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EXHIBIT 10.4
 
 
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: $500,000
Purchase Price: $500,000
 Issue Date: October __, 2011

    
SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, GreenHouse Holdings, Inc., a Nevada corporation (hereinafter
called “Borrower”), hereby promises to pay to Premier Alliance Group, Inc.,
located at 4521 Sharon Road, Suite 300, Charlotte, North Carolina 28211, Fax:
(704) 521-8078 (together with its successors, representatives, and permitted
assigns, the “Holder”) or order, without demand, the sum of Five Hundred
Thousand Dollars ($500,000) (“Principal Amount”) on April __, 2012  (the
“Maturity Date”), if not sooner paid.

This Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower and the Holder dated at or about the date hereof
(the “Subscription Agreement”), and shall be governed by the terms of such
Subscription Agreement.  Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as set forth in
the Subscription Agreement.  The following terms shall apply to this Note:

ARTICLE I

GENERAL PROVISIONS

1.1   Interest.  The outstanding principal amount of this Note shall bear
interest at a rate of eight percent (8%) per annum and compounded quarterly from
the Issue Date until the Maturity Date.  Such interest shall be based on a
365-day year and calculated for the actual number of days elapsed in which
interest is being calculated.

1.2   Interest Payments.  The Borrower shall pay the Holder all accrued but
unpaid interest on the Maturity Date.  The Holder shall have no obligation to
deliver to the Borrower any invoice or other statement setting forth the amount
of principal, interest or any other amount due on any payment date, and any
absence by the Holder to provide any such invoice or statement shall not reduce
or otherwise impair the Borrower’s obligation to pay any amounts payable
hereunder.  The Borrower shall make all interest payments under this Note to the
Holder by 5:00 p.m. EST on the date when due.  The Borrower shall make all
payments in United States Dollars in immediately available funds transferred by
wire transfer to an account designated by the Holder.
    
 
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1.3   Default Interest.  Upon the occurrence of an Event of Default (as defined
in Article III hereof), then to the extent permitted by law, the Borrower will
pay interest in cash to the Holder, payable on demand, on the outstanding
principal balance of this Note from the date of the Event of Default until such
Event of Default is cured at the rate of the lesser of eighteen percent (18%)
per annum and the maximum applicable legal rate per annum.

1.4   Ranking.  Except as set forth in the next sentence, this Note shall be
senior in priority to all liabilities and obligations of the Borrower.  The
Holder shall receive a first-priority security interest in all other assets of
the Borrower. This Note shall be senior to all other future obligations and
liabilities of the Borrower.  

1.5   Security.  Payment of the principal of, and interest on, this Note and all
other amounts due under the Subscription Agreement, is secured by certain
personal property as provided in the Security Agreement.

1.6   Payment.  Payment of this Note and all interest thereon shall be paid to
the Holder by wire transfer to an account designated by the Holder or at such
address outside of the United States and its possessions as the Holder may
instruct the Borrower in writing in U.S. Dollars.

1.7   Conversion Privileges.  The Conversion Privileges set forth in Article II
shall remain in full force and effect immediately from the date hereof and until
this Note is paid in full regardless of the occurrence of an Event of
Default.  This Note shall be payable in full on the Maturity Date, unless
previously converted into Common Stock in accordance with Article II hereof.

ARTICLE II

CONVERSION RIGHTS

The Holder shall have the right to convert the principal and any interest due
under this Note into Shares of the Borrower's Common Stock (“Common Stock”) as
set forth below.

2.1   Conversion into the Borrower's Common Stock.

(a)    The Holder shall have the right from and after the date of the issuance
of this Note and then at any time until this Note is fully paid, to convert any
outstanding and unpaid principal portion of this Note, and accrued interest, at
the election of the Holder (the date of giving of such notice of conversion
being a “Conversion Date”) into fully paid and nonassessable shares of Common
Stock as such stock exists on the date of issuance of this Note, or any shares
of capital stock of Borrower into which such Common Stock shall hereafter be
changed or reclassified, at the Conversion Price as defined in Section 2.1(b)
hereof, determined as provided herein.  Upon delivery to the Borrower of a
completed Notice of Conversion, a form of which is annexed hereto as Exhibit A,
Borrower shall issue and deliver to the Holder within four (4) business days
after the Conversion Date (such fourth day being the “Delivery Date”) that
number of shares of Common Stock for the portion of this Note converted in
accordance with the foregoing.  The Holder will not be required to surrender the
note to the Borrower until the Note has been fully converted or satisfied.  At
the election of the Holder, the Borrower will deliver accrued but unpaid
interest on this Note, if any, through the Conversion Date directly to the
Holder on or before the Delivery Date.  The number of shares of Common Stock to
be issued upon each conversion of this Note shall be determined by dividing that
portion of the outstanding principal amount of this Note and accrued but unpaid
interest, if any, to be converted, by the Conversion Price.

