f8k071910_clearlite.htm

0001213900-10-002981.txt : 20100723 0001213900-10-002981.hdr.sgml : 20100723 20100723172651 ACCESSION NUMBER: 0001213900-10-002981 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20100719 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20100723 DATE AS OF CHANGE: 20100723 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLEAR-LITE HOLDINGS, INC. CENTRAL INDEX KEY: 0001412299 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 208257363 STATE OF INCORPORATION: NV FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-52877 FILM NUMBER: 10968091 BUSINESS ADDRESS: STREET 1: 102 NE 2ND STREET STREET 2: SUITE 400 CITY: BOCA RATON STATE: FL ZIP: 33432 BUSINESS PHONE: 561-544-6966 MAIL ADDRESS: STREET 1: 102 NE 2ND STREET STREET 2: SUITE 400 CITY: BOCA RATON STATE: FL ZIP: 33432 FORMER COMPANY: FORMER CONFORMED NAME: AirtimeDSL DATE OF NAME CHANGE: 20081027 FORMER COMPANY: FORMER CONFORMED NAME: China H2O DATE OF NAME CHANGE: 20080617 FORMER COMPANY: FORMER CONFORMED NAME: AirtimeDSL DATE OF NAME CHANGE: 20070913 8-K 1 f8k071910_clearlite.htm CURRENT REPORT f8k071910_clearlite.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 19, 2010

Clear-Lite Holdings, Inc.

(Exact name of registrant as specified in its charter)

Nevada	000-52877	20-8257363
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

102 NE 2nd Street, PMB 400

Boca Raton, FL 33432-3908

(Address of principal executive offices, including zip code)

(561) 544-6966

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On July 19, 2010 (the “Effective Date”), Clear-Lite Holdings, Inc., a Nevada corporation (the “Company”), entered into a convertible promissory note of up to $650,000 with one accredited investor (the “Investor”) (the “Initial Note”). This is the first of a series of convertible notes between the Company and the investor which may occur over the next several years which, if fully funded, could provide the Company with funding aggregating up to $4,150,000, in the form of seven (7) $500,000 convertible promissory notes. ; However, there are no assurances that any further funding transactions will occur, or if further transactions do occur, the number of potential transactions which may occur is uncertain and dependent on numerous factors including, without limitation, the Company’s progress in developing its current business plan, its financial condition and resources, strength and volatility of stock prices for the Company’s common stock and other factors over which the Company has no control.

Pursuant to the terms of the Initial Note, the Investor is entitled to have such shares underlying the note registered in a registration statement, to be filed with the U.S. Securities & Exchange Commission (the “SEC”) within thirty (30) days of the Effective Date (the “Registration Statement”). It is anticipated that the Company will receive (i) $115,000 within five (5) business days of the Effective Date; (ii) $50,000 within five (5) business days of filing the Registration Statement; (iii) $50,000 within five (5) business days of the earlier of (a) filing of the first amended Registration Statement or (b) the SEC declaring the Registration Statement effective; (iv) $ 150,000 within ten (10) business days of notice of the Registration Statement being declared effective by the SEC; (v) $150,000 within thirty (30) business days of notice of the Registration Statement being declared effective by the SEC; and (vi) $135,000 within sixty (60) business days of notice of the Registration Statement being declared effective by the SEC.

The Initial Note bears interest at a rate of 10% and has a maturity date of July 19, 2013. Prepayment under the Initial Note is not permitted, unless approved by the Investor. Under the terms of the Initial Note, the Investor is entitled, at its option, to convert all or part of the principal amount and accrued interest into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), at a conversion price equal to the lesser of (i) $0.10 or (ii) 65% of the average of the two lowest closing prices of the Common Stock in the twenty two (22) trading days immediately prior to the conversion, subject to adjustment in certain circumstances.

The Initial Note is subject to various default provisions (an “Event of Default”), and the occurrence of such an Event of Default will cause the outstanding principal amount under the Initial Note, together with accrued and unpaid interest and all other amounts payable under the Initial Note, to become immediately due and payable to the Investor.

The Initial Note contains a standard “blocker” provision so that the Investor shall not have the right to convert any portion of the Initial Note to the extent that, after giving effect to such conversion, the Investor and its affiliates would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As more fully described in Item 1.01, on the Effective Date, the Company entered into the Initial Note with the Investor. The Initial Note is a debt obligation arising other than in the ordinary course of business which constitutes a direct financial obligation on the Company.

