ex102.htm


    

      


      THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR
ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE LAW IS AVAILABLE.

      


      AUDIOSTOCKS,
INC.

      


      CONVERTIBLE
PROMISSORY NOTE

      


      
        	
                Principal
      Amount:                                           
      $25,000

              	 
      	
                Issuance
      Date:                                                 July
      1, 2008

              
	 
      	 
      	 
      
	
                Interest
      Rate:                                                    
      10%

              	 
      	
                Maturity
      Date:                                     December
      31, 2008

              


      

      


      WHEREAS,
AudioStocks, Inc., a Delaware corporation (the "Borrower"), currently
maintains on its financial books and records an outstanding debt to a third
party contractor (the “Contractor”) which
has provided consulting services to the Borrower.

      


      WHEREAS,
pursuant to an agreement between the Contractor and Meaux Street Partners, LP
(the "Holder"),
the Contractor has assigned such outstanding debt to the Holder.

      


      NOW
THEREFORE, for value received and in consideration of such outstanding debt, the
Borrower hereby promises to pay to the order of Meaux Street Partners, LP (the
"Holder"), at
such place as the Holder may from time to time designate, in lawful money of the
United States of America, TWENTY FIVE THOUSAND DOLLARS ($25,000) due and payable
on December 31, 2008. The Principal Amount of this Note and any accrued interest
is convertible, at the sole and absolute discretion of the Holder, into Common
Stock as provided in Article II below. Repayment of this Note is unconditionally
guaranteed by the Borrower and shall be secured by all of the assets of the
Borrower and the Borrower hereby provides the Holder express consent to file a
UCC-1 Financing Statement for the purpose of securing such
interest.  Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a business day, the same shall instead
be due on the next succeeding day which is a business day.  As used in
this Note, the term “business day” shall mean any day other than a Saturday,
Sunday or a day on which commercial banks of the United States of America are
authorized or required by law or executive order to remain closed.

      


      


      ARTICLE
I

      


      GENERAL
PROVISIONS

      


      1.1           Payment
Grace Period.  The Borrower shall have a
five (5) day grace period to pay any monetary amounts due under this Note, after
which grace period and during the pendency of any other Event of Default (as
defined below) a default interest rate of the lesser of fifteen percent (15%)
and the maximum applicable legal rate per annum shall apply to the amounts owed
hereunder.

      


      ­           1.2           Interest.  Beginning
on the issuance date of this Note (the “Issuance Date”), the
outstanding principal balance of this Note shall bear interest, in arrears, at a
rate per annum equal to ten percent (10%), payable at the end of the term of the
Note at the option of the Holder in (i) cash, or (ii) in registered shares of
the Borrower’s common stock, par value $0.001 per share (the “Common Stock”). If
Holder elects to receive interest in Common Stock, the price of the Common Stock
shall be determined in accordance with Section 2 below. Interest shall be
computed on the basis of a 360-day year of twelve (12) thirty (30) day months
and shall accrue commencing on the Issuance Date.  Furthermore, upon
the occurrence of an Event of Default (as defined in Article 3 below), then to
the extent permitted by law, the Borrower will pay interest to the Holder,
payable on demand, on the outstanding principal balance of the Note from the
date of the Event of Default until such Event of Default is cured at the rate of
the lesser of fifteen percent (15%) and the maximum applicable legal rate per
annum.

      


      1.3           Conversion
Privileges.  The Conversion Privileges set forth in Article II
shall remain in full force and effect immediately from the date hereof and until
the Note is paid in full regardless of the occurrence of an Event of
Default.  The Note shall be payable in full on the Maturity Date,
unless previously converted into Common Stock in accordance with Article II
hereof; provided, that if an Event of Default has occurred, the Holder may
extend the Maturity Date up to an amount of time equal to the pendency of the
Event of Default.  Such extension must be on notice in
writing.

      


      


      ARTICLE
II

      


      CONVERSION
RIGHTS

       

      The
Holder shall have the right to convert the principal and any interest due under
this Note into Shares of the Borrower's Common Stock as set forth
below.

