Document:

f8k040408ex10i_celsius.htm

    Exhibit
10.1

    CONVERTIBLE
NOTE

    

    THIS NOTE
HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE NOTE MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION OR SAFE
HARBOR THEREFROM.

     

     

    
      

      
        	
                No.
      03-2008

              	 
      	
                US
      $750,000

              

      

      
 

    

    CELSIUS
HOLDINGS, INC.

    

    8%
UNSECURED CONVERTIBLE NOTE

    

    THIS Note
is one of a duly authorized issue US $750,000.00 of CELSIUS HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Nevada ("Celsius") designated as its 8%
Unsecured Convertible  Note.

    

           FOR
VALUE RECEIVED, Celsius promises to pay to CD Financial, LLC., the registered
holder hereof (the "Holder"), the principal sum of
Seven Hundred and Fifty Thousand United States Dollars (US $750,000) together
with interest on the unpaid principal sum from the date hereof stated below as
provided herein.  After an Event of Default, interest will accrue on
the unpaid principal balance at the then current statutory interest rate
provided under Florida law. The principal of this Note and interest are payable
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts, at the address
last appearing on the Note Register of Celsius as designated in writing by the
Holder from time to time. Celsius will make payments when due to the registered
holder of this Note and addressed to such holder at the last address appearing
on the Note Register at such time payment is made.

    

           This
Note is subject to the following additional provisions:

    

           1.     Celsius
shall be entitled to withhold from all payments of principal of this Note, and
any  interest due on this Note any amounts required to be withheld
under the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.

    

           2.     This
Note has been issued subject to investment representations of the original
purchaser hereof and may be transferred or exchanged only in compliance with the
Securities Act of 1933,
as amended (the "Act"),
and other applicable state and foreign securities laws. In the event of any
proposed transfer of this Note, Celsius may require, prior to issuance of a new
Note in the name of such other person, that it receive reasonable transfer
documentation including legal opinions that the issuance of the Note in such
other name does not and will not cause a violation of the Act or any applicable
state or foreign securities laws. Prior to due presentment for transfer of this
Note, Celsius and any agent of Celsius may treat the person in whose name this
Note is duly registered on Celsius' Note Register as the owner hereof for the
purpose of receiving payment as herein provided and for all other purposes,
whether or not this Note be overdue, and neither Celsius nor any such agent
shall be affected by notice to the contrary.

    

           3.     Except
as provided by law, no recourse shall be had for the payment of the principal
of, or the interest on, this Note, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of Celsius, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

    

           4.     The
Holder of the Note, by acceptance hereof, agrees that this Note is being
acquired for investment and that such Holder will not offer, sell or otherwise
dispose of this Note except under circumstances which will not result in a
violation of the Act or any applicable state Blue Sky or foreign laws or similar
laws relating to the sale of securities.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

           5.     This
Note shall be governed by and construed in accordance with the laws of the State
of Florida. Each of the parties consents to the jurisdiction of the state and
federal courts sitting in Palm Beach County, Florida, and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non coveniens, to the bringing of any such proceeding in such
jurisdiction.

    

           6.     The
following shall constitute an "Event of
Default":

    

    
      	
              (a)  

            	
              Celsius
      shall default in the payment of principal on this Note and same shall
      continue for a period of five (5) days;
or

            

    

    
      	
              (b)  

            	
              Any
      of the representations or warranties made by Celsius herein or other
      written statements heretofore or hereafter furnished by Celsius in
      connection with the execution and delivery of this Note or the Agreement
      pursuant to which this Note has been  issued shall be false or
      misleading in any material respect at the time made;
  or

            

    

    
      	
              (c)  

            	
              Celsius
      shall fail to perform or observe, in any material respect, any other
      covenant, term, provision, condition, agreement or obligation of this Note
      and such failure shall continue uncured for a period of ten (10) days
      after written notice from the Holder of such failure;
  or

            

    

    
      	
              (d)  

