Document:

Exhibit 10.2

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: $9,500.00                         ISSUE DATE: JANUARY 13, 2014
PURCHASE PRICE: $9,500.00

                           CONVERTIBLE PROMISSORY NOTE

     FOR  VALUE  RECEIVED,  LIBERTY  COAL  ENERGY  CORP.,  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 $9,500.00  together with any interest as set forth herein,
on October 15, 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 funded 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
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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

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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.

     1.2 Conversion 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 45% multiplied by the Market Price (as defined herein)  (representing
a discount  rate of 55%).  "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  "OTCQB") as reported by a reliable  reporting  service  ("Reporting
Service") designated by the Holder (i.e.  Bloomberg) or, if the OTCQB 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  OTCQB,  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,

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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.

     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 (ii) 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.

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     (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.

     (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

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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.

     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

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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."

     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.

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     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. The provision of this Section 1.6b
shall not apply to the  consolidation  of the Company shares on a 1 share for 15
shares which is planned within 90 days of signing this Note.

                                       8
<PAGE>
     (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 from the date the
Note is signed until the Maturity  Date,  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.

     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

                                       9
<PAGE>
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 [INTENTIONALLY DELETED].

     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

                                       10
<PAGE>
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 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 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 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  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 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)

                                       11
<PAGE>
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 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 "Second Optional Prepayment Amount") equal to 140%,  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  any to the contrary stated elsewhere  herein,  at any time
during the period  beginning  on the date that is one hundred  twenty-one  (121)
days 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 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 150%,  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.

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

                                       12
<PAGE>
                         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.

     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:

                                       13
<PAGE>
     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, as of the date of this Note,  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.

     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

                                       14
<PAGE>
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  OTCQB 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
<PAGE>
     3.14 Reverse  Splits..  The  Borrower  effectuates  a reverse  split of its
Common Stock without prior written notice to the Holder on the date that news of
the split is made public.

          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

                                       16
<PAGE>
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.

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

                                       17
<PAGE>
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 Borrower, to:
          LIBERTY COAL ENERGY CORP.
          2782 Gateway Road
          Carlsbad, CA 92009
          Attn: ROBERT T. MALASEK, Chief Financial Officer
          facsimile:

     With a copy by fax only to (which copy shall not constitute notice):
          Jackson|DeMarco|Tidus|Peckenpaugh
          Jason J Belice
          2030 Main Street, 12th Floor
          Irvine, California 92614
          Tel. 949.851.7410 Fax. 949.752.0597

     If to the Holder:
          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

     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

                                       18
<PAGE>
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.

     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.

                                       19
<PAGE>
     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.

     4.10  Remedies.  The  Borrower  acknowledges  that  a  breach  by it of its
obligations  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  obligations
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 January13, 2014.

                                      LIBERTY COAL ENERGY CORP.

                                      By:
                                         ------------------------------------
                                         ROBERT T. MALASEK
                                         Chief Financial Officer

                                       20
<PAGE>
                         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 LIBERTY COAL ENERGY  CORP.,  a Nevada  corporation  (the  "Borrower")
according to the conditions of the convertible  note of the Borrower dated as of
January13,  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

                                       21exh_101.htm

EXHIBIT 10.1

 

SEPARATION AND RELEASE AGREEMENT

 

This Separation and Release Agreement (the “Agreement”), by and between BBCN Bank (“BBCN”) and Soo Bong Min (“Executive”), is effective as of January 15, 2014.

 

WHEREAS, BBCN has employed Executive pursuant to an employment agreement between Executive and BBCN dated April 30, 2013 (the “Employment Agreement”).

 

WHEREAS, BBCN and Executive have mutually agreed to terminate the Employment Agreement and Executive’s employment and service as an executive officer of and a director of BBCN in accordance with this Agreement; and

 

WHEREAS, BBCN and Executive desire to enter into this Agreement to memorialize the terms of, and each party’s rights and obligations in connection with, the termination of Executive’s employment and service as a director.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, including the execution of the Release Agreement (as hereinafter defined) by Executive, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties agree as follows:

 

1) Termination of Service.  The Employment Agreement and Executive’s employment with BBCN, and any and all of Executive’s other positions and offices (including service as a director) with BBCN, will terminate effective as of the close of business on January 15, 2014 without the need for any further action by Executive (the “Termination Date”); provided that Sections 2(f), 6, 7, 8, 9 and 13 of the Employment Agreement shall survive termination of the Employment Agreement.  Without limiting the generality of the foregoing, Executive’s execution and delivery of this Agreement shall serve as Executive’s resignation, effective on the close of business on the Termination Date, as a director of the Bank (and of any of its affiliates)  and as a member of any Committee of the Bank (and of its affiliates).

