THIS
      TERM
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS TERM NOTE HAVE
      NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
      SECURITIES LAWS. THIS TERM NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION
      OF THIS TERM NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS TERM NOTE UNDER
      SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO FRIENDLYWAY CORPORATION THAT SUCH REGISTRATION IS
      NOT
      REQUIRED.

     

    FORM
      OF SENIOR SUBORDINATED SECURED 

     

    CONVERTIBLE
      TERM NOTE

     

    FOR
      VALUE
      RECEIVED, FRIENDLYWAY CORPORATION, a Nevada corporation, (the "Borrower"),
      hereby promises to pay to [NAME OF HOLDER] (the "Holder") or its registered
      assigns or successors in interest, or order, the sum of $___________, together
      with any accrued and unpaid interest thereon, on _____________ 2009 [30
      MONTHS FROM CLOSING]
      (the
      "Maturity Date") if not sooner paid. The entire original principal amount of
      this Senior Subordinated Secured Convertible Term Note (this "Term Note") is
      subject to amortizing payments pursuant to Section 1.2 hereof and is hereinafter
      referred to as the "Amortizing Principal Amount." 

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in that certain Securities Purchase Agreement dated as of the date hereof
      between the Borrower, the Holder, and the other purchasers (“Holders”) of Term
      Notes (the "Purchase Agreement").

     

    The
      following terms shall apply to this Term Note:

     

    ARTICLE
      I

     

    INTEREST
      & AMORTIZATION; RANKING

     

    1.1 Interest
      Rate.
      Subject
      to Sections 1.1(b), 4.12 and 5.6 hereof, interest payable on this Term Note
      shall accrue for the Amortizing Principal Amount at a rate per annum (the
      "Interest Rate") equal to the greater of (x) the "prime rate" published in
      The
      Wall Street Journal from time to time (the "Prime Rate"), plus four percent
      (4%), or (y) fourteen percent (14%). The Prime Rate shall be increased or
      decreased as the case may be for each increase or decrease in the prime rate
      in
      an amount equal to such increase or decrease in the prime rate; each change
      to
      be effective as of the day of the change in such rate. Interest shall accrue
      from the date hereof and shall be calculated on the basis of a 360 day year.
      Interest on the Amortizing Principal Amount, shall be payable monthly, in
      arrears, commencing on [SUCH DATE THAT IS 60 DAYS FROM CLOSING] and on the
      first
      day of each consecutive calendar month thereafter (each, a "Repayment Date")
      and
      on the Maturity Date, whether by acceleration or otherwise.

     

    
      
        
        

      

      
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    1.2 Minimum
      Monthly Principal Payments.
      Amortizing payments of the Amortizing Principal Amount shall begin on [SUCH
      DATE
      THAT IS 60 DAYS FROM CLOSING] and shall recur on each succeeding Repayment
      Date
      thereafter until the Amortizing Principal Amount has been repaid in full,
      whether by the payment of cash or by the conversion of such principal into
      Common Stock pursuant to the terms hereof. Subject to Section 2.1 and Article
      III below, on each Repayment Date, the Borrower shall make payments to the
      Holder in the amount of $________ (the "Monthly Principal Amount"), together
      with any accrued and unpaid interest then due on the Amortizing Principal
      Amount, plus any and all other amounts which are then owing under this Term
      Note
      that have not been paid (the Monthly Principal Amount, together with such
      accrued and unpaid interest and such other amounts, collectively, the "Monthly
      Amount"). Any Principal Amount that remains outstanding on the Maturity Date
      shall be due and payable on the Maturity Date.

     

    1.3 Ranking
      and Covenants.
      Except
      for those certain senior secured notes in the aggregate principal amount of
      up
      to $600,000 that may be issued by the Company to Ram Capital Resources or its
      affiliates (“Permitted
      Senior Indebtedness”),
      no
      indebtedness of the Company is senior to this Note in right of payment, whether
      with respect to principal, interest, damages or upon liquidation or dissolution
      or otherwise. Other than the Permitted Senior Indebtedness and any renewal,
      refinancing or replacement thereof that does not exceed the aggregate amount
      of
      the Permitted Senior Indebtedness, the Company will not, and will not permit
      any
      Subsidiary to, directly or indirectly, enter into, create, incur, assume or
      suffer to exist any indebtedness of any kind, that is senior or pari passu
      in
      any respect to the Company’s obligations under the Notes. 

