UNITED STATES








NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED
BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. 


	
   

  	
   

  
	
  Principal Amount: S22,500.00

  	
  Issue Date: December 7, 2011 

  
	
  Purchase Price: $22,500.00 

  	
   

  



CONVERTIBLE PROMISSORY NOTE


          FOR
VALUE RECEIVED, GREEN ENDEAVORS, INC., a Utah
corporation (hereinafter called the "Borrower"), hereby promises to pay to the
order of ASHER ENTERPRISES, INC.,
a Delaware corporation, or registered assigns (the "Holder") the sum of
$22,500.00 together with any interest as set forth herein, on September 12,
2012 (the "Maturity Date"), and to pay interest on the unpaid principal balance
hereof at the rate of eight percent (8%) (the "Interest Rate") per annum from
the date hereof (the "Issue Date") until the same becomes due and payable, whether
at maturity or upon acceleration or by prepayment or otherwise. This Note may
not be prepaid in whole or in part except as otherwise explicitly set forth
herein. Any amount of principal or interest on this Note which is not paid when
due shall bear interest at the rate of twenty two percent (22%) per annum from
the due date thereof until the same is paid ("Default Interest"). Interest
shall commence accruing on the date that the Note is fully paid and shall be
computed on the basis of a 365-day year and the actual number of days elapsed.
All payments due hereunder (to the extent not converted into common stock,
$0.001 par value per share (the "Common Stock") in accordance with the terms
hereof) shall be made in lawful money of the United States of America. 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 and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of interest due on such date. 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. Each capitalized term
used herein, and not otherwise defined, shall have the meaning ascribed thereto
in that certain Securities Purchase Agreement dated the date hereof, pursuant to
which this Note was originally issued (the "Purchase Agreement").





















  







          This Note
is free from all taxes, liens, claims and encumbrances with respect to the
issue thereof and shall not be subject to preemptive rights or other similar
rights of shareholders of the Borrower and will not impose personal liability
upon the holder thereof. 


          The
following terms shall apply to this Note: 


ARTICLE I.CONVERSION RIGHTS


          1.1 Conversion Right. The Holder
shall have the right from time to time, and at any time during the period
beginning on the date which is one hundred eighty (180) days following the date
of this Note and ending on the later of: (i) the Maturity Date and (ii) the
date of payment of the Default Amount (as defined in Article III) pursuant to
Section 1.6(a) or Article III, each in respect of the remaining outstanding
principal amount of this Note 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, 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 (the
"Conversion Price") 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
the Notes 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 shares of Common Stock
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 (the "Exchange Act"), and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso, provided, further,
however, that the limitations on conversion may be waived by the Holder
upon, at the election of the Holder, not less than 61 days' prior notice to the
Borrower, and the provisions of the conversion limitation shall continue to
apply until such 61st day (or such later date, as determined by the Holder, as
may be specified in such notice of waiver). The number of shares of Common
Stock to be issued upon each conversion of this Note shall be determined by
dividing the Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of conversion, in the
form attached hereto as Exhibit A (the "Notice of Conversion"), delivered to
the Borrower by the Holder in accordance with Section 1.4 below; provided that
the Notice of Conversion is submitted by facsimile or e-mail (or by other means
resulting in, or reasonably expected to result in, notice) to the Borrower
before 6:00 p.m., New York, New York time on such conversion date (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) at the Borrower's option, accrued
and unpaid interest, if any, on such principal amount at the interest rates
provided in this Note to the Conversion Date, plus (3) at the Borrower's
option, 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
amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. 


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          1.2 Conversion Price. 


                    (a) Calculation of Conversion Price.
The conversion price (the "Conversion Price") shall equal the Variable
Conversion Price (as defined herein) (subject to equitable adjustments for
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,
combinations, recapitalization, reclassifications, extraordinary distributions
and similar events). The "Variable Conversion Price" shall mean 56% multiplied
by the Market Price (as defined herein) (representing a discount rate of 44%).
"Market Price" means the average of the lowest three (3) Trading Prices (as
defined below) for the Common Stock during the ten (10) Trading Day period
ending on the latest complete Trading Day prior to the Conversion Date.
"Trading Price" means, for any security as of any date, the closing bid price
on the Over-the-Counter Bulletin Board, or applicable trading market (the
"OTCQB") as reported by a reliable reporting service ("Reporting Service")
designated by the Holder (i.e. Bloomberg) or, if the OTCQB is not the principal
trading market for such security, the closing bid price of such security on the
principal securities exchange or trading market where such security is listed
or traded or, if no closing bid price of such security is available in any of
the foregoing manners, the average of the closing bid prices of any market
makers for such security that are listed in the "pink sheets" by the National
Quotation Bureau, Inc. If the Trading Price cannot be calculated for such
security on such date in the manner provided above, the Trading Price shall be
the fair market value as mutually determined by the Borrower and the holders of
a majority in interest of the Notes being converted for which the calculation
of the Trading Price is required in order to determine the Conversion Price of
such Notes. "Trading Day" shall mean any day on which the Common Stock is
tradable for any period on the OTCQB, or on the principal securities exchange
or other securities market on which the Common Stock is then being traded. 