            	
              Celsius
      shall (1) admit in writing its inability to pay its debts generally as
      they mature; (2) make an assignment for the benefit of creditors or
      commence proceedings for its dissolution; or (3) apply for or consent to
      the appointment of a trustee, liquidator or receiver for its or for a
      substantial part of its property or business;
or

            

    

    
      	
              (e)  

            	
              A
      trustee, liquidator or receiver shall be appointed for Celsius or for a
      substantial part of its property or business without its consent and shall
      not be discharged within ninety (90) days after such appointment;
      or

            

    

    
      	
              (f)  

            	
              Any
      governmental agency or any court of competent jurisdiction at the instance
      of any governmental agency shall assume custody or control of the whole or
      any substantial portion of the properties or assets of the Celsius and
      shall not be dismissed within ninety (90) days thereafter;
    or

            

    

    
      	
              (g)  

            	
              Bankruptcy,
      reorganization, insolvency or liquidation proceedings or other proceedings
      for relief under any bankruptcy law or any law for the relief of debtors
      shall be instituted by or against Celsius and, if instituted against
      Celsius, shall not be dismissed within ninety  (90) days after
      such institution or Celsius shall by any action or answer approve of,
      consent to, or acquiesce in any such proceedings or admit the material
      allegations of, or default in answering a petition filed in any such
      proceeding.

            

    

    

    Then, or
at any time thereafter, and in each and every such case, unless such Event of
Default shall have been waived in writing by the Holder (which waiver shall not
be deemed to be a waiver of any subsequent default) at the option of the Holder
and in the Holder's sole discretion, the Holder may consider
the  unpaid principal amount and interest under this Note immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived, anything herein or in any note or other
instruments contained to the contrary notwithstanding, and the Holder may
immediately enforce any and all of the Holder's rights and remedies provided
herein or any other rights or remedies afforded by law.

    

           7.     At
the option of the Holder, the unpaid principal of this Note may be converted in
whole into unregistered common shares of Celsius Holdings, Inc. (“Common
Shares”), calculated to the nearest share, at any time and from time to time on
any Business Day after April 16, 2008 up to 5:00 p.m. (EST) on July 10, 2008
(“the Initial Maturity Date”), by issuing an irrevocable written instruction to
Celsius to convert the unpaid principal of the Note into Common Shares
(“Conversion Instructions”). The number of Common Shares into which the unpaid
principal of this Note may be converted is equal to $750,000 divided by the
Conversion Price. The “Conversion Price” shall be equal to the 75% of the
average of volume weighted average prices of the Common Shares during the 5
trading days prior to Holder’s election to convert. Notwithstanding the above,
in no event shall the Note be converted to more than 40 million Common
Shares.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

           8.     Accrued
interest under this Note shall be paid on July 10, 2008, and on the 10th day of
each month thereafter.  In the event that the Holder has not provided
Celsius with Conversion Instructions on or before 5:00 p.m. (ES) on the Initial
Maturity Date, the unpaid principal balance of this Note shall be paid in 10
equal quarterly payments starting on December10,
2008.  Notwithstanding the foregoing or any contrary provision other
than paragraph 7 hereof, upon 5-days’ prior written notice to the Holder (a
“Prepayment Notice”), Celsius shall be permitted to prepay any balance due on
the Note, with accrued interest, without prepayment penalty or future interest
due, provided, if any such Prepayment Notice is given to the Holder before the
Initial Maturity Date, the Holder may exercise its rights to convert in
accordance with paragraph 7 hereof.

    

           9.     Nothing
contained in this Note shall be construed as conferring upon the Holder the
right to vote or to receive dividends or to consent or receive notice as a
shareholder in respect of any meeting of shareholders or any rights whatsoever
as a shareholder of Celsius, unless and to the extent converted in accordance
with the terms hereof.

    

          10.                      If
all interest accrued as of the date of this Note under the terms of that certain
8% Unsecured Convertible Note issued by Celsius to CD Financial, LLC for the
principal sum of $250,000 dated December 18, 2007 (the “2007 Note”) is paid by
Celsius to CD Financial, LLC, this Note shall subsume and replace the 2007 Note
in its entirety.