     

    ARTICLE
      II

     

    CONVERSION
      REPAYMENT

     

    2.1 (a) Payment
      of Monthly Amount in Cash or Common Stock.
      If the
      Monthly Amount is required to be paid in cash pursuant to Section 2.1(b), then
      the Borrower shall pay the Holder an amount equal to 100% of the Monthly Amount
      due and owing to the Holder on the Repayment Date in cash. If the Monthly Amount
      is required to be paid in shares of Common Stock pursuant to Section 2.1(b),
      the
      number of such shares to be issued by the Borrower to the Holder on such
      Repayment Date (in respect of such portion of the Monthly Amount converted
      into
      shares of Common Stock pursuant to Section 2.1(b)), shall be the number
      determined by dividing (x) the portion of the Monthly Amount converted into
      shares of Common Stock, by (y) 85% of the average of the Volume Weighted Average
      Price (“VWAP”) of the shares of Common Stock for each of the ten (10) trading
      days prior to the applicable Repayment Date, as reported by Bloomberg, L.P.
      on
      the Principal Market (as hereinafter defined) (“Monthly Conversion Price”). The
      foregoing is conditioned upon the Borrower being a currently reporting public
      entity under the Securities and Exchange Act of 1934, as amended and to the
      extent this condition is not satisfied at a particular Repayment Date, the
      Company shall be required to pay the Monthly Amount in cash only. 

     

    
      
        
        

      

      
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    (b) Monthly
      Amount Conversion Guidelines.
      Subject
      to Sections 2.1(a) and 2.2 hereof, the Holder shall convert into shares of
      Common Stock all or a portion of the Monthly Amount due on each Repayment Date
      according to the following guidelines (collectively, the "Conversion Criteria"):
      (i) the amount of such conversion does not exceed twenty five percent (25%)
      of
      the aggregate dollar trading volume of the Common Stock for the twenty two
      (22)
      trading day period immediately preceding the applicable Repayment Date. If
      the
      Conversion Criteria are not met, the Holder shall convert only such part of
      the
      Monthly Amount that meets the Conversion Criteria. Any part of the Monthly
      Amount due on a Repayment Date that the Holder has not been able to convert
      into
      shares of Common Stock due to failure to meet the Conversion Criteria, shall
      be
      paid by the Borrower in cash at the rate of 100% of the Monthly Amount otherwise
      due on such Repayment Date, within three (3) business days of the applicable
      Repayment Date.

     

    (c) Application
      of Conversion Amounts.
      Any
      amounts converted by the Holder pursuant to Section 2.1(b) shall be deemed
      to
      constitute payments of, or applied against, (i) first, outstanding fees, (ii)
      second, accrued interest on the Amortizing Principal Amount and (iii) third,
      the
      Amortizing Principal Amount.

     

    2.2 No
      Effective Registration.
      Notwithstanding anything to the contrary herein, no amount payable hereunder
      may
      be converted into Common Stock unless (a) either (i) an effective current
      Registration Statement (as defined in the Registration Rights Agreement)
      covering the shares of Common Stock to be issued in satisfaction of such
      obligations exists, or (ii) an exemption from registration of the Common Stock
      is available pursuant to Rule 144(k) of the Securities Act, and (b) no Event
      of
      Default hereunder exists and is continuing, unless such Event of Default is
      cured within any applicable cure period or is otherwise waived in writing by
      the
      Holder in whole or in part at the Holder’s option.