                    (b) Conversion Price During Major
Announcements. Notwithstanding anything contained in Section 1.2(a) to the
contrary, in the event the Borrower (i) makes a public announcement that it
intends to consolidate or merge with any other corporation (other than a merger
in which the Borrower is the surviving or continuing corporation and its
capital stock is unchanged) or sell or transfer all or substantially all of the
assets of the Borrower or (ii) any person, group or entity (including the
Borrower) publicly announces a tender offer to purchase 50% or more of the
Borrower's Common Stock (or any other takeover scheme) (the date of the
announcement referred to in clause (i) or (ii) is hereinafter referred to as
the "Announcement Date"), then the Conversion Price shall, effective upon the
Announcement Date and continuing through the Adjusted Conversion Price
Termination Date (as defined below), be equal to the lower of (x) the
Conversion Price which would have been applicable for a Conversion occurring on
the Announcement Date and (y) the Conversion Price that would otherwise be in
effect. From and after the Adjusted Conversion Price Termination Date, the
Conversion Price shall be determined as set forth in this Section 1.2(a). For
purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with
respect to any proposed transaction or tender offer (or takeover scheme) for
which a public announcement as contemplated by this Section 1.2(b) has been
made, the date upon which the Borrower (in the case of clause (i) above) or the
person, group or entity (in the case of clause (ii) above) consummates or
publicly announces the termination or abandonment of the proposed transaction
or tender offer (or takeover scheme) which caused this Section 1.2(b) to become
operative. 


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          1.3 Authorized Shares. The
Borrower covenants that during the period the conversion right exists, the
Borrower will reserve 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 issued pursuant
to the Purchase Agreement. The Borrower is required at all times to have
authorized and reserved five times the number of shares that is actually
issuable upon full conversion of the Note (based on the Conversion Price of the
Notes in effect from time to time)(the "Reserved Amount"). The Reserved Amount
shall be increased from time to time in accordance with the Borrower's
obligations pursuant to Section 4(g) of the Purchase Agreement. The Borrower
represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. In addition, if the 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 the Notes shall be convertible at
the 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 the outstanding Notes. The Borrower (i) acknowledges that it
has irrevocably instructed its transfer agent to issue certificates for the
Common Stock issuable upon conversion of this Note, and (ii)agrees that its
issuance of this Note 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 the Borrower does not maintain the Reserved Amount it will be considered
an Event of Default under Section 3.2 of the Note. 


          1.4 Method of Conversion. 


                    (a) Mechanics of Conversion.
Subject to Section 1.1, 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, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 6:00 p.m.,
New York, New York time) and (B)subject to Section 1.4(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 Holder and 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. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima
facie, be controlling and
determinative in the absence of manifest error. 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. 


4





















  







                    (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 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 the amount of any such tax or shall
have established to the satisfaction of the Borrower 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 or e-mail (or other reasonable means of communication) of a Notice
of Conversion meeting the requirements for conversion as provided in this
Section 1.4, 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) business days after such receipt
(but in any event the fifth (5th) business day being hereinafter referred to as
the "Deadline") (and, solely in the case of conversion of the entire unpaid
principal amount hereof, surrender of this Note) in accordance with the terms
hereof and the Purchase Agreement. 


                    (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 outstanding principal amount and the amount of accrued
and unpaid interest on this Note shall be reduced to reflect such conversion,
and, unless the Borrower defaults on its obligations under this Article I, 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 specified
in the Notice of Conversion shall be the Conversion Date so long as the Notice
of Conversion is received by the Borrower before 6:00 p.m., New York, New York
time, on such date. 


                    (f) Delivery of Common Stock by
Electronic Transfer. In lieu of delivering physical certificates representing
the Common Stock issuable upon conversion, provided the Borrower is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Holder and its compliance with
the provisions contained in Section 1.1 and in this Section 1.4, the Borrower
shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting
the account of Holder's Prime Broker with DTC through its Deposit Withdrawal
Agent Commission ("DWAC") system. 


