f8k021709ex10iii_attdrinks.htm


     

     

    Exhibit
10.3       Form of Secured Convertible
Note

    


     

     

    "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
$                                                                                                                                                                                       
  Issue Date: March ___, 2009

    Purchase
Price: $

    


    SECURED CONVERTIBLE
NOTE

    


    FOR VALUE RECEIVED, ATTITUDE DRINKS,
INC., a Delaware corporation (hereinafter called "Borrower"), hereby promises to
pay to _____________(the "Holder") or order, without demand, the sum of
_______________ Dollars ($____________), with interest accruing thereon, on
December ___, 2009 (the "Maturity Date"), if not retired sooner.

    


    This Note
has been entered into pursuant to the terms of a subscription agreement between
the Borrower, the Holder and certain other holders (the “Other Holders”) of
convertible promissory notes (the “Other Notes”), dated of even date herewith
(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 is set
forth in the Subscription Agreement.  The following terms shall apply
to this Note:

    


    ARTICLE
I

     

    GENERAL
PROVISIONS

    


    1.1           Interest
Rate.   Interest payable on this Note shall accrue at the
annual rate of twelve percent (12%) and be payable on the Maturity Date,
accelerated or otherwise, when the principal and remaining accrued but unpaid
interest shall be due and payable, or sooner as described below.

    


    1.2           Payment
Grace Period.  The Borrower shall have a
five (5) day grace period to pay any monetary amounts due under this Note, after
which grace period a default interest rate of twenty percent (20%) per
annum.

    


    1.3           Conversion
Privileges.  The Conversion Privileges set forth in Article II
shall remain in full force and effect immediately from the date hereof and until
the Note is paid in full regardless of the occurrence of an Event of
Default.  The Note shall be payable in full on the Maturity Date,
unless previously converted into Common Stock in accordance with Article II
hereof; provided, that if an Event of Default has occurred, the Borrower may not
pay this Note, without the consent of the Holder, until one year after the later
of the date the Event of Default has been cured or one year after the Maturity
Date.

     

     

    
      
         

      

      
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    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, $.001 par value per share
(“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 (the "Conversion Price"),
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 three (3) business days
after the Conversion Date (such third day being the “Delivery Date”) that number
of shares of Common Stock for the portion of the Note converted in accordance
with the foregoing.  At the election of the Holder, the Borrower will
deliver accrued but unpaid interest on the 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 principal of the Note and
interest, if any, to be converted, by the Conversion Price.

    


    (b)  Subject
to adjustment as provided in Section 2.1(c) hereof, the fixed conversion price
per share shall be $.05 (“Fixed Conversion Price”) and after all of the
occurrence of an Event of Default, the giving of written notice by Holder to
Borrower of such occurrence and upon an actual conversion under this Note, the
per share conversion price shall be the lesser of  (i) the Fixed
Conversion Price, or (ii) 80% of the average of the three lowest closing bid
prices for the Common Stock as reported by Bloomberg L.P. for the Principal
Market for the date preceding a Conversion Date, but in no event greater than
the Fixed Conversion Price (such actual conversion price being the “Conversion
Price”).

    


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

     

     

    
      
         

      

      
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    A.           Merger,
Sale of Assets, etc.  If the Borrower at any time shall consolidate
with or merge into or sell or convey all or substantially all its assets to any
other corporation, this Note, as to the unpaid principal portion thereof and
accrued interest thereon, shall thereafter be deemed to evidence the right to
purchase such number and kind of shares or other securities and property as
would have been issuable or distributable on account of such consolidation,
merger, sale or conveyance, upon or with respect to the securities subject to
the conversion or purchase right immediately prior to such consolidation,
merger, sale or conveyance.  The foregoing provision shall similarly
apply to successive 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 consolidation, merger, sale or
conveyance.

    


    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..

     

    D.           Share
Issuance.   If at any time while this Note is outstanding, the
Borrower shall agree to or issue (the “Lower Price Issuance”) any shares of
Common Stock or securities convertible into or exercisable directly or
indirectly for shares of Common Stock (or modify any of the foregoing which may
be outstanding) to any person or entity at a price per share or conversion or
exercise price per share which shall be less than the Conversion Price, then the
Conversion Price shall automatically be reduced to such other Lower Price
Issuance.  For purposes of the adjustment described in this paragraph,
the issuance of any security of the Company carrying the right to convert such
security into shares of Common Stock or of any warrant, right or option to
purchase Common Stock (other than Excepted Issuances) shall result in the
adjustment of the Conversion Price where such right to convert is at a price
lower than the applicable Conversion Price.  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.  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.