     

    2.3 Optional
      Redemption of Amortizing Principal Amount.
      The
      Borrower will have the option of prepaying the outstanding Amortizing Principal
      Amount ("Optional Amortizing Redemption"), in whole or in part, by paying to
      the
      Holder a sum of money equal to one hundred (100%) of the portion of the
      Amortizing 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 Term Note, the Purchase Agreement or any Related
      Agreement (the "Amortizing Redemption Amount") on the Amortizing Redemption
      Payment Date (as defined below). The Borrower shall deliver to the Holder a
      notice of redemption (the "Notice of Amortizing Redemption") specifying the
      date
      for such Optional Amortizing Redemption (the "Amortizing Redemption Payment
      Date"), which date shall be not less than thirty (30) days after the date of
      the
      Notice of Amortizing Redemption (the "Redemption Period"). A Notice of
      Amortizing Redemption shall not be effective with respect to any portion of
      the
      Amortizing Principal Amount for which the Holder have a pending election to
      convert pursuant to Section 3.1, or for conversions initiated or made by the
      Holder pursuant to Section 3.1 during the Redemption Period. The Amortizing
      Redemption Amount shall be determined as if such Holder's conversion elections
      had been completed immediately prior to the date of the Notice of Amortizing
      Redemption. On the Amortizing Redemption Payment Date, the Amortizing Redemption
      Amount shall be paid in good funds to the Holder. In the event the Borrower
      fails to pay the Amortizing Redemption Amount on the Amortizing Redemption
      Payment Date as set forth herein, then such Notice of Amortizing Redemption
      will
      be null and void.

     

    
      
        
        

      

      
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    ARTICLE
      III

     

    CONVERSION
      RIGHTS

     

    3.1 Holder’s
      Conversion Rights.
      Subject
      to Section 2.2, the Holder shall have the right, but not the obligation, to
      convert all or any portion of the then aggregate outstanding Principal Amount
      of
      this Term Note, together with interest and fees due hereon, into shares of
      Common Stock, subject to the terms and conditions set forth in this Article
      III.
      The Holder may exercise such right by delivery to the Borrower of a written
      Notice of Conversion pursuant to Section 3.3. The shares of Common Stock to
      be
      issued upon such conversion are herein referred to as the "Conversion
      Shares."

     

    3.2 Intentionally
      Omitted.
      

     

    3.3
       Mechanics
      of Holder’s Conversion.
      (a) In
      the event that the Holder elect to convert any amounts outstanding under this
      Term Note into Common Stock, the Holder shall give notice of such election
      by
      delivering an executed and completed notice of conversion (a "Notice of
      Conversion") to the Borrower, which Notice of Conversion shall provide a
      breakdown in reasonable detail of the Principal Amount, accrued interest and
      fees being converted. On each Conversion Date (as hereinafter defined) and
      in
      accordance with its Notice of Conversion, the Holder shall make the appropriate
      reduction to the Principal Amount, accrued interest and fees as entered in
      its
      records and shall provide written notice thereof to the Borrower within two
      (2)
      business days after the Conversion Date. Each date on which a Notice of
      Conversion is delivered or telecopied to the Borrower in accordance with the
      provisions hereof shall be deemed a "Conversion Date". A form of Notice of
      Conversion to be employed by the Holder is annexed hereto as Exhibit
      A.

     

    (b)
      Pursuant to the terms of a Notice of Conversion, the Borrower will issue
      instructions to the transfer agent accompanied by an opinion of counsel, if
      so
      required by the Borrower's transfer agent, within one (1) business day of the
      date of the delivery to the Borrower of the Notice of Conversion and shall
      cause
      the transfer agent to transmit the certificates representing the Conversion
      Shares to the Holder by crediting the account of the Holder’s designated broker
      with The Depository Trust Company ("DTC") through its Deposit Withdrawal Agent
      Commission ("DWAC") system within three (3) business days after receipt by
      the
      Borrower of the Notice of Conversion (the "Delivery Date"). In the case of
      the
      exercise of the conversion rights set forth herein the conversion privilege
      shall be deemed to have been exercised and the Conversion Shares issuable upon
      such conversion shall be deemed to have been issued upon the date of receipt
      by
      the Borrower of the Notice of Conversion. The Holder shall be treated for all
      purposes as the record holders of such shares of Common Stock, unless the Holder
      provides the Borrower written instructions to the contrary.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.4 Late
      Payments.
      The
      Borrower understands that a delay in the delivery of the shares of Common Stock
      in the form required pursuant to this Article beyond the Delivery Date could
      result in economic loss to the Holder. As compensation to the Holder for such
      loss, the Borrower agrees to pay late payments to the Holder for late issuance
      of such shares in the form required pursuant to this Article III upon conversion
      of the Note, in the amount equal to $250 per business day after the Delivery
      Date. The Borrower shall pay any payments incurred under this Section in
      immediately available funds upon demand.