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                    (g) Failure to Deliver Common Stock
Prior to Deadline. Without in any way limiting the Holder's right to pursue
other remedies, including actual damages and/or equitable relief, the parties
agree that if delivery of the Common Stock issuable upon conversion of this
Note is not delivered by the Deadline (other than a failure due to the
circumstances described in Section 1.3 above, which failure shall be governed
by such Section) the Borrower shall pay to the Holder $2,000 per day in cash,
for each day beyond the Deadline that the Borrower fails to deliver such Common
Stock. Such cash amount shall be paid to Holder by the fifth day of the month
following the month in which it has accrued or, at the option of the Holder (by
written notice to the Borrower by the first day of the month following the
month in which it has accrued), shall be added to the principal amount of this
Note, in which event interest shall accrue thereon in accordance with the terms
of this Note and such additional principal amount shall be convertible into
Common Stock in accordance with the terms of this Note. The Borrower agrees
that the right to convert is a valuable right to the Holder. The damages resulting
from a failure, attempt to frustrate, interference with such conversion right
are difficult if not impossible to qualify. Accordingly the parties acknowledge
that the liquidated damages provision contained in this Section 1.4(g) are
justified. The liquidated damages shall not apply in the event of an act of god
or in the event that the Borrower has done everything in its power that is
requested of by either the Holder or the Borrower's transfer agent in order to
effectuate the delivery of Common Stiock pursuant to a Notice of conversion it
recevies. 


          1.5 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 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 1.5 and who
is an Accredited Investor (as defined in the Purchase Agreement). Except as
otherwise provided in the Purchase 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 without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
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 an
exemption that permits removal of the legend, shall bear a legend substantially
in the following form, as appropriate: 


"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE
HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES."


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          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, which opinion shall be accepted
by the Company so that the sale or transfer is effected 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. In the event that the Company does not accept the
opinion of counsel provided by the Buyer with respect to the transfer of
Securities pursuant to an exemption from registration, such as Rule 144 or
Regulation S, at the Deadline, it will be considered an Event of Default
pursuant to Section 3.2 of the Note. 


          1.6 Effect of Certain Events. 


                    (a) Effect of Merger, Consolidation,
Etc. At the option of the Holder, the sale, conveyance or disposition of
all or substantially all of the assets of the Borrower, the effectuation by the
Borrower of a transaction or series of related transactions in which more than
50% of the voting power of the Borrower is disposed of, or the consolidation,
merger or other business combination of the Borrower with or into any other
Person (as defined below) or Persons when the Borrower is not the survivor
shall either: (i) be deemed to be an Event of Default (as defined in Article
III) pursuant to which the Borrower shall be required to pay to the Holder upon
the consummation of and as a condition to such transaction an amount equal to
the Default Amount (as defined in Article III) or (ii) be treated pursuant to
Section 1.6(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 and prior to conversion of all of the Notes, 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, 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 


7





















  







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. The
Borrower shall not affect any transaction described in this Section 1.6(b)
unless (a) it 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 shareholders 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) and (b) the resulting successor or acquiring entity (if
not the Borrower) assumes by written instrument the obligations of this Section
1.6(b). 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 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) Adjustment Due to Dilutive
Issuance. If, at any time when any Notes are issued and outstanding, the
Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is
deemed to have issued or sold, any shares of Common Stock for no consideration
or for a consideration per share (before deduction of reasonable expenses or
commissions or underwriting discounts or allowances in connection therewith)
less than the Conversion Price in effect on the date of such issuance (or
deemed issuance) of such shares of Common Stock (a "Dilutive Issuance"), then
immediately upon the Dilutive Issuance, the Conversion Price will be reduced to
the amount of the consideration per share received by the Borrower in such
Dilutive Issuance. 


                    The
Borrower shall be deemed to have issued or sold shares of Common Stock if the
Borrower in any manner issues or grants any warrants, rights or options (not
including employee stock option plans), whether or not immediately exercisable,
to subscribe for or to purchase Common Stock or other securities convertible
into or exchangeable for Common Stock ("Convertible Securities") (such
warrants, rights and options to purchase Common Stock or Convertible Securities
are hereinafter referred to as "Options") and the price per share for which
Common Stock is issuable upon the exercise of such Options is less than the
Conversion Price then in effect, then the Conversion Price shall be equal to
such price per share. For purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon the exercise of such Options" is
determined by dividing (i) the total amount, if any, received or receivable by
the Borrower as consideration for the issuance or granting of all such 


8





















  







Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Borrower upon the exercise of all such
Options, plus, in the case of Convertible Securities issuable upon the
exercise of such Options, the minimum aggregate amount of additional
consideration payable upon the conversion or exchange thereof at the time such
Convertible Securities first become convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise of
all such Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Conversion Price will be made upon
the actual issuance of such Common Stock upon the exercise of such Options or
upon the conversion or exchange of Convertible Securities issuable upon
exercise of such Options. 


                    Additionally,
the Borrower shall be deemed to have issued or sold shares of Common Stock if
the Borrower in any manner issues or sells any Convertible Securities, whether
or not immediately convertible (other than where the same are issuable upon the
exercise of Options), and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share.
For the purposes of the preceding sentence, the "price per share for which
Common Stock is issuable upon such conversion or exchange" is determined by
dividing (i) the total amount, if any, received or receivable by the Borrower
as consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to
the Borrower upon the conversion or exchange thereof at the time such
Convertible Securities first become convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities. 


