ex102.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    THIS
14% SECURED CONVERTIBLE PROMISSORY NOTE (THE “NOTE”) AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THIS NOTE
OR THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE UNDER SAID ACT, OR
ANY OTHER VALID EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR AN
OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF
COUNSEL IN COMPARABLE TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

    


    


    AUDIOSTOCKS,
INC.

    (a
Delaware corporation)

    


    14%
Secured Convertible Promissory Note

    


    Issue
Date: __________ ___, 2009

    (the
“Issue Date”)

    


    Total
Principal Amount of Note: $100,000

    


    


    FOR VALUE RECEIVED, AudioStocks, Inc. a Delaware
corporation (hereinafter called the “Company” or “Borrower”), hereby promises to
pay to the order of Noctua Fund LP, or its registered assigns (the “Holder”) the sum of One
Hundred Thousand Dollars ($100,000) (the “Principal Amount”), the
maturity date set forth in Section 1.4 below
(the “Maturity Date”),
and to pay interest on the unpaid principal balance hereof at the rate of
fourteen percent (14%) per annum (the “Initial Interest Rate”)
from October 1, 2009 until the same becomes due and payable at the Maturity
Date, whether at maturity or upon acceleration or by prepayment or otherwise and
thereafter, shall accrue at a default rate of 18% (the “Default Rate”) per annum until
repaid as more fully set forth below.  All payments due hereunder
shall be made in lawful money of the United States of America.  The
Principal Amount or Interest of this Note is convertible, at the sole and
absolute discretion of the Holder, into common stock (the “Common Stock”) of the Borrower
as provided in Article
II below.    Repayment of this Note is
unconditionally guaranteed by the Company and each of its current and future
subsidiaries (the “AudioStocks
Subsidiaries” or the “Secured Parties”), and shall
be secured by all of the assets of the Borrower, and Secured Parties, which
security interest shall be subordinate to no other debt.   All
payments shall be made at such address as the Holder shall hereafter give to the
Borrower by written notice made in accordance with the provisions of this
Note.  Whenever any amount expressed to be due by the terms of this
Note is due on any day which is not a business day, the same shall instead be
due on the next succeeding day which is a business day.  As used in
this Note, the term “business day” shall mean any day other than a Saturday,
Sunday or a day on which commercial banks in the city of New York, New York are authorized or
required by law or executive order to remain closed.

    


               The
following terms shall apply to this Note:

    


    ARTICLE
I.  INTEREST AND AMORTIZATION AND REPAYMENT

    


    1.1   Interest
Rate.  Subject to Section 1.3 hereof,
interest payable on this Note shall accrue at the Initial Interest Rate a rate
per annum of fourteen percent (14%).  Interest on the Principal Amount
shall be simple interest, payable monthly, commencing on October 1, 2009 and on
the first day of each consecutive calendar month thereafter (each, a “Repayment Date”) and on and
until the Maturity Date, whether by acceleration or otherwise.

    


    1.2           Minimum
Monthly Payments.  All outstanding interest shall be paid
monthly.

    


    1.3           Default
Interest Rate.  Following the occurrence and during the
continuance of an Event of Default, and in addition to any other remedies that
Holder may have, the annual interest rate on this Note shall automatically be
increased to the lesser of (i) eighteen percent (18%) or the higher rate
permissible by law (the “Default Interest Rate”), and
all outstanding obligations under this Note, including unpaid interest, shall
continue to accrue interest from the date of such Event of Default at such
interest rate applicable to such obligations until such Event of Default is
cured or waived (any such amount referred to herein as “Default
Interest”).

    


    1.4           Repayment.  Subsequent
to October 1, 2009, this Note shall be unconditionally and immediately repaid
upon demand only by the Holder, in U.S. cash currency, by bank check payable to
Holder or its assigns, or bank wire transfer in accordance with Holder’s written
instructions for the full amount of the demand.  In any event, this
Note must be repaid in full by October 1, 2012 (the “Maturity
Date”).  The Holder may make demand for repayment at its sole
discretion, in whole or in part and from time to time until the entire balance
of this Note is repaid or converted, after the earlier to occur of (i) the
closing of a debt (secured or otherwise), equity or preferred stock or
derivative security financing or re-financing or debt/equity line, of the
Borrower or any Secured Party, with gross proceeds or maximum credit limit of
$750,000 or greater (ii) or upon any Event of Default.

