyer
or its nominee,
for the Conversion
Shares in such
amounts as
specified from
time to time
by the
Buyer to the Company upon conversion
of the Note in accordance with
the terms thereof (the
“Irrevocable Transfer
Agent Instructions”). 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
Instructions in a form as
initially delivered pursuant to the Purchase
Agreement (including but not limited
to the provision to irrevocably reserve
shares of Common Stock in the Reserved
Amount) signed by the successor
transfer agent to Borrower
and the Borrower. Prior
to registration of the Conversion Shares
under the 1933 Act or the date
on which the Conversion Shares
may be sold pursuant to Rule 144 without
any restriction as to the number
of Securities as of a particular
date that can
then be immediately sold, all such
certificates shall bear
the restrictive legend specified
in Section 2(g) of
this Agreement. The Company warrants
that: (i) no instruction other
than the Irrevocable Transfer
Agent Instructions referred
to in this
Section 5, and
stop transfer
instructions to
give effect
to Section
2(f) hereof
(in the case of the Conversion Shares,
prior to registration of the Conversion Shares
under the 1933 Act or the date on which
the Conversion Shares may be
sold pursuant to Rule 144 without
any restriction as to the number of
Securities as of a particular
date that can then be immediately
sold), will be given
by the Company to its transfer
agent and that
the Securities shall otherwise
be freely transferable on the books and
records of the Company as and
to the extent provided in this Agreement
and the Note; (ii)
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 Conversion
Shares to be issued to the Buyer
upon conversion of or otherwise
pursuant to the Note as and
when required by the Note
and this Agreement; and
(iii) it will not fail to remove
(or directs its transfer
agent not to remove or impairs, delays,
and/or hinders its
transfer agent from
removing) any restrictive
legend (or
to withdraw
any stop transfer instructions
in respect thereof) on any certificate
for any Conversion Shares issued
to the Buyer upon conversion
of or otherwise pursuant to the Note
as and when required
by the Note and this Agreement.
Nothing in this Section shall
affect in any way the Buyer’s
obligations and agreement set
forth in Section 2(g) hereof
to comply with all applicable
prospectus delivery requirements, if any,
upon re-sale of the Securities.
If the Buyer provides the Company, at
the cost of the Buyer, with
(i) an opinion of counsel in form,
substance and scope customary for opinions
in comparable transactions, to the effect
that a public sale or transfer
of such Securities may
be made without
registration under the 1933 Act and
such sale or transfer
is effected or (ii) the Buyer
provides reasonable assurances
that the Securities can
be sold pursuant to Rule
144, the Company shall
permit the transfer, and,
in the case of the Conversion Shares,
promptly instruct its transfer
agent to issue one or more
certificates, free from restrictive
legend, in such
name and in such denominations
as specified by the Buyer.
The Company acknowledges that
a breach by it of
its obligations hereunder
will cause
irreparable harm to the
Buyer, by vitiating the intent
and purpose of the transactions
contemplated hereby. Accordingly,
the Company acknowledges that the remedy
at law for a breach
of its obligations under this
Section 5 may be
inadequate and agrees,
in the event of a breach
or threatened breach by the Company
of the provisions of this Section, that
the Buyer 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.

    	8

    	 

    

 

6.                  
Conditions to the
Company’s Obligation
to Sell.
The obligation of
the Company hereunder
to issue and
sell the Note to
the Buyer
at the
Closing is subject
to the satisfaction,
at or before
the Closing Date of
each of the
following conditions
thereto, provided that
these conditions are for the
Company’s sole benefit and
may be waived by the Company at
any time in its sole discretion

 

a.               
The Buyer
shall have
executed this
Agreement and delivered
the same to the Company.

 

b.                  
The Buyer
shall have
delivered the Purchase
Price in accordance
with Section 1(b)
above.

 

c.                   
The representations
and warranties
of the
Buyer shall
be true
and correct
in all
material respects
as of
the date when
made and
as of the
Closing Date
as though
made at
that time (except
for representations
and warranties
that speak
as of a
specific date),
and the Buyer shall have
performed, satisfied and complied
in all material respects
with the covenants, agreements
and conditions
required by
this Agreement
to be performed,
satisfied or complied with
by the Buyer at or
prior to the Closing Date.

 

d.                  
No litigation,
statute, rule,
regulation, executive
order, decree,
ruling or injunction
shall have been
enacted, entered,
promulgated or
endorsed by
or in any
court

or
governmental authority
of competent
jurisdiction or any
self-regulatory organization
having authority over
the matters
contemplated hereby
which prohibits
the consummation
of any of
the transactions contemplated
by this Agreement.

 

7.                  
Conditions to
The Buyer’s
Obligation to Purchase.
The obligation
of the Buyer
hereunder to purchase
the Note
at the
Closing is subject
to the satisfaction,
at or before
the Closing Date
of each
of the
following conditions,
provided that
these conditions
are for
the Buyer’s sole
benefit and may be
waived by the
Buyer at any
time in its sole discretion:

 

a.               
The Company
shall have executed
this Agreement
and delivered

 

b.                  
The Company
shall have delivered
to the Buyer
the duly executed
Note (in such denominations as
the Buyer shall request) in accordance
with Section 1(b) above.