    

           IN
WITNESS WHEREOF, Celsius has caused this instrument to be duly executed by an
officer thereunto duly authorized.

    

    Dated:
April 4, 2008

    

    CELSIUS
HOLDINGS, INC.

    a Nevada
Corporation

    

    By:   /s/ Stephen C. Haley                                                       

                  
Stephen C Haley, Chief Executive OfficerEXHIBIT 10.37

                             NOTE PURCHASE AGREEMENT
                             -----------------------

     This Note Purchase Agreement, dated as of April 4, 2008, (this
"Agreement"), is entered into by and among Salon Media Group, Inc., a Delaware
corporation (the "Company"), and each of the purchasers (collectively the
"Purchasers" and individually a "Purchaser"), listed on the Schedule of
Purchasers attached hereto as Exhibit A (the "Schedule of Purchasers").

                                     RECITAL
                                     -------

     A. On the terms and subject to the conditions set forth herein, the
Purchasers are willing to purchase from the Company, and the Company is willing
to sell to the Purchasers, Convertible Promissory Notes (each, a "Note" and
collectively, the "Notes"), in the principal amounts set forth opposite each
Purchaser's name on the Schedule of Purchasers (each, a "Loan Amount" and
collectively, the "Loan Amounts").

                                    AGREEMENT
                                    ---------

     NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties, and covenants set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:

     1. Notes.

          (a) Issuance of Notes. In reliance upon the representations,
warranties and covenants of the parties set forth herein, the Company agrees to
issue, sell and deliver to the Purchasers, and the Purchasers agree to purchase
from the Company, the Notes, in an aggregate amount not to exceed $2,000,000.
The purchase price for the Notes shall be payable in immediately available
funds.

          (b) Terms of the Notes. The terms and conditions of the Notes are set
forth in the form of Note attached hereto as Exhibit B. Capitalized terms not
otherwise defined herein shall have the meanings set forth in Exhibit B attached
hereto.

     2. Closings; Delivery.

          (a) Closing. The closing of the purchase and sale hereunder (the
"Closing"), shall take place at the offices of DLA Piper US LLP, counsel to the
Company, 2000 University Avenue, East Palo Alto, California 94303 in one or more
closings at such time and place as the Company and each Purchaser may agree
(each a "Closing Date").

          (b) Delivery. Subject to the terms of this Agreement, at each Closing,
the Company will deliver to each Purchaser a Note in such Purchaser's name
representing the Note purchased by such Purchaser, and such Purchaser will
deliver to the Company, by check or wire transfer, payment for the Note being
purchased in an amount equal to the amount set forth opposite Purchaser's name
on the Schedule of Purchasers.

                                       1
<PAGE>

     3. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Purchaser as of the date hereof:

          (a) Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
business as currently conducted.

          (b) Corporate Power. The Company has all requisite legal and corporate
power to enter into, execute and deliver this Agreement and to issue each Note.
This Agreement, and the Notes, when issued, are valid and binding obligations of
the Company, enforceable in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium, usury or other laws of general application relating to or affecting
enforcement of creditors' rights and the rules or laws governing specific
performance, injunctive relief or other equitable remedies.

          (c) Authorization.

               (i) Corporate Action. All corporate and legal action on the part
of the Company, its officers, directors and stockholders necessary for the
execution and delivery of this Agreement, the sale and issuance of the Notes,
and the performance of the Company's obligations hereunder and under the Notes
have been taken.

               (ii) Valid Issuance. The Notes and any shares of common stock
issued upon conversion of the Notes (the "Securities"), when issued in
compliance with the provisions of this Agreement and the Notes, as the case may
be, will be validly issued and will be free of any liens or encumbrances and
issued in compliance with all applicable federal securities laws, provided,
however, that the Securities may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein, and as may be required
by future changes in such laws.

          (d) Government Consent, Etc. No consent, approval, order or
authorization of, or designation, registration, declaration or filing with, any
federal, state, local or other governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this
Agreement and the Notes, other than, if required, filings or qualifications
under the Securities Act of 1933, as amended (the "Securities Act"), and other
applicable state securities laws, which filings or qualifications, if required,
will be timely filed or obtained by the Company.