      


      2.1.           Conversion into the
Borrower's Common Stock.

      


      (a)           The
Holder shall have the right from and after the date of the issuance of this Note
and then at any time until this Note is fully paid, to convert any outstanding
and unpaid principal portion of this Note, at the election of the Holder (the
date of giving of such notice of conversion being a "Conversion Date")
into fully paid and nonassessable shares of Common Stock as such stock exists on
the date of issuance of this Note, or any shares of capital stock of Borrower
into which such Common Stock shall hereafter be changed or reclassified, at the
conversion price as defined in Section 2.1(b) hereof (the "Conversion Price"),
determined as provided herein. Upon delivery to the Borrower of a completed
“Notice of Conversion”, attached hereto as Exhibit A,
Borrower shall issue and deliver to the Holder within three (3) business days
after the Conversion Date (such third day being the “Delivery Date”) that
number of shares of Common Stock for the portion of the Note converted in
accordance with the foregoing.  At the election of the Holder, the
Borrower will deliver accrued but unpaid interest on the Note, if any, through
the Conversion Date directly to the Holder on or before the Delivery
Date.  The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing that portion of the
principal of the Note to be converted by the Conversion Price.

      


      (b) Subject
to adjustment as provided in Section 2 hereof, the Conversion Price per share
shall be $0.15 per share.

      


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

      


      


      (i).           Merger, Sale of Assets,
etc.  If the Borrower at any time shall consolidate with or
merge into or sell or convey all or substantially all its assets to any other
corporation, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
such number and kind of shares or other securities and property as would have
been issuable or distributable on account of such consolidation, merger, sale or
conveyance, upon or with respect to the securities subject to the conversion or
purchase right immediately prior to such consolidation, merger, sale or
conveyance.  The foregoing provision shall similarly apply to
successive transactions of a similar nature by any such successor or
purchaser.  Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or
conveyance.

      


      (ii)           Reclassification,
etc.  If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of
securities of any class or classes that may be issued or outstanding, this Note,
as to the unpaid principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted number of
such securities and kind of securities as would have been issuable as the result
of such change with respect to the Common Stock immediately prior to such
reclassification or other change.

      


      (iii)           Stock Splits, Combinations
and Dividends.  If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, or if a
dividend is paid on the Common Stock in shares of Common Stock, the Conversion
Price shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event..

       

      (iv)           Ratchet Clause
Provision.   So long as this Note is outstanding, if the
Borrower shall issue or agree to issue any shares of Common Stock for a
consideration less than the Conversion Price in effect at the time of such
issue, then, and thereafter successively upon each such issuance, the Conversion
Price shall be reduced to match such other lower issue price.  For
purposes of this adjustment, the issuance of any security carrying the right to
convert such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in an adjustment to the Conversion
Price upon the issuance of the above-described security and again upon the
issuance of shares of Common Stock upon exercise of such conversion or purchase
rights if such issuance is at a price lower than the then applicable Conversion
Price.  The reduction of the Conversion Price described in this
paragraph is in addition to other rights of the Holder described in this
Note.

      


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

      


      (f)           During
the period the conversion right exists, Borrower will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Common Stock issuable upon the full conversion of this
Note.  Borrower represents that upon issuance, such shares will be
duly and validly issued, fully paid and non-assessable.  Borrower
agrees that its issuance of this Note shall constitute full authority to its
officers, agents, and transfer agents who are charged with the duty of executing
and issuing stock certificates to execute and issue the necessary certificates
for shares of Common Stock upon the conversion of this Note.

      


      2.2.           Optional Redemption of
Principal Amount.     Provided an Event of
Default or an event which with the passage of time or the giving of notice could
become an Event of Default has not occurred, whether or not such Event of
Default has been cured, the Borrower will have the option of prepaying the
outstanding Principal amount of this Note ("Optional Redemption"), in whole or
in part, by paying to the Holder a sum of money equal to the product obtained by
multiplying: (i) 120% and; (ii) the sum of (a) the outstanding principal, (ii)
the unpaid interest, and (iii) any default and penalty payments due (the
"Redemption Amount").  Borrower’s election to exercise its right to
prepay must be by notice in writing (“Notice of Redemption”).  Upon a
Notice of Redemption, Investor at its option may convert all or a portion of its
outstanding debentures held within ten days of notice by Company. The Notice of
Redemption shall specify the date for such Optional Redemption (the "Redemption
Payment Date"), which date shall be thirty (30) business days after the date of
the Notice of Redemption (the "Redemption Period"). A Notice of Redemption shall
not be effective with respect to any portion of the Principal Amount for which
the Holder has a pending election to convert, or for conversions initiated or
made by the Holder during the Redemption Period.   On the
Redemption Payment Date, the Redemption Amount, less any portion of the
Redemption Amount against which the Holder has exercised its conversion rights,
shall be paid in United States Dollars to the Holder. In the event the Borrower
fails to pay the Redemption Amount on the Redemption Payment Date as set forth
herein, then (i) such Notice of Redemption will be null and void, (ii) Borrower
will have no right to deliver another Notice of Redemption, and (iii) Borrower’s
failure may be deemed by Holder to be a non-curable Event of
Default.  A Redemption Notice may be given only at a time a
registration statement covering all of the shares issuable upon conversion of
all amounts convertible under this Note (“Registration Statement”) is
effective.  A Notice of Redemption may not be given nor may the
Borrower effectuate a Redemption without the consent of the Holder, if at any
time during the Redemption Period an Event of Default or an Event which with the
passage of time or giving of notice could become an Event of Default (whether or
not such Event of Default has been cured), has occurred or the Registration
Statement is not effective each day during the Redemption Period.