                    (e) Purchase Rights. If, at any
time when any Notes are 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 any
class of 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. 


                    (f) Notice of Adjustments. Upon
the occurrence of each adjustment or readjustment of the Conversion Price as a
result of the events described in this Section 1.6, the Borrower, at its
expense, shall promptly compute such adjustment or readjustment and prepare and
furnish to the Holder 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. 


9





















  







          1.7 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 issued pursuant to the Purchase Agreement 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"), which shall be
4.99% of the total shares outstanding on the Closing Date (as defined in the Purchase
Agreement), subject to equitable adjustment from time to time for stock splits,
stock dividends, combinations, capital reorganizations and similar events
relating to the Common Stock occurring after the date hereof. Once the Maximum
Share Amount has been issued, if the Borrower fails to eliminate any
prohibitions under applicable law or the rules or regulations of any stock
exchange, interdealer quotation system or other self-regulatory organization
with jurisdiction over the Borrower or any of its securities on the Borrower's
ability to issue shares of Common Stock in excess of the Maximum Share Amount,
in lieu of any further right to convert this Note, this will be considered an
Event of Default under Section 3.3 of the Note. 


          1.8 Status as Shareholder. 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 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 tenth (10th) 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 Note with respect to such unconverted portions of this Note and
the 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 (including, without limitation, (i)
the right to receive Conversion Default Payments pursuant to Section 1.3 to the
extent required thereby for such Conversion Default and any subsequent
Conversion Default and (ii) the right to have the Conversion Price with respect
to subsequent conversions determined in accordance with Section 1.3) for the
Borrower's failure to convert this Note. 


          1.9 Prepayment. Notwithstanding
anything to the contrary contained in this Note, so long as the Borrower has
not received a Notice of Conversion from the Holder, then at any time during
the period beginning on the Issue Date and ending on the date which is sixty
(60) days following the issue date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the
Holder of the Note to prepay the outstanding Note (principal and accrued
interest), in full, in accordance with this Section 1.9. Any notice of
prepayment hereunder (an "Optional Prepayment Notice") shall be delivered to
the Holder of the Note at its registered addresses and shall state: (1) that
the Borrower is exercising its right to prepay the Note, and (2) the date of
prepayment which shall be not more than three (3) Trading Days from the date of
the Optional Prepayment Notice. On the date fixed for prepayment (the "Optional
Prepayment Date"), the Borrower shall make payment of the Optional Prepayment
Amount (as defined below) to or upon the order of the Holder as specified by
the Holder in writing to the Borrower at least one (1) business day prior to
the Optional Prepayment Date. If 


10





















  







the Borrower exercises its right to prepay the Note, the Borrower shall
make payment to the Holder of an amount in cash (the "Optional Prepayment
Amount") equal to 125%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on
the unpaid principal amount of this Note to the Optional Prepayment Date plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x)
plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails
to pay the Optional Prepayment Amount due to the Holder of the Note within two
(2) business days following the Optional Prepayment Date, the Borrower shall
forever forfeit its right to prepaythe Note pursuant to this Section 1.9. 


          Notwithstanding
anything to the contrary contained in this Note, so long as the Borrower has
not received a Notice of Conversion from the Holder, then at any time during
the period beginning on the date which is sixty-one (61) days following the
issue date and ending on the date which is ninety (90) days following the issue
date, the Borrower shall have the right, exercisable on not less than three (3)
Trading Days prior written notice to the Holder of the Note to prepay the
outstanding Note (principal and accrued interest), in full, in accordance with
this Section 1.9. Any Optional Prepayment Notice shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the
Borrower is exercising its right to prepay the Note, and (2) the date of
prepayment which shall be not more than three (3) Trading Days from the date of
the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower
shall make payment of the Second Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as specified by the Holder in writing to the
Borrower at least one (1) business day prior to the Optional Prepayment Date.
If the Borrower exercises its right to prepay the Note, the Borrower shall make
payment to the Holder of an amount in cash (the "Second Optional Prepayment
Amount") equal to 130%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on
the unpaid principal amount of this Note to the Optional Prepayment Date plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x)
plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails
to pay the Second Optional Prepayment Amount due to the Holder of the Note
within two (2) business days following the Optional Prepayment Date, the
Borrower shall forever forfeit its right to prepaythe Note pursuant to this
Section 1.9. 