    



    
      
        
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    ARTICLE
II.  CONVERSION RIGHTS

    


    2.1           Conversion
Right.  The Holder shall have the right at any time, and from
time to time, on or prior to the Maturity Date to convert all or any part of the
outstanding and unpaid principal amount of this Note, into fully paid and
non-assessable shares of Common Stock, or initially 500,000 shares (the “Conversion Shares”), of the
Borrower as such Common Stock exists on the Issue Date, or any shares of capital
stock or other securities of the Borrower into which such Common Stock shall
hereafter be changed or reclassified at the Conversion Price (as defined below)
determined as provided herein (a “Conversion”); provided, however, that in no
event shall the Holder be entitled to convert any portion of this Note in excess
of that portion of this Note upon conversion of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of this Note or the unexercised
or unconverted portion of any other security of the Borrower subject to a
limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of Conversion Shares issuable upon the conversion of
the portion of this Note with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
affiliates of more than 4.99% of the outstanding shares of Common
Stock.  For purposes of the proviso 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 Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such
proviso.  The Holder of this Note may waive the limitations set forth
herein  at its sole and absolute discretion by written notice of not
less than sixty-one (61) days to the Company.  The number of
Conversion Shares to be issued upon each conversion of the convertible portion
of this Note shall be determined by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price in effect on the date the notice of
conversion, in the form attached hereto as Exhibit
A (the “Notice of
Conversion”), is delivered to the Borrower by the Holder in accordance
with Section
2.5 below. (the “Conversion
Date”).  The term “Conversion Amount” means, with
respect to any conversion of this Note, the sum of (1) the principal amount of
this Note to be converted in such conversion plus (2) accrued and
unpaid interest, if any, on such principal amount at the interest rates provided
in this Note to the Conversion Date plus (3) default
interest, if any, on the amounts referred to in the immediately preceding
clauses (1) and/or (2) plus (4) at the
Holder’s option, any other amounts owed to the Holder pursuant to this
Note.

    


    2.2           Conversion
Price.

    


    (a)           Calculation
of Conversion Price. The term “Conversion Price” as used
herein shall be equal to $.20 per share.

    


      The
calculation of Conversion Price based on trading prices set forth in the
previous paragraph shall be subject, as set forth in Section 2.7, to
equitable adjustments  upon the occurrence of certain events
including, but not limited to, stock splits, reverse stock splits, stock
dividends or rights offerings by the Borrower relating to the Borrower’s
securities or the securities of any subsidiary of the Borrower or of Secured
Parties, combinations, recapitalization, reclassifications, extraordinary
distributions and similar events until converted in full.

    


    (b) Deficiency
Upon Conversion.  Upon Conversion,
in the event of any deficiency of any amounts due Holder hereunder, Borrower
agrees to pay Holder, at Holder’s option any such deficiency in either cash or
additional shares of Common Stock.  If the Holder elects, in its sole
and absolute discretion to be paid such deficiency in Common Stock, such Common
Stock shall be valued at the Conversion Price, then in effect. Nothing herein
shall be deemed to limit the ability of Holder to collect any of the Principal
Amount of this Note in cash or otherwise enforce any of its rights herein, as
against the Borrower or any of the guarantors and Secured Parties or obligate
the Holder to accept such shares in lieu of such deficiency.

    


    2.3           Application
of Conversion Amounts.  Any amounts converted by the Holder
pursuant to Section
2.1 or paid by the Borrower shall be deemed to constitute payments of and
applied, (i) first, any amounts owed other than accrued and unpaid interest (ii)
second, against accrued and unpaid interest on the Principal Amount, and (iii)
third, against the Principal Amount.

    


    2.4           Authorized
Shares.  For so long as the conversion right exists, the
Borrower will reserve (and, from time to time, amend its Certificate of
Incorporation so as to maintain reserved) from its authorized and unissued
Common Stock a sufficient number of shares, free from preemptive rights, to
provide for the issuance of Common Stock upon the full conversion of this Note
and all other convertible securities of the Borrower, options or
warrants.  As of the date of issuance of this Note, the Borrower has a
sufficient number of authorized and unissued shares of Common Stock that have
been duly reserved   for issuance upon conversion of this Note
and such other securities  (the “Reserved
Amount”).  The Reserved Amount shall be increased from time to
time in accordance with the Borrower’s obligations pursuant to this Note and
other agreements to which the Borrower may be obligated to issue shares (subject
to the anti dilution provisions and other restrictions on such issuances
herein).  The Borrower represents that upon issuance, such shares will
be duly and validly issued, fully paid and non-assessable.  In
addition, the if Borrower shall issue any securities or make any change to its
capital structure which would change the number of shares of Common Stock into
which this Note shall be convertible at their then current conversion price, the
Borrower shall at the same time make proper provision so that thereafter there
shall be a sufficient number of shares of Common Stock authorized and reserved,
free from preemptive rights, for conversion of this Note.  The
Borrower agrees that the issuance of this Note by Borrower and execution hereof
by Borrower shall constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock in accordance with the terms
and conditions of this Note.

    


    If, at
any time a Holder of this Note submits a Notice of Conversion, and the Borrower
does not have sufficient authorized but unissued shares of Common Stock
available to effect such conversion in accordance with the provisions of this
Article II (a
“Conversion Default”),
the Borrower shall issue to the Holder all of the shares of Common Stock which
are then available to effect such conversion.  The portion of this
Note which the Holder included in its Conversion Notice and which exceeds the
amount which is then convertible into available shares of Common Stock (the
“Excess Amount”) shall,
notwithstanding anything to the contrary contained herein, not be convertible
into Common Stock in accordance with the terms hereof until (and at the Holder’s
option at any time after) the date additional shares of Common Stock are
authorized by the Borrower to permit such conversion.  The Borrower
shall use its best efforts to authorize a sufficient number of shares of Common
Stock as soon as practicable following the earlier of (i) such time that the
Holder notifies the Borrower or that the Borrower otherwise becomes aware that
there are or likely will be insufficient authorized and unissued shares to allow
full conversion thereof and (ii) a Conversion Default.  The Borrower
shall send notice to the Holder of the authorization of additional shares of
Common Stock, and the Authorization Date.