    


    (d)  Whenever the Conversion
Price is adjusted pursuant to Section 2.1(c) above, the Borrower shall promptly
mail to the Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a statement of the facts requiring such
adjustment.

    


    (e)  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 150% 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.

     

     

    
      
         

      

      
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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.

     

          
2.3.           Maximum
Conversion.  The Holder shall not be entitled to convert on a
Conversion Date that amount of the Note in connection with that number of shares
of Common Stock which would be in excess of the sum of (i) the number of shares
of Common Stock beneficially owned by the Holder and its affiliates on a
Conversion Date, (ii) any Common Stock issuable in connection with the
unconverted portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made on a Conversion Date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock of the Borrower on such Conversion
Date.  For the purposes of the provision to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder.  Subject to the foregoing, the Holder shall not be limited
to aggregate conversions of 4.99%.  The Holder shall have the
authority and obligation to determine whether the restriction contained in this
Section 2.3 will limit any conversion hereunder and to the extent that the
Holder determines that the limitation contained in this Section applies, the
determination of which portion of the Notes are convertible shall be the
responsibility and obligation of the Holder.  The Holder may waive the
conversion limitation described in this Section 2.3, in whole or in part, upon
and effective after 61 days prior written notice to the Borrower to increase
such percentage to up to 9.99%.

     

          
2.4.           Mandatory
Conversion.  Provided an Event of Default or an event which
with the passage of time or giving of notice could become an Event of Default
has not occurred, then, until the Maturity Date, the Borrower will have the
option by written notice to the Holder (“Notice of Mandatory Conversion”) of
compelling the Holder to convert all or a portion of the outstanding and unpaid
principal of the Note and accrued interest, thereon, into Common Stock at fifty
percent (50%) of the Conversion Price, as adjusted, then in affect (“Mandatory
Conversion”). The Notice of Mandatory Conversion, which notice must be given on
the first day following twenty (20) consecutive trading days (“Lookback Period”)
during which the closing price for the Common Stock as reported by Bloomberg, LP
for the Principal Market shall be greater than Five Dollars ($5.00) each such
trading day and during which twenty (20) trading days, the daily trading volume
as reported by Bloomberg L.P. for the Principal Market is greater than 100,000
shares. The date the Notice of Mandatory Conversion is given is the “Mandatory
Conversion Date.” The Notice of Mandatory Conversion shall specify the aggregate
principal amount of the Note which is subject to Mandatory
Conversion.  Mandatory Conversion Notices must be given
proportionately to all Holders of Notes. The Borrower shall reduce the amount of
Note principal subject to a Notice of Mandatory Conversion by the amount of Note
Principal and interest for which the Holder had delivered a Notice of Conversion
to the Borrower during the twenty (20) trading days preceding the Mandatory
Conversion Date. Each Mandatory Conversion Date shall be a deemed Conversion
Date and the Borrower will be required to deliver the Common Stock issuable
pursuant to a Mandatory Conversion Notice in the same manner and time period as
described in the Subscription Agreement.  A Notice of Mandatory
Conversion may be given only in connection with an amount of Common Stock which
would not cause a Holder to exceed the 4.99% (or if increased, 9.99%) beneficial
ownership limitation set forth in Section 2.3 of this Note.

     

     

    
      
         

      

      
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2.5.           Reservation.   On
or before May 30, 2009, Borrower will reserve from its authorized and unissued
Common Stock to provide for the issuance of Common Stock upon 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.

     

          
2.6.           Optional Redemption of
Principal Amount.   Provided an Event of Default or an
event which with the passage of time or the giving of notice could become an
Event of Default has not occurred, whether or not such Event of Default has been
cured, the Borrower will have the option of prepaying the outstanding Principal
amount of this Note (“Optional Redemption”), in whole or in part, by paying to
the Holder a sum of money equal to one hundred and twenty percent (120%) of the
Principal amount to be redeemed, together with accrued but unpaid interest
thereon and any and all other sums due, accrued or payable to the Holder arising
under this Note or any Transaction Document through the Redemption Payment Date
as defined below (the “Redemption Amount”).  Borrower’s election to
exercise its right to prepay must be by notice in writing (“Notice of
Redemption”).  The Notice of Redemption shall specify the date for
such Optional Redemption (the “Redemption Payment Date”), which date shall be at
least thirty (30) business days after the date of the Notice of Redemption (the
“Redemption Period”).  A Notice of Redemption shall not be effective
with respect to any portion of the Principal Amount for which the Holder has
previously delivered an election to convert, or subject to the previous
sentence, for conversions initiated or made by the Holder during the Redemption
Period.  On the Redemption Payment Date, the Redemption Amount, less
any portion of the Redemption Amount against which the Holder has permissibly
exercised its conversion rights, shall be paid in good funds to the Holder. In
the event the Borrower fails to pay the Redemption Amount on the Redemption
Payment Date as set forth herein, then (i) such Notice of Redemption will be
null and void, (ii) Borrower will have no right to deliver another Notice of
Redemption, and (iii) Borrower’s failure may be deemed by Holder to be a
non-curable Event of Default.  A Notice of Redemption may not be given
nor may the Borrower effectuate a Redemption without the consent of the Holder,
if at any time during the Redemption Period an Event of Default, or an event
which with the passage of time or giving of notice could become an Event of
Default (whether or not such Event of Default has been cured), has
occurred.  During the Optional Redemption Period, the Company must
abide by all of its obligations to the Note Holder.

