Document:

fs1ex10a_paybyday.htm

     

    
      SHARE
EXCHANGE AGREEMENT

      

      THIS SHARE EXCHANGE AGREEMENT (the
"Agreement") is entered into and effective as of August 31, 2007, by and among
PAY BY THE DAY HOLDINGS, INC., a Nevada corporation (“PBDH”), and PAY BY THE DAY
COMPANY INC., an Ontario corporation (“PBDI”), and the shareholders of PBDI
incorporated herein (collectively the “Shareholders”).

      

      

      1.
RECITALS

      

      This Agreement is entered into with
reference to and in contemplation of the following facts, circumstances and
representations:

      

                     
1.1          PBDH desires to
issue a total of 200,000 shares of its common stock (the "Buyer Shares") to the
PBDI in exchange for the PBDI Shares.

      

      1.2           PBDI
and the Shareholders desire to exchange the PBDI Shares for the Buyer Shares in
accordance with the terms and conditions of this Agreement.

      

      1.3          PBDH,
PBDI, and the Shareholders desire that this transaction be
consummated.

      

      1.4           The
Shareholders desire to exchange the PBDI shares for the Buyer Shares in
accordance with the terms of the Agreement.

      

      2.  EXCHANGE
AND ISSUANCE OF SHARES

      

      2.1           Exchange
of Buyer Shares: PBDH shall exchange and deliver to the PBDI and the
Shareholders a total of 200,000 restricted shares of the common stock of
PBDH.

      

      2.2           Exchange
of PBDI Shares:  At the Closing, the PBDI and the Shareholders shall
exchange and deliver to PBDH a total of 1,000 shares of the common stock of PBDI
which represents one hundred percent (100%) of the issued and outstanding shares
of PBDI.  PBDI will become a wholly owned subsidiary of
PBDH.

      

      2.3           
Nature of Buyer Shares:  The Buyer Shares shall be issued with a
restrictive legend in accordance with the rules and regulations of the
Securities and Exchange Commission.

      

      2.4  Private Sale
Acknowledgment:  The parties acknowledge and agree that the exchange
and issuance of the Buyer Shares is being undertaken as a private sale pursuant
to Section 4(2) of the Securities Act of 1933, as amended and Nevada Statutes,
and is not being transacted via a broker-dealer and/or in the public market
place.

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      

      3.  REPRESENTATIONS
AND WARRANTIES OF BUYER.

      

      PBDH represents and warrants
to  PBDI and the Shareholders as follows:

      

      3.1           
Organization: PBDH is a corporation duly incorporated and validly existing under
the laws of the State of Nevada and is in good standing with respect to all of
its regulatory filings.

      

      3.2           Capitalization:  The
authorized capital of PBDH consists of 100,000,000 common shares with a par
value $.001, of which 50,000 common shares have been issued and are currently
outstanding.

      

      3.3           Books
and Records:  All material transactions of PBDH have been promptly and
properly recorded or filed in or with its books and records and the Minute Book
of PBDH contains records of all meetings and proceedings of the shareholders and
directors thereof.

      

      3.4           Legal
Compliance:  To the best of its knowledge, PBDH is not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which
PBDH is subject or which apply to it or any of its assets.

      

      3.5           Adverse
Financial Events: PBDH has not experienced nor is it aware of any occurrence or
event which has had or might reasonably be expected to have a material adverse
effect on its financial condition.

      

      3.6           Disputes,
Claims and Investigations:  There are no disputes, claims, actions,
suits, judgments, investigations or proceedings outstanding or pending or to the
knowledge of PBDH threatened against or affecting PBDH at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau or agency.

      

      3.7           Employee
Liabilities: PBDH has no known liability to former employees or any liability to
any governmental authorities with respect to current or former
employees.

      

      3.8  No Conflicts or
Agreement Violations:  The execution, delivery and performance of this
Agreement will not conflict with or be in violation of the articles or by-laws
of PBDH or of any agreement to which PBDH is a party and will not give any
person or company a right to terminate or cancel any agreement or right enjoyed
by PBDH and will not result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever in favor of a third party
upon or against the assets of PBDH.