(b)   Subject to adjustment as provided in Section 2.1(d) hereof, the conversion
price per share shall be equal to 70% of the volume weighted average price for
the twenty (20) trading days prior to the date a notice of conversion is given
to the Company (the “Conversion Price”).
   
 
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(c)   Subject to adjustment as provided in Section 2.1(d) hereof, if the
contemplated merger between the Borrower and the Holder is completed, this Note
shall automatically convert into such number of shares equal to the Principal
Amount divided by the opening bid price of the shares of the merged entities on
the day after the Closing Date.  Such shares shall be factored into the pro rata
share split between the two companies as credited to the Holder and debited to
the Borrower.

(d)    The Conversion Price and number and kind of shares or other securities to
be issued upon conversion determined pursuant to Section 2.1(a)(b) and (c),
shall be subject to adjustment from time to time upon the happening of certain
events while this conversion right remains outstanding, as follows:

A.   Merger, Sale of Assets, etc.  If (A) the Borrower effects any merger
or  consolidation of the Borrower with or into another entity, (B) the Borrower
effects any sale of all or substantially all of its assets in one or a series of
related transactions,  (C) any tender offer or exchange offer (whether by the
Borrower or another entity) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, (D) the Borrower consummates a stock purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more persons or
entities whereby such other persons or entities acquire more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by such other persons or entities making or party to, or associated or
affiliated with the other persons or entities making or party to, such stock
purchase agreement or other business combination), (E) any “person” or “group”
(as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934
Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of 50% of the aggregate Common Stock of
the Borrower, or (F) the Borrower effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental  Transaction”), this Note, as to the unpaid
principal portion thereof and accrued interest thereon, shall thereafter be
deemed to evidence the right to convert into such number and kind of shares or
other securities and property as would have been issuable or distributable on
account of such Fundamental Transaction, upon or with respect to the securities
subject to the conversion right immediately prior to such Fundamental
Transaction.  The foregoing provision shall similarly apply to successive
Fundamental Transactions of a similar nature by any such successor or
purchaser.  Without limiting the generality of the foregoing, the anti-dilution
provisions of this Section shall apply to such securities of such successor or
purchaser after any such Fundamental Transaction.

B.   Reclassification, etc.  If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes that may be issued or
outstanding, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
an adjusted number of such securities and kind of securities as would have been
issuable as the result of such change with respect to the Common Stock
immediately prior to such reclassification or other change.

C.   Stock Splits, Combinations and Dividends.  If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Conversion Price shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of combination
of shares, in each such case by the ratio which the total number of shares of
Common Stock outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.
   
 
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D.   Share Issuance.   So long as this Note is outstanding, if the Borrower
shall issue any Common Stock except for the Excepted Issuances, prior to the
complete conversion or payment of this Note, for a consideration per share that
is less than the Conversion Price that would be in effect at the time of such
issuance, then, and thereafter successively upon each such issuance, the
Conversion Price shall be reduced to such other lower issue price.  For purposes
of this adjustment, the issuance of any security or debt instrument of the
Borrower carrying the right to convert such security or debt instrument into
Common Stock or of any warrant, right or option to purchase Common Stock shall
result in an adjustment to the Conversion Price upon the issuance of the
above-described security, debt instrument, warrant, right, or option and again
upon the issuance of shares of Common Stock upon exercise of such conversion or
purchase rights if such issuance is at a price lower than the then applicable
Conversion Price.  The reduction of the Conversion Price described in this
paragraph is in addition to the other rights of the Holder described in the
Subscription Agreement.  Common Stock issued or issuable by the Borrower for no
consideration will be deemed issuable or to have been issued for $0.001 per
share of Common Stock.

(e)    Whenever the Conversion Price is adjusted pursuant to Section 2.1(d)
above, the Borrower shall promptly, but not later than the fifth (5th) business
day after the effectiveness of the adjustment, provide notice to the Holder
setting forth the Conversion Price after such adjustment and setting forth a
statement of the facts requiring such adjustment. Failure to provide the
foregoing notice shall be deemed an Event of Default under this Note.

