ex10-1.htm


    THIS
      NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      “ACT”). IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENTS AS TO THE NOTE UNDER THE ACT
      OR
      AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER THAT REGISTRATION IS NOT
      REQUIRED.

    


    


    CONVERTIBLE
      PROMISSORY NOTE

    


    
      	
              $131,558.22

            	
              JANUARY
                15, 2008

            


    

    


    1.              
      Promise to
      Repay.  Theater Xtreme Entertainment Group, inc., a Florida
      Corporation (the “Borrower”), promises to
      pay___________(“Lender”), or its registered
      assigns, the principal sum of One Hundred Thirty-One Thousand Five Hundred
      Fifty
      Eight and 22/100 Dollars ($131,558.22) together with interest thereon at the
      rate hereinafter specified and any and all other sums which may be due and
      owing
      to the Lender in accordance with the terms contained herein (including, without
      limitation, the issuance of a warrant to Lender as contemplated in Section
      6
      below) as repayment of the loan that the Lender has made to Borrower on the
      date
      hereof.

     

    2. Interest.  Borrower
      shall pay interest from the date of this Convertible Promissory Note (this
      “Note”) on the principal
      amount outstanding from time to time at a rate per annum equal to Twenty-One
      percent (21%), compounded monthly. The interest shall be due on the first to
      occur of (i) the Maturity Date (as defined below), (ii) upon repayment of the
      Note in full, or (iii) on conversion of the principal amount plus accrued
      interest, if any, of the Note to Common Shares in Borrower (“Financing Offering”), as
      provided in Section 7 below.

     

    3. Calculation
      of
      Interest.  Interest on the principal amount of this Note shall
      be calculated on the basis of a 360 day year factor applied to the actual days
      on which there exists an unpaid principal balance due under this
      Note.

     

    4. Maturity.  The
      principal balance of this Note, together with all then unpaid and accrued
      interest, shall be due and payable in full on the date that is one hundred
      twenty (120) days from the date of this Note (the “Maturity Date”).

     

    5. Prepayment.  The
      Borrower may prepay this Note, together with all then unpaid and accrued
      interest, in whole or in part at any time or from time to time without penalty
      or additional interest. Any amounts prepaid hereunder shall be applied as
      provided in Section 9 below.

     

    6. Warrant.  Simultaneously
      with the issuance of this Note, the Borrower hereby grants to the Lender a
      warrant to purchase 131,558 Common Shares with an exercise price equal to Fifty
      Cents ($0.50) per share (the “Warrant”). The Warrant shall
      be in substantial form and substance as Exhibit A, attached hereto.

     

    7. Conversion.  Lender
      may convert the principal balance plus accrued interest, if any, in whole or
      in
      part, into Common Shares, at its election at any time prior to payment (the
      “Conversion”). The
      conversion price for this Note shall be equal to Ten Cents ($0.10) per
      share.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If
      Lender undertakes the Conversion,
      Lender shall notify Borrower of the Conversion (the “Conversion Notice”) including
      the amount of the principal balance of the Note plus accrued interest up to,
      but
      not including, the Note Conversion Date (as defined below) to be
      converted.  The effective date of the Conversion shall be the date of
      the Conversion Notice (the “Note Conversion Date”). Any
      amounts so converted to Common Shares shall reduce on a dollar for dollar basis
      the outstanding principal balance and accrued interest, if any, of this
      Note.

     

    On
      full conversion of the Note, Lender
      shall surrender this Note at Borrower’s principal executive office, or, if this
      Note has been lost, stolen, destroyed or mutilated, then, in the case of loss,
      theft or destruction, Lender shall deliver an indemnity agreement reasonably
      satisfactory in form and substance to Borrower or, in case of mutilation, Lender
      shall surrender and cancel this Note. On Conversion, Lender will be entitled
      to
      any accrued but unpaid interest on the converted principal amount of this Note
      which has not been converted into Common Shares as described above through
      the
      Note Conversion Date. Borrower warrants that Common Shares issuable on the
      Conversion will, upon Conversion, be validly issued, fully paid and
      non-assessable and free from all taxes, liens and charges in respect to issue
      thereof.

     

    8.              
      Representations
      and Warranties of Lender.  To induce
      Borrower to accept the loan evidenced by this Note, Lender represents and
      warrants to Borrower as follows:

     

    (a) Own
      Account.  Lender
      understands that the shares of Common Stock into which this Note is convertible,
      and the shares underlying the Warrant referred to in Section 6 have not been
      registered under the Act or any applicable state securities law.  If
      Lender acquires any such shares Lender will do so as principal for Lender’s own
      account and not with a view to or for distributing or reselling any such
      securities or any part thereof, has no present intention of distributing any
      of
      such securities in violation of the Act or any applicable state securities
      law
      and has no direct or indirect arrangement or understanding with any other person
      or entity to distribute or regarding the distribution of any of such securities
      in violation of the Act or any applicable state securities law.

     

    (b) Borrower
      Status. Lender is an
“accredited investor” as defined in Rule 501(a) promulgated under the
      Act.

     

    (c) Experience
      of
      Borrower.  Lender has such knowledge, sophistication and
      experience in business and financial matters so as to be capable of evaluating
      the merits and risks of the investment in Borrower (including the making of
      the
      loan evidenced by this Note) and has evaluated the merits and risks of such
      investment.  Lender is able to bear the economic risk of an investment
      in this Note and such other securities of the Borrower and, at the present
      time,
      is able to afford a complete loss of such investment.