 

c.                   
The Irrevocable
Transfer Agent
Instructions, in form
and substance satisfactory
to a majority-in-interest of the
Buyer, shall have been delivered
to and acknowledged
in writing by
the Company’s Transfer Agent.

 

d.                  
The representations
and warranties
of the
Company shall
be true
and correct
in all
material respects
as of
the date when
made and
as of
the Closing Date
as though
made at
such time (except
for representations and
warranties that
speak as
of a specific date)
and the Company shall have performed,
satisfied and complied in all
material respects with the covenants,
agreements and conditions required
by this Agreement to be performed,
satisfied or complied with
by the Company at or
prior to the
Closing Date. The Buyer
shall have received
a certificate or certificates,
executed by the chief
executive officer of the Company,
dated as
of the Closing Date,
to the foregoing
effect and
as to
such other
matters as may
be reasonably requested
by the Buyer including, but not
limited to certificates with
respect to the Company’s Certificate
of Incorporation, By-laws
and Board of Directors’
resolutions relating to the transactions
contemplated hereby.

 

e.                   
No litigation,
statute, rule,
regulation, executive
order, decree,
ruling or injunction
shall have been
enacted, entered,
promulgated or
endorsed by
or in any
court or
governmental authority
of competent
jurisdiction or any
self-regulatory organization
having authority over the matters contemplated
hereby which prohibits the consummation
of any of the transactions contemplated
by this Agreement.

 

f.                   
No event
shall have
occurred which
could reasonably
be expected
to have
a Material
Adverse Effect on
the Company including
but not limited
to a change
in the 1934
Act reporting
status of the
Company or the
failure of
the Company to
be timely in
its 1934 Act
reporting obligations.

 

g.                   
The Conversion
Shares shall
have been authorized
for quotation on
the OTCBB
and trading in
the Common Stock
on the OTCBB
shall not have
been suspended
by the
SEC or the OTCBB.

 

h.                  
The Buyer
shall have
received an
officer’s certificate
described in Section
3(c) above, dated as
of the Closing
Date.

    	9

    	 

    

 

		8.	Governing
                                         Law;
                                         Miscellaneous.

 

a.                  
Governing Law.
This
Agreement
shall
be governed
by and
construed in accordance
with the laws
of the
State of New
York without
regard to
principles of
conflicts of
laws. 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 New York or in the federal
courts located in the state and
county of Nassau. The parties
to this Agreement hereby irrevocably waive
any objection to
jurisdiction and
venue of any action instituted
hereunder and shall
not assert
any defense based
on lack of jurisdiction or venue
or based upon forum non conveniens.
The Company and Buyer
waive trial by
jury. The prevailing party shall
be entitled to recover from
the other party its reasonable
attorney's fees and
costs. In the event
that any provision
of this Agreement
or any other
agreement delivered in connection
herewith is invalid or unenforceable
under any applicable statute
or rule of law, then
such provision shall be deemed
inoperative to the
extent that
it may conflict
therewith and shall
be deemed
modified to conform
with such
statute or
rule of
law. Any
such provision which
may prove
invalid or
unenforceable under
any law shall
not affect
the validity or enforceability
of any other provision
of any agreement.
Each party hereby irrevocably waives
personal service of
process and
consents to
process being served
in any suit, action
or proceeding in connection
with this Agreement or
any other Transaction
Document by mailing
a copy thereof
via registered or certified mail
or overnight delivery (with
evidence of delivery) to
such party at the address
in effect for notices
to it under this Agreement and
agrees that such
service shall constitute
good and sufficient service
of process and
notice thereof. Nothing contained
herein shall be deemed to limit in any
way any right to serve
process in any other manner permitted
by law.

 

b.                  
Counterparts. This
Agreement may
be executed
in one or
more counterparts,
each of which
shall be
deemed an
original but all
of which
shall constitute
one and
the same
agreement and
shall become
effective when
counterparts have
been signed
by each
party and delivered to the
other party.

 

 

c.                   
Headings. The
headings of this
Agreement are for
convenience of reference
only and shall
not form part of,
or affect
the interpretation of, this
Agreement.

 

d.                  
Severability. In
the event
that any
provision of
this Agreement
is invalid
or unenforceable
under any
applicable statute
or rule
of law, then
such provision
shall be
deemed inoperative
to the extent
that it
may conflict
therewith and
shall be
deemed modified
to conform with such
statute or rule of law.
Any provision hereof
which may prove invalid or unenforceable
under any
law shall
not affect
the validity or enforceability
of any other
provision hereof.