      


      2.3.           Method of
Conversion.     This Note may be converted by
the Holder in whole or in part as described in Section 2 hereof.  Upon
partial conversion of this Note, a new Note containing the same date and
provisions of this Note shall, at the request of the Holder, be issued by the
Borrower to the Holder for the principal balance of this Note and interest which
shall not have been converted or paid.

      


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

      


      


      


      


      


      ARTICLE
III

       

      EVENT
OF DEFAULT

      


      Upon an
Event of Default (as defined herein), Holder shall, at its option, require all
sums of principal and interest then remaining unpaid hereon and all other
amounts payable hereunder immediately due and payable, upon demand (the “Default Demand”),
without presentment, or grace period. The amount due Borrower upon an Event of
Default (the “Default
Payment”) shall be the product of: (i) 1.50; and (ii) the sum of any
outstanding principal, unpaid interest and any default or penalty payments due.
Borrower may, at its sole option, elect to receive the Default Payment in Common
Stock (the “Default
Stock Payment”). The number of Common Shares due to Borrower pursuant to
a Default Stock Payment shall be calculated using a per share price of Common
Stock based upon the lesser of: (i) $0.01; or (ii) the average of the three (3)
lowest Closing Prices within the twenty (20) trading days previous to a Default
Demand. The occurrence of any of the following shall be considered an event of
default ("Event of
Default").

      


      3.1         Failure to Pay Principal or
Interest.  The Borrower fails to pay any installment of
Principal Amount, interest or other sum due under this Note when due and such
failure continues for a period of ten (10) business days after the due
date.

      


      3.2         Failure to Convert.
The Borrower provides notice to the Holder, including by way of public
announcement, at any time, of its inability to comply or its intention not to
comply with proper requests for conversion of this Note into shares of Common
Stock.

      


      3.3         Breach of
Covenant.  The Borrower breaches any material covenant or other
term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of ten (10) business days after written
notice to the Borrower from the Holder.

      


      3.4         Breach of Representations
and Warranties.  Any material representation or warranty of the
Borrower made herein, statement or certificate given in writing pursuant hereto
or in connection herewith or therewith shall be false or misleading in any
material respect as of the date made and as of each Closing Date.

      


      3.6         Receiver or
Trustee.  The Borrower or any Subsidiary of Borrower shall make
an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for them or for a substantial part of their
property or business; or such a receiver or trustee shall otherwise be
appointed.

      


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

      


      3.8         Non-Payment.   The
Borrower shall have received a notice of default, which remains uncured for a
period of more than twenty (20) days, on the payment of any one or more debts or
obligations aggregating in excess of One Hundred Thousand Dollars (US
$100,000.00) beyond any applicable grace period.

      


      3.9         Bankruptcy.  Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be instituted by or
against the Borrower or any Subsidiary of Borrower and if instituted against
them are not dismissed within forty-five (45) days of initiation.

      


      3.10                   Delisting.   Once
listed, the delisting of the Common Stock from any Principal Market; failure to
comply with the requirements for continued listing on a Principal Market for a
period of seven consecutive trading days; or notification from a Principal
Market that the Borrower is not in compliance with the conditions for such
continued listing on such Principal Market.

      


      3.11                   Stop
Trade.  An SEC or judicial stop trade order or Principal Market
trading suspension with respect to Borrower’s Common Stock that lasts for five
or more consecutive trading days.

      


      3.12                   Failure to Deliver Common
Stock or Replacement Note.  Borrower's failure to timely
deliver Common Stock to the Holder pursuant to and in the form required by this
Note, and, if requested by Borrower, a replacement Note.

      


      3.13                   Failure to Remove
Restrictive Legend. The failure of the Maker to instruct its transfer
agent to remove any legends from shares of Common Stock eligible to be sold
under Rule 144 of the Securities Act and issue such un-legended certificates to
the Holder within three (3) business days of the Holder’s request so long as the
Holder has provided reasonable assurances to the Borrower that such shares of
Common Stock can be sold pursuant to Rule 144.

