Unassociated Document


    

      THIS
        NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
        BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
        COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
        FOR
        SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
        STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
        SATISFACTORY TO CHINA MEDIA1 CORP. THAT SUCH REGISTRATION IS NOT
        REQUIRED.

       

                                                                                

      


      
        	 Principal Amount: $__________	
                   Issue
                  Date: November 1, 2005

              


      

      


      CONVERTIBLE
        PROMISSORY NOTE

      


      FOR
        VALUE
        RECEIVED, CHINA MEDIA1 CORP., a Nevada corporation (hereinafter called
“Borrower”), hereby promises to pay to _________________, ________________-,
        _____________, Fax: _________________, (the “Holder”) or its registered assigns
        or successors in interest or order, without demand, the sum of
        [__________________________________] Dollars ($___________) (“Principal
        Amount”), with simple and unpaid interest thereon, on May 1, 2007 (the “Maturity
        Date”), if not sooner paid.

      


      This
        Note
        has been entered into pursuant to the terms of a subscription agreement between
        the Borrower, the Holder and certain other holders (the “Other Holders”) of
        convertible promissory notes (the “Other Notes”), dated of even date herewith
        (the “Subscription Agreement”), and shall be governed by the terms of such
        Subscription Agreement. Unless otherwise separately defined herein, all
        capitalized terms used in this Note shall have the same meaning as is set
        forth
        in the Subscription Agreement. The following terms shall apply to this
        Note:

      


      ARTICLE
        I

      


      INTEREST;
        AMORTIZATION

      


      1.1.    Interest
        Rate.
        Subject
        to Section 5.7 hereof, interest payable on this Note shall accrue at a rate
        per
        annum (the “Interest Rate”) equal to the “prime rate” published in The Wall
        Street Journal from time to time, plus four percent (4%). The interest rate
        shall be increased or decreased as the case may be for each increase or decrease
        in the prime rate in an amount equal to such increase or decrease in the
        prime
        rate; each change to be effective as of the day of the change in such rate.
        The
        Interest Rate shall not be less than eight percent (8%). Interest shall be
        calculated on the basis of a 360-day year. Interest on the Principal Amount
        shall accrue from the date of this Note and be payable quarterly, in arrears,
        commencing on January 1, 2006 and on the first business day of each consecutive
        calendar quarter thereafter (each, a “Repayment Date”) and on the Maturity Date,
        whether by acceleration or otherwise.

      


      1.2.    Minimum
        Monthly Principal Payments.
        Amortizing payments of the outstanding Principal Amount of this Note shall
        commence on the seven month anniversary date of this Note and on the same
        day of
        each month thereafter (each a “Repayment Date”) until the Principal Amount and
        interest have been repaid in full, whether by the payment of cash or by the
        conversion of such Principal Amount and interest into Common Stock pursuant
        to
        the terms hereof. Subject to Section 2.1 and Article 3 below, on each Repayment
        Date, the Borrower shall make payments to the Holder in an amount equal to
        one-twelfth of the initial Principal Amount, and any other amounts (other
        than
        regular interest) which are then owing under this Note that have not been
        paid
        (collectively, the “Monthly Amount”). Amounts of conversions of Principal Amount
        and interest made by the Holder or Borrower pursuant to Section 2.1 or Article
        III, amounts redeemed pursuant to Section
        2.3 of this Note shall
        be
        applied first against outstanding fees and damages, then against accrued
        interest on the Principal Amount and then to Monthly Amounts commencing with
        the
        Monthly Amount first payable and then Monthly Amounts thereafter in
        chronological order. Any Principal Amount, interest and any other sum arising
        under this Note and the Subscription Agreement that remains outstanding on
        the
        Maturity Date shall be due and payable on the Maturity Date.

      


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      1.3.    Default
        Interest Rate.
        Following the occurrence and during the continuance of an Event of Default
        (as
        defined in Article IV), which, if susceptible to cure is not cured within
        twenty
        (20) days, otherwise then from the first date of such occurrence, the annual
        interest rate on this Note shall (subject to Section 5.7) automatically be
        increased to fifteen percent (15%). 