    


    Nothing
herein shall limit the Holder’s right to pursue actual damages against Borrower
or any guarantor or Secured Party for the Borrowers failure to maintain a
sufficient number of authorized shares of Common Stock or to repay this Note
pursuant to the guarantees, and each Holder shall have the right to pursue all
remedies available at law or in equity (including degree of specific performance
and/or injunctive relief or under this Note.

    


    2.5           Method of
Conversion.

    


    (a)           Mechanics
of Conversion.  Subject to Section 2.1, the
Principal Amount and interest of this Note may be converted by the Holder in
whole or in part at any time from time to time after the Issue Date, by (A)
submitting to the Borrower a Notice of Conversion (by facsimile or other
reasonable means of communication dispatched on the Conversion Date prior to
5:00 p.m., New York, New
York time) and (B) subject to Section 2.5(b),
surrendering this Note at the principal office of the Borrower.

    


    (b)           Surrender
of Note Upon Conversion.  Notwithstanding
anything to the contrary set forth herein, upon conversion of this Note in
accordance with the terms hereof, the Holder shall not be required to physically
surrender this Note to the Borrower unless the entire unpaid principal amount of
this Note is so converted.  The Borrower shall maintain records
showing the principal amount so converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the Holder and the
Borrower, so as not to require physical surrender of this Note upon each such
conversion.  Notwithstanding the foregoing, if any portion of this
Note is converted as aforesaid, the Holder may not transfer this Note unless the
Holder first physically surrenders this Note to the Borrower, whereupon the
Borrower will forthwith issue and deliver upon the order of the Holder a new
Note of like tenor, registered as the Holder (upon payment by the Holder of any
applicable transfer taxes) may request, representing in the aggregate the
remaining unpaid principal amount of this Note.

    


     THE
HOLDER AND ANY ASSIGNEE, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE AND AGREE THAT,
BY REASON OF THE PROVISIONS OF THIS PARAGRAPH, FOLLOWING CONVERSION OF A PORTION
OF THIS NOTE, THE UNPAID AND UNCONVERTED PRINCIPAL AMOUNT OF THIS NOTE
REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNT STATED ON THE FACE
HEREOF.

    


    (c)           Payment
of Taxes.   The
Borrower shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock or
other securities or property on conversion of this Note in a name other than
that of the Holder (or in street name), and the Borrower or the Transfer Agent,
as the case may be, shall not be required to issue or deliver any such shares or
other securities or property unless and until the person or persons (other than
the Holder or the custodian in whose street name such shares are to be held for
the Holder’s account) requesting the issuance thereof shall have paid to the
Borrower or the Transfer Agent, as the case may be, the amount of any such tax
or shall have established to the satisfaction of the Transfer Agent, that such
tax has been paid.

    


    (d)           Delivery
of Common Stock Upon Conversion.  Upon receipt by
the Borrower from the Holder of a facsimile transmission, Adobe Acrobat
electronic reproduction (or other reasonable means of reproduction of a
signature) of a Notice of Conversion meeting the requirements for conversion as
provided in this Section 2.5, the
Borrower shall issue and deliver or cause to be issued and delivered to or upon
the order of the Holder certificates for the Common Stock issuable upon such
conversion within three (3) full business days (the “Deadline”) after such receipt
(and, solely in the case of conversion of the entire unpaid principal amount
hereof, surrender of this Note) in accordance with the terms hereof. The
Borrower shall pay liquidated damages, in addition to other damages or lost
profits resulting in the decline in price of the shares after the Deadline date
(regardless of whether such shares could have been sold), of 1% of the number of
shares not delivered for each 3 business day after the Deadline (i.e. 1% after
six business days after the deadline, an aggregate of 2% after nine days, 3%
after 14 days etc.).

    