(f)    During the period the conversion right exists, Borrower will reserve from
its authorized and unissued Common Stock not less than an amount of Common Stock
equal to 125% of the amount of shares of Common Stock issuable upon the full
conversion of this Note.  Borrower represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable.  Borrower agrees
that its issuance of this Note shall constitute 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.

2.2   Method of Conversion.  This Note may be converted by the Holder in whole
or in part as described in Section 2.1(a) hereof and the Subscription
Agreement.  Upon partial conversion of this Note, a new Note containing the same
date and provisions of this Note shall, at the request of the Holder, be issued
by the Borrower to the Holder for the principal balance of this Note and
interest which shall not have been converted or paid.

ARTICLE III
   
EVENT OF DEFAULT

The occurrence of any of the following events of default (“Event of Default”)
shall, at the option of the Holder hereof, make all sums of principal and
interest then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable, upon demand, without presentment or grace period,
all of which hereby are expressly waived, except as set forth below:

3.1   Failure to Pay Principal or Interest.  The Borrower fails to pay any
installment of principal, interest or other sum due under this Note when due.

3.2   Breach of Covenant.  The Borrower or any Subsidiary breaches any material
covenant or other term or condition of the Subscription Agreement, Transaction
Documents or this Note in any material respect and such breach, if subject to
cure, continues for a period of ten (10) business days after written notice to
the Borrower from the Holder.
   
 
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3.3   Breach of Representations and Warranties.  Any material representation or
warranty of the Borrower made herein, in the Subscription Agreement, Transaction
Documents, or any agreement, statement or certificate given in writing pursuant
hereto or in connection therewith shall be false or misleading in any material
respect as of the date made and the Closing Date.

3.4   Liquidation.   Any dissolution, liquidation or winding up by Borrower or a
Subsidiary of a substantial portion of their business.
 
3.5   Cessation of Operations.   Any cessation of operations by Borrower or a
Subsidiary (providing the ______ of such subsidiary’s operations would have been
a Material Adverse Effect on the business of the 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 come due.
 
3.6   Maintenance of Assets.   The failure by Borrower or any Subsidiary to
maintain any (i) material intellectual property rights, personal, real property,
equipment leases or other assets which are necessary to conduct its business
(whether now or in the future) and such breach is not cured within ten (10) days
after written notice to the Borrower from the Holder, or (ii) assets that
represent any material part of the Collateral (as defined in the Security
Agreement).

3.7   Receiver or Trustee.  The Borrower or any Subsidiary of 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 its
property or business; or such a receiver or trustee shall otherwise be
appointed.

3.8   Judgments.  Any money judgment, writ or similar final process shall be
entered or made in a nonappealable adjudication against Borrower or any
Subsidiary or any of its property or other assets for more than $50,000, unless
stayed, vacated or satisfied within ten (10) days.

3.9   Bankruptcy.  Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower or any Subsidiary of
Borrower.

3.10   Delisting.   Delisting of the Common Stock from any Principal Market;
failure to comply with the requirements for continued listing on a Principal
Market for a period of five (5) consecutive trading days; or notification from a
Principal Market that the Borrower is not in compliance with the conditions for
such continued listing on such Principal Market.

3.11   Non-Payment.   Except for the obligations set forth on Schedule 3.11, a
default by the Borrower or any Subsidiary under any one or more obligations in
an aggregate monetary amount in excess of $50,000 for more than five (5) days
after the due date, unless the Borrower or such Subsidiary is contesting the
validity of such obligation in good faith and has segregated cash funds equal to
not less than one-half of the contested amount or all of the contested amount,
whichever is greater.

3.12   Stop Trade.  An SEC or judicial stop trade order or Principal Market
trading suspension that lasts for five (5) or more consecutive trading days.
   
 
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3.13   Failure to Deliver Common Stock or Replacement Note.  Borrower’s failure
to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note, Sections 7 and 11 of the Subscription Agreement or, if
required, a replacement Note following a partial conversion.

3.14   Reservation Default.   Failure by the Borrower to have reserved for
issuance upon conversion of this Note the number of shares of Common Stock as
required in the Subscription Agreement and this Note, and such failure continues
for a period of twenty (20) days.