          Notwithstanding
anything to the contrary contained in this Note, so long as the Borrower has
not received a Notice of Conversion from the Holder, then at any time during
the period beginning on the date which is ninety-one (91) days following the
issue date and ending on the date which is one hundred twenty (120) days
following the issue date, the Borrower shall have the right, exercisable on not
less than three (3) Trading Days prior written notice to the Holder of the Note
to prepay the outstanding Note (principal and accrued interest), in full, in
accordance with this Section 1.9. Any Optional Prepayment Notice shall be
delivered to the Holder of the Note at its registered addresses and shall state:
(1) that the Borrower is exercising its right to prepay the Note, and (2) the
date of prepayment which shall be not more than three (3) Trading Days from the
date of the Optional Prepayment Notice. On the Optional Prepayment Date, the
Borrower shall make payment of the Third Optional Prepayment Amount (as defined
below) to or upon the order of the Holder as specified by the Holder in writing
to the Borrower at least one (1) business day prior to the Optional Prepayment
Date. If the Borrower exercises its right to prepay the Note, the Borrower
shall make payment to the Holder of an amount in cash (the "Third Optional
Prepayment Amount") equal to 135%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid 


11





















  







principal amount of this Note to the Optional Prepayment Date plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x)
plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails
to pay the Third Optional Prepayment Amount due to the Holder of the Note
within two (2) business days following the Optional Prepayment Date, the
Borrower shall forever forfeit its right to prepaythe Note pursuant to this
Section 1.9. 


          Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period
beginning on the date that is one hundred twenty-one (121) day from the issue
date and ending one hundred fifty (150) days following the issue date, the
Borrower shall have the right, exercisable on not less than three (3) Trading
Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section
1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the
Note at its registered addresses and shall state: (1) that the Borrower is
exercising its right to prepay the Note, and (2) the date of prepayment which
shall be not more than three (3) Trading Days from the date of the Optional
Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make
payment of the Fourth Optional Prepayment Amount (as defined below) to or upon
the order of the Holder as specified by the Holder in writing to the Borrower
at least one (1) business day prior to the Optional Prepayment Date. If the
Borrower exercises its right to prepay the Note, the Borrower shall make
payment to the Holder of an amount in cash (the "Fourth Optional Prepayment
Amount") equal to 140%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on
the unpaid principal amount of this Note to the Optional Prepayment Date plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x)
plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and
1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails
to pay the Fourth Optional Prepayment Amount due to the Holder of the Note
within two (2) business days following the Optional Prepayment Date, the
Borrower shall forever forfeit its right to prepaythe Note pursuant to this
Section 1.9. 


          Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period
beginning on the date that is one hundred fifty-one (151) day from the issue
date and ending one hundred eighty (180) days following the issue date, the
Borrower shall have the right, exercisable on not less than three (3) Trading
Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section
1.9. Any Optional Prepayment Notice shall be delivered to the Holder of the
Note at its registered addresses and shall state: (1) that the Borrower is
exercising its right to prepay the Note, and (2) the date of prepayment which
shall be not more than three (3) Trading Days from the date of the Optional
Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make
payment of the Fifth Optional Prepayment Amount (as defined below) to or upon
the order of the Holder as specified by the Holder in writing to the Borrower
at least one (1) business day prior to the Optional Prepayment Date. If the
Borrower exercises its right to prepay the Note, the Borrower shall make
payment to the Holder of an amount in cash (the "Fifth Optional Prepayment
Amount") equal to 150%, multiplied by the sum of: (w) the then outstanding principal
amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal amount of this Note to the Optional Prepayment Date plus (y)
Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.
If the Borrower delivers an Optional Prepayment Notice and fails to pay the
Fifth Optional Prepayment Amount due to the Holder of the Note within two (2)
business days following the Optional Prepayment Date, the Borrower shall
forever forfeit its right to prepay the Note pursuant to this Section 1.9. 


12





















  







          After the
expiration of one hundred eighty (180) following the date of the Note, the
Borrower shall have no right of prepayment.


ARTICLE II.CERTAIN COVENANTS


          2.1 Distributions on Capital Stock.
So long as the Borrower shall have any obligation under this Note, the Borrower
shall not without the Holder's written consent (a) pay, declare or set apart
for such payment, any dividend or other distribution (whether in cash, property
or other securities) on shares of capital stock other than dividends on shares
of Common Stock solely in the form of additional shares of Common Stock or (b)
directly or indirectly or through any subsidiary make any other payment or
distribution in respect of its capital stock except for distributions pursuant
to any shareholders' rights plan which is approved by a majority of the
Borrower's disinterested directors. 


          2.2 Restriction on Stock Repurchases.
So long as the Borrower shall have any obligation under this Note, the Borrower
shall not without the Holder's written consent redeem, repurchase or otherwise
acquire (whether for cash or in exchange for property or other securities or
otherwise) in any one transaction or series of related transactions any shares
of capital stock of the Borrower or any warrants, rights or options to purchase
or acquire any such shares. 