    


    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.

     

     

    
      
         

      

      
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3.2           Breach of
Covenant.  The Borrower 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.

     

      
    3.3           Breach of Representations
and Warranties.  Any material representation or warranty of the
Borrower made herein, in the Subscription Agreement, Transaction Documents, or
in 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           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.

     

           
3.5           Judgments.  Any
money judgment, writ or similar final process shall be entered or filed against
Borrower or any of its property or other assets for more than $100,000, and
shall remain unvacated, unbonded or unstayed for a period of forty-five (45)
days.

     

           
3.6           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 and if instituted against
them are not dismissed within 45 days of initiation.

     

           
3.7           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 seven
(7) 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.

     

           
3.8           Non-Payment.   A
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $100,000 for more than twenty days after the due
date, unless the Borrower 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.

     

           
3.9           Stop
Trade.  An SEC or judicial stop trade order or Principal Market
trading suspension that lasts for five or more consecutive trading
days.

     

           
3.10         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 and Sections 7 and 11 of the Subscription Agreement, or, if required, a
replacement Note.

     

           
3.11         Reservation
Default.   Failure by the Borrower to have reserved for
issuance upon conversion of the Note the amount of Common stock as set forth in
this Note, and the Subscription Agreement.

     

          
3.12         Financial Statement
Restatement.  The restatement 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.

     

     

    
      
         

      

      
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3.13         Other Note
Default.  The occurrence of any Event of Default under any
other Note between Borrower and Holder.

     

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

    


    ARTICLE
IV

    


    SECURITY
INTEREST

     

           
4.         Security Interest/Waiver of
Automatic Stay.   This Note is secured by a security
interest granted to the Collateral Agent for the benefit of 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 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 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 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 second 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: (i) if to the Borrower to: Attitude
Drinks Inc., 10415 Riverside Drive, Suite 101, Palm Beach Gardens, FL 33410,
Attn: Roy Warren, CEO and President, telecopier: (561) 799-5039, with a copy by
telecopier only to: Weed & Co., LLP, 4695 MacArthur Court, Suite 1430,
Newport Beach, CA 92660, Attn: Rick Weed, Esq., telecopier number: (949)
475-9087, and (ii) if to the Holder, to the name, address and telecopy number
set forth on the front page of this Note, with a copy by telecopier only to
Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York
10176, telecopier number: (212) 697-3575.

     

           
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.

     

           
5.5           Cost of
Collection.  If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys’ fees.

     

     

    
      
         

      

      
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5.6           Governing
Law.  This Note shall be governed by and construed in
accordance with the laws of the State of New York, including, but not limited to, New
York statutes of limitations.  Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall 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.

     

          
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 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 shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to
the Borrower.

    


                   
5.8.          Construction.   Each
party acknowledges that its legal counsel participated in the preparation of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party

    against
the other.

     

           
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         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.

    


    IN WITNESS WHEREOF, Borrower has
caused this Note to be signed in its name by an authorized officer as of the
____ day of March, 2009.

    


    ATTITUDE
DRINKS INC.

    


    By:____________________________________

               Name:

               Title:

    


    WITNESS:

    


    ______________________________________

     

     

    
      
         

      

      
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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 Attitude Drinks Inc. on March ___,
2009 into Shares of Common Stock of Attitude Drinks Inc. (the “Borrower”)
according to the conditions set forth in such Note, as of the date written
below.

    


    


    Date of
Conversion:____________________________________________________________________

    


    


    Conversion
Price:______________________________________________________________________

    


    


    Number of
Shares of Common Stock Beneficially Owned on the Conversion Date: Less than 5%
of the outstanding Common Stock of Attitude Drinks Inc.
___________________________________________

    


    


    Shares To
Be
Delivered:_________________________________________________________________

    


    


    Signature:____________________________________________________________________________

    


    


    Print
Name:__________________________________________________________________________

    


    


    Address:_____________________________________________________________________________

    


       ____________________________________________________________________________

    


    


    
 

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