Convertible Note Agreement

CONVERTIBLE NOTE AGREEMENT This Agreement by and between a corporation duly organized and existing under the laws of the State of , "Corporation" and those individuals listed on Exhibit A which is attached and incorporated by reference, " Note Holders". W I T N E S S E T H: WHEREAS, Note Holders are willing to lend Corporation the aggregate sum of which shall be evidenced by percent Convertible Promissory Notes. In consideration of the mutual covenants and conditions contained in this agreement, the parties agree, represent and warrant as follows: 1. Issue of Notes A. The Corporation will authorize the issue of its percent Convertible notes, "Notes" in the aggregate principal amount of to be dated to mature on to bear interest on the unpaid principal thereof at the rate of percent per annum until maturity, payable on the day of in each year, commencing on , , and after maturity at the rate of percent per annum until paid, and to be substantially in the form of Exhibit A attached hereto. For the purposes of calculating interest for any period for which the interest shall be payable, such interest shall be calculated on the basis of a day month and a day year. The Corporation will promptly and punctually pay to Note Holders or their nominee the interest on any of the Notes held by Note Holders without presentment of the Notes. In the event that Note Holders shall sell or transfer any of the Notes, they shall notify the Corporation of the name and address of the transferee. In the event the Corporation defaults on any installment of interest or principal, then any Note Holder of these Notes may, at his option, without notice, declare the entire principal and the interest accrued thereon immediately due and payable and may proceed to enforce the collection thereof. All the Notes shall contain a confession of judgment provision. B. The Corporation will also authorize the issue of shares of its common stock, " Stock" and will authorize the issuance of and reserve for such purchase such a number of additional shares of common stock, "Conversion Stock" as may from time to time be the maximum number required for issuance upon conversion of the Notes pursuant to the conversion privileges hereinafter stated. 2. Sale and Purchase of Notes and Stock The Corporation will sell the Notes to the purchasers listed on Exhibit A, each of whom agrees to purchase the principal amount of the Notes set opposite their names, subject to the terms and conditions of and in reliance upon the representations and warranties of the Corporation contained in this agreement, at the purchase price of percent of the principal amount. 3. Representations and Warranties by the Corporation A. Corporation, a duly organized corporation existing in good standing under the laws of the State of has the corporate power to own its own property and to carry on in the business as it is now being conducted. B. Corporation has on its corporate records the names of the following individuals who each own shares of common stock which constitute all the issue and outstanding capital stock of the Corporation as of this date. C. The Corporation has furnished to the Note Holders an Offering Circular which is attached as Exhibit B. The financial statements contained in Exhibit B are true and correct and have been prepared in accordance with generally accepted accounting principles consistently followed throughout the period indicated. D. There is no action or proceeding pending or threatened against the Corporation before any court or administrative agency, the determination of which might result in any material adverse change in the business of the Corporation. E. The Corporation has title to the respective properties and assets including the properties and assets reflected on the financial statement for the year ending , and which assets and properties are subject to no liens, mortgages, encumbrances or charges except a security interest to F. The Corporation is not a party to any contract or agreement or subject to any restriction which materially and adversely affects its business, property, assets, or financial condition, and neither the execution nor delivery of this Agreement, nor the confirmation of the transactions contemplated herein, nor the fulfillment of the terms hereof, nor the compliance with the terms and provisions hereof and of the Notes, will conflict with or result in the breach of the terms, conditions or provisions or constitute a default, under the Articles of Incorporation or of any Agreement or instrument to which the Corporation is now a party. G. The Corporation has not declared, set aside, paid or made any dividend or other distributions with respect to its capital stock and has not made or caused to be made directly or indirectly, any payment or other distribution of any nature whatsoever to any of the holders of its capital stock except for regular salary payments for services rendered and the reimbursement of business expenses. H. All of the equipment and automobiles of the Corporation are in good condition and repair. I. There are no outstanding options or rights to purchase shares of the Corporation and no outstanding securities with the right of conversion into shares of the Corporation. J. The Corporation owns or possesses adequate licenses or other rights to use, all patents, trademarks, trade names, trade secrets, and copyrights used in its business. No one has asserted to the Corporation that its operations infringe on the patents, trademarks, trade secrets or other rights utilized in the operation of its business. K. Neither the Corporation nor any agent or employee acting in its behalf has offered the Notes or the Stock or any portion thereof for sale to or solicited in any offer to buy the same from anyone other than the purchasers listed in the attached Exhibit A, and neither the Corporation nor any agent or employee acting in its behalf will sell or offer for sale the Notes or Stock or any portion thereof to or solicit any offer to buy the Notes or the Stock from anyone so as to bring the issuance or sale thereof within the provisions of Section 5 of the Securities Act of 1933. 4. Representations and Warranties by the Note Holders The Note Holders represent and warrant that: A. The Note Holders are subscribing for the Notes and Stock for investment purposes and not with the view to or for sale in connection with any distribution thereof and that they have no present intent to sell, give or otherwise transfer the Notes or Stock. B. The Note Holders state that they are and residents of the State of . C. The Note Holders understand that this is a highly speculative investment in a Corporation which is insolvent both from a legal and an equity standpoint. D. Individuals represent and warrant that they have a net worth in excess dollars exclusive of their residences and that they are sophisticated investors who are knowledgeable about the business. E. Note Holders state that they will be active in the affairs of the business of the Corporation. 5. Prepayment of the Notes Corporation shall have the right to make prepayments on principal of the Notes at any time on days written notice. Such prepayment shall be accompanied by a payment of all accrued interest to date. There shall be no premium for the amount so prepaid. 6. Conversion. A. The Holder of any of the Notes at any time up to and including the maturity date (or, as to any of the Notes to which notice of prepayment shall have been given, at any time up to the close of business on the third business day prior to the day fixed for prepayment) but not thereafter may convert the Notes in whole or in part into as many fully paid and nonassessable shares of Common Stock of the Corporation as the principal amount of the Note so converted in a multiple of per share, and upon surrender of the certificate representing the Notes to the Corporation at its principal office in the City of . If any of the Notes shall be converted in part, the Corporation shall, at its option and without charge to the Holder, either (I) execute and deliver to the Holder Notes for the balance of the principal amount so converted, or (