      

      3.9  Validly Issued and
Authorized Shares:  That the PBDH Shares will be validly authorized
and issued by PBDH, they will be fully paid and non-assessable and they will be
issued in full compliance with all federal and state securities
laws.

      

      3.10  Corporate
Authority:  The officers or representatives of PBDH executing this
Agreement represent that they have been authorized to execute this Agreement
pursuant to a resolution of the Board of Directors and shareholders of
PBDH.

      

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      

      
        	
                4.  

              	
                REPRESENTATIONS
      OF PBDI AND THE SHAREHOLDERS

              

      

      

      PBDI hereby represents and warrant as
follows:

      

      4.1           Share
Ownership:  That the SHAREHOLDERS are the owners, beneficially and of
record, of the PDBI Shares and said shares are free and clear of all liens,
encumbrances, claims, charges and restrictions.

      

      4.2           Transferability
of PBDI Shares:  That SHAREHOLDERS have full power to transfer the
PBDI Shares to PBDH without obtaining the consent or approval of any other
person or governmental authority.

      

      4.3           Validly
Issued and Authorized Shares:  That the PBDI Shares are validly
authorized and issued, fully paid, and nonassessable, and the PBDI Shares have
been so issued in full compliance with all securities laws of Ontario
Canada.

      

      4.4           Organization:
PBDI is a corporation duly incorporated and validly existing under the laws
of  the Province Ontario and is in good standing with respect to all
of its regulatory filings.

      

      4.5           Capitalization:  The
authorized capital of PBDI consists of ___ common shares, par value US$0._ of
which 1000 common shares are issued and outstanding as fully paid and
non-assessable shares.

      

      4.6           Books
and Records:  All material transactions of PBDI have been promptly and
properly recorded or filed in or with its books and records and the Minute Book
of PBDI contains records of all meetings and proceedings of the shareholders and
directors thereof.

      

      4.7           Legal
Compliance: PBDI is not in breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which PBDI is subject or which apply
to it or any of its assets.

      

      4.8           Adverse
Financial Events: PBDI has not experienced nor is it aware of any occurrence or
event which has had or might reasonably be expected to have a material adverse
effect on its financial condition.

      

      4.9           Disputes,
Claims and Investigations:  There are no disputes, claims, actions,
suits, judgments, investigations or proceedings outstanding or pending or to the
knowledge of PBDI threatened against or affecting PBDI at law or in equity or
before or by any federal, municipal or other governmental department,
commission, board, bureau or agency.

      

      4.10           Employee
Liabilities: PBDI has no liability to former employees or any liability to any
government authorities with respect to current or former employees.

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
 

      4.11           No
Conflicts or Agreement Violations:  The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
Articles of Incorporation of PBDI or of any agreement to which PBDI is a party
and will not give any person or company a right to terminate or cancel any
agreement or right enjoyed by PBDI and will not result in the creation or
imposition of any lien, encumbrance or restriction of any nature whatsoever in
favor of a third party upon or against the assets of PBDI.

      

      4.12           No
Liens:  That PBDI has not received a notice of any assignment, lien,
encumbrance, claim or charge against the PBDI Shares.

      

      4.13           Corporate
Authority:  The officers or representatives of PBDI executing this
Agreement represent that they have been authorized to execute this Agreement
pursuant to a resolution of the Boards of Directors and shareholders of
PBDI.

      

      4.14           Business
of PBDI: PBDI is in the business of financing of computers and consumer
electronics and owns the assets and intellectual property listed in Schedule C
attached hereto free of all encumbrances. The assets listed in Schedule C are
all the assets used in the operation of PBDI’s business.

      

      4.15           Operation:
Until the Closing PBDI will continue to operate its business in the normal
course and will not enter any material contracts or incur material obligations
without the written consent of the PBDH.

      

      

      5.  CLOSING,
ESCROW HOLDER AND CONDITIONS TO CLOSING

      

      5.1           Exchange
Closing:  The closing of the share exchange as contemplated by this
Agreement (the "Closing") shall take place at the offices of Anslow &
Jaclin, LLP, 195 Route 9 South, Suite 204 Manalapan, NJ 07726 or such other
place as agreed by the parties at such time and place as may be agreed among by
the parties, but in no event later than September 30, 2007.