      


      ARTICLE
        II

      


      CONVERSION
        REPAYMENT

      


      2.1.    Payment
        of Monthly Amount in Cash or Common Stock.
        Subject
        to Section 3.2 hereof, if the Market Price (as defined below) is less than
        200%
        of the Fixed Conversion Price (as defined in Section 3.1), the Borrower,
        at the
        Borrower’s election, shall pay the Monthly Amount (i) in cash in an amount equal
        to 110% of the Principal Amount component of the Monthly Amount and 100%
        of all
        other components of the Monthly Amount, within three (3) business days after
        the
        applicable Repayment Date, or (ii) in registered Common Stock at an applied
        conversion rate equal to the lesser of (A) the Fixed Conversion Price (as
        defined in section 3.1 hereof), or (B) eighty percent (80%) of the average
        of
        the five lowest closing bid prices of the common stock as reported by Bloomberg
        L.P. for the Principal Market for the twenty trading days preceding such
        Repayment Date. Unless waived by the Holder, the Borrower may not elect to
        pay a
        Monthly Amount due on a Repayment Date in Common Stock in an amount of shares
        of
        Common Stock which would exceed in the aggregate for all Holders of Notes
        similar to this Note, thirty-five percent (35%) of the aggregate daily trading
        volume for the twenty trading days preceding the Repayment Date as reported
        by
        Bloomberg L.P. for the Principal Market multiplied by the VWAP (as defined
        below) for such twenty day period. Amounts paid with shares of Common Stock
        must
        be delivered to the Holder not later than three (3) business days after the
        applicable Repayment Date. The Borrower must send notice to the Holder by
        confirmed telecopier not later than 6:00 PM, New York City time on the tenth
        (10th)
        business day preceding a Repayment Date notifying Holder of Borrower’s election
        to pay the Monthly Redemption Amount in cash or Common Stock. Elections by
        the
        Borrower must be made to all Other Holders in proportion to the relative
        Note
        principal held by the Holder and the Other Holders. If such notice is not
        timely
        sent or if the Monthly Amount is not timely delivered, then Holder shall
        have
        the right, instead of the Company, to elect within five trading days after
        the
        applicable Repayment Date whether to be paid in cash or Common Stock. Such
        Holder’s election shall not be construed to be a waiver of any default by
        Borrower relating to non-timely compliance by Borrower with any of its
        obligations under this Note. Subject to Section 3.2 hereof, if the Market
        Price
        is equal to or greater than 200% of the Fixed Conversion Price, then the
        Monthly
        Amount must be paid with Common Stock valued at the Fixed Conversion Price.
        “Market Price” shall mean the average of the closing bid prices of the Common
        Stock as reported by Bloomberg L.P. for the Principal Market for the five
        trading days preceding the relevant Repayment Date. “VWAP” shall mean the sum of
        the dollars traded for every purchase and sale of the Common Stock on the
        Principal Market (determined as the price per share of Common Stock at which
        such purchase and sale occurred multiplied by the number of shares of Common
        Stock so purchased and sold) divided by the total shares of Common Stock
        traded
        during the period.

      


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      2.2.    No
        Effective Registration.
        Notwithstanding anything to the contrary herein, no amount payable hereunder
        may
        be
        paid in
        shares
        of Common
        Stock by
        the Borrower without the Holder’s consent unless (a) either (i) an effective
        current Registration Statement covering the shares of Common Stock to be
        issued
        in satisfaction of such obligations exists, or (ii) an exemption from
        registration of the resale of shares of Common Stock to be issued in
        satisfaction of such obligations is available pursuant to Rule 144(k) of
        the
        1933 Act exists, and (b) no Event of Default hereunder (or an event that
        with
        the passage of time or the giving of notice could become an Event of Default),
        exists and is continuing, unless such event or Event of Default is cured
        within
        any applicable cure period or is otherwise waived in writing by the Holder
        in
        whole or in part at the Holder’s option.

