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|No. «CertNo» | U.S. $«Number»
|------------ | --------------

FC FINANCIAL SERVICES INC.(Incorporated under the laws of the State of Nevada)

8% CONVERTIBLE NOTE 
  DUE JUNE 30, 2009

(BEING ONE OF A SERIES OF CONVERTIBLE NOTES APPROVED BY RESOLUTION
  
  OF THE DIRECTORS OF THE CORPORATION DATED JUNE 26, 2006, 
  AND SUBJECT TO THE TERMS AND CONDITIONS (THE TERMS) THEREOF.)

FOR VALUE RECEIVED, FC FINANCIAL
  SERVICES INC.(herein referred to as the 
  Corporation) promises to pay to:

«Name_of_Subscriber_»«Address_of_Subscriber»

or any subsequent registered holder hereof (the Holder),
  the principal sum of

$«Number»

on or prior to June 30, 2009 (the Maturity Date),
  and to pay interest on the principal sum outstanding on June 30 of each year
  commencing on June 30, 2007, at the rate of 8% per annum subject to adjustment
  for any part period in accordance with the Terms of this Note. Such interest
  shall be paid in United States currency or common shares in accordance with
  the Terms of this Note, to the person and at the address in whose name this
  Note is registered on the records of the Corporation regarding registration
  and transfers of the Notes (the Note Register) on the business day
  immediately preceding the payment date. The principal of this Note is payable,
  if converted in shares of common stock, or if not converted, in such coin or
  currency of the United States of America as at the time of payment is legal
  tender for payment of public and private debts, to the person and at the address
  in whose name this Note is registered on the Note Register on the business day
  immediately preceding the payment date. The forwarding of such payment shall
  constitute a payment hereunder and shall satisfy and discharge the liability
  for principal on this Note to the extent of the sum or common stock of the Corporation
  so paid.

Notwithstanding any other provision of this Note the Holder shall
  not be entitled to convert this Note to acquire beneficial ownership of more
  than 4.99% of the outstanding common stock of the Corporation.

THIS
  NOTEis one of a duly authorized issue of Notes of the Corporation, designated
  as its 8% Convertible Notes due June 30, 2009 (the Notes).

THIS
  NOTEis subject to the terms and conditions established by Resolutions of
  the Directors of the Corporation dated June 26, 2006 creating the series of
  Notes, which are incorporated herein by reference, and available for inspection
  at the head office of the Corporation at 110 Jardin Drive, Suite 13, Concord,
  Ontario, Canada L4K 2T7.

IN
  WITNESS WHEREOF, the Corporation has caused this instrument to be duly executed
  by an officer thereunto duly authorized.

|    | FC FINANCIAL SERVICES INC.   
|--- | -----------------------------
|    |                              
|    |                              
|By: |                              
|    | Taras Chebountchak, President

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TERMS AND CONDITIONS OF 8% CONVERTIBLE NOTES DUE JUNE 30,
2009 APPROVED BY RESOLUTION OF THE BOARD OF DIRECTORS DATED JUNE 26, 2006
OF

FC FINANCIAL SERVICES INC.(the
Corporation)

Section
1.           Note
Denominations.The Notes are initially issuable in denominations of at least
One Thousand ($1,000 US) and integral multiples of $1.00 US in excess thereof.
Upon conversion of a portion, but less than all, of a Note in accordance with
the terms hereof, a new note or notes may be issued to the Holder in a
denomination equal to the exact amount of the unconverted portion of the
Note.

Section
2.           Interest
Payments.The Corporation may, at its option, elect to pay interest by the
issuance of common shares of the Corporation (Shares), the number of Shares to
be determined by dividing the amount of the interest payment by the number which
is 90% of the average market price of the Corporations common shares for the 10
trading days immediately prior to the interest payment date. The amount of
interest payable in respect of any Note for any payment period shall be reduced
proportionately in the event the Note shall not be outstanding for the entire
payment period as a result of its issuance after June 30, 2007, or its
conversion prior to the end of any payment period.