     

    3.5 Conversion
      Mechanics.

     

    (a)
      The
      number of shares of Common Stock to be issued upon each conversion of this
      Term
      Note pursuant to this Article III shall be determined by dividing that portion
      of the Principal Amount and interest and fees to be converted, if any, by the
      then applicable Fixed Conversion Price. For purposes hereof, the initial "Fixed
      Conversion Price" means $0.14. In the event of any conversions of outstanding
      obligations under this Term Note in part pursuant to this Article III, such
      conversions shall be deemed to constitute conversions (i) first, of the Monthly
      Amount for the current calendar month, and (ii) then of outstanding Amortizing
      Principal Amount, by applying the conversion amount to Monthly Principal Amounts
      for the remaining Repayment Dates in chronological order.

     

    (b)
      The
      Fixed Conversion Price and number and kind of shares or other securities to
      be
      issued upon conversion are subject to adjustment from time to time upon the
      occurrence of certain events, as follows:

     

    A.
      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 Fixed
      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.

     

    B.
      During
      the period the conversion right exists, the Borrower will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Common Stock upon the full conversion of this Term Note.
      The
      Borrower represents that upon issuance and receipt of adequate consideration,
      such shares will be duly authorized and validly issued, fully paid and
      non-assessable. The Borrower agrees that its issuance of this Term 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 Term Note.

     

    C.
      Share
      Issuances.
      Subject
      to the provisions of this Section 3.5, if the Borrower shall at any time prior
      to the conversion or repayment in full of the Principal Amount issue any shares
      of Common Stock or securities convertible into Common Stock to a person other
      than the Holder (except (i) pursuant to Subsections A or B above;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (ii)
      pursuant to options, warrants or other obligations to issue shares outstanding
      on the date hereof as disclosed to the Holder in writing or in the Borrower's
      Exchange Act filings (iii) pursuant to any options, warrants or shares of Common
      Stock that may be sold and issued to Ram Capital Resources and its affiliates
      on
      or before [July 30, 2006]; and (iv) pursuant to options that are issuable as
      of
      the date hereof under any employee incentive stock option plan adopted by the
      Borrower) for a consideration per share (the "Offer Price") less than the Fixed
      Conversion Price in effect at the time of such issuance, then the Fixed
      Conversion Price shall be immediately reset to such lower Offer Price at the
      time of issuance of such securities. For purposes hereof, the issuance of any
      security of the Borrower convertible into or exercisable or exchangeable for
      Common Stock shall result in an adjustment to the Fixed Conversion Price at
      the
      time of issuance of such securities.

     

    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 Term Note, as to the unpaid Principal Amount 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.

     

    3.6 Issuance
      of Replacement Note.
      Upon
      any partial conversion of this Term Note, a replacement Note containing the
      same
      date and provisions of this Term Note shall, at the written request of the
      Holder, be issued by the Borrower to the Holder for the outstanding Principal
      Amount of this Term Note and accrued interest which shall not have been
      converted or paid. Subject to the provisions of Article IV, the Borrower will
      pay no costs, fees or any other consideration to the Holder for the production
      and issuance of a replacement Note.

     

    ARTICLE
      IV

     

    EVENTS
      OF DEFAULT

     

    Upon
      the
      occurrence and continuance of an Event of Default beyond any applicable grace
      period, Atlantic Professional Association, Inc., as Agent
      on
      behalf of the Holders and acting upon the direction of the Note
      Requisite
      Holders
      may make all sums of principal, interest and other fees then remaining unpaid
      hereon and all other amounts payable hereunder immediately due and payable.
      In
      the event of such an acceleration, the amount due and owing to the Holder shall
      be 125% of the outstanding principal amount of the Note (plus accrued and unpaid
      interest and fees, if any) (the "Default Payment"). The Default Payment shall
      be
      applied first to any fees due and payable to the Holder pursuant to this Term
      Note, the Purchase Agreement or the Related Agreements, then to accrued and
      unpaid interest due on the Note and then to the outstanding principal balance
      of
      the Note.