    (e)           Obligation
of Borrower to Deliver Common Stock.  Upon receipt by the
Borrower of a Notice of Conversion, the Holder shall be deemed to be the Holder
of record of the Common Stock issuable upon such conversion (the “Conversion Shares”), the
outstanding principal amount and the amount of accrued and unpaid interest (and
any other unpaid amounts) on this Note shall be reduced to reflect such
conversion, and, unless the Borrower defaults on its obligations under this
Article II, all
rights with respect to the portion of this Note being so converted shall
forthwith terminate except the right to receive the Common Stock or other
securities, cash or other assets, as herein provided, on such
conversion.  If the Holder shall have given a Notice of Conversion as
provided herein, the Borrower’s obligation to issue and deliver the certificates
for Common Stock shall be absolute and unconditional, irrespective of the
absence of any action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, the recovery of any judgment against any
person or any action to enforce the same, any failure or delay in the
enforcement of any other obligation of the Borrower to the holder of record, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by the Holder of any obligation to the Borrower, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Borrower to the Holder in connection with such
conversion.  The Conversion Date with respect to a Notice of
Conversion shall be the date on which the Notice of Conversion is given so long
as the Notice of Conversion is received by the Escrow Agent before 5:00 p.m.,
New York, New York time, on such date;
or if received after 5:00 p.m. New York, New York time the Conversion Date shall
be the following date.  Upon failure of the Borrower to timely deliver
the shares of Common Stock issuable upon any such conversion, the Holder shall
be entitled, as liquidated damages and not as a penalty, to a cash payment equal
to 1.5% of the dollar amount of any such conversion for each 30-day period (or
pro-rata for any portion thereof) following the Conversion Date until delivery
of the Conversion Shares.

    


    2.6           Concerning
the Shares.  The shares of Common Stock issuable upon
conversion of this Note may not be sold or transferred unless  (i)
such shares are sold pursuant to an effective registration statement under the
Act or (ii) the Borrower or its transfer agent shall have been furnished with an
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (iii) such shares are sold or transferred
pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares
are issued or transferred pursuant to a valid court order or other exemption
from the registration requirements of the Act, or (v) such shares are
transferred to an “affiliate” (as defined in Rule 144) of the Borrower who
agrees to sell or otherwise transfer the shares only in accordance with this
Section 2.6 and
who is an Accredited Investor (as defined in the Act).  Except as
otherwise provided in the Agreement (and subject to the removal provisions set
forth below), until such time as the shares of Common Stock issuable upon
conversion of this Note have been registered under the Act or otherwise may be
sold pursuant to Rule 144 or any other exemption, each certificate for shares of
Common Stock issuable upon conversion of this Note that has not been so included
in an effective registration statement or that has not been sold pursuant to an
effective registration statement or issued pursuant to a valid exemption from
the registration requirements of the Act, an exemption that permits removal of
the legend, shall bear a legend substantially in the following form, as
appropriate:

    


    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.  THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.”

    


    The
legend set forth above shall be removed and the Borrower shall issue to the
Holder a new certificate therefore free of any transfer legend if (i) the
Borrower or its transfer agent shall have received an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Common Stock
may be made without registration under the Act, including the provisions of Rule
144 and the shares are so sold or transferred, or (ii) in the case of the Common
Stock issuable upon conversion of this Note, such security is registered for
sale by the Holder under an effective registration statement filed under the Act
or otherwise may be sold pursuant to Rule 144 without any restriction as to the
number of securities as of a particular date that can then be immediately
sold.  Nothing in this Note shall (i) limit the Borrower’s obligation
under the Agreement or (ii) affect in any way the Holder’s obligations to comply
with applicable prospectus delivery requirements upon the resale of the
securities referred to herein.

    


    2.7           Effect of
Certain Events.

    


    (a)           Effect of
Merger, Consolidation, Etc.  The sale, conveyance or
disposition of all or substantially all of the assets of the Borrower or of any
Secured Party (as defined below) other than to the Borrower or a
wholly-owned subsidiary of the Borrower, the effectuation by the Borrower or any
Secured Party of a transaction or series of related transactions in which more
than 50% of the voting power of the Borrower or of a Secured Party is disposed
of, or the consolidation, merger or other business combination of the Borrower
or Secured Party with or into any other Person or Persons when the Borrower or
Secured Party is not the survivor shall:  (i) be deemed to be an Event
of Default (as defined in Article III) and, at the sole
and absolute discretion of holder, may be treated pursuant to Section 2.7(b)
hereof.  “Person” shall mean any
individual, corporation, limited liability company, partnership, association,
trust or other entity or organization.

    


    (b)           Adjustment
Due to Merger, Consolidation, Etc. If, at any time when
this Note is issued and outstanding, there shall be any merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which shares of Common Stock of the Borrower shall be changed into
the same or a different number of shares of another class or classes of stock or
securities of the Borrower or another entity, or in case of any sale or
conveyance of all or substantially all of the assets of the Borrower other than
in connection with a plan of complete liquidation of the Borrower and other than
to a wholly-owned subsidiary of the Borrower, then the Holder of this Note shall
thereafter have the right to receive upon conversion of this Note, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the Holder would have been entitled to receive
in such transaction had this Note been converted in full immediately prior to
such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect
to the rights and interests of the Holder of this Note to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Price and of the number of shares issuable upon conversion of the
Note) shall thereafter be applicable, as nearly as may be practicable in
relation to any securities or assets thereafter deliverable upon the conversion
hereof.  Neither the Borrower nor any of the Secured Parties may
effect any transaction described in this Section 2.7(b) unless
(a) it/they first gives, to the extent practicable, thirty (30) days prior
written notice (but in any event at least fifteen (15) days prior written
notice) of the record date of the special meeting of stockholders to approve, or
if there is no such record date, the consummation of, such merger,
consolidation, exchange of shares, recapitalization, reorganization or other
similar event or sale of assets (during which time the Holder shall be entitled
to convert this Note or, if such transaction results in an Event of Default,
declare such an Event of Default) and (b) the resulting
successor or acquiring entity (if not the Borrower) assumes by written
instrument the obligations of this Section 2.7(b) and
all of the assets and business of the Borrower and Secured Parties are also
being transferred to the acquiring entity and remain subject to the terms
hereof.  The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share exchanges.