Section
3.           Sale, Transfer
or Exchange.The Notes and any Shares issued upon conversion of the Notes or
as payment of interest on the Notes (the Note Shares) will be issued to the
Holder pursuant to Regulation S of the Securities Act of 1933 (the Securities
Act) on the representations of the Holder in favor of the Corporation. Neither
the Notes nor the Note Shares may be sold, transferred, pledged or hypothecated
in the absence of an effective registration statement under the Securities Act
relating to such securities or an opinion of counsel reasonably satisfactory to
the Corporation that registration is not required under the Securities Act. Each
certificate for the Notes and the Note Shares shall contain a legend on the face
thereof, in form and substance satisfactory to counsel for the Corporation,
setting forth the restrictions on transfer contained in these terms and
conditions. By acceptance of any certificate representing the Notes, the Holder
acknowledges and agrees that:

| | (1) | The Holder will only sell the Notes and the Note Shares
      only in accordance with the provisions of Regulation S of the Securities
      Act, pursuant to registration under the Securities Act, or pursuant to an
      available exemption from registration pursuant to the Securities
    Act;     
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                            
| | (2) | The Corporation will refuse to register any transfer of
      the Notes and the Note Shares not made in accordance with the provisions
      of Regulation S of the Securities Act, pursuant to registration under the
      Securities Act, or pursuant to an available exemption from
      registration;
| |     |                                                                                                                                                                                                                                                                                                            
| | (3) | The Holder will not engage in hedging transactions except
      in accordance with the Securities Act;                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                            
| | (4) | The Holder does not have beneficial ownership of more
      than 4.99% of the outstanding Shares of the Corporation and after
      acquiring the Note Shares will not have beneficial ownership of more than
      4.99% of the outstanding Shares of the Corporation.                                    
| |     |                                                                                                                                                                                                                                                                                                            
| | (5) | The Holder is not entitled to any registration rights
      with respect to the Notes and the Note Shares.                                                                                                                                                                                                 

All certificates representing the Notes and the Note Shares
will be endorsed with the following legend:

> NEITHER THESE SECURITIES, THE SECURITIES ISSUABLE
>     UPON CONVERSION HEREOF OR THE SECURITIES ISSUED AS PAYMENT OF INTEREST HEREON
>     HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
>     OR THE SECURITIES COMMISSION OF ANY STATE OR PROVINCE OR UNDER THE SECURITIES
>     ACT OF 1933, AS AMENDED (THE SECURITIES ACT). THE SECURITIES ARE
>     RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS
>     PERMITTED UNDER THE SECURITIES ACT OR OTHER APPLICABLE SECURITIES LAWS PURSUANT
>     TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION
>     REQUIREMENTS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED
>     UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

In addition, the Holder will comply with all other applicable
securities legislation in addition to the Securities Act to which the Holder is
subject in selling or transferring any Notes or Note Shares and the Corporation
may refuse to register any sale or transfer not in compliance with such other
securities legislation.

Any Holder of a Note, by acceptance thereof, agrees to the
representations, warranties and covenants herein.

Prior to due presentment to the Corporation for transfer of a
Note, the Corporation and any agent of the Corporation may treat the person in
whose name the Note is duly registered on the Corporations Note

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Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not the Note
be overdue, and neither the Corporation nor any such agent shall be affected by
notice to the contrary.

Section
4.           Conversion.The Record Holders of a Note shall have conversion rights as follows (the
Conversion Rights):

(a)
Right to Convert; Conversion Price. The record Holder of a Note shall be
entitled, at any time, at the office of the Corporation, to convert all or any
portion of the Note held by such Holder into that number of fully-paid and
non-assessable shares of Common Stock as shall be equal to the Principal Amount
to be converted at the price of $1.00 per share (the Conversion Price).