          (e) Offering. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the offer, issue,
and sale of the Notes and any shares common stock issued upon the conversion of
the Notes will be exempt from the registration and prospectus delivery
requirements of the Securities Act, and have been registered or qualified (or
are exempt from registration and qualification) under the registration, permit,
or qualification requirements of all applicable state securities laws.

     4. Representations and Warranties by the Purchaser. Each Purchaser hereby
represents and warrants to the Company as of the date hereof:

                                       2
<PAGE>

          (a) Investment Intent. The Securities will be acquired for the
Purchaser's own account, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act. The Purchaser understands that the Securities have not
been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act pursuant to Section 4(2) thereof, which exemption depends
upon, among other things, the bona fide nature of the Purchaser's investment
intent expressed herein.

          (b) Access to Information. During the negotiation of the transactions
contemplated herein, the Purchaser and its representatives have been afforded
full and free access to corporate books, financial statements, records,
contracts, documents, and other information concerning the Company, and to its
offices and facilities, have been afforded an opportunity to ask such questions
of the Company's officers, employees, agents, accountants and representatives
concerning the Company's business, operations, financial condition, assets,
liabilities and other relevant matters as they have deemed necessary or
desirable, and have been given all such information as has been requested, in
order to evaluate the merits and risks of the prospective investment
contemplated herein.

          (c) Due Diligence. The Purchaser and its representatives have been
solely responsible for the Purchaser's own "due diligence" investigation of the
Company and its management and business, for its own analysis of the merits and
risks of this investment, and for its own analysis of the fairness and
desirability of the terms of the investment. Notwithstanding the foregoing, such
due diligence investigation shall not limit the representations and warranties
made by the Company in Section 4 hereof.

          (d) Accredited Investor. The Purchaser (i) is an "Accredited Investor"
as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act or has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of such Purchaser's
prospective investment in the Securities; and (ii) has the ability to bear the
economic risks of such Purchaser's prospective investment, including a complete
loss of Purchaser's investment in the Securities.

          (e) General Solicitation. The Purchaser has not been offered the
Securities by any form of advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any such media.

          (f) Authority. The Purchaser has the full right, power and authority
to enter into and perform the Purchaser's obligations under this Agreement, and
this Agreement constitutes a valid and binding obligation of the Purchaser
enforceable in accordance with its terms except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, usury or other
laws of general application relating to or affecting enforcement of creditors'
rights and the rules or laws governing specific performance, injunctive relief
or other equitable remedies.

          (g) Government Consent. No consent, approval, order or authorization
of, or designation, registration, declaration or filing with, any federal,
state, local or other governmental authority on the part of the Purchaser is
required in connection with the valid execution and delivery of this Agreement.

                                       3
<PAGE>

          (h) Restricted Securities. The Purchaser understands that the Company
has no present intention of registering the Securities, and that if the Company
does not (i) register its Common Stock with the Securities and Exchange
Commission pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (ii) become subject to Section 15(d) of the
Exchange Act, (iii) supply information pursuant to Rule 15c2-11 thereunder, or
(iv) have a registration statement covering the Securities under the Securities
Act in effect when Purchaser desires to sell the Securities, the Purchaser may
be required to hold the Securities for an indeterminate period. Purchaser also
understands that any sale of the Securities that might be made by such Purchaser
in reliance upon Rule 144 under the Securities Act may be made only in limited
amounts in accordance with the terms and conditions of that rule.

     5. Restrictive Legend. Each certificate or document representing the
Securities, and any other securities issued in respect of the Securities upon
any stock split, stock dividend, recapitalization, merger, consolidation or
similar event shall be stamped or otherwise imprinted with a legend in
substantially the following form (in addition to any legend required under
applicable state securities laws):

          THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT
          BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
          EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
          SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE
          ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
          THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT
          SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
          REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

     6. Miscellaneous.

          (a) Waivers and Amendments. Any provision of this Agreement may be
amended, waived or modified upon the written consent of the Company and the
Purchasers holding at least a majority in interest of the then outstanding Loan
Amounts.