    


    (c)           Adjustment
Due to Distribution. If the Borrower shall
declare or make any distribution of its assets (or rights to acquire its assets)
to holders of Common Stock as a dividend, stock repurchase, by way of return of
capital or otherwise (including any dividend or distribution to the Borrower’s
shareholders in cash or shares (or rights to acquire shares) of capital stock of
a any Secured Party or subsidiary (i.e., a spin-off)) (a “Distribution”), then the
Holder of this Note shall be entitled, upon any conversion of this Note after
the date of record for determining shareholders entitled to such Distribution,
to receive the amount of such assets which would have been payable to the Holder
with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date
for the determination of shareholders entitled to such
Distribution.

    


    (d)           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, 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.

    


    (e)           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.

    


    (f)           Purchase
Rights/ Right
of Participation in Future Offerings.   If, at any time
when this Note is issued and outstanding, the Borrower issues any convertible
securities or rights to purchase stock, warrants, securities or other property
(the “Purchase Rights”)
pro rata to the record holders of its Common Stock, then the Holder of this Note
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such Holder could have acquired if such
Holder had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (without regard to any limitations on conversion
contained herein) immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.  In the event that a
debt, convertible debt, equity, preferred equity or derivative security
financing of any kind is conducted by the Borrower or any Secured Party at any
time or from time to time while any portion of this Note is outstanding, the
Holder shall have the right, but not obligation to (i) request repayment of this
Note in whole or in part to the closing date of such financing, or (ii) to
convert and apply all or any portion of the Principal Amount or interest of this
Note towards an equivalent dollar amount of subscription for securities in such
offering(s) at the same terms and conditions as offered to all other investors
and shall execute and be subject to and have the benefits of all of the
agreements and rights granted to other investors in such
offering(s).  The foregoing shall be a right only, and not obligation
of the Holder and nothing herein shall be deemed to constitute a limitation or
waiver on Holders other rights to anti dilution protections or other restrictive
covenant benefits set forth herein.  In the event of application of a
portion of the Note a replacement Note for the remaining portion of interest and
Principal Amount not so applied towards a subscription in an offering, shall be
issued to Holder reflecting the unpaid balance herein.

    


    (g)   Share
Issuance.  So long as this Note is outstanding, if
the       Borrower shall issue any Common
Stock, prior to the complete conversion of any convertible portion of this Note
for a consideration less than $.20 per share (as adjusted for stock splits,
stock combinations or consolidations, stock dividends, mergers or similar
transactions) the Conversion Price that would be in effect at the time of such
issue, then, and thereafter successively upon each such issuance, the Conversion
Price shall be reduced by multiplying the Conversion Price then in effect by a
fraction, (A) the numerator of which is the dollar price per share for which the
Common Stock or (or common stock equivalents) is sold in such offering or the
dollar price  for which such shares are issuable upon conversion or
exchange or upon exercise of warrants or options and (B) the denominator of
which is $.20.  Notwithstanding the foregoing, the Conversion Price
shall not be increased. For purposes of this adjustment, the issuance of any
security or debt instrument or derivative 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 or the modification of any
of the foregoing which may be outstanding shall result in an adjustment to the
Conversion Price upon the modification or 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 $.20 per share (as adjusted for stock
splits, stock combinations or consolidations, stock dividends, mergers or
similar transactions).  The reduction of the Conversion Price
described in this paragraph is in addition to the other rights of the Holder
described in this Note.

    


    (h)           Notice of
Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Conversion Price as a result of the events described in the
second sentence of Section 2.2(a) and/or
this Section
2.7, the Borrower, at its expense, shall promptly compute such adjustment
or readjustment and prepare and furnish to the Holder of a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based.  The Borrower shall, upon
the written request at any time of the Holder, furnish to such Holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the
Conversion Price at the time in effect and (iii) the number of shares of Common
Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.

    


                                (i)           Spin-Off.  If,
at any time while any portion of this Note remains outstanding, the Borrower or
any Secured Party spins off or otherwise divests itself of a part of its
business or operations or disposes of all or of a part of its assets in a
transaction (the "Spin
Off") in which the Borrower, in addition to or in lieu of any other
compensation received and retained by the Borrower for such business, operations
or assets, causes securities of another entity (the "Spin Off Securities") to be
issued to security holders of the Borrower, the Borrower shall cause to be
reserved Spin Off Securities equal to the number thereof which would have been
issued to the Holder had all of the convertible portion of Holder's Note
outstanding on the record date (the "Record Date") for determining
the amount and number of Spin Off Securities to be issued to security holders of
the Borrower, (the "Outstanding
Notes") been converted as of the close of business on the trading day
immediately before the Record Date (the "Reserved Spin Off Shares").
Notwithstanding the foregoing, nothing herein shall be demand to permit any Spin
Off which shall result in an immediate Event of Default.