      


      2.3.    Optional
        Redemption of 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 one
        hundred
        and twenty percent (120%) of the Principal amount to be redeemed, together
        with
        accrued but unpaid interest thereon and any and all other sums due, accrued
        or
        payable to the Holder arising under this Note or any Transaction Document
        through the Redemption Payment Date as defined below (the “Redemption Amount”).
        Borrower’s election to exercise its right to prepay must be by notice in writing
        (“Notice of Redemption”). The Notice of Redemption shall specify the date for
        such Optional Redemption (the “Redemption Payment Date”), which date shall be
        twenty (20) 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 good funds to the Holder. In the event
        the
        Borrower fails to pay the Redemption Amount on the Redemption Payment Date
        as
        set forth herein, then 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 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
        registering the Registrable Securities is not effective each day during the
        Redemption Period.

      


      ARTICLE
        III

      


      CONVERSION
        RIGHTS

      


      3.1.    Holder’s
        Conversion Rights.
        Subject
        to Section 3.2, the Holder shall have the right, but not the obligation,
        to
        convert all or any portion of the then aggregate outstanding Principal Amount
        of
        this Note, together with interest and fees due hereon, and any sum arising
        under
        the Subscription Agreement, and the Transaction Documents, including but
        not
        limited to Liquidated Damages, into shares of Common Stock, subject to the
        terms
        and conditions set forth in this Article III, at the rate of $0.35 per share
        of
        Common Stock (“Fixed Conversion Price”), as the same may be adjusted pursuant to
        this Note and the Subscription Agreement. The Holder may exercise such right
        by
        delivery to the Borrower of a written Notice of Conversion pursuant to Section
        3.3. After the
        occurrence of an Event of Default, the
        Fixed
        Conversion Price shall be 80% of the VWAP for the five trading days prior
        to a
        Conversion Date.

      


      3.2.    Conversion
        Limitation.
        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
        3.2 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 3.2, in whole or in part, upon and
        effective after 61 days prior written notice to the Borrower. The Holder
        may
        allocate decide whether to convert a Note or exercise Warrants to achieve
        an
        actual 4.99% ownership position.

      


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      3.3.    Mechanics
        of Holder’s Conversion.
        

      


      (a)    In
        the
        event that the Holder elects to convert any amounts outstanding under this
        Note
        into Common Stock, the Holder shall give notice of such election by delivering
        an executed and completed notice of conversion (a “Notice of Conversion”) to the
        Borrower, which Notice of Conversion shall provide a breakdown in reasonable
        detail of the Principal Amount, accrued interest and amounts being converted.
        The original Note is not
        required
        to be surrendered to the Borrower
        until
        all sums due under the Note have been paid. On each Conversion Date (as
        hereinafter defined) and in accordance with its Notice of Conversion, the
        Holder
        shall make the appropriate reduction to the Principal Amount, accrued interest
        and fees as entered in its records.
        Each
        date
        on which a Notice of Conversion is delivered or telecopied to the Borrower
        in
        accordance with the provisions hereof shall be deemed a “Conversion Date.” A
        form of Notice of Conversion
        to be employed by the Holder is annexed hereto as Exhibit A.

      


      (b)    Pursuant
        to the terms of a Notice of Conversion, the Borrower will issue instructions
        to
        the transfer agent accompanied by an opinion of counsel (if so required by
        the
        Borrower’s transfer agent), and shall cause the transfer agent to transmit the
        certificates representing the Conversion Shares to the Holder by crediting
        the
        account of the Holder’s designated broker with the Depository Trust Corporation
        (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within
        three (3) business days after receipt by the Borrower of the Notice of
        Conversion (the “Delivery Date”). In the case of the exercise of the conversion
        rights set forth herein, the conversion privilege shall be deemed to have
        been
        exercised and the Conversion Shares issuable upon such conversion shall be
        deemed to have been issued upon the date of receipt by the Borrower of the
        Notice of Conversion. The Holder shall be treated for all purposes as the
        beneficial holder of such shares of Common Stock, or, in the case that Borrower
        delivers physical certificates as set forth below, the record holder of such
        shares of Common Stock, unless the Holder provides the Borrower written
        instructions to the contrary.  Notwithstanding
        the foregoing to the contrary, the Borrower or its transfer agent shall only
        be
        obligated to issue and deliver the shares to the DTC on the Holder’s behalf via
        DWAC (or certificates free of restrictive legends) if the registration statement
        providing for the resale of the shares of Common Stock issuable upon the
        conversion of this Note is effective and the Holder has complied with all
        applicable securities laws in connection with the sale of the Common Stock,
        including, without limitation, the prospectus delivery requirements, and
        has
        provided representations accordingly. In the event that Conversion Shares
        cannot
        be delivered to the Holder via DWAC, the Borrower shall deliver physical
        certificates representing the Conversion Shares by the Delivery Date to an
        address designated by Holder in the United States.