          (b) Governing Law. This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware regard to the conflicts of law provisions
of the State of Delaware or of any other state.

          (c) Entire Agreement. This Agreement, together with Exhibit A and
Exhibit B attached hereto, constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.

                                       4
<PAGE>

          (d) Expenses. The Company and the Purchasers shall each bear their
respective expenses and legal fees incurred in connection with the negotiation
and consummation of this Agreement.

          (e) Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
(i) upon actual delivery to the party to be notified, (ii) 24 hours after
confirmed facsimile transmission, (iii) one (1) business day after deposit with
a recognized overnight courier, or (iv) three (3) business days after deposit
with the U.S. Postal Service by first class certified or registered mail,
postage prepaid, return receipt requested, addressed or sent (a) if to a
Purchaser, at the address or facsimile number of the Purchaser set forth below
such party's name on the Schedule of Purchasers, or at such other address or
number as the Purchaser shall have furnished to the Company in writing upon 10
days' notice, or (b) if to the Company, at 101 Spear Street, Suite 203, San
Francisco, CA 94105 , fax number (415.645.9206) or at such other address or
number as the Company shall have furnished to the Purchasers in writing upon 10
days' notice.

          (f) Validity. If any provision of this Agreement or a Note shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

          (g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.

                  [remainder of page intentionally left blank]

                                       5
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Note Purchase
Agreement as of the date first set forth above.

                                             COMPANY:

                                             SALON MEDIA GROUP, INC.
                                             a Delaware corporation

                                             By: /s/ Christopher Neimeth
                                                 ----------------------------
                                                 Christopher Neimeth,
                                                 Chief Executive Officer

                                       6
<PAGE>

                          COUNTERPART SIGNATURE PAGE TO
                             NOTE PURCHASE AGREEMENT

                                              PURCHASERS:
                                              -----------

                                              /s/ John Warnock
                                              ------------------------------
                                              John Warnock

                                       7
<PAGE>

                          COUNTERPART SIGNATURE PAGE TO
                             NOTE PURCHASE AGREEMENT

                                              PURCHASERS:
                                              -----------

                                              The Hambrecht 1980 Revocable Trust

                                              By: /s/ William R. Hambrecht
                                                 -------------------------------

                                              Name: William R. Hambrecht
                                                   -----------------------------

                                              Title:  Trustee
                                                     ---------------------------

                                       8
<PAGE>

                                    EXHIBIT A
                                    ---------

                             SCHEDULE OF PURCHASERS
                             ----------------------

PURCHASERS                             DATE OF INVESTMENT     AMOUNT OF NOTE
----------                             ------------------     --------------
John Warnock                              April 4, 2008          $500,000
The Hambrecht 1980
Revocable Trust                           April 4, 2008          $500,000

<PAGE>

                                    EXHIBIT B
                                    ---------

THIS NOTE AND THE SECURITIES EVIDENCED BY THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE
WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF SUCH SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING
THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.

                           CONVERTIBLE PROMISSORY NOTE
                           ---------------------------

$____________                                                    XXXXXX, __ 2008

     FOR VALUE RECEIVED, Salon Media Group, Inc., a Delaware corporation (the
"Company"), promises to pay to ________________________ (the "Holder"), or its
registered assigns, the principal sum of Dollars ($_________), or such lesser
amount as shall then equal the outstanding principal amount hereof, together
with simple interest from the date of this Note on the unpaid principal balance
at a rate equal to seven and one-half percent (7.5%) per annum. The interest
rate shall be computed on the basis of the actual number of days elapsed and a
year of 365 days. Such interest shall be payable in semi-annual installments
and, at the option of the Company, may be paid in cash or by the delivery of a
note in substantially the same form as this Note for an amount equal to the
interest payment then due Holder. All unpaid principal, together with the unpaid
and accrued interest payable hereunder, if not converted by the provisions of
Section 5 below, shall be due and payable on demand at any time after the
earlier of (i) March 31, 2012 (the "Maturity Date"), (ii) when such amounts are
declared due and payable by the Holder upon or after the occurrence of an Event
of Default (as defined below) or (ii) in the event of a Change of Control. This
Note is one of a series of Convertible Promissory Notes containing substantially
identical terms and conditions issued pursuant to the Note Purchase Agreement
dated April 4, 2008 (the "Purchase Agreement"), and the holders of the Notes are
referred to herein as the "Holders."