(b)
Mechanics of Conversion. In order to convert the Notes into full shares
of Common Stock, the Holder shall deliver a copy of the fully executed notice of
conversion in the form on the rear of the certificate evidencing the Note
(Notice of Conversion) to the Corporation at the office of the Corporation
which notice shall specify the amount of the Note to be converted (together with
a copy of the first page of each Note to be converted) prior to Midnight,
Pacific time (the Conversion Notice Deadline) on the date of Conversion
specified on the Notice of Conversion and (ii) surrender the original Note(s);
provided, however, that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such conversion
unless either the original Notes are delivered to the Corporation as provided
above, or the Holder notifies the Corporation that such Note(s) have been lost,
stolen or destroyed. In the case of a dispute as the calculation of the
Conversion Price, the Corporations calculation shall be deemed conclusive
absent manifest error.

(i)
Lost or Stolen Notes. Upon receipt by the Corporation of evidence of the
loss, theft, destruction or mutilation of a Note, and (in the case of loss,
theft or destruction) indemnity or security reasonably satisfactory to the
Corporation, and upon surrender and cancellation of the Note, if mutilated, the
Corporation shall execute and deliver new Note(s) of like tenor and date.

(ii)
Delivery of Common Stock upon Conversion. The Corporation shall issue and
use its best efforts to deliver within a reasonable time after delivery to the
Corporation of a Note and Notice of Conversion, or after provision for security
or indemnification required by (i) above, to such Holder of the Note at the
address of the Holder on the books of the Corporation, a certificate for the
number of shares of Common Stock to which the Holder shall be entitled as
aforesaid.

(iii)
No Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of a Note. If any conversion of the Note would create a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, a cash adjustment will be made for the fractional interest.

(iv)
Date of Conversion. The date of which conversion occurs (the Date of
Conversion) shall be deemed to be the date set forth in such Notice of
Conversion, provided that the copy of the Notice of Conversion is delivered or
faxed to the Corporation before midnight, Pacific time, on the Date of
Conversion, and (ii) that the original Notes to be converted are surrendered,
and received by the Corporation within five business days from the Date of
Conversion. The person or persons entitled to receive the shares of common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date. If the original
Notes to be converted are not received by the Transfer Agent or the Corporation
within five business days after the Date of Conversion or if the facsimile of
the Notice of Conversion is not received by the Corporation or its designated
transfer agent prior to the Conversion Notice Deadline, the Notice of
Conversion, at the Corporations option, may be declared null and void.

(c)
Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
Notes, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all then outstanding Notes; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding Notes, the
Corporation will immediately take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.

(d) Adjustment to Conversion Price.

(i)
Adjustment Due to Stock Split, Stock Dividend, Etc. If at any time when the
Notes are issued and outstanding, the number of outstanding shares of Common
Stock is increased by a stock split, stock dividend, or other similar event, the
Fixed Conversion Price shall be proportionately reduced, or if the number of
outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Fixed Conversion Price
share be proportionately increased.

(ii)
Adjustment Due to Merger, Consolidation, Etc. If at any time when the Notes
are issued and outstanding, there shall be any merger, amalgamation,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Corporation
shall be changed into the same or a different number of shares of another class
or classes of stock or securities of the company or another entity, then the
Holders of the Notes shall thereafter have the right to receive upon conversion
of the Notes, upon the basis and upon the terms and conditions specified

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herein and in lieu of the shares of Common Stock immediately
theretofore issuable upon conversion, such stock and/or securities which the
Holder would have been entitled to receive in such transaction had the Notes
been converted immediately prior to such transaction, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the Holders of the Notes to the end that the provisions hereof (including,
without limitation, provisions for adjustment of the Fixed Conversion Price and
of the number of shares issuable upon conversion of the Notes shall thereafter
be applicable, as nearly as may be practicable in relation to any securities
thereafter deliverable upon the exercise hereof.