3.15   Financial Statement Restatement.  The restatement after the date hereof
of any financial statements filed by the Borrower with the Securities and
Exchange Commission 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 statements,
have constituted a Material Adverse Effect.

3.16   Reverse Splits.   The Borrower effectuates a reverse split of its Common
Stock without twenty (20) days prior written notice to the Holder.

3.17   Event Described in Subscription Agreement.  The occurrence of an Event of
Default as described in the Subscription Agreement or any other Transaction
Document that, if susceptible to cure, is not cured during any designated cure
period.

3.18   Executive Officers Breach of Duties.  Any of Borrower’s named executive
officers or directors is convicted of a violation of securities laws related to
activities regarding the Borrower’s securities, or a settlement in excess of
$250,000 is reached by any such officer or director relating to a violation of
securities laws related to activities regarding the Borrower’s securities,
breach of fiduciary duties or self-dealing.

3.19   Cross Default.  A default by the Borrower of a material term, covenant,
warranty or undertaking of any other agreement to which the Borrower is a party,
or the occurrence of an event of default under any such other agreement to which
Borrower is a party which is not cured after any required notice and/or cure
period.

3.20   Notification Failure.   A failure by Borrower to notify Holder of any
material event of which Borrower is obligated to notify Holder pursuant to the
terms of this Note or any other Transaction Document.
  

ARTICLE IV

SECURITY INTEREST

4.   Security Interest/Waiver of Automatic Stay.   This Note is secured by a
security interest granted to the Holder pursuant to a Security Agreement, as
delivered by Borrower to Holder.  The Borrower acknowledges and agrees that
should a proceeding under any bankruptcy or insolvency law be commenced by or
against the Borrower or a Subsidiary, or if any of the Collateral (as defined in
the Security Agreement) should become the subject of any bankruptcy or
insolvency proceeding, then the Holder should be entitled to, among other relief
to which the Holder may be entitled under the Transaction Documents and any
other agreement to which the Borrower or a Subsidiary and Holder are parties
(collectively, “Loan Documents”) and/or applicable law, an order from the court
granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section
362 to permit the Holder to exercise all of its rights and remedies pursuant to
the Loan Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE
BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362.  FURTHERMORE,
THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION
362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
(INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT,
CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY
OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW.  The
Borrower hereby consents to any motion for relief from stay that may be filed by
the Holder in any bankruptcy or insolvency proceeding initiated by or against
the Borrower and, further, agrees not to file any opposition to any motion for
relief from stay filed by the Holder.  The Borrower represents, acknowledges and
agrees that this provision is a specific and material aspect of the Loan
Documents, and that the Holder would not agree to the terms of the Loan
Documents if this waiver were not a part of this Note. The Borrower further
represents, acknowledges and agrees that this waiver is knowingly, intelligently
and voluntarily made, that neither the Holder nor any person acting on behalf of
the Holder has made any representations to induce this waiver, that the Borrower
has been represented (or has had the opportunity to he represented) in the
signing of this Note and the Loan Documents and in the making of this waiver by
independent legal counsel selected by the Borrower and that the Borrower has
discussed this waiver with counsel.
  

 
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ARTICLE V

MISCELLANEOUS

5.1   Failure or Indulgence Not Waiver.  No failure or delay on the part of the
Holder hereof 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 privilege.  All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
 
5.2   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
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 first 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:
Greenhouse Holdings, Inc.
Attn: John Galt, President
5171 Santa Fe Street
Suite J
San Diego, California  92109
Telephone: (858) 275-2626
Facsimile: (949 315-3827
   
with a copy to:
   
Peter Campitiello, Esq.
Tarter Krinsky & Drogin LLP
1350 Broadway
New York, New York  10018
Telephone (212) 216-8085
Facsimile (212) 216-8001

If to the Holder:
To the address and facsimile number listed on the first paragraph of this Note.
   

 
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5.3   Amendment Provision.  The term “Note” and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.
 
5.4   Assignability.  This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.  The Borrower may not assign its obligations under this
Note.
 
5.5   Expenses.  The Borrower shall pay the Holder hereof reasonable costs of
collection, including reasonable attorneys’ fees.
 
A.   Expenses for Amendments.  If the Holder shall employ counsel for advice or
other representation or shall incur legal or other costs and expenses in
connection with any amendment or modification of this Note or any of the other
Transaction Documents, then, and in any such event, the reasonable counsel fees
arising from such services and all expenses, costs, charges and other reasonable
fees of such counsel incurred in connection with or related to any of the events
or actions described above shall be payable by the Borrower.
 