    


    2.8           Trading
Market Limitations.
Unless permitted by the applicable rules and regulations of the principal
securities market on which the Common Stock is then listed or traded, in no
event shall the Borrower issue upon conversion of or otherwise pursuant to this
Note and the other notes or indebtedness, more than the maximum number of shares
of Common Stock that the Borrower can issue pursuant to any rule of the
principal United States securities market on which the Common Stock is then
traded (the “Maximum Share
Amount”), subject to equitable adjustment from time to time for stock
splits, reverse stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the Common Stock occurring after
the date hereof.  

    


    2.9           Status as
Stockholder.  Upon submission
of a Notice of Conversion by a Holder, (i) the shares covered thereby (other
than the shares, if any, which cannot be issued because their issuance would
exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share
Amount) shall be deemed converted into shares of Common Stock and (ii) the
Holder’s rights as a Holder of such converted portion of this Note shall cease
and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at
law or in equity to such Holder because of a failure by the borrower or Borrower
to comply with the terms of this Note.  Notwithstanding the foregoing,
if a Holder has not received certificates for all shares of Common Stock prior
to the third (3rd) business day after the expiration of the Deadline with
respect to a conversion of any portion of this Note for any reason, then (unless
the Holder otherwise elects to retain its status as a holder of Common Stock by
so notifying the Borrower) the Holder shall regain the rights of a Holder of
this Borrower with respect to such unconverted portions of this Note and the
Borrower and Borrower shall, as soon as practicable, return such unconverted
Note to the Holder or, if the Note has not been surrendered, adjust its records
to reflect that such portion of this Note has not been converted.  In
all cases, the Holder shall retain all of its rights and remedies for the
Borrower’s failure to convert this Note to the extent convertible.

    


    ARTICLE
III. EVENTS OF DEFAULT

    


    The
occurrence of any of the following events of default (each, an "Event of Default") shall 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,
notice or grace period, all of which hereby are expressly waived, except as set
forth below:

    


    3.1           Event of
Default under Note or Security Agreements of Secured
Parties.  An Event of Default under this Note, any Guaranty or
Security Agreement, mortgage, or Intercreditor Agreement
signed, contemporaneous with or subsequently, by any of the Secured Parties
if required pursuant to this Note (collectively, the “Collateral Documents”); a
default by the Borrower or a Secured Party of a material term, covenant,
warranty or undertaking of this Note or any Collateral Document or any other
loan agreement between any Holder and Borrower;  or the occurrence of
a material event of default under any such other agreement relating to
indebtedness of the Borrower which, in each case, is not cured after any
required notice and/or cure period;

    


    3.2           Failure
to Pay Principal or Interest.  The Borrower fails to pay the
principal hereof or interest thereon when due on this Note, whether at maturity,
demand upon acceleration or otherwise;

    


    3.3           Conversion
and the Shares.  The Borrower fails to issue or cause its
transfer agent to transfer any certificate for shares of Common Stock issuable
to the Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note, or fails to remove any restrictive legend (or to withdraw
any stop transfer instructions in respect thereof) on any certificate for any
shares of Common Stock issuable to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note (or makes any
announcement, statement or threat that it does not intend to honor the
obligations described in this paragraph) and any such failure shall continue
uncured (or any announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for three business days after the Borrower
shall have been notified thereof in writing by the Holder (the third day and
each third day thereafter being the date that the requirement to issue penalty
shares shall also begin to accrue in addition to other remedies as provided
above);

    


    3.4           Reservation
of Shares.  The Borrower at any time does not have sufficient
shares of Common Stock authorized for issuance upon conversion of this Note,
after reserving sufficient number of shares for issuance upon exercise or
conversion of all other warrants, options or convertible securities outstanding
from time to time; provided,
however, that there shall no longer be deemed an Event of Default under
this Section
3.4 if and for so long as (i) the Borrower amends its Certificate of
Incorporation prior to any attempted Conversion of the Note or (ii) if other
common stock or outstanding convertible securities are redeemed, cancelled or
expire, thereby permitting conversion of the complete convertible portion of the
Note;

    


    3.5           Exploitation
of Property.  The Borrower Secured Party fails to make best
efforts to exploit its assets and contracts;

    


    3.6           Transactions.  (a)
the Borrower or any Secured Party enters into any transaction or series of
transactions relating to the sale or pledge of all or substantially all of their
assets, land or securities in an asset purchase or pursuant to a merger or
otherwise enters into an agreement or otherwise consummates merger as described
in Section
2.7(b) or spinoff  in Section 2.7(i) above
or similar transaction or (B) the Borrower or a Secured Party enters into
directly or indirectly any transaction or material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any affiliate
(other than the Borrower or another subsidiary of Borrower which is subject to
the terms hereof and the Collateral Documents);

    