Section
5.           Events of
Default and Notices Thereof.The term Event of Default includes any one of
the following; (i) failure of the Corporation to pay interest for 45 days or
principal when due; (ii) failure of the Corporation to perform any other
covenant herein for 45 days after notice; (iii) default by the Corporation with
respect to its obligations to pay principal of or interest on certain other
indebtedness aggregating more than $1,500,000 or the acceleration of such
indebtedness under the terms of the instruments evidencing such indebtedness;
and (iv) events of bankruptcy or insolvency of the Corporation.

In case an event of Default (other than an Event of Default
resulting from bankruptcy or insolvency) shall occur and be continuing for a
period of 45 days from the date that an Event of Default is deemed to have
occurred, the holders of a least 25% in aggregate principal amount of the Notes
then outstanding may by notice in the writing to the Corporation declare all
unpaid principal and accrued interest on the Notes then outstanding to be due
and payable immediately.

Section
6.           Modification
and Waiver.Modification and amendment of the Notes may be made by the
Corporation with the consent of the holders of not less than a majority in
principal amount of the outstanding Notes, provided that no such modification or
amendment may, without the consent of the holder of each Note affected thereby
(i) change the stated maturity of the principal of or any installment of
interest on any Note, (ii) reduce the principal of, or the rate of interest on,
any Note, (iii) change the currency of payment of principal of or interest on
any Note, (iv) reduce the above-stated percentage of holders of Notes necessary
to modify or amend the Notes or (v) modify any of the foregoing provisions or
reduce the percentage of outstanding Notes necessary to waive any covenant or
past default. Holders of not less than a majority in principal amount of the
outstanding Notes may waive any covenant or past defaults. (See Events of
Default and Notice Thereof) An amendment to the Notes may not adversely affect
the rights under the subordination provisions of the holders of any issue of
Senior Indebtedness without the consent of such holders.

Section
7.           No Voting
Rights.The Notes shall not entitle the Holders thereof to any of the rights
of a stockholder of the Corporation, including without limitation, the right to
vote, to receive dividends and other distributions, or to receive any notice of,
or to attend meetings of stockholders or any other proceedings of the
Corporation.

Section
8.           Governing Law.The Notes shall be governed by and construed in accordance with the laws of
the State of Nevada, U.S.A. without giving effect to the principles of conflicts
of laws, except for matters arising under the Securities Act or the Securities
Exchange Act of 1934, as amended, which matters shall be governed by and
construed in accordance with such laws or matters relating to realization on the
security which shall be governed by the laws of the jurisdiction under which
such security is located.

Section
9.           Business Day
Definition.For purposes hereof, the term business day shall mean any day
on which banks are generally open for business in the State of Nevada, USA and
excluding any Saturday and Sunday.

Section
10.           Notices.Any notice or other communication required or permitted to be given
hereunder shall be given as provided herein or delivered against receipt if to
(i) the Corporation at 110 Jardin Drive, Suite 13, Concord, Ontario, Canada L4K
2T7, fax number (905) 761-1095 and (ii) the Holder of a Note, to such holder at
its last address as shown on the Note Register (or to such other address as the
party shall have furnished in writing as its new address to be entered on the
Note Register (which address must include a telecopy number in accordance with
the provisions of this Section 12). Any notice or other communication needs to
be made by facsimile and delivery shall be deemed give, except as otherwise
required herein, at the time of transmission of said facsimile. Any notice given
on a day that is not a business day shall be effective upon the next business
day.

Section
11.           Waiver of any
Breach to be in Writing.Any waiver by the Corporation or the Holder of a
Note of a breach of any provision of the Note shall not operate as, or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of the Note. The failure of the Corporation or the Holder
hereof to insist upon strict adherence to any term of the Note on one or more
occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of the
Note. Any waiver must be in writing.

Section
12.           Unenforceable
Provisions.If any provision of a Note is invalid, illegal or unenforceable,
the balance of the Note shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

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