 

2) Duties and Authority.  After the Termination Date, Executive shall have no authority to act on behalf of BBCN, or to bind BBCN to any undertaking or agreement.

 

3) Accrued Obligations; Reimbursements. Within five (5) business days after the Termination Date, BBCN shall pay to Executive any earned but unpaid annual base salary and any accrued but unused vacation pay, and, in accordance with the applicable expense reimbursement policy, as soon as practicable following submission of all applicable documentation, any expense reimbursement payments owed to Executive for expenses incurred prior to the Termination Date.

 

4) Payments and Benefits.  In addition to the accrued and other amounts described in Section 3 of this Agreement, provided Executive executes the Release and Covenant attached hereto as Exhibit A (the “Release Agreement”) on or prior to February 5, 2014, and does not revoke the Release Agreement within the seven (7) day revocation period following execution thereof (the “Revocation Period”), BBCN  shall pay or provide to Executive the following (in each case, subject to withholding of applicable taxes):

 

  

 

  

a) A lump sum cash payment in the amount of Three Hundred Eighty Five Thousand Dollars ($385,000.00), less required withholdings, to be paid the first business day following the expiration of the Revocation Period without Executive revoking the Release Agreement.

 

b) BBCN shall accelerate the vesting of sixteen thousand (16,000) unvested shares of performance stock units of BBCN Bancorp (the “Performance Units”) granted to Executive pursuant to the Performance Units award agreement dated as of May 1, 2013.  Notwithstanding the terms of the Performance Units award agreement, the Performance Units shall be deemed fully vested immediately upon the expiration of the Revocation Period without Executive revoking the Release Agreement.

 

5) No Other Benefits. Except for (a) the amounts and benefits described in Sections 3 and 4 of this Agreement, (b) Executive’s rights with respect to any accrued and vested benefits under any qualified 401(k) savings plan and any right to continuation of group health coverage at Executive’s expense in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), and (c) Executive’s claims for indemnification and advancement of expenses as a director, officer or employee of BBCN under the Articles of Incorporation or Bylaws of BBCN or any indemnification agreement, Executive shall not be entitled to any other payments or benefits from BBCN in respect of his employment or termination thereof.  For the avoidance of doubt, except as provided for in Section 4(b), any other unvested outstanding equity awards shall be forfeited as of the Termination Date.

 

6) Nonsolicitation of Employees.  For a period of eighteen (18) months after the Termination Date, without the written consent of BBCN’s Board of Directors or a person authorized thereby (which consent may be withheld in the absolute discretion of BBCN), Executive shall not, directly or indirectly solicit, recruit, induce, or encourage any person who is an employee of BBCN during such eighteen-month period to terminate his or her employment with BBCN or to become an employee of any organization with which Executive may become affiliated, or cause or influence any organization with which Executive may become affiliated to do the same; provided, however, that nothing in this Section 6 shall prohibit Executive or any organization with which Executive may become affiliated from (x) soliciting any person whose employment or engagement for services was terminated by BBCN at least three months prior to the date of such solicitation provided such termination was not encouraged or assisted by Executive or any organization with which Executive may become affiliated, or (y) engaging in any general solicitation not targeted at any employee of BBCN, including any non-directed executive searches or placing general advertisements for employees in newspapers or other media of general circulation.

 

7) Enforcement.  The parties agree and acknowledge that the obligations of the parties pursuant to Sections 6, 8 and 9 of this Agreement are of a unique and special nature and that a party will not have an adequate remedy at law in the event of a failure by the obligated party to abide by his or its obligations under such Sections, nor will money damages adequately compensate for the injury caused by breach of such obligations.  Therefore, it is agreed and hereby acknowledged by the parties that, in the event of a breach by a party of any of such obligations, BBCN and Executive shall have the right, among other rights, to damages sustained thereby and to obtain an injunction or decree of specific performance from any court of 

 

  

2

  

competent jurisdiction to restrain or compel the other party to perform as agreed in Section 6, 8 or 9 of this Agreement, as applicable. Nothing herein shall in any way limit or exclude any other right granted by law or equity to any party.