    3.7           Breach of
Covenants.  The Borrower or any Secured Party breaches any
material covenant or  any other material term or condition contained
in this or any other Note or any of the other Collateral Documents, any other
loan or agreement between any of the holders of the Note (or their affiliates)
and Borrower, or otherwise and such breach continues for a period of
five  (5) calendar days after written notice thereof to the Borrower
or its agent or any Secured Party from the Holder (or any other Holder or
Collateral Agent);

    


    3.8           Breach of
Representations and Warranties.  Any representation or warranty
of the Borrower made herein or in any agreement, statement or certificate given
in writing pursuant hereto or in connection herewith, shall be false or
misleading in any material respect when made and the breach of which has (or
with the passage of time will have) a material adverse effect on the rights of
the Holder with respect to this Note, or any of the other Collateral
Documents;

    


    3.9           Receiver
or Trustee.  The Borrower, any Secured Party or any subsidiary
of the 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;

    


    3.10           Judgments.  Any
money judgment, writ or similar process shall be entered or filed against the
Borrower or Secured Party or any subsidiary of the Borrower or any of its
property or other assets for more than $10,000, and shall remain un-vacated,
un-bonded or un-stayed for a period of twenty (20) days unless otherwise
consented to by the Holder, which consent will not be unreasonably
withheld;

    


    3.11           Bankruptcy.  Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower, Secured Party or any subsidiary of the
Borrower and if instituted against Borrower is not dismissed within thirty (30)
days;

    


    3.14           Delisting
of Common Stock.  The Borrower shall fail to maintain the
listing of the Common Stock on at least one of the OTCBB, the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange, the Archipelago
Exchange, or the American Stock Exchange, or shall fail to comply in all
material responses with the reporting requirements of the Act or Exchange
Act;

    


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

    


    3.14           Other
Defaults.  Any other event specifically described or identified
as such herein or in any of the Collateral Documents;

    


    3.15.                      Remedies
of Default.  In addition to remedies set forth below, if any
other Event of Default has occurred and is continuing, holders of a majority or
more in principal amount of the Note at the time outstanding may at any time at
its or their option, by notice or notices to the Company or any officer thereof
or of any Subsidiary, declare all the Notes then outstanding to be immediately
due and payable.  Notwithstanding the foregoing, Default Interest and
penalties shall accrue from the date of Event of Default regardless of whether
Holder has been advised of such Event of Default.

     

    


    ARTICLE
IV.  MISCELLANEOUS

    


    4.1           Failure
or Indulgence Not Waiver.  No failure or delay on the part of
the Holder 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 privileges.  All rights and remedies
existing hereunder are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

    


               4.2           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, confirmed email (with a hard copy by
mail or fax) 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 (i) 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 (ii) 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:

    AudioStocks,
Inc.,

    Attn:
Luis J. Leung

    Telecopier
number: (760) 804-8845

    


    (ii)
if to Holder,
to:

    


    Noctua
Fund LP

    Attn:
James B. Panther, II

    Electronic
Mail to: james@noctuacapital.com

    


    with a copy
to:

    


    Noctua
Fund LP

    Attn:
Mark L. Baum, Esq.

    Electronic
Mail to: mark@noctuacapital.com

    


    4.3           Amendments.  This
Note and any provision hereof may only be amended by an instrument in writing
signed by the Borrower, and, if this Note has been assigned, the Holders of 51%
of the principal interest on the Notes.  Any modifications or waiver
approved in accordance with the previous sentence shall be binding upon all Holders of Notes.
The term “Note” and all reference thereto, as used throughout this instrument,
shall mean this instrument (and the other Notes issued pursuant to the
Agreement) as originally executed, or if later amended or supplemented, then as
so amended or supplemented. Notwithstanding the foregoing, any Holder may waive
rights with respect to such Holder’s Note only.

    


    4.4           Assignability.  This
Note shall be binding upon the Borrower, their successors and assigns, and shall
inure to the benefit of the Holder and its successors and assigns.

    


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

    


    4.6           Governing
Law.  THIS NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICT OF LAWS.  THE BORROWER HEREBY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE OR UNITED STATES FEDERAL COURTS LOCATED IN FLORIDA
WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO
IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH
PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT
A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
OR IN ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN
ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND
EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
CONNECTION WITH SUCH DISPUTE.  THIS NOTE MAY BE ENFORCED BY, AN ANY
ACTION MAY BE INITIATED BY, COLLATERAL AGENT ON BEHALF OF ANY
HOLDERS.

    


    4.7           Certain
Amounts.  Whenever pursuant to this Note the Borrower is
required to pay an amount in excess of the outstanding Principal Amount (or the
portion thereof required to be paid at that time) plus accrued and unpaid
interest plus any Default Interest, the Borrower and the Holder agree that the
actual damages to the Holder from the receipt of cash payment on this Note may
be difficult to determine and the amount to be so paid by the Borrower
represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn
a return from the sale of shares of Common Stock acquired upon conversion of
this Note at a price in excess of the price paid for such shares pursuant to
this Note.  The Borrower and the Holder hereby agree that such amount
of stipulated damages is not plainly disproportionate to the possible loss to
the Holder from the receipt of a cash payment without the opportunity to convert
this Note into shares of Common Stock.