B.   Costs of Collection.  In the event of a default or an Event of Default, in
addition to any other sums payable by the Borrower hereunder, the Borrower shall
pay the Holder’s and any other holders’ of the Notes costs of collection,
including reasonable attorneys’ fees, including post judgment costs of
collection, incurred by the Holder’s or any other holders’ of the Notes in the
collection of the obligations of the Borrower to the Holder and any other
holders of the notes whether under this Note or the other Transaction Documents,
and in the enforcement of any provision hereof and thereof, whether suit be
brought or not.
 
C.   Expenses in Dispute.  In the event of any dispute regarding the subject
matter hereunder, the non-prevailing party in any dispute shall be required to
fully reimburse the prevailing party in any dispute for all of its documents
attorneys’ fees, costs and expenses incurred in connection with such dispute,
the outcome of which shall have been determined by a court of competent
jurisdiction.
 
5.6   Governing Law.  This Note shall be governed by and construed in accordance
with the laws of the State of New York without regard to conflicts of laws
principles that would result in the application of the substantive laws of
another jurisdiction.  Any action brought by either party against the other
concerning the transactions contemplated by this Agreement must be brought only
in the civil or state courts of New York or in the federal courts located in the
State and county of New York.  Both parties and the individual signing this
Agreement on behalf of the Borrower agree to submit to the jurisdiction of such
courts.  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 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 unenforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other decision in favor of the Holder.  This Note shall be
deemed an unconditional obligation of Borrower for the payment of money and,
without limitation to any other remedies of Holder, may be enforced against
Borrower by summary proceeding pursuant to New York Civil Procedure Law and
Rules Section 3213 or any similar rule or statute in the jurisdiction where
enforcement is sought.  For purposes of such rule or statute, any other document
or agreement to which Holder and Borrower are parties or which Borrower
delivered to Holder, which may be convenient or necessary to determine Holder’s
rights hereunder or Borrower’s obligations to Holder are deemed a part of this
Note, whether or not such other document or agreement was delivered together
herewith or was executed apart from this Note.
   
 
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5.7   Maximum Payments.  Nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the
maximum rate permitted by applicable law.  In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum rate
permitted by applicable law, any payments in excess of such maximum rate shall
be credited against amounts owed by the Borrower to the Holder and thus refunded
to the Borrower.
 
5.8   Non-Business Days.   Whenever any payment or any action to be made shall
be due on a Saturday, Sunday or a public holiday under the laws of the State of
New York, such payment may be due or action shall be required on the next
succeeding business day and, for such payment, such next succeeding day shall be
included in the calculation of the amount of accrued interest payable on such
date.
 
5.9   Redemption.  This Note may not be redeemed or called without the consent
of the Holder except as described in this Note or the Subscription Agreement.

5.10   Shareholder Status.  The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this Note.  However, the
Holder will have the rights of a shareholder of the Borrower with respect to the
Shares of Common Stock to be received after delivery by the Holder of a
Conversion Notice to the Borrower.

5.11   Facsimile Signature.  In the event that the Borrower’s signature is
delivered by facsimile transmission, PDF, electronic signature or other similar
electronic means, such signature shall create a valid and binding obligation of
the Borrower with the same force and effect as if such signature page were an
original thereof.

[Remainder of Page Intentionally Left Blank]

[Signature Pages Follow]
   
 
9

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IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an
authorized officer as of the [●] day of October 2011.
 
   

 
GREENHOUSE HOLDINGS, INC.
         
 
By:
/s/        Name: John Galt       Title: President          

 
WITNESS:

______________________________________

[Signature Page to Secured Convertible Promissory Note]
    
 
10

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NOTICE OF CONVERSION

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

The undersigned hereby elects to convert $_________ of the principal and
$_________ of the interest due on the Note issued by GREENHOUSE HOLDINGS, INC.
on ________, 20__ into Shares of Common Stock of GREENHOUSE HOLDINGS, INC. (the
“Borrower”) according to the conditions set forth in such Note, as of the date
written below.

Date of
Conversion:____________________________________________________________________

Conversion
Price:______________________________________________________________________

Shares To Be
Delivered:_________________________________________________________________

Signature:____________________________________________________________________________

Print
Name:___________________________________________________________________________

Address:_____________________________________________________________________________

_____________________________________________________________________________

11

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