Item 3.02 Unregistered Sales of Equity Securities.

Reference is made to the description set forth under Item 1.01 above with respect to the Initial Note, which is incorporated into this Item 3.02 by reference.

The Initial Note was offered and sold to the Investor in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder. The Investor is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description

10.1 $650,000 Convertible Promissory Note, dated July 19, 2010

10.2 Form of $500,000 Convertible Promissory Note

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Clear-Lite Holdings, Inc.

Date: July 23, 2010	By:	/s/ Thomas Irvine
	Name:	Thomas Irvine
	Title:	Chief Executive Officer and President

EX-10.1 2 f8k071910ex10i_clearlite.htm $650,000 CONVERTIBLE PROMISSORY NOTE, DATED JULY 19, 2010 f8k071910ex10i_clearlite.htm

Exhibit 10.1

CONVERTIBLE PROMISSORY NOTE

$650,000 PLUS INTEREST DUE & PAYABLE

DOCUMENT A-07192010

THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE HARBOR PROVISION.

FOR VALUE RECEIVED, on the Effective Date, as defined below on the signature page, Clear-Lite Holdings, Inc. as Obligor ("Borrower,” or “Obligor”), hereby promises to pay to the Lender (“Lender” or “Holder”), as defined below on the signature page, the Principal Sum, as defined below, along with the Interest Rate, as defined below, according to the terms herein.

The "Lender" shall be:	JMJ Financial / Its Principal, or Its Assignees
The "Principal Sum" shall be:	$650,000 (six hundred fifty thousand US Dollars) Subject to the following: accrued, unpaid interest shall be added to the Principal Sum.
The “Consideration” shall be:	$650,000 (six hundred fifty thousand US dollars) in the form of cash payment by wire or check as set forth in the attached Funding Schedule and corresponding Registration Rights Agreement.
The "Interest Rate" shall be:	10% one-time interest charge on the Principal Sum. No interest or principal payments are required until the Maturity Date, but both principal and interest may be included in conversion prior to maturity date.
The "Conversion Price" shall be the following price:	As applied to the Conversion Formula set forth in 2.2, the lesser of (a) $0.10 or 65% (sixty five percent) of the average of the two lowest closing prices in the 22 trading days prior to the conversion; as applies to Clear-Lite Holdings, Inc. voting common stock.
The "Maturity Date" is the date upon which the Principal Sum of this Note, as well as any unpaid interest shall be due and payable, and that date shall be:	July 19, 2013
Registration Rights shall be:	Registration rights of the common shares underlying this note are set forth in the corresponding Registration Rights Agreement.
The “Prepayment Terms” shall be:	Prepayment is not permitted without the consent of the Lender.

ARTICLE 1 PAYMENT-RELATED PROVISIONS

1.1 Interest Rate. Subject to the Holder's right to convert, interest payable on this Note will accrue interest at the Interest Rate and shall be applied to the Principal Sum.

1.2 Payable on Demand. This Note is payable on demand in an amount not to exceed the cash amount paid in as set forth in the attached Funding Schedule.

ARTICLE 2 CONVERSION RIGHTS

The Holder will have the right to convert the Principal Sum and accrued interest under this Note into Shares of the Borrower's Common Stock as set forth below.

2.1 Conversion Rights and Cashless Exercise. Subject to the terms set forth in Section 2.7, the Holder will have the right at its election from and after the Effective Date, and then at any time, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest into shares of fully paid and nonassessable shares of common stock of Clear-Lite Holdings, Inc. (as such stock exists on the date of issuance of this Note, or any shares of capital stock of Clear-Lite Holdings, Inc. into which such stock is hereafter changed or reclassified, the "Common Stock") as per the Conversion Formula set forth in Section 2.2. Any such conversion shall be cashless, and shall not require further payment from Holder. &# 160;Unless otherwise agreed in writing by both the Borrower and the Holder, at no time will the Holder convert any amount of the Note into common stock that would result in the Holder owning more than 4.99% of the common stock outstanding of Clear-Lite Holdings, Inc. Shares from any such conversion will be delivered to Holder by 2:30pm EST within 3 (three) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment).

2.2. Conversion Formula. The number of shares issued through conversion is the conversion amount divided by the conversion price.

# Shares = Conversion Amount

Conversion Price

2.3. This section 2.3 intentionally left blank.

2.4. This section 2.4 intentionally left blank.

2.5 Reservation of Shares. As of the issuance date of this Note and for the remaining period during which the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of this Note. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees that its issuance of this Note constitutes full authority to its officers, agents and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note.