 

8) Cooperation.   The parties acknowledge that from time to time the assistance and cooperation of Executive may be of value with respect to (a) areas and matters in which Executive was involved during his employment, including with respect to any internal or external communications concerning the business of BBCN, his involvement and participation therein and his termination of employment, and (b) transitioning matters in which Executive was involved during his employment. Executive shall provide such assistance and cooperation without additional compensation. Executive will be provided an opportunity to review and approve any internal or external announcements regarding his termination of service.  Executive acknowledges that he has approved a press release in the form attached hereto as Exhibit B (the “Press Release”) to be issued upon the execution and delivery of this Agreement. Executive agrees not to make any public comments (including any comments to the media or press) regarding the terms and circumstances surrounding his departure from BBCN other than as set forth in the Press Release.

 

9) Non-Disparagement.  Executive shall not make any public comments disparaging or denigrating BBCN or BBCN Bancorp, including each of its respective current, former and future officers, directors, employees, agents, representatives, attorneys, and shareholders, or encourage or assist any other person or entity making any such public comments. BBCN shall use its reasonable best efforts to cause the members of BBCN’s Board of Directors and its executive officers with the title of Executive Vice President and above not to make any public comments disparaging or denigrating Executive or encourage or assist any other person or entity making any such public comments.  Nothing set forth herein shall be interpreted to prohibit either party from responding publicly to incorrect public statements, making truthful statements when required by law, subpoena, court order, or the like and/or from responding to any inquiry about this Agreement or its underlying facts and circumstances by any regulatory or investigatory organization and/or from making any truthful statements in the course of any legal proceeding.

 

10) Return of Property. No later than the Termination Date, Executive agrees to return to BBCN all company-owned property in his possession, specifically including all keys and card keys to company buildings or property; all company-owned equipment; and all company documents and papers, including all trade secrets and other confidential company information and, after returning such information to BBCN, to purge all BBCN confidential information from any personal computers, tablets or other such devices and otherwise to follow BBCN security protocols applicable to employees whose employment has been terminated.

 

11) Entire Agreement.  This Agreement sets forth the complete agreement between Executive and BBCN relating the Executive’s termination of employment.  Executive acknowledges that, except as described in this Agreement, Executive is not entitled to any further compensation or benefits from BBCN.  Executive further acknowledges and agrees that, in signing this Agreement, Executive does not rely and has not relied upon any representations or statements by BBCN or representative thereof with regard to the subject matter, basis, or effect of this Agreement or the Release Agreement that are not specifically set forth in this Agreement 

 

  

3

  

or the Release Agreement. Notwithstanding the foregoing, nothing in this Agreement is intended to or shall limit, supersede, nullify, or affect (a) Executive’s claims for indemnification and advancement of expenses as a director, officer or employee of BBCN under the Articles of Incorporation or Bylaws of BBCN and any indemnification agreement or (c) any duties and responsibilities Executive may have or owe to BBCN by virtue of any separate agreement or obligation. Without limiting the generality of the foregoing, after the termination of his employment, Executive shall continue to have a duty and obligation to maintain the confidentiality of all trade secrets (including lists of customers and customer prospects of BBCN) and other confidential information of BBCN and its customers and not to use any such trade secrets or other confidential information for any purpose except in connection with the services to be provided pursuant to Section 8 of this Agreement.

 

12) Severability.  If any section, subsection or provision hereof is found for any reason whatsoever to be invalid or inoperative, that section, subsection or provision shall be deemed severable and shall not affect the force and validity of any other provision of this Agreement.  If any covenant herein is determined by a court to be overly broad thereby making the covenant unenforceable, the parties agree and it is their desire that such court shall substitute a reasonable judicially enforceable limitation in place of the offensive part of the covenant and that as so modified the covenant shall be as fully enforceable as if set forth herein by the parties themselves in the modified form.  The covenants of Executive in this Agreement shall each be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of Executive against BBCN, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by BBCN of the covenants in this Agreement.

 

13) No Admission of Wrongdoing.  Neither this Agreement nor the Release Agreement shall be construed as an admission of liability or wrong-doing by either party.

 

14) No Limitation of Rights.  Nothing in this Agreement shall limit or otherwise affect BBCN’s rights with respect to any compensation plans, agreements or arrangements, including, without limitation, any rights it may have to amend, modify or terminate such plans, agreements or arrangements in accordance with their terms.

 

15) Governing Law.  This Agreement shall be interpreted, construed, and governed by the laws of the State of California, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

 

16) Construction.  Each party acknowledges that: (a) it has read this Agreement and the Release Agreement; (b) it has been represented (or has an opportunity to be represented) in the preparation, negotiation and execution of this Agreement by legal counsel of its own choice; and (c) it understands the terms and consequences of this Agreement and is fully aware of the legal and binding effect of this Agreement. This Agreement shall not be construed more strongly against either party, regardless of who is more responsible for its preparation.  If there is a conflict between this Agreement and any present or future law, the part that is affected shall be curtailed only to the extent necessary to bring it within the requirements of that law.

