No.: KK-[     ]		$[      ]
Dated: December __, 2010

FOR VALUE RECEIVED, KaChing KaChing, Inc., a Delaware corporation (the “Maker”), hereby promises to pay to the order  of [       ] (together with its successors, representatives, and permitted assigns, the “Holder”), in accordance with the terms hereinafter provided, the principal amount of [       ] DOLLARS AND NO CENTS ($[      ]), together with interest thereon.  In connection with the issuance of this Note, the Maker is issuing separate convertible promissory notes (the “Other Notes”) to separate purchasers (the “Other Holders”) in one or more subsequent closings pursuant to the Purchase Agreement (as defined in Section 1.01 hereof) in an aggregate amount of at least $1,681,615.11.

 

All payments under or pursuant to this Note shall be made in United States Dollars in immediately available funds to the Holder at the address of the Holder first set forth above or at such other place as the Holder may designate from time to time in writing to the Maker or by wire transfer of funds to the Holder’s account, instructions for which are attached hereto as Exhibit A. The outstanding principal balance of this Note shall be due and payable on June __, 2012 (the “Maturity Date”) or at such earlier time as provided herein.

 

 

 

 

(a) Beginning on the issuance date of this Note (the “Issuance Date”), the outstanding principal balance of this Note shall bear interest, in arrears, at a rate per annum equal to ten  percent (10%), payable quarterly on January 1, April 1, July 1 and October 1, beginning on January 1, 2011 in (A) cash or (B) subject to Section 3.04 below, so long as no Event of Default (as defined in Section 2.01 of this Note) shall have occurred during the relevant calendar quarter, shares of the Maker’s common stock, $.001 par value per share (the “Common Stock”). The Maker shall provide irrevocable written notice to the Holder of the form of interest payment at least ten (10) days prior to an interest payment date. If no such notice is provided at least ten (10) days prior to an interest payment date or if an Event of Default shall have occurred during the relevant calendar quarter, the Maker must make the interest payment in cash. The number of shares of Common Stock to be issued as payment of accrued and unpaid interest shall be determined by dividing (a) the total amount of accrued and unpaid interest to be paid in Common Stock by (b) the lesser of (i) the Conversion Price (as defined in Section 3.02 hereof) and (ii) 90% of the average of the Closing Bid Price (as defined in Section 1.02(b) below) for the ten (10) Trading Days immediately preceding the interest payment date. Interest shall be computed on the basis of a 360-day year of twelve (12) 30-day months and shall accrue commencing on the Issuance Date. Furthermore, upon the occurrence of an Event of Default (as defined in Section 2.01 hereof), then to the extent permitted by law, the Maker will pay interest to the Holder, payable on demand, on the outstanding principal balance of the Note from the date of the Event of Default until such Event of Default is cured at the annual rate of the lesser of twenty-four percent (24%) and the maximum applicable legal rate per annum.

 

(b) The term “Closing Bid Price” shall mean, on any particular date (i) the last closing bid price per share of the Common Stock on such date on any registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the last closing bid price on such exchange or quotation system on the date nearest preceding such date, or (ii) if the Common Stock is not listed then on a registered national stock exchange, the last trading price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (iii) if the Common Stock is not then reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes on such date, as determined in good faith by the Holder, or (iv) if the Common Stock is not then publicly traded, the fair market value of a share of Common Stock as determined by the Holder and reasonably acceptable to the Maker.

 

 

 

 

 

Section 2.01 Events of Default. The occurrence of any of the following events shall be an “Event of Default” under this Note:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(v) any Shareholder Guarantor shall (A) default or be in default in any payment of any amount or amounts of principal of or interest on any Indebtedness that is secured by a Lien on any Pledged Collateral (“Secured Indebtedness”) (notwithstanding the prohibition against incurring or permitting any Liens on Pledged Collateral contained within the Shareholder Guaranties) or (B) default in the observance or performance of any other agreement or condition relating to any Secured Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Secured Indebtedness to cause with the giving of notice if required, such Secured Indebtedness to become due prior to its stated maturity; or

 

 

Section 2.02 Remedies Upon An Event of Default. If an Event of Default shall have occurred and shall be continuing, the Holder of this Note may at any time at its option, (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that upon the occurrence of an Event of Default described in Sections 2.01(q) or (r), the outstanding principal balance and accrued interest hereunder shall be automatically due and payable, (b) demand that the principal amount of this Note then outstanding and all accrued and unpaid interest thereon shall be converted into shares of Common Stock at a Conversion Price per share calculated pursuant to Section 3.01 hereof assuming that the date that the Event of Default occurs is the Conversion Date (as defined in Section 3.01 hereof), or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note, the Purchase Agreement, the Security Documents or applicable law. No course of delay on the part of the Holder shall operate as a waiver thereof or otherwise prejudice the right of the Holder. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

 

 

Section 3.01 Conversion Option. At any time on or after the Issuance Date, this Note shall be convertible (in whole or in part), at the option of the Holder (the “Conversion Option”), into such number of fully paid and non-assessable shares of Common Stock (the “Conversion Rate”) as is determined by dividing (x) that portion of the outstanding principal balance plus any accrued but unpaid interest under this Note as of such date that the Holder elects to convert by (y) the Conversion Price (as defined in Section 3.02 hereof) then in effect on the date on which the Holder faxes a notice of conversion (the “Conversion Notice”), duly executed, to the Maker (facsimile number (702) 463-7007, Attn.: Chief Executive Officer) (the “Conversion Date”); provided, however, that the Conversion Price shall be subject to adjustment as described in Section 3.05 below. The Holder shall deliver this Note to the Maker at the address designated in the Purchase Agreement at such time that this Note is fully converted. With respect to partial conversions of this Note, the Maker shall keep written records of the amount of this Note converted as of each Conversion Date.