2.6. Delivery of Conversion Shares. Shares from any such conversion will be delivered to Holder by 2:30pm EST within 3 (three) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment). If those shares are not delivered in accordance with this timeframe stated in this Section 2.6, at any time for any reason prior to offering those shares for sale in a private transaction or in the public market through its broker, Holder may rescind that particular conversion to have the conversion amount returned to the note balance with the conversion shares returned to the Borrower. The Company will ma ke its best efforts to deliver shares to Holder same day / next day.

2.7. This section 2.7 intentionally left blank.

ARTICLE 3 MISCELLANEOUS

3.1. Notices. Any notice required or permitted hereunder must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

3.2. Amendment Provision. The term "Note" and all reference thereto, as used throughout this instrument, means this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

3.3. Assignability. This Note will be binding upon the Borrower and its successors and permitted assigns, and will inure to the benefit of the Holder and its successors and permitted assigns, and may be assigned by the Holder.

3.4. Governing Law. This Note will be governed by, and construed and enforced in accordance, with the laws of the State of Florida, without regard to the conflict of laws principles thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts.

3.5. Maximum Payments. Nothing contained herein may be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum will be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

3.6. Attorney Fees. In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Note, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys' fees and other reasonable costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

3.7. No Public Announcement. Except as required by law, no public announcement may be made regarding this Note, payments, or conversions without written permission by both Borrower and Holder.

3.8. Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Holder has the right to have any such opinion provided by its counsel. Holder also has the right to have any such opinion provided by Borrower’s counsel.

3.9. Director’s Resolution. Once effective, Borrower will execute and deliver to Holder a copy of a Board of Director’s resolution resolving that this note is validly issued, paid, and effective.

BORROWER[S]:


/s/ Thomas Irvine			/s/ Paul Niedermeyer
Thomas Irvine			Paul Niedermeyer
CEO Clear-Lite Holdings, Inc.			VP of Operations Clear-Lite Holdings, Inc.

LENDER/HOLDER:

/s/ JMJ Financial

JMJ Financial / Its Principal

FUNDING SCHEDULE

§	$115,000 paid to borrower within 5 business days of execution and closing of this agreement.

§	$50,000 paid to Borrower within 5 business days of filing of the registration statement, and that registration statement must be filed within 30 days of the execution of this agreement.

§	$50,000 paid to Borrower within 5 business days of the earlier of (a) filing of the first amended registration statement or (b) the SEC declaring the registration statement effective.

§	$150,000 paid to Borrower within 10 business days of notice of effective registration statement, and that registration statement must be effective no later than 135 days from the execution of this agreement.

§	$150,000 paid to Borrower within 30 business days of notice of effective registration statement, and that registration statement must be effective no later than 135 days from the execution of this agreement.

§	$135,000 paid to Borrower within 60 business days of notice of effective registration statement, and that registration statement must be effective no later than 135 days from the execution of this agreement.

Conditions to Funding Each Payment:

§	If at the time of an payment the Borrower’s common stock is less than $0.05 per share, the Holder shall fund that payment adjusted as follows:

Adjusted Payment = (current share price/$0.05)*scheduled payment amount

For example, if at the time of the second $50,000 payment the share price is $0.03 per share, then the adjusted payment would be ($0.03/$0.05)*$50,000 = $30,000

§	At the time of each payment interval, the total dollar trading volume of Borrower’s common stock for the previous 22 trading days must be at least $500,000 (five hundred thousand).

o	If within 90 days from the date of this agreement, then this condition will not apply to the first three payments ($115,000, $50,000, and $50,000).

o	If beyond 90 days from the date of this agreement, then this condition will apply to the first three payments ($115,000, $50,000, and $50,000).

o	This condition will apply to the last three payments ($150,000, $150,000, and $135,000) at all times.

§	At the time of each payment interval, there shall not exist an event of default as described within any of the agreements between Borrower and Holder.

SAMPLE

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert the Note)

The undersigned hereby elects to convert a portion of the Note issued by Clear-Lite Holdings, Inc. into Shares of Common Stock of Clear-Lite Holdings, Inc. according to the conditions set forth in such Note, as of the date written below.