     

    The
      occurrence of any of the following events set forth in Sections 4.1 through
      4.10, inclusive, is an "Event of Default":

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    4.1 Failure
      to Pay Principal, Interest or other Fees.
      The
      Borrower fails to pay when due any installment of principal, interest or other
      fees hereon in accordance herewith, or the Borrower fails to pay when due any
      amount due under any other promissory note issued by the Borrower, and in any
      such case, such failure shall continue for a period of three (3) days following
      the date upon which any such payment was due.

     

    4.2 Breach
      of Covenant.
      The
      Borrower breaches any covenant or any other term or condition of this Term
      Note
      or the Purchase Agreement in any material respect, or the Borrower or any of
      its
      Subsidiaries breaches any covenant or any other term or condition of any Related
      Agreement in any material respect and, in any such case, such breach, if subject
      to cure, continues for a period of fifteen (15) days after the occurrence
      thereof.

     

    4.3 Breach
      of Representations and Warranties.
      Any
      representation or warranty made by the Borrower in this Term Note or the
      Purchase Agreement, or by the Borrower or any of its Subsidiaries in any Related
      Agreement, shall, in any such case, be false or misleading in any material
      respect on the date that such representation or warranty was made or deemed
      made.

     

    4.4 Receiver
      or Trustee.
      The
      Borrower or any of its Subsidiaries 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.

     

    4.5 Judgments.
      Any
      money judgment, writ or similar final process shall be entered or filed against
      the Borrower or any of its Subsidiaries or any of their respective property
      or
      other assets for more than $50,000, and shall remain unvacated, unbonded or
      unstayed for a period of thirty (30) days.

     

    4.6 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any of its
      Subsidiaries and not stayed within 30 days.

     

    4.7 Stop
      Trade.
      An SEC
      stop trade order or Principal Market trading suspension of the Common Stock
      shall be in effect for five (5) consecutive days or five (5) days during a
      period of ten (10) consecutive days, excluding in all cases a suspension of
      all
      trading on a Principal Market, provided that the Borrower shall not have been
      able to cure such trading suspension within thirty (30) days of the notice
      thereof or list the Common Stock on another Principal Market within sixty (60)
      days of such notice. The "Principal Market" for the Common Stock shall include
      the OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System,
      American Stock Exchange, or New York Stock Exchange (whichever of the foregoing
      is at the time the principal trading exchange or market for the Common
      Stock).

     

    4.8 Failure
      to Deliver Common Stock or Replacement Note.
      The
      Borrower shall fail (i) to timely deliver Common Stock to the Holder pursuant
      to
      and in the form required by this Term Note, if such failure to timely deliver
      Common Stock shall not be cured within two (2) business days or (ii) to deliver
      a replacement Note to the Holder within seven (7) business days following the
      required date of such issuance pursuant to this Term Note, the Purchase
      Agreement or any Related Agreement (to the extent required under such
      agreements).

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    4.9 Default
      Under Related Agreements or Other Agreements.
      The
      occurrence and continuance of any Event of Default (as defined in the Purchase
      Agreement or any Related Agreement) or any event of default (or similar term)
      under any other indebtedness.

     

    4.10 Change
      in Control.
      Any
      "Person" (as defined in Section 13(d)(3) under the Securities Exchange Act
      of
      1934, as amended (the "Exchange Act")), not including the Holders shall become
      the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more
      than 25% of the total voting power attached to all outstanding equity securities
      of the Borrower.

     

    DEFAULT
      RELATED PROVISIONS

     

    4.11 Default
      Interest Rate.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Borrower shall pay additional interest on this Term Note in an amount equal
      to
      two percent (2%) per month (twenty-four percent (24%) per annum), and all
      outstanding obligations under this Term Note, including unpaid interest, shall
      continue to accrue such additional interest from the date of such Event of
      Default until the date such Event of Default is cured or waived.

     

    4.12 Conversion
      Privileges.
      The
      conversion privileges set forth in Article III shall remain in full force and
      effect immediately from the date hereof and until this Term Note is paid in
      full.

