CrowdGather,
Inc., a Nevada corporation (the “ Company
”), for value received, hereby promises to pay to
Smart Goal Investment Limited (“ Holder
”), the sum of Five Hundred Thousand Dollars ($500,000)
on the terms and conditions set forth in this Convertible
Promissory Note (“ Note
”). Payment for all amounts due hereunder
shall be made by mail to the registered address of
Holder.
The
following is a statement of the rights of Holder of this Note
and the conditions to which this Note is subject, and to which
Holder hereof, by the acceptance of this Note,
agrees:
1.
Maturity
. The principal hereof and any unpaid accrued
interest hereon, as set forth below, shall be due and payable
on the earlier to occur of: (i) July 8, 2009
(“ Maturity
Date ”); and (ii) when declared due and payable
by Holder upon the occurrence of an Event of Default (as
defined below).
2.
Interest
. This Note shall accrue interest on the principal
at a rate of eight percent (8%) per annum (the “
Interest
Rate ”). Interest shall be calculated
on the basis of a 360-day year for the actual number of days
elapsed. Interest accruing on this Note shall be
subject to mandatory conversion as provided in Section 5
below, except that upon an occurrence of an Event of Default,
the Company shall be obligated to pay the interest due on this
Note by delivering to Holder cash equal to the outstanding
principal amount of the Note plus any due and unpaid
interest. If there occurs an acceleration or
prepayment of the Note prior to the Maturity Date in
accordance with the terms hereof, all interest due and payable
at such time on the principal amount due shall be paid in
full. All payments hereunder are to be applied
first to reasonable costs and fees referred to herein, second
to the payment of accrued interest, and the remaining balance
to the payment of principal.
3.
Events of
Default . If any of the events specified in
this Section 3 shall occur (herein individually referred to as
an “ Event of
Default ”), Holder may, so long as such condition
exists, declare the entire principal and unpaid accrued
interest hereon immediately due and payable, by notice in
writing to the Company:
(a) Default
in the payment of the principal or unpaid accrued interest of
this Note when due and payable; or
(b) The
institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to institution of
bankruptcy or insolvency proceedings against it or the filing
by it of a petition or answer or consent seeking
reorganization or release under the Federal Bankruptcy Act, or
any other applicable Federal or state law, or the consent by
it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar
official of the Company, or of any substantial part of its
property, or the making by it of an assignment for the benefit
of creditors, or the taking of corporate action by the Company
in furtherance of any such action; or
(c) If,
within 60 calendar days after the commencement of an action
against the Company, without the consent or acquiescence of
the Company (and service of process in connection therewith on
the Company) seeking any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar relief
under any present or future statute, law or regulation, such
action shall not have been resolved in favor of the Company or
all orders or proceedings thereunder affecting the operations
or the business of the Company stayed, or if the stay of any
such order or proceeding shall thereafter be set aside, or if,
within 60 calendar days after the appointment without the
consent or acquiescence of the Company of any trustee,
receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company, such
appointment shall not have been vacated.
4.
Holder’s
Rights Upon Event of Default . Upon the
occurrence and continuance of any Event of Default, Holder in
his sole and absolute discretion shall have the right
to:
(i) convert
all of the principal amount and unpaid accrued interest
attributable to this Note into shares of the Company’s
$.001 par value common stock (“Common Stock”) at a
conversion price of $1.00 per share; or
(ii) declare
all unpaid interest and principal immediately due and payable
and exercise all other legal rights in connection
therewith.
5.
Conversion
.
(a)
Mandatory
Conversion . The outstanding principal
balance and unpaid accrued interest on this Note shall
automatically convert into shares of Common Stock immediately
prior to the closing of the