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

     1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:

          (a) "Change of Control" shall mean (i) the acquisition of the Company
by another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation); or

<PAGE>

(ii) a sale of all or substantially all of the assets of the Company, in either
case, in which the stockholders of the Company immediately prior to the
acquisition or sale, as the case may be, do not hold a majority of the
outstanding shares of capital stock of the surviving corporation.
Notwithstanding the foregoing, a transaction shall not be deemed a Change of
Control if the sole purpose of the transaction is to change the state of the
Company's incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company's
securities immediately prior to such transaction.

          (b) "Common Stock" shall mean the Company's common stock.

          (c) "Obligations" shall mean all principal and accrued interest due
hereunder.

          (d) "Original Conversion Price" shall mean the volume-weighted price
per share of Common Stock on the five (5) trading days prior to the date of
initial Closing under the Purchase Agreement. Such Initial Conversion Price
shall be adjusted to stock splits and the like.

          (e) "Subsequent Conversion Price" shall mean the higher of (i) the
volume-weighted price per share of Common Stock on the five (5) trading days
prior to the closing date of a subsequent Closing which the Holder participated
pursuant to the Purchase Agreement or (ii) the Original Conversion Price. Such
Subsequent Conversion Price shall be adjusted to stock splits and the like.

     2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:

          (a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on the due date hereunder or (ii) any interest or other
payment required under the terms of this Note on the date due, and such payment
shall not have been made within ten (10) days of the Company's receipt of the
Holder's written notice to the Company of such failure to pay;

          (b) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall
(i) apply for or consent to the appointment of a receiver, trustee, liquidator
or custodian of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its or any of its creditors, (iii)
be dissolved or liquidated in full or in part, (iv) become insolvent (as such
term may be defined or interpreted under any applicable statute), (v) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or consent to any such relief or to
the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vi) take any
action for the purpose of effecting any of the foregoing;

          (c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for
the appointment of a receiver, trustee, liquidator or custodian of the Company
or of all or a substantial part of its property, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with respect to
the Company or the debts thereof under any bankruptcy, insolvency or other
similar law or hereafter in effect shall be commenced and an order for relief
entered, or such proceeding shall not be dismissed or discharged within thirty
(30) days of commencement; or

                                        2
<PAGE>

          (d) Breach of Agreements. Unless waived by the Holders of at least a
majority in interest of the then outstanding Loan Amounts (as defined in the
Purchase Agreement) (the "Majority Holders"), the Company's material breach of
any representation, covenant or agreement contained in this Note or the Purchase
Agreement, which such breach is not cured by the Company within ten (10) days
after written notice thereof is given to the Company by the Holder.

     3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default and at any time thereafter during the continuance of such Event
of Default, upon the written consent of the Majority Holders, Holder may declare
all outstanding Obligations payable by the Company hereunder to be immediately
due and payable without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived. In addition to the foregoing
remedies, upon the occurrence or existence of any Event of Default, upon the
written consent of the Majority Holders, the Holder may exercise any other
right, power or remedy granted to it or otherwise permitted to it by law, either
by suit in equity or by action at law, or both.

     4. Prepayment; Payment After Maturity Date Without Demand. This Note may
not be prepaid in whole or in part at any time by the Company without the prior
written consent of the Holder.

     5. Optional Conversion.

          (a) At any time Holder may convert all of the principal and accrued
interest then outstanding under the Note into Common Stock. The number of shares
of Common Stock issued upon conversion shall be equal to the Obligations divided
by (i) the Original Conversion Price if the Holder participated in the initial
Closing or (ii) the Subsequent Closing Price if the Holder participated in a
subsequent Closing.