      


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

      


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

      


      


      ARTICLE
IV

      


      INDEMNIFICATION

      


      4.1        General
Indemnity.  The Borrower agrees to indemnify the Holder and
hold them harmless against any losses, claims, damages or liabilities incurred
by the Holder, in connection with, or relating in any manner, directly or
indirectly, to the Holder in connection with the Note, unless it is determined
by a court of competent jurisdiction that such losses, claims, damages or
liabilities arose out of the Holder’ gross negligence, willful misconduct,
dishonesty or fraud. Additionally, the Borrower agrees to reimburse the Holder
immediately for any and all expenses, including, without limitation, attorney
fees, incurred by the Holder in connection with investigating, preparing to
defend or defending, or otherwise being involved in, any lawsuits, claims or
other proceedings arising out of or in connection with or relating in any
manner, directly or indirectly, from the Note (as defendant, nonparty, or in any
other capacity other than as a plaintiff, including, without limitation, as a
party in an interpleader action).  The Borrower further agrees that
the indemnification and reimbursement commitments set forth in this paragraph
shall extend to any controlling person, strategic alliance, partner, member,
shareholders, director, officer, employee, agent or subcontractor of the Holder
and their heirs, legal representatives, successors and assigns. The provisions
set forth in this Section shall survive any termination of this
Note.

      


      


      ARTICLE
V

       

      MISCELLANEOUS

      


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

      


      5.2        Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:

      


      (i) if to
the Borrower to:

      


      Audiostocks,
Inc.

      2038
Corte del Nogal, Suite 110

      Carlsbad,
California 92011

      (760)
804-8845 (fax)

      


      and (ii)
if to the Holder, to:

      


      Meaux
Street Partners, LP

      1302
Waugh Drive, Number 618

      Houston,
Texas 77019

      


      5.3        Amendment
Provision.  The term "Note" or “Agreement” and all reference
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.

      


      5.4        Assignability.  This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and
assigns.  This Note, and all of the terms and conditions described
herein, is assignable and may be transferred sold, or pledged, hypothecated or
otherwise granted as security by the Holder. The Borrower may not assign any of
its obligations under this Note without the consent of the Holder.

      


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

      


      5.6        Governing
Law.  The subject matter of this Note shall be governed by and
construed in accordance with the laws of the State of California (without
reference to its choice of law principles) as applied to residents of the State
of California relating to contracts executed in and to be performed solely
within the State of California, and to the exclusion of the law of any other
forum, without regard to the jurisdiction in which any action or special
proceeding may be instituted.  EACH PARTY HERETO AGREES TO SUBMIT TO
THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED
IN NORTH COUNTY OF SAN DIEGO, CALIFORNIA FOR RESOLUTION OF ALL DISPUTES ARISING
OUT OF, IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION,
AND ENFORCEMENT OF THIS NOTE, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM. AS A MATERIAL INDUCEMENT FOR
THIS AGREEMENT, EACH PARTY SPECIFICALLY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY
ISSUES SO TRIABLE. The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs.

      


      5.7        Maximum
Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that
the rate of interest required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to
the Borrower.

      


      5.8        Shareholder
Status.  The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this
Note.  However, the Holder will have all the rights of a shareholder
of the Borrower with respect to the shares of Common Stock to be received by
Holder after delivery by the Holder of a Conversion Notice to the
Borrower.

      


      IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by an authorized officer as of the
1st
day of July, 2008.

      


      AUDIOSTOCKS,
INC.

      


                                      /s/ Luis J. Leung


      


      ________________________________

      By:           Luis
J. Leung

      Its:           Chief
Executive Officer

      


      WITNESS:

      


      


      


      ______________________________________

      


      


      


      


      


      


      


      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

      


      


      


      


      


      


      


      


      


      


      


      EXHIBIT
A

      


      NOTICE
OF CONVERSION

      


      (To be
executed by the Registered Holder in order to convert the Note)

      


      


      The
undersigned hereby elects to convert $_________ of the principal and $_________
of the interest due on the Note issued by Audiostocks, Inc. on ____________,
200__ into Shares of Common Stock of Audiostocks, Inc. (the "Borrower")
according to the conditions set forth in such Note, as of the date written
below.

      


      


      


      Date of
Conversion:____________________________________________________________________

      


      


      Conversion
Price:______________________________________________________________________

      


      


      Shares To
Be
Delivered:_________________________________________________________________

      


      


      Signature:____________________________________________________________________________

      


      


      Print
Name:__________________________________________________________________________

      


      


      Address:_____________________________________________________________________________

      


         ____________________________________________________________________________