          2.3 Borrowings. So long as the
Borrower shall have any obligation under this Note, the Borrower shall not,
without the Holder's written consent, create, incur, assume guarantee, endorse,
contingently agree to purchase or otherwise become liable upon the obligation
of any person, firm, partnership, joint venture or corporation, except by the
endorsement of negotiable instruments for deposit or collection, or suffer to
exist any liability for borrowed money, except (a) borrowings in existence or
committed on the date hereof and of which the Borrower has informed Holder in
writing prior to the date hereof, (b) indebtedness to trade creditors or
financial institutions incurred in the ordinary course of business, (c)
borrowings that do not render the Borrower a "Shell" company as defined in the
Securities Act of 1933, or (d) borrowings, the proceeds of which shall be used
to repay this Note. 


          2.4 Sale of Assets. So long as
the Borrower shall have any obligation under this Note, the Borrower shall not,
without the Holder's written consent, sell, lease or otherwise dispose of any significant
portion of its assets outside the ordinary course of business. Any consent to
the disposition of any assets may be conditioned on a specified use of the
proceeds of disposition. 


          2.5 Advances and Loans. So long
as the Borrower shall have any obligation under this Note, the Borrower shall
not, without the Holder's written consent, lend money, give credit or make
advances to any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the
Borrower, except loans, credits or advances (a) in existence or committed on
the date hereof and which the Borrower has informed Holder in writing prior to
the date hereof, (b) made in the ordinary course of business or (c) not in
excess of $100,000. 


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ARTICLE III.EVENTS OF DEFAULT


          If any of
the following events of default (each, an "Event of Default") shall occur: 


          3.1 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, upon acceleration or
otherwise. 


          3.2 Conversion and the Shares.
The Borrower fails to issue shares of Common Stock to the Holder (or announces
or threatens in writing that it will not honor its obligation to do so) upon
exercise by the Holder of the conversion rights of the Holder in accordance
with the terms of this Note, or the exercise of the Warrant in favor of the
Holder, fails to transfer or cause its transfer agent to transfer (issue)
(electronically or in certificated form) any certificate for shares of Common
Stock issued to the Holder upon conversion of or otherwise pursuant to this
Note as and when required by this Note (or the Warrant pursuant to the
Warrant), the Borrower directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or issuing)
(electronically or in certificated form) any certificate for shares of Common
Stock to be issued to the Holder upon conversion of or otherwise pursuant to
this Note as and when required by this Note (or the Warrant pursuant to the
Warrant), or fails to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing) any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on
any certificate for any shares of Common Stock issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this
Note (or the Warrant pursuant to the Warrant)(or makes any written
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 written announcement, statement or threat not to honor its
obligations shall not be rescinded in writing) for three (3) business days
after the Holder shall have delivered a Notice of Conversion (or Exercise
Notice pursuant to the Warrant). It is an obligation of the Borrower to remain
current in its obligations to its transfer agent. It shall be an event of
default of this Note, if a conversion of this Note is delayed, hindered or
frustrated due to a balance owed by the Borrower to its transfer agent. If at
the option of the Holder, the Holder advances any funds to the Borrower's
transfer agent in order to process a conversion, such advanced funds shall be
paid by the Borrower to the Holder within forty eight (48) hours of a demand
from the Holder. 


          3.3 Breach of Covenants. The
Borrower breaches any material covenant or other material term or condition
contained in this Note and any collateral documents including but not limited
to the Purchase Agreement and such breach continues for a period of ten (10)
days after written notice thereof to the Borrower from the Holder. 


          3.4 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 (including, without limitation, the Purchase Agreement),
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 the Purchase Agreement. 


          3.5 Receiver or Trustee. The
Borrower 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. 


14





















  







          3.6 Judgments. Any money
judgment, writ or similar process shall be entered or filed against the
Borrower or any subsidiary of the Borrower or any of its property or other
assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder,
which consent will not be unreasonably withheld. 


          3.7 Bankruptcy. Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings,
voluntary or involuntary, for relief under any bankruptcy law or any law for
the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower. 


          3.8 Delisting of Common Stock.
The Borrower shall fail to maintain the listing of the Common Stock on at least
one of the OTCQB or an equivalent replacement exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the
American Stock Exchange. 


          3.9 Failure to Comply with the
Exchange Act. The Borrower shall fail to comply with the reporting
requirements of the Exchange Act; and/or the Borrower shall cease to be subject
to the reporting requirements of the Exchange Act. 


          3.10 Liquidation. Any dissolution,
liquidation, or winding up of Borrower or any substantial portion of its
business. 


          3.11 Cessation of Operations. Any
cessation of operations by Borrower or Borrower admits it is otherwise
generally unable to pay its debts as such debts become due, provided, however,
that any disclosure of the Borrower's ability to continue as a "going concern"
shall not be an admission that the Borrower cannot pay its debts as they become
due. 


          3.12 Maintenance of Assets.   The failure by Borrower to maintain any
material intellectual property rights, personal, real property or other assets
which are necessary to conduct its business (whether now or in the future). 