 

 

 

(a) Not later than three (3) Trading Days after any Conversion Date (the “Delivery Date”), the Maker or its designated transfer agent, as applicable, shall issue and deliver to the Holder or, at the request of the Holder (provided that a registration statement under the Securities Act providing for the resale of the Common Stock to which the Holder shall be entitled is then in effect or such shares may be sold without the requirement to be in compliance with Rule 144(c)(1) of the Securities Act and otherwise without restriction or limitation pursuant to Rule 144 of the Securities Act), to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) as specified in the Conversion Notice, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. Notwithstanding the foregoing to the contrary, the Maker or its transfer agent shall only be obligated to issue and deliver the shares to DTC on a Holder’s behalf via DWAC if (i) such shares may be issued without restrictive legends and (ii) the Maker and the transfer agent are participating in DTC through the DWAC system. If all of the conditions set forth in clauses (i) and (ii) above are not satisfied, the Maker or its designated transfer agent, as the case may be, shall deliver physical certificates representing the number of shares of Common Stock being acquired upon the conversion of this Note. If in the case of any Conversion Notice, any shares of Common Stock to which a Holder is entitled to receive thereunder are not delivered to or as directed by the applicable Holder by the Delivery Date, the Holder shall be entitled by written notice to the Maker at any time on or before its receipt of such shares of Common Stock thereafter, to rescind such conversion, in which event the Maker shall immediately return this Note tendered for conversion, whereupon the Maker and the Holder shall each be restored to their respective positions immediately prior to the delivery of such notice of revocation, except that any amounts described in Sections 3.03(b) and (c) shall be payable through the date notice of rescission is given to the Maker.

 

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(c) In addition to any other rights available to the Holder, if the Maker fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the shares of Common Stock issuable upon conversion of this Note on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the shares of Common Stock issuable upon conversion of this Note which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Maker shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Common Stock issuable upon conversion of this Note that the Maker was required to deliver to the Holder in connection with the conversion at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Note and equivalent number of shares of Common Stock for which such conversion was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Maker timely complied with its conversion and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Maker shall be required to pay the Holder $1,000. The Holder shall provide the Maker written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Maker. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Maker’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

 

 

 

 

 

 

 

 

(v) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Issuance Date there shall be a capital reorganization of the Maker (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 3.05(a)(i), (ii) and (iii), or a reclassification, exchange or substitution of shares provided for in Section 3.05(a)(iv)), or a merger or consolidation of the Maker with or into another corporation where the holders of outstanding voting securities of the Maker prior to such merger or consolidation do not own over fifty percent (50%) of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or the sale of all or substantially all of the Maker’s properties or assets to any other person (an “Organic Change”), then as a part of such Organic Change, (A) if the surviving entity in any such Organic Change is a public company that is registered pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and its common stock is listed or quoted on a national exchange or the OTC Bulletin Board, an appropriate revision to the Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the Holder shall have the right thereafter to convert such Note into the kind and amount of shares of stock and other securities or property of the Maker or any successor corporation resulting from Organic Change, and (B) if the surviving entity in any such Organic Change is not a public company that is registered pursuant to the Exchange Act, or its common stock is not listed or quoted on a national exchange or the OTC Bulletin Board, the Holder shall have the right to demand that the unpaid principal of this Note and any accrued interest thereon be immediately prepaid by the Maker. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3.05(a)(v) with respect to the rights of the Holder after the Organic Change to the end that the provisions of this Section 3.05(a)(v) (including any adjustment in the applicable Conversion Price then in effect and the number of shares of stock or other securities deliverable upon conversion of this Note and the Other Notes) shall be applied after that event in as nearly an equivalent manner as may be practicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

 

 

 

 

The undersigned hereby  irrevocably elects to convert $ ________________  of the principal amount and ______________ of accrued but unpaid interest of the above  Note No.  ______ into  shares  of Common  Stock of KaChing KaChing,  Inc. (the “Maker”)  according to the conditions hereof, as of the date written below.   Date of Conversion: _____________________________________________________________________________________________________________________________________________   Applicable Conversion Price: ______________________________________________________________________________________________________________________________________   Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the Date of Conversion:____________________________________________________________   Number of shares of Common Stock to be issued upon Conversion:____________________________________________________________________________________________________________________________________________________   Signature: _____________________________________________________________________________________________________________________________________________________________   Address:  _____________________________________________________________________________________________________________________________________________________