 

  

4

  

17) Expenses and Fees.  Subject to the next sentence, each party shall bear the expenses incurred by such party in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby.  If any legal action or arbitration is brought relating to this Agreement, the prevailing party in any final judgment or arbitration award, or the non-dismissing party in the event of a voluntary dismissal by the party instituting the action, shall be entitled to the full amount of all reasonable expenses, including all court costs, arbitration fees and actual attorneys’ fees paid or incurred in good faith.

 

18) Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

19) Successors.  This Agreement may not be assigned by Executive.  In addition to any obligations imposed by law upon any successor to BBCN, BBCN will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the stock, business and/or assets of BBCN, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that BBCN would be required to perform it if no such succession had taken place.  Executive agrees and consents to any such assumption by a successor or parent of BBCN, as well as any assignment of this Agreement by BBCN for that purpose.  As used in this Agreement, “BBCN” shall mean BBCN as herein before defined as well as any such successor or parent that expressly assumes this Agreement or otherwise becomes bound by all of its terms and provisions by operation of law.

 

20) Amendment.  This Agreement may be amended only by written agreement executed by each of the parties.

 

21) Tax Withholding.  BBCN may deduct from all compensation and benefits payable under this Agreement any taxes or withholdings BBCN is required to deduct pursuant to state, federal or local laws.

 

22) Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered in accordance with the terms and conditions set forth in the arbitration agreement attached as an exhibit to the Employment Agreement.

 

23) Notices.  All notices or other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered: (a) by hand; (b) by a nationally recognized overnight courier service; or (c) by United States first class registered or certified mail, return receipt requested, to the principal address of the other party, as set forth below. The date of notice shall be deemed to be the earlier of (i) actual receipt of notice by any permitted means, or (ii) two business days following dispatch by overnight delivery service or the United States Mail.  Executive shall be obligated to notify the Company in writing of any change in Executive's address.  Notice of a change of address shall be effective only when done in accordance with this paragraph.

 

  

5

  

Company's Notice Address:

 

BBCN Bank

3731 Wilshire Blvd., Suite 1000

Los Angeles, CA 90010

Attn:  Legal Department

 

Executive’s Notice Address:

 

Soo Bong Min

5326 Godbey Drive

La Canada, CA 91011

 

24) Internal Revenue Code Section 409A.  To the extent applicable, it is intended that this Agreement and any payment made hereunder (including each installment payment of cash severance made pursuant to Section 2 above) shall comply with the requirements of Section 409A of the Internal Revenue Code, or an exemption or exclusion therefrom and any related regulations or other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service and this Agreement shall be interpreted accordingly; provided that, for the avoidance of doubt, this provision shall not be construed to require a gross-up or other reimbursement payment in respect of any taxes, interest or penalties imposed on Executive as a result of Internal Revenue Code Section 409A.

 

(Signature page follows.)

 

 

 

  

6

  

IN WITNESS WHEREOF, each party has signed this Agreement as of the date first set forth above.

 

 

	 	

BBCN BANK

	 
	 	 	 	 
	 	By: 	 	 
	 	 	Kevin S. Kim, Chairman
	 	 	 	 
	 	 	 	 
	 	SOO BONG MIN	 
	 	 	 
	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

  

7

  

EXHIBIT A

 

RELEASE AND COVENANT

 

 

 

 

 

 

 

  

 

  

RELEASE AND COVENANT

 

This Release and Covenant (this “Agreement”) sets forth the agreement of BBCN Bank (the "Company") and Soo Bong Min ("Executive") relating to the termination of Executive’s employment with Company.  Subject to the execution of this Agreement, the parties hereto agree as follows:

1.         Termination of Employment.

(A) Executive agrees and acknowledges that the termination of his employment with Company shall be effective as of January 15, 2014 (the "Termination Date").

(B) Executive acknowledges Executive's obligation  promptly to return to the Company all property of the Company in Executive's possession including, without limitation, keys, credit cards, cell phones, pagers, computers, office equipment, documents and files and instruction manuals on or before the Termination Date, or earlier if so requested  by the Company. After the Termination Date, the Company shall forward all mail addressed to Executive to the most recent address provided by Executive to the Company.