Date of Conversion:________________________________________________

Conversion Amount:__________________________________________________

Conversion Price:__________________________________________________

Shares To Be Delivered:_____________________________________________

Signature:________________________________________________________

Print Name:______________________________________________________

Address:________________________________________________________

_______________________________________________________________

Shares from any such conversion will be delivered to Holder by 2:30pm EST within 3 (three) business days of conversion notice by “DWAC/FAST” electronic transfer in accordance with Section 2.6.

SHARE DELIVERY ATTACHMENT

EXAMPLE

2.6. Delivery of Conversion Shares. Shares from any such conversion will be delivered to Holder by 2:30pm EST within 3 (three) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment). If those shares are not delivered in accordance with this timeframe stated in this Section 2.6, at any time for any reason prior to offering those shares for sale in a private transaction or in the public market through its broker, Holder may rescind that particular conversion to have the conversion amount returned to the note balance with the conversion shares returned to the Borrower. The Company will make its best efforts to deliver shares to Holder same day / next day.

Example:

Holder delivers conversion notice to Borrower at 5:15pm eastern time on Monday January 1st.

Borrower’s transfer agent must deliver shares to Holder’s broker via “DWAC/FAST” electronic transfer by no later than 2:30pm eastern time on Thursday January 4th.

EX-10.2 3 f8k071910ex10ii_clearlite.htm FORM OF $500,000 CONVERTIBLE PROMISSORY NOTE f8k071910ex10ii_clearlite.htm

Exhibit 10.2

CONVERTIBLE PROMISSORY NOTE

$500,000 PLUS INTEREST DUE & PAYABLE

FOR VALUE RECEIVED, on the Effective Date, as defined below on the signature page, ClearLite Holdings, Inc as Obligor ("Borrower,” or “Obligor”), hereby promises to pay to the Lender (“Lender” or “ Holder”), as defined below on the signature page, the Principal Sum, as defined below, along with the Interest Rate, as defined below, according to the terms herein.

The "Lender" shall be:	JMJ Financial / Its Principal, or Its Assignees
The "Principal Sum" shall be:	$500,000 (five hundred thousand US Dollars): Subject to the following: accrued, unpaid interest shall be added to the Principal Sum.
The “Consideration” shall be:	$500,000 (five hundred thousand US Dollars) in the form of the Secured & Collateralized Promissory Note Document C-07192010a (including Security & Collateral Agreement).
The "Interest Rate" shall be:	10% one-time interest charge on the Principal Sum. No interest or principal payments are required until the Maturity Date, but both principal and interest may be included in conversion prior to maturity date.
The "Conversion Price" shall be the following price:	As applied to the Conversion Formula set forth in 2.2, 65% (sixty five percent) of the average of the two lowest closing prices in the 22 trading days prior to the conversion; as applies to ClearLite Holdings, Inc. voting common stock.
The "Maturity Date" is the date upon which the Principal Sum of this Note, as well as any unpaid interest shall be due and payable, and that date shall be:	3 (three) years from the Effective Date, as defined below on the signature page.
The “Prepayment Terms” shall be:	Prepayment is not permitted, unless approved by Holder in writing.

ARTICLE 1 PAYMENT-RELATED PROVISIONS

1.1 Interest Rate. Subject to the Holder's right to convert, interest payable on this Note will accrue interest at the Interest Rate and shall be applied to the Principal Sum.

ARTICLE 2 CONVERSION RIGHTS

The Holder will have the right to convert the Principal Sum and accrued interest under this Note into Shares of the Borrower's Common Stock as set forth below.

2.1 Conversion Rights and Cashless Exercise. Subject to the terms set forth in Section 2.7, the Holder will have the right at its election from and after the Effective Date, and then at any time, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest into shares of fully paid and nonassessable shares of common stock of ClearLite Holdings, Inc. (as such stock exists on the date of issuance of this Note, or any shares of capital stock of ClearLite Holdings, Inc. into which such stock is hereafter changed or reclassified, the "Common Stock") as per the Conversion Formula set forth in Section 2.2. Any such conversion shall be cashless, and shall not require further payment from Holder. Unless otherwise agreed in writing by both the Borrower and the Holder, at no time will the Hol der convert any amount of the Note into common stock that would result in the Holder owning more than 4.99% of the common stock outstanding of ClearLite Holdings, Inc. Shares from any such conversion will be delivered to Holder by 2:30pm EST within 3 (three) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment).

2.2. Conversion Formula. The number of shares issued through conversion is the conversion amount divided by the conversion price.