      


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      3.4.    Conversion
        Mechanics.

      


      (a)    The
        number of shares of Common Stock to be issued upon each conversion of this
        Note
        pursuant to this Article III shall be determined by dividing that portion
        of the
        Principal Amount and interest and fees to be converted, if any, by the then
        applicable Fixed Conversion Price.

      


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

      


      A.    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 convert into 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 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.

      


      B.    Reclassification,
        etc.
        If the
        Borrower at any time shall, by reclassification or otherwise, change the
        Common
        Stock into the same or a different number of securities of any class or classes,
        this Note, as to the unpaid principal portion thereof and accrued interest
        thereon, shall thereafter be deemed to evidence the right to convert into
        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.

      


      C.    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.

      


      D.    Share
        Issuance.
        So long
        as this Note is outstanding, if the Borrower shall issue any Common Stock
        except
        for the Excepted Issuances (as defined in the Subscription Agreement), prior
        to
        the complete conversion or payment of this Note, for a consideration less
        than
        the Fixed Conversion Price that would be in effect at the time of such issue,
        then, and thereafter successively upon each such issuance, the Fixed Conversion
        Price shall be reduced to such other lower issue price. For purposes of this
        adjustment, the issuance of any security or debt instrument of the Borrower
        carrying the right to convert such security or debt instrument into Common
        Stock
        or of any warrant, right or option to purchase Common Stock shall result
        in an
        adjustment to the Fixed Conversion Price upon the issuance of the
        above-described security, debt instrument, warrant, right, or option and
        again
        upon the issuance of shares of Common Stock upon exercise of such conversion
        or
        purchase rights if such issuance is at a price lower than the then applicable
        Conversion Price. The reduction of the Fixed Conversion Price described in
        this
        paragraph is in addition to the other rights of the Holder described in the
        Subscription Agreement.

      


      (c)    Whenever
        the Conversion Price is adjusted pursuant to Section 3.4(b) 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.

      


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      3.5    Reservation.
        During
        the period the conversion right exists, Borrower will reserve from its
        authorized and unissued Common Stock not less than
        one
        hundred
        seventy-five
        percent
        (175%)
        of the
        number of shares to provide for the issuance of Common Stock 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.

      


      3.6    Issuance
        of Replacement Note.
        Upon
        any partial conversion of this Note, a replacement Note containing the same
        date
        and provisions of this Note shall,
        at the
        written request of the Holder, be
        issued
        by the Borrower to the Holder for the outstanding Principal Amount of this
        Note
        and accrued interest which shall not have been converted or paid, provided
        Holder has surrendered an original Note to the Borrower. In the event that
        the
        Holder elects not to surrender a Note for reissuance upon partial payment
        or
        conversion, the Holder hereby indemnifies the Borrower against any and all
        loss
        or damage attributable to a third-party claim in an amount in excess of the
        actual amount then due under the Note, and the
        Borrower is hereby expressly authorized to offset any such amounts mutually
        agreed upon by Borrower and Holder or pursuant to a judgment in Borrower’s favor
        against amounts then due under the Note.

      


      ARTICLE
        IV

      


      EVENTS
        OF DEFAULT

      


      The
        occurrence of any of the following events of default (“Event of Default”) shall,
        at the option of the Holder hereof, make all sums of principal and interest
        then
        remaining unpaid hereon and all other amounts payable hereunder immediately
        due
        and payable, upon demand, without presentment, or grace period, all of which
        hereby are expressly waived, except as set forth below:

      


      4.1    Failure
        to Pay Principal or Interest.
        The
        Borrower fails to pay any installment of Principal Amount, interest or other
        sum
        due under this Note or any Transaction Document when due and such failure
        continues for a period of 5 business days after the due date.