2.         Release.

(A) In consideration of the foregoing and the benefits paid and payable to Executive under the Employment Agreement, Executive hereby waives all claims against Company, its affiliates  and their respective officers, directors, executives, employees representatives and agents (hereinafter the "Releasees"), and releases and discharges the Releasees from liability for any and all claims and damages that Executive may have against them as of the date of this Agreement, whether known or unknown, including, but not limited to, any claims arising out of his employment relationship with the Company or its affiliates or the termination of such employment, or any violation of any federal, state or local fair employment practice law, including Title VII of the Civil Rights Act, the Civil Rights Act of 1991, the Age Discrimination in Employment Act as amended by the Older Workers' Benefit Protection Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, the California Family Rights Act, the California Labor Code, or any other employee relations statute, rule, executive order, law or ordinance, tort, express or implied contract, public policy or other obligations; provided, however, that nothing herein shall be deemed a waiver or release of Executive's right to enforce the obligations of Company under this Agreement or the Executive  Employment Agreement or Executive's rights to indemnification to the fullest extent provided  by law or in any applicable articles of incorporation, charter or similar document, by-laws  or contract.

(B) Executive acknowledges that Executive has had up to 21 days to consider the terms of this Agreement and is hereby advised by Company to discuss the terms of this Agreement with an attorney unrelated to Company prior to signing this Agreement. Executive further acknowledges that Executive is entering into this Agreement freely, knowingly, and voluntarily, with a full understanding of its terms. Executive also acknowledges that Executive will have 7 

  

 

  

days from the date he signs this Agreement to revoke the Agreement by notifying the Legal Department of the Company in writing.

 

3.         Waiver.

The Executive hereby expressly waives and relinquishes all rights and benefits under Section 1542 of the California Civil Code which provides:

"SECTION 1542. GENERAL RELEASE - CLAIM EXTINGUISHED. A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HIS MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."

The Executive understands and acknowledges that the significance and consequences of this waiver of Section 1542 of the Civil Code is that even if Executive should eventually suffer damages arising out of Executive's employment relationship with the Company and its affiliates, or termination of such employment, Executive will not be permitted to make any claim for those damages except as expressly permitted by this Agreement. Furthermore, Executive acknowledges that the Company intends these consequences even as to claims for injuries and/or damages that may exist as of the date of this Agreement but which Executive does not know exist, and which, if known, would materially affect Executive's decision to execute this Agreement.

4.         Cooperation. Executive agrees to cooperate fully with Company and to provide such information as Company may reasonably request with respect to any Company related transaction, investment or other matter in which Executive was involved in any way while employed by Company.

5.         No Reliance. The parties hereto represent and acknowledge that, in executing this Agreement, they do not rely and have not relied upon any representation or statement, written or oral, made by either of the parties or by either of the parties' agents, attorneys, or representatives with regard to the subject matter, basis, or effect of this Agreement or otherwise, other than those specifically stated in this written Agreement.

6.         Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, administrators, representatives, executors, successors, and assigns. This Agreement shall also inure to the benefit of all the Releasees and their respective heirs, administrators, representatives, executors, successors, and assigns. This Agreement shall not be assignable by Executive.

7.         No Waiver. Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach hereof, or as a waiver of a breach of any other provision.

  

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8.         Interpretation: Choice of Law. This Agreement shall be interpreted in accordance with the plain meaning of its terms and not strictly for or against any of the parties hereto. This Agreement and all provisions hereof shall be governed by and construed under the laws of the State of California without regard to the choice of law rules thereof

9.         Integration Clause. This Agreement, along with the Employment Agreement and the Arbitration Agreement, constitute the entire agreement between Executive and the Company concerning the subject matter addressed herewith. No amendments to this Agreement will be valid unless in writing and signed by Executive and an authorized representative of the Company.

10.           Acknowledgment; Counterpart Execution. Executive acknowledges that Executive has carefully read this Agreement, fully understands and accepts all of its provisions, and signs it voluntarily of Executive's own free will. Executive further acknowledges that Executive has been provided a full opportunity to review and reflect on the terms of this Agreement and to seek the advice of legal counsel of Executive's choice. This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original.  Photographic and facsimile copies of such signed counterparts may be used in lieu of the originals for any purpose.

 

IN WITNESS WHEREOF, each party has signed this Agreement as of the date set forth below.

 

	 	

BBCN BANK

	 
	 	 	 	 
	 	By:	 	 
	 	 	Kevin S. Kim, Chairman
	 	 	 	 
	 	Date:	 	 
	 	 	 	 
	 	 	 	 
	 	SOO BONG MIN	 
	 	 	 	 
	 	 	 	 
	 	Date:	 	 

 

 

 

  

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EXHIBIT B

 

PRESS RELEASE

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