# Shares = Conversion Amount

Conversion Price

2.3. This section 2.3 intentionally left blank.

2.4. This section 2.4 intentionally left blank.

2.6. Delivery of Conversion Shares. Shares from any such conversion will be delivered to Holder by 2:30pm EST within 3 (three) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment). If those shares are not delivered in accordance with this timeframe stated in this Section 2.6, at any time for any reason prior to offering those shares for sale in a private transaction or in the public market through its broker, Holder may rescind that particular conversion to have the conversion amount returned to the note balance with the conversion shares returned to the Borrower. The Company will make its reasonable best efforts to deliver shares to Holder same day / n ext day.

2.6.1. Conversion Delay Penalties. Holder may assess penalties or liquidated damages (both referred to herein as “penalties”) as follows. For each conversion, in the event that shares are not delivered by the forth business day (inclusive of the day of the conversion), a penalty of $2,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the principal balance of the Note (under Holder and Borrower’s expectation that any penalty amounts will tack back to the original date of the note). Borrower will not be subjected to any penalties once its transfer agent processes the shares to the DWAC system.

2.7. Discharge By Payment. Conversions under this Convertible Promissory Note Document B-07192010a are available only after the Conversion Amount described herein is discharged by payment of equal or greater value from the Secured & Collateralized Promissory Note Document C-07192010a by either, at the Holder’s choice, cash payment, or surrender of security/collateral, or other negotiated form of payment mutually agreed to in writing.

ARTICLE 3 MISCELLANEOUS

3.7. No Public Announcement. Except as required by law, no public announcement may be made regarding this Note, payments, or conversions without written permission by both Borrower and Holder.

3.9. Effective Date. This Note will become effective only upon occurrence of the two following events: execution by both parties, and delivery of valid payment by the Lender in the form of the Secured & Collateralized Promissory Note Document C-07192010a (including Security & Collateral Agreement).

3.10. Director’s Resolution. Once effective, Borrower will execute and deliver to Holder a copy of a Board of Director’s resolution resolving that this note is validly issued, paid, and effective.

3.11. No Shorting. Holder agrees that so long as any Notes from Borrower to Holder remain outstanding, Holder will not enter into or effect any “short sales” of the common stock or hedging transaction which establishes a net short position with respect to the common stock of ClearLite Holdings, Inc. Borrower acknowledges and agrees that upon submission of conversion notice as set forth in Section 3.1 (up to the amount of cash paid in under the Notes), Holder immediately owns the common shares described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales.

Signature Page to Follow

BORROWER[S]:


Thomas Irvine		Paul Niedermeyer
CEO		VP of Operations
ClearLite Holdings, Inc.		ClearLite Holdings, Inc.

LENDER/HOLDER:

____________________________

JMJ Financial / Its Principal

EFFECTIVE DATE AS EXECUTED BY LENDER/HOLDER: ________________________

NOTARY FOR SIGNATURE BY LENDER/HOLDER:

SAMPLE

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert the Note)

The undersigned hereby elects to convert a portion of the Note issued by ClearLite Holdings, Inc. into Shares of Common Stock of ClearLite Holdings, Inc. according to the conditions set forth in such Note, as of the date written below.

Date of Conversion:________________________________________________

Conversion Amount:__________________________________________________

Conversion Price:_________________________________________________

Shares To Be Delivered:_____________________________________________

Signature:________________________________________________________

Print Name:______________________________________________________

Address:________________________________________________________

_______________________________________________________________

Shares from any such conversion will be delivered to Holder by 2:30pm EST within 2 (two) business days of conversion notice by “DWAC/FAST” electronic transfer in accordance with Section 2.6.

SHARE DELIVERY ATTACHMENT

EXAMPLE

2.6. Delivery of Conversion Shares. Shares from any such conversion will be delivered to Holder by 2:30pm EST within 2 (two) business days of conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (see “Share Delivery” attachment). If those shares are not delivered in accordance with this timeframe stated in this Section 2.6, at any time for any reason prior to offering those shares for sale in a private transaction or in the public market through its broker, Holder may rescind that particular conversion to have the conversion amount returned to the note balance with the conversion shares returned to the Borrower. The Company will make its best efforts to deliver shares to Holder same day / next day.

Example:

Holder delivers conversion notice to Borrower at 5:15pm eastern time on Monday January 1st.

Borrower’s transfer agent must deliver shares to Holder’s broker via “DWAC/FAST” electronic transfer by no later than 10:30am eastern time on Wednesday January 3rd.