          3.13 Financial Statement Restatement.
The restatement of any financial statements filed by the Borrower with the SEC
for any date or period from two years prior to the Issue Date of this Note and
until this Note is no longer outstanding, if the result of such restatement
would, by comparison to the unrestated financial statement, have constituted a
material adverse effect on the rights of the Holder with respect to this Note
or the Purchase Agreement. 


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


          3.15 Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its
transfer agent, the Borrower fails to provide, prior to the effective date of
such replacement, a fully executed Irrevocable Transfer Agent Instructions in a
form as initially delivered pursuant to the Purchase Agreement (including but
not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Borrower and the
Borrower. 


15





















  







          3.16 Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other
related or companion documents, a breach or default by the Borrower of any
covenant or other term or condition contained in any of the Other Agreements,
after the passage of all applicable notice and cure or grace periods, shall, at
the option of the Holder, be considered a default under this Note and the Other
Agreements, in which event the Holder shall be entitled (but in no event
required) to apply all rights and remedies of the Holder under the terms of
this Note and the Other Agreements by reason of a default under said Other
Agreement or hereunder. "Other Agreements" means,
collectively, all agreements and instruments between, among or by: (1) the
Borrower, and, or for the benefit of, (2)the Holder and any affiliate of the
Holder, including, without limitation, promissory notes; provided, however, the
term "Other Agreements" shall not include the related or companion documents to
this Note. Each of the loan transactions will be cross-defaulted with each
other loan transaction and with all other existing and future debt of Borrower
to the Holder.


          Upon the
occurrence and during the continuation of any Event of Default specified in
Section 3.1 (solely with respect to failure to pay the principal hereof or
interest thereon when due at the Maturity Date), the Note shall become immediately
due and payable and the Borrower shall pay to the Holder, in full satisfaction
of its obligations hereunder, an amount equal to the Default Sum (as defined
herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF
DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND
PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS
OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED
HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the
continuation of any Event of Default specified in Sections 3.1 (solely with
respect to failure to pay the principal hereof or interest thereon when due on
this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon
acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15
exercisable through the delivery of written notice to the Borrower by such
Holders (the "Default Notice"), and upon the occurrence of an Event of Default
specified the remaining sections of Articles III (other than failure to pay the
principal hereof or interest thereon at the Maturity Date specified in Section
3,1 hereof), the Note shall become immediately due and payable and the Borrower
shall pay to the Holder, in full satisfaction of its obligations hereunder, an
amount equal to the greater of (i) 150% times the sum of (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid principal amount of this Note to the date of payment (the
"Mandatory Prepayment Date") plus (y) Default Interest, if any, on the
amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed
to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding
principal amount of this Note to the date of payment plus the amounts
referred to in clauses (x), (y) and (z) shall collectively be known as the
"Default Sum") or (ii) the "parity value" of the Default Sum to be prepaid,
where parity value means (a) the highest number of shares of Common Stock
issuable upon conversion of or otherwise pursuant to such Default Sum in
accordance with Article I, treating the Trading Day immediately preceding the
Mandatory Prepayment Date as the "Conversion Date" for purposes of determining
the lowest applicable Conversion Price, unless the Default Event arises as a
result of a breach in respect of a specific Conversion Date in which case such
Conversion Date shall be the Conversion Date), multiplied by (b) the
highest Closing Price for the Common 


16





















  







Stock during the period beginning on the date of first occurrence of
the Event of Default and ending one day prior to the Mandatory Prepayment Date
(the "Default Amount") and all other amounts payable hereunder shall
immediately become due and payable, all without demand, presentment or notice,
all of which hereby are expressly waived, together with all costs, including,
without limitation, legal fees and expenses, of collection, and the Holder
shall be entitled to exercise all other rights and remedies available at law or
in equity. 


          If the
Borrower fails to pay the Default Amount within five (5) business days of
written notice that such amount is due and payable, then the Holder shall have
the right at any time, so long as the Borrower remains in default (and so long
and to the extent that there are sufficient authorized shares), to require the
Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the
Default Amount divided by the Conversion Price then in effect. 


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, or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be: 


          If to the
Borrower, to: 


GREEN
ENDEAVORS, INC. 

59 West 100 South -2nd Floor 

Salt Lake City, UT 84101 

Attn: RICHARD SURBER, President/Chief Executive Officer 

facsimile:


17





















  







          With a copy
by fax only to (which copy shall not constitute notice): 


[enter name of
law firm] 

Attn: [attorney name] 

[enter address line 1] 

[enter city, state, zip] 

facsimile: [enter fax number] 


          If to the
Holder: 


ASHER
ENTERPRISES, INC. 