     

    4.13 Cumulative
      Remedies.
      The
      remedies under this Term Note shall be cumulative.

     

    ARTICLE
      V

     

    MISCELLANEOUS

     

    5.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    


    5.2 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) five days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. All communications shall be sent to the Borrower at the address
      provided in the Purchase Agreement executed in connection herewith, and to
      the
      Holder at the address provided in the Purchase Agreement for such Holder, or
      at
      such other address as the Borrower or the Holder may designate by ten days
      advance written notice to the other parties hereto. A Notice of Conversion
      shall
      be deemed given when made to the Borrower pursuant to the Purchase
      Agreement.

    


    
      
        
        

      

      
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    5.3 Amendment.
      Any
      provision of this Term Note to the contrary notwithstanding, changes in or
      additions to this Term Note may be made, and compliance with any term, covenant,
      condition or provision set forth in the Term Notes may be omitted or waived
      (either generally or in a particular instance and either retroactively or
      prospectively), and any default or Event of Default and the consequences thereof
      may be waived, by a consent or consents in writing signed by the Note Requisite
      Holders; provided,
      however,
      that
      (i) the Company shall deliver copies of the form of such consent or consents
      to
      any Holder who did not execute the same; (ii) no such consent shall be effective
      to reduce the principal of or rate of interest payable on any Term Notes, or
      to
      postpone the date fixed for the payment of the principal thereof or of interest
      thereon, without the consent of the Holder of each Term Note so affected; and
      (iii) no such consent shall extend to or impair any obligation not expressly
      waived or impair any right consequent thereon. Any consent may be given subject
      to satisfaction of conditions stated therein. A waiver on any occasion shall
      not
      be construed as a bar to or a waiver of any such right or remedy on any future
      occasion.

     

    5.4 Assignability.
      This
      Term 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, and
      may
      be assigned by the Holder in accordance with the requirements of the Purchase
      Agreement. This Term Note shall not be assigned by the Borrower without the
      consent of the Holder.

     

    5.5 Governing
      Law.
      This
      Term Note shall be governed by and construed in accordance with the laws of
      the
      State of New York, without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      New
      York or in the federal courts located in the state of New York. Both the
      Borrower and the Holder 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
      Term 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 Term 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
      the Holder, to realize on any collateral or any other security for such
      obligations, or to enforce a judgment or other court order in favor of the
      Holder.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    5.6 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
      Holders and thus refunded to the Borrower.

     

    5.7 Security
      Interest and Guarantee.
      The
      holders of Term Notes have been granted a security interest (i) in certain
      assets of the Borrower and its Subsidiaries as more fully described in the
      Security Agreement dated as of the date hereof and (ii) pursuant to the Stock
      Pledge Agreement dated as of the date hereof. The obligations of the Borrower
      under this Term Note and other Term Notes are guaranteed by certain Subsidiaries
      pursuant to the Subsidiary Guaranty dated as of the date hereof.

     

    5.8 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Term 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 Term Note to favor any party against the
      other.

     

    5.9 Cost
      of Collection.
      If
      default is made in the payment of this Term Note, the Borrower shall pay to
      the
      Holders reasonable costs of collection, including reasonable attorney's
      fees.


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Borrower has caused this Term Note to be signed in its
      name
      effective as of this ___ day of June, 2006.

    
      	 	 	 
	 	FRIENDLYWAY
              CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
                Ken Upcraft 

              Title:
                President and CEO

            
	 	 
	 	 
	WITNESS:	 
	 	 
	 	 


    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        


    

     

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION

     

    (To
      be
      executed by the Holder in order to convert all or part of the Note into Common
      Stock

     

    [Name
      and
      Address of Holder]

     

    The
      Undersigned hereby converts $_________ of the principal and $_____________
      of
      the interest due on [specify applicable Repayment Date] under the Convertible
      Term Note issued by FRIENDLYWAY CORPORATION dated June __, 2006 by delivery
      of
      Shares of Common Stock of FRIENDLYWAY CORPORATION on and subject to the
      conditions set forth in Article III of such Note.

     

    1.
      Date
      of Conversion _______________________

     

    2.
      Shares
      To Be Delivered: _______________________

     

    By:

     

    
      
        
        

      

      
        12