      


      4.2    Breach
        of Covenant.
        The
        Borrower breaches any material covenant or other term or condition of the
        Subscription Agreement, this Note or Transaction Document in any material
        respect and such breach, if subject to cure, continues for a period of 15
        business days after written notice to the Borrower from the Holder.

      


      4.3    Breach
        of Representations and Warranties.
        Any
        material representation or warranty of the Borrower made herein, in the
        Subscription Agreement, Transaction Document or in any agreement, 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 the Closing Date.

      


      4.4    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.

      


      4.5    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 $100,000,
        and
        shall remain unvacated, unbonded, unappealed, unsatisfied, or unstayed for
        a
        period of 45 days.

      


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      4.6    Non-Payment.
        The
        Borrower shall have received a notice of default, which remains uncured for
        a
        period of more than 30 business days beyond any applicable grace period,
        on the
        payment of any one or more debts or obligations aggregating in excess of
        $100,000;

      


      4.7    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 45 days
        of
        initiation.

      


      4.8    Delisting.
        Failure
        of the Common Stock to be quoted or listed on the OTC Bulletin Board (“Bulletin
        Board”) or other Principal Market for a period of seven consecutive trading
        days.

      


      4.9    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.

       

      4.10  
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 or the Subscription Agreement, and, if
        requested by Borrower, a replacement Note,
        and
        such failure continues for a period of 20 business days after the due
        date.

      


      4.11    Non-Registration
        Event.
        The
        occurrence of a Non-Registration Event as described in the Subscription
        Agreement.

      


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

      


      4.13    Default
        under Amended and Restated Operating Agreement.
        Either
        the Borrower shall have received a notice of default, which remains uncured
        for
        a period of more than 30 business days beyond any applicable grace period,
        or
        the Borrower has delivered a notice of default, which remains uncured for
        a
        period of more than 30 business days beyond any applicable grace period,
        under
        an Amended and Restated Operating Agreement by and among the Borrower,
Chuangrun
        Media Company Limited, and Guangzhou Chuangrun Advertising Co. Ltd., amended
        and
        restated
        on
        October 10, 2005 and retroactively effective as of January 1, 2005.

      


      4.14    Revenues/Deferred
        Revenues.
        The
        Borrower fails to obtain “Gross Receipts” (as defined below) according to the
        following schedule:

      


      
        	 	
                a.

              	
                U.S.
                  $4,000,000 for the fiscal year ended December 31, 2005 (as disclosed
                  on
                  the Borrower’s annual report on Form 10-KSB for the year then
                  ended);

              


      

      


      
        	 	
                b.

              	
                U.S.
                  $10,000,000 for the 15 months ended March 31, 2006 (as disclosed
                  on the
                  Borrower’s quarterly report on Form 10-QSB for the quarter then
                  ended);

              


      

      


      
        	 	
                c.

              	
                U.S.
                  $16,000,000 for the 18 months ended June 30, 2006 (as disclosed
                  on the
                  Borrower’s quarterly report on Form 10-QSB for the quarter then
                  ended);

              


      

      


      
        	 	
                d.

              	
                U.S.
                  $22,000,000 for the 21 months ended September 30, 2006 (as disclosed
                  on
                  the Borrower’s quarterly report on Form 10-QSB for the quarter then
                  ended); and 

              


      

      


      
        	 	 	
                e.

              	
                U.S.
                  $28,000,000 for the 24 months ended December 31, 2006 (as disclosed
                  on the
                  Borrower’s annual report on Form 10-KSB for the year then
                  ended).

              


      

      


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      “Gross
        Receipts” means the sum of (a) any revenues recorded by the Borrower pursuant to
        its revenue recognition policies in accordance with U.S. generally accepted
        accounting principles, and (b) any prepayments actually received by the Borrower
        that are deferred as a liability and recognized over a service period pursuant
        to its revenue recognition policies in accordance with U.S. generally accepted
        accounting principles.