     

    (d) Available
      Information.  Lender understands and acknowledges
      that:

     

    (i) Lender
      has been given access to, and prior to the execution of this Note, performed
      its
      own due diligence investigation and has had the opportunity to ask questions
      of
      and receive answers from, Borrower (and to analyze its responses) concerning
      the
      business and operations of the Borrower and to obtain any other information
      that
      Lender requested with respect to the Borrower’s operations and Lender’s proposed
      loan to the Borrower in order to evaluate the investment and verify the accuracy
      of all information furnished to the Lender regarding the Borrower;
      and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii) Lender
      has been given access to and has read all of the Borrower’s SEC
      filings.

     

    (e) Residence.
Lender
      is a bona fide resident at the
      address indicated for Lender in Section 15.

     

    (f) Insufficient
      Authorized
      Shares.  Lender understands that the Borrower does not have
      enough authorized shares of common stock to allow full Conversion of this Note
      and full exercise of the Warrant referred to in Section 6 while Lender is
      completing a currently contemplated offering of Preferred Stock and
      Warrants.  Consequently, Lender understands and acknowledges that
      Lender may not be able to obtain all such shares on Conversion or on such
      exercise in the absence of shareholder approval of an amendment of the Articles
      of Incorporation of Borrower.

     

    9.              
      Payments.  Payments
      of interest must be made in such coin or currency of the United States of
      America as at the time of payment is legal tender of the payment of public
      and
      private debts. Payments received after 2:00 P.M. will be treated as being
      received on the next banking day If any interest is paid on this Note that
      is
      deemed to exceed the then legal maximum rate, that portion of the interest
      payment representing an amount in excess of the then legal maximum rate will
      be
      credited and applied to the next payment of interest due under this Note, if
      any, or otherwise returned to Borrower.

     

    10.             
      Cure
      Period.  If any payment is not paid by the due date set forth
      herein, Lender shall notify Borrower in writing. Borrower shall have five (5)
      business days from the date of such notification to make full payment (the
      “Cure Period”).

     

    11.              
      Default and
      Remedies.  Any failure to make any payments due under this Note
      when due or within the applicable Cure Period or upon the failure to comply
      with
      any other terms and provisions of this Note shall be a default under this Note
      and shall entitle Lender to all of the rights and remedies specified herein
      or
      otherwise available under applicable law. Upon a default, the entire unpaid
      principal balance of this Note, together with all accrued but unpaid interest
      and other sums due hereunder shall immediately become due and payable in full
      and Lender shall have the right to bring suit for such amount and to exercise
      any other remedies available. The Borrower hereby waives presentment, demand
      for
      payment, notice of dishonor, notice of protest, and all other notices of demands
      in connection with the delivery, acceptance and performance of this Note.

     

    12.              
      Costs of
      Collection.  If at any time the indebtedness evidenced by this
      Note is collected through legal proceedings or this Note is placed in the hands
      of an attorney or attorneys for collection, borrower hereby agrees to pay all
      reasonable costs and expenses (including attorneys’ fees) incurred by the Lender
      in collecting or attempting to collect such indebtedness.

     

    13.              
      Governing
      Law.  This Note and all actions arising out of or in connection
      with this Note shall be governed by and construed in accordance with the laws
      of
      the State of Maryland.

     

    14.              
      No
      Waiver.  The delay or failure of Lender to exercise its rights
      hereunder shall not be deemed a waiver thereof. No waiver of any rights of
      the
      Lender shall be effective unless in writing and signed by Lender and any waiver
      of any right shall not apply to any other right or to such right in any
      subsequent event or circumstance not specifically included in such
      waiver.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    15.              
      Notices. Any Notices or other communication required hereunder shall be deemed
      properly given if delivered in person or if mailed by registered or certified
      mail. Postage prepaid, return receipt requested to the parties at the following
      addresses:

     

    
      	 	 	
              If
                to the Borrower, to:

            
	 	 	 
	 	 	
              Theater
                Xtreme Entertainment Group, Inc.

            
	 	 	
              250
                Corporate Boulevard

            
	 	 	
              Suites
                E&F

            
	 	 	
              Newark,
                DE  19702

            
	 	 	
              Attention:
                CFO

            
	 	 	
              Facsimile:  312-455-1612

            
	 	 	 
	 	 	
              With
                a copy to:

            
	 	 	 
	 	 	
              Ballard
                Spahr Andrews & Ingersoll LLP

            
	 	 	
              1735
                Market Street

            
	 	 	
              51st
                Floor

            
	 	 	
              Philadelphia,
                PA  19103

            
	 	 	
              Attention:
                Steven B. King, Esq.

            
	 	 	
              Facsimile:  215-864-9961

            
	 	 	 
	 	 	if
              to Lender:
	 	 	 
	 	 	 
	 	 	
              With
                a copy to:

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 


    

    


    


    


    IN
      WITNESS
      WHEREOF,   Borrower has caused this Note to be executed on
      its behalf by its duly authorized officer as of the day and year first above
      written.

    


    


    
      	 	
              Theater
                Xtreme Entertainment Group. Inc., a Florida corporation,

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /s/
                Scott R. Oglum

            
	 	 	
              Scott
                R. Oglum

            
	 	 	
              Chairman
                and Chief Executive Officer