1 Linden Pl., Suite 207 

Great Neck, NY. 11021 

Attn: Curt Kramer, President 

facsimile: 516-498-9894 


          With a copy
by fax only to (which copy shall not constitute notice): 


Naidich Wurman
Birnbaum & Maday, LLP 

80 Cuttermill Road, Suite 410 

Great Neck, NY 11021 

Attn: Bernard S. Feldman, Esq. 

facsimile: 516-466-3555 


          4.3 Amendments. This Note and any
provision hereof may only be amended by an instrument in writing signed by the
Borrower and the Holder. The term "Note" and all reference thereto, as used
throughout this instrument, shall mean this instrument (and the other Notes
issued pursuant to the Purchase Agreement) as originally executed, or if later
amended or supplemented, then as so amended or supplemented. 


          4.4 Assignability. This Note
shall be binding upon the Borrower and its successors and assigns, and shall
inure to be the benefit of the Holder and its successors and assigns. Each
transferee of this Note must be an "accredited investor" (as defined in Rule
501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary,
this Note may be pledged as collateral in connection with a bona fide margin
account or other lending arrangement. 


          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 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 Note shall be brought only in the state courts of New York or in the
federal courts located in the state and county of Nassau. The parties to this
Note hereby irrevocably waive any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum
non conveniens. The Borrower and Holder waive trial by jury. The
prevailing party shall be entitled to recover from the other party its 


18





















  







reasonable attorney's fees and costs. In the event that any provision
of this Note or any other agreement delivered in connection herewith 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 enforceability of any other provision of any
agreement. Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in
connection with this Agreement or any other Transaction Document by mailing a
copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. 


          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 Default Interest
on such 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 Purchase Agreement. By its
acceptance of this Note, each party agrees to be bound by the applicable terms
of the Purchase Agreement. 


          4.9 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 of the Borrower's shareholders (and
copies of proxy materials and other information sent to shareholders). In the
event of any taking by the Borrower of a record of its shareholders for the
purpose of determining shareholders who are entitled to receive payment of any
dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire (including by way of merger, consolidation, reclassification
or recapitalization) any share of any class or any other securities or
property, or to receive any other right, or for the purpose of determining
shareholders who are entitled to vote in connection with any proposed sale,
lease or conveyance of all or substantially all of the assets of the Borrower or
any proposed liquidation, dissolution or winding up of the Borrower, the
Borrower shall mail a notice to the Holder, at least twenty (20) days prior to
the record date specified therein (or thirty (30) days prior to the
consummation of the transaction or event, whichever is earlier), of the date on
which any such record is to be taken for the purpose of such dividend,
distribution, right or other event, and a brief statement regarding the amount
and character of such dividend, distribution, right or other event to the
extent known at such time. The Borrower shall make a public announcement of any
event requiring notification to the Holder hereunder substantially
simultaneously with the notification to the Holder in accordance with the terms
of this Section 4.9. 


19





















  







          4.10 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 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. 


          IN WITNESS
WHEREOF, Borrower has caused this Note to be signed in its name by its duly
authorized officer this December 7, 2011. 


	
   

  	
   

  
	
   

  	
  GREEN ENDEAVORS,
  INC. 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  

  
	
   

  	
   

  	
  RICHARD
  SURBER

  
	
   

  	
   

  	
  President/Chief
  Executive Officer

  



20





















  







EXHIBIT A 

NOTICE OF CONVERSION


          The
undersigned hereby elects to convert $_________________ principal amount of the
Note (defined below) into that number of shares of Common Stock to be issued
pursuant to the conversion of the Note ("Common Stock") as set forth below, of
GREEN ENDEAVORS, INC., a Utah corporation (the "Borrower") according to the
conditions of the convertible note of the Borrower dated as of December 7, 2011
(the "Note"), as of the date written below. No fee will be charged to the
Holder for any conversion, except for transfer taxes, if any. 


Box Checked as to applicable instructions: 


	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  The Borrower
  shall electronically transmit the Common Stock issuable pursuant to this
  Notice of Conversion to the account of the undersigned or its nominee with
  DTC through its Deposit Withdrawal Agent Commission system ("DWAC Transfer").
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name of DTC
  Prime Broker: 

  Account Number:

  
	
   

  	
  o

  	
  The
  undersigned hereby requests that the Borrower 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:

  



 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ASHER ENTERPRISES, INC.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1 Linden
  Pl., Suite 207

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Great Neck,
  NY. 11021

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:
  Certificate Delivery

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (516)
  498-9890

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date of
  Conversion:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Applicable
  Conversion Price:

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
  Number of
  Shares of Common Stock to be Issued

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Pursuant to Conversion of the Notes:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Amount of
  Principal Balance Due remaining

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Under the Note after this conversion:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ASHER
  ENTERPRISES, INC.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Curt
  Kramer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:
  President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1 Linden
  Pl., Suite 207

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Great Neck,
  NY. 11021

  	
   

  	
   

  	
   

  	
   

  
										



21