 

e.                   
Entire Agreement;
Amendments. This
Agreement and
the instruments
referenced herein contain
the entire understanding
of the parties
with respect to
the matters covered
herein and therein
and, except
as specifically
set forth
herein or
therein, neither
the Company nor
the Buyer makes any
representation, warranty, covenant or
undertaking with respect
to such
matters. No
provision of this
Agreement may be waived
or amended
other than by an
instrument in writing signed by the
majority in interest of the
Buyer.

    	10

    	 

    

 

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

 

If
to the Company, to:

CO-S
IGNER, INC.

8275
S. Eastern Avenue – Suite
200-661 Las
Vegas, NV
89123

Attn:
KURTIS A. KRAMARENKO,
Chief Executive Officer 

facsimile:
[enter fax number]

 

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

Kyleen
Cane Cane•Clark LLP

3273
E. Warm Springs
Rd. Las
Vegas, NV
89120

 

If
to the Buyer:

ASHER
ENTERPRISES, INC.

1
Linden Pl., Suite 207
Great Neck, NY. 11021
Attn: Curt Kramer,
President

facsimile:
516-498-9894

 

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

Naidich
Wurman Birnbaum & Maday
LLP

80
Cuttermill Road, Suite
410

Great
Neck, NY 11021

Attn:
Bernard S. Feldman,
Esq. 

facsimile:
516-466-3555

 

Each
party shall provide
notice to the other party of
any change
in address.

 

    	11

    	 

    

g.                   
Successors and
Assigns. This
Agreement shall
be binding upon
and inure to
the benefit
of the parties
and their successors
and assigns.
Neither the Company nor the
Buyer shall
assign this Agreement
or any rights
or obligations
hereunder without
the prior written
consent of the other. Notwithstanding
the foregoing, subject to Section
2(f), the Buyer may assign
its rights hereunder to any
person that purchases Securities
in a private transaction from
the Buyer or to any
of its “affiliates,”
as that term is defined
under the 1934 Act, without the consent
of the Company.

 

h.                  
Third Party
Beneficiaries.
This Agreement
is intended for
the benefit
of the parties
hereto and
their respective
permitted successors
and assigns,
and is not
for the
benefit of, nor may
any provision hereof
be enforced by,
any other
person.

 

i.                    
Survival. The
representations and
warranties of
the Company and
the agreements
and covenants
set forth
in this Agreement
shall survive
the closing hereunder
notwithstanding any
due diligence investigation
conducted by or on
behalf of the Buyer. The Company
agrees to indemnify and hold harmless
the Buyer and all
their officers, directors, employees
and agents for loss or damage arising as
a result of or related to
any breach or alleged breach
by the Company of any
of its representations, warranties and
covenants set forth in this Agreement
or any of its covenants
and obligations under
this Agreement, including advancement
of expenses as they are
incurred.

 

j.                    
Publicity. The Company,
and the Buyer
shall have
the right
to review
a reasonable
period of time
before issuance
of any
press releases,
SEC, OTCBB
or FINRA
filings, or any
other public
statements with
respect to the
transactions contemplated
hereby; provided, however, that
the Company shall be entitled, without
the prior approval of the Buyer,
to make any
press release or SEC, OTCBB
(or other applicable trading
market) or FINRA filings
with respect to such transactions
as is required by applicable
law and regulations (although
the Buyer
shall be consulted
by the Company in
connection with
any such press release
prior to its release and shall
be provided with a copy thereof
and be given an opportunity to
comment thereon).

 

k.                  
Further Assurances.
Each party
shall do and
perform, or cause
to be done
and performed,
all such
further acts
and things,
and shall
execute and
deliver all
such other
agreements, certificates,
instruments and
documents, as
the other
party may reasonably request in
order to carry out the intent and
accomplish the purposes of this Agreement
and the consummation of the
transactions contemplated hereby.

 

l.                    
No Strict
Construction. The
language used
in this Agreement
will be deemed
to be the
language chosen by
the parties
to express
their mutual intent,
and no rules
of strict construction
will be applied against any
party.

 

m.                  
Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm
to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provision s of this Agreement , that the Buyer shall be entitled, in addition to all
other available remedie s at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions
restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without
the necessity of showing economic loss and without any bond or other security being required.

 

 

    	12

    	 

    

IN
WITNESS WHEREOF , the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.

 

	CO-SIGNER,
    INC.
	 
	By:
    /s/ Kurtis A. Kramarenko
	Kurtis
    A. Kramarenko
	Chief
    Executive Officer
	 
	ASHER
    ENTERPRISES, INC.
	 
	By:
    /s/ Curt Kramer
	Name:
    Curt Kramer Title: President
	1
    Linden Pl., Suite 207 Great Neck, NY. 11021

 

 

	AGGREGATE
                           SUBSCRIPTION AMOUNT:

         

        Aggregate
        Principal Amount of Note:
	 

         

        $32,500.00

	Aggregate
    Purchase Price:	$32,500.00
	3865(3)
        1-8-14

        kurt@co-Signer.com
        garv@co-signer.corn
	 

 

    	13

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