    4.8           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.

    


    4.9           Allocations
of Maximum Share Amount and Reserved Amount.  The Maximum Share
Amount and Reserved Amount shall be allocated pro rata among the Holders of
Notes issued pursuant to the Agreement based on the principal amount of such
Notes issued to each Holder except as otherwise agreed by such
Holders.  Each increase to the Maximum Share Amount and Reserved
Amount shall be allocated pro rata among the Holders of Notes based on the
principal amount of such Notes held by each Holder at the time of the increase
in the Maximum Share Amount or Reserved Amount except as otherwise agreed by
such Holders.  In the event a Holder shall sell or otherwise transfer
any of such Holder’s Notes, each transferee shall be allocated a pro rata
portion of such transferor’s Maximum Share Amount and Reserved
Amount.  Except as otherwise agreed to by such Holders, any portion of
the Maximum Share Amount or Reserved Amount which remains allocated to any
person or entity which does not hold any Notes shall be allocated to the
remaining Holders of Notes, pro rata based on the principal amount of such Notes
then held by such Holders.

    


    4.10           Damages
Shares.  Any shares of Common Stock that may be issuable to the
Holder pursuant to this Note in excess of the Conversion Shares (“Damages Shares”) shall be
treated as Common Stock issuable upon conversion of this Note for all purposes
hereof and shall be subject to all of the limitations and afforded all of the
rights of the other shares of Common Stock issuable hereunder.

    


    4.11           Denominations.  At
the request of the Holder, upon surrender of this Note, the Borrower shall
promptly issue new Notes in the aggregate outstanding principal amount hereof,
in the form hereof, in such denominations as the Holder shall
request.

    


    4.13           Notice of
Corporate Events.  Except as
otherwise provided below, the Holder of this Note shall have no rights as a
Holder of Common Stock unless and only to the extent that it converts this Note
into Common Stock.  The Borrower shall provide the Holder with prior
notification of any meeting or other corporate or company action of the
Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders).  

    


    4.14           Remedies.  The Borrower
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder, by vitiating the intent and purpose of the
transaction contemplated hereby.  Accordingly, the Borrower
acknowledges that the remedy at law for a breach of its obligations under this
Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be
entitled, in addition to all other available remedies at law as provided in
Article III above, or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or curing any
breach of this Note and to enforce specifically the terms and provisions
thereof, without the necessity of showing economic loss and without any bond or
other security being required.  This Note is and shall be deemed an
unconditional obligation of Borrower and Secured Parties and Guarantors for the
payment of money only and, without limitation to any other remedies Holder may
have, may be enforced against either or both of Borrower and Secured Parties and
Guarantors by summary proceeding pursuant summary proceeding/collection rule or
statute in the jurisdiction where enforcement is sought.

    


    


    [Signature
Page Follows]

    


    



    
      
        
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    Counterpart
Signature Page to 14% Secured Convertible Promissory Note Issued __________ ___,
2009

    


    


    IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer
this ______________ ____, 2009.

    


    


    AUDIOSTOCKS,
INC.

    


    


    By:           ______________________________

    
      	
               
      

            	 	
              Name:
      Luis Leung

            


    

    
      	
               
      

            	
              Title:
      President

            


    

    


    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
        
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    EXHIBIT
A

    


    NOTICE
OF CONVERSION

    


    (To be
Executed by the Registered Holder

    in order
to Convert the Notes)

    


               The
undersigned hereby irrevocably elects to convert $________principal amount of
the Note (defined below) into shares of common stock, par value $______ per
share ("Common Stock"),
of AudioStocks, Inc., a Delaware Corporation (the "Company" or “Borrower”) according to the
conditions of the convertible Notes of the Company dated as of ___________
_____, 2009 (the "Notes"), as of the date
written below.  If securities are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates.  No
fee will be charged to the Holder for any conversion, except for transfer taxes,
if any.  A copy of each Note is attached hereto (or evidence of loss,
theft or destruction thereof).

    


               The
undersigned hereby requests that the Company issue a certificate or certificates
for the number of shares of Common Stock set forth below (which numbers are
based on the Holder's calculation attached hereto) in the name(s) specified
immediately below or, if additional space is necessary, on an attachment
hereto:

    


     Name:                                                                                                                     

     Address:                                                                                                                     

    


    The undersigned represents and warrants
that all offers and sales by the undersigned of the securities issuable to the
undersigned upon conversion of the Notes shall be made pursuant to registration
of the securities under the Securities Act of 1933, as amended (the "Act"), or pursuant to an
exemption from registration under the Act.

    


               Date
of Conversion:____________________________

               Applicable
Conversion Price:____________________

               Number
of Shares of Common Stock to be Issued:____

               Pursuant
to Conversion of the Notes:__________

               Signature:____________________________________

    Name:_______________________________________

    Address:_____________________________________

    
      	 
      


    

    



    
      
        
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