      


      4.15    Cross
        Default.
        A
        default by the Borrower of a material term, covenant, warranty or undertaking
        of
        any Transaction Document or 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
        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 noticeAny 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: China Media1 Corp., 2020
        Main Street, Suite 500, Irvine, CA 92614, Attn: Ernest Cheung, Secretary,
        telecopier:
        (949) 428-7401, with a copy by telecopier only to Spectrum Law Group, LLP,
        1900
        Main Street, Suite 125, Irvine, CA 92614-7321, Attn: Marc Indeglia, Esq.,
        telecopier number: (949) 851-5940, and (ii) if to the Holder, to the name,
        address and telecopy number set forth on the front page of this Note, with
        a
        copy by telecopier
        only to
        Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York
        10176, telecopier number: (212) 697-3575.

       

      5.3    Amendment
        Provision.
        The
        term “Note” 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.

      


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      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.
        This
        Note
        shall be governed by and construed in accordance with the laws of the State
        of
        New York, without regard to conflicts
        of laws
        principles that would result in the application of the substantive laws of
        another jurisdiction. Any
        action brought by either party against the other concerning the transactions
        contemplated by this Agreement shall be brought only in the state courts
        of New
        York or in the federal courts located in the state of New York. Both parties
        and
        the individual signing this Note on behalf of the Borrower agree to
        submit
        to the
        jurisdiction of such courts. The prevailing party shall be entitled to recover
        from the other party its reasonable attorney’s fees and costs. In the event that
        any provision of this Note is invalid or unenforceable under any applicable
        statute or rule of law, then such provision shall be deemed inoperative to
        the
        extent that it may conflict therewith and shall be deemed modified to conform
        with such statute or rule of law. Any such provision which may prove invalid
        or
        unenforceable under any law shall not affect the validity or unenforceability
        of
        any other provision of this Note. Nothing contained herein shall be deemed
        or
        operate to preclude the Holder from bringing suit or taking other legal action
        against the Borrower in any other jurisdiction to collect on the Borrower’s
        obligations to Holder, to realize on any collateral or any other security
        for
        such obligations, or to enforce a judgment or other court in favor of the
        Holder.

      


      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.    Construction.
        Each
        party acknowledges that its legal counsel participated in the preparation
        of
        this Note and, therefore, stipulates that the rule of construction that
        ambiguities are to be resolved against the drafting party shall not be applied
        in the interpretation of this Note to favor any party

      against
        the other.

      


      5.9    Redemption.
        This
        Note may not be redeemed or called without the consent of the Holder except
        as
        described in this Note.

      


      5.10    Stockholder
        Status.
        The
        Holder shall not have rights as a stockholder of the Borrower with respect
        to
        unconverted portions of this Note. However, the Holder will have the rights
        of a
        stockholder of the Borrower with respect to the Shares of Common Stock to
        be
        received after delivery by the Holder of a Conversion Notice to the
        Borrower.

      


      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        Borrower has caused this Note to be signed in its name by an authorized officer
        as of the 1st
        day of
        November, 2005.

      
         

      

      
        	 	 	 
	 	CHINA
                MEDIA1 CORP.
	 
 	 
 	 
 
	 	By:  	/s/ Ernest
                Cheung
	 	
                
Name:
                Ernest Cheung
	 	Title: 
                Secretary


      


      WITNESS:

      


      


      


      ______________________________________

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      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 China Media1 Corp. on November
        1, 2005
        into Shares of Common Stock of China Media1 Corp. (the “Borrower”) according to
        the conditions set forth in such Note, as of the date written
        below.

      


      


      


      Date
        of
        Conversion:____________________________________________________________________

      


      


      Conversion
        Price:______________________________________________________________________

      


      


      Number
        of
        Shares of Common Stock Beneficially Owned on the Conversion Date:
        Less
        than 5% of the outstanding Common Stock of China Media1 Corp.

      


      


      Shares
        To
        Be
        Delivered:_________________________________________________________________

      


      


      Signature:____________________________________________________________________________

      


      


      Print
        Name:__________________________________________________________________________

      


      


      Address:_____________________________________________________________________________

      


      ____________________________________________________________________________

      


      
        
          
          

        

        
          11