          (b) Fifteen (15) days prior written notice (the "Company Notice")
shall be delivered to the Holder of this Note at the address last shown on the
records of the Company for the Holder or, if no such address appears, at the
place where the principal executive office of the Company is located, notifying
the Holder of the terms and conditions of a Change of Control, the price per
share to be paid to holders of Common Stock in such Change of Control and
calling upon such Holder, if conversion is elected by the Holder, to surrender
to the Company, in the manner and at the place designated, the Note. If the
Holder elects to convert this Note (or elects to have the Note repaid in full by
the Company in the case of a Change of Control), the Holder shall provide
written notice to the Company no later than five (5) days after the Company
Notice is deemed given.

          (c) No fractional shares of Common Stock shall be issued upon
conversion of this Note. Upon the conversion of all of the principal and accrued
interest outstanding under this Note, in lieu of the Company issuing any
fractional shares to the Holder, the Company shall pay to the Holder the amount
of outstanding principal and accrued interest that is not so converted. Upon
full conversion of this Note, the Company shall be forever released from all its
obligations and liabilities under this Note.

                                        3
<PAGE>

     6. Right of Exchange. In the event that the Company, at any time prior to
the payment in full of this Note, or conversion thereof, shall (a) issue and
sell shares of its common or preferred stock or an instrument convertible into
its common or preferred stock or (b) issue and sell debentures or enter into any
new indebtedness (in either case a "Financing"), then the Holders of the first
$1 million in principal of the Notes issued hereunder may choose to exchange the
outstanding principal balance and accrued interest due under this Note for new
securities issued on the same terms and conditions of the Financing. If the
Company completes a Financing in excess of $500,000, then this Right of Exchange
will terminate 30 days following notice of such a Financing being given to these
Holders.

     7. Successors and Assigns. Subject to the restrictions on transfer
described in Section 8 below, the rights and obligations of the Company and the
Holder of this Note shall be binding upon and benefit the successors, assigns,
heirs, administrators and transferees of the parties.

     8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and the Majority Holders.
Any amendment or waiver effected in accordance with this Section 7 shall be
binding upon the Company, the Holders and each transferee of a Note.
Notwithstanding the foregoing, any amendment which reduces the amount of the
Obligations of this Note shall require the consent of the Holder of this Note.

     9. Transfer of this Note. This Note may not be transferred in violation of
any restrictive legend set forth hereon. Each new Note issued upon transfer of
this Note shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with the Securities Act of 1933,
as amended (the "Securities Act"), unless in the opinion of counsel for the
Company such legend is not required in order to ensure compliance with the
Securities Act. The Company may issue stop transfer instructions to its transfer
agent in connection with such restrictions. Prior to presentation of this Note
for registration of transfer, the Company shall treat the Holder as the owner
and registered holder of this Note for the purpose of receiving all payments of
principal and interest hereon and for all other purposes whatsoever, whether or
not this Note shall be overdue and the Company shall not be affected by notice
to the contrary.

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

     11. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
(i) upon actual delivery to the party to be notified, (ii) 24 hours after
confirmed facsimile transmission, (iii) one (1) business day after deposit with
a recognized overnight courier, or (iv) three (3) business days after deposit
with the U.S. Postal Service by first class certified or registered mail,
postage prepaid, return receipt requested, addressed or sent (a) if to the

                                        4
<PAGE>

Holder, at the address or facsimile number of the Holder set forth below such
party's name on the Schedule of Purchasers, or at such other address or number
as the Holder shall have furnished to the Company in writing upon 10 days'
notice, or (b) if to the Company, at 101 Spear Street, Suite 203, San Francisco,
CA 94105 , fax number (415.645.9206) or at such other address or number as the
Company shall have furnished to the Holder in writing upon 10 days' notice.

     12. Payment. Payment shall be made in lawful tender of the United States.

     13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.

     14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflicts of law
provisions of the State of Delaware or of any other state.

     IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note
to be issued as of the date first set forth above.

                                           Salon Media Group, Inc.
                                           a Delaware corporation

                                           By:
                                              -------------------------------
                                              Christopher Neimeth
                                              Chief Executive Officer

                                        5

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