      

      5.2           Closing
Conditions:  Prior to the Closing the following will be
required:

      

      5.2.1.    Delivery of
PBDI Shares:  PBDI shall deliver to PBDH the certificate or
certificates representing the PBDI Shares, duly endorsed for transfer
accompanied by a duly executed assignment of the PBDI Shares to PBDH. The PBDI
will deliver the PBDI Shares in escrow to Anslow & Jaclin, LLP, Attention:
Gregg Jaclin, who will be instructed to hold the PBDI Shares in escrow on the
terms set out in this Agreement pending Closing. If Closing does not occur as
set out herein, Anslow & Jaclin, LLP are instructed and authorized to return
the PBDI Shares to PBDI.

      

      5.2.2.     Delivery of
Buyer Shares: PBDH shall deliver to PBDI certificates representing the Buyer
Shares registered in the names of  Jordan Starkman as set forth in
Schedule “A” to Anslow & Jaclin, LLP who will on Closing deliver the Buyer
Shares to a representative of PBDI.  If Closing does not occur as set
out herein, Anslow & Jaclin, LLP are instructed and authorized to return the
Buyer Shares to the PBDH.

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      5.2.3.    Requisite
Corporate Resolutions:  Each party shall deliver to the other
certified copies of resolutions from their respective Boards of Directors and
shareholders authorizing the subject transaction.

      

      5.2.4.     Satisfactory
Completion of Due Diligence:  PBDI shall deliver to the other written
notice that it has completed its due diligence investigation and is satisfied
with the results of such investigation.

      

      5.2.5.    Audited
financial statements of PBDI in US GAAP for the 2 years to the end of PBDI’s
fiscal year end and unaudited statements for any quarters ending after the
fiscal year end but prior to the Closing Date. PBDI agrees to provide these
within 45 days of execution of this Agreement.

      

      5.2.6.     An 8-K for
filing with the SEC with registration statement level disclosure about the
business and management of PBDI and the acquisition of PBDI by the PBDH, as
prepared by the PBDH. PBDI will provide full disclosure and assistance as
requested by the PBDH and its advisors for the purpose of preparing such
filing.

       

      5.3           Close
of Transaction:  The subject transaction shall "close" upon the
satisfaction of the above conditions.

       

            
5.4     Notices:
All notices given pursuant to this Agreement must be in writing and may be given
by (1) personal delivery, or (2) registered or certified mail, return receipt
requested, or (3) via facsimile transmission to the parties as set forth
below.  Any party hereto may by notice so given change its address for
any future notices:

        REPRESENTATIONS AND
WARRANTIES OF SHAREHOLDERS ALONE

      

      The Shareholders alone further
represent and warrant to Buyer as follows with respect to the Buyer
Shares:

      

      5.5           Financially
Responsible:  That they are financially responsible, able to meet
their obligations and acknowledge that this investment will be
speculative.

      

      5.6           Investment
Experience:  That they have had experience in the business of
investments in one or more of the following: (i) investment experience with
securities such as stocks and bonds; (ii) ownership of interests in
partnerships, new ventures and start-up companies; (iii) experience in business
and financial dealings; and that they can protect their own interests in an
investment of this nature and they do not have an "Investor Representative", as
that term is defined in Regulation D of the Securities Act of 1933 and do not
need such an Investor Representative.

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
 

      5.7           Investment
Risk:  That they are capable of bearing the high degree of economic
risks and burdens of this investment, including but not limited to the
possibility of complete loss of all their investment capital and the lack of a
liquid market, such that they may not be able to liquidate readily the
investment whenever desired or at the then current asking price.

      

      5.8           Access
to Information:  That they have had access to the information
regarding the financial condition of Buyer and they were able to request copies
of such information, ask questions of and receive answers from Buyer regarding
such information and any other information their desires concerning the Buyer
Shares, and all such questions have been answered to their full
satisfaction.

      

      5.9           Private
Transaction:  That at no time was were they presented with or
solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.

      

      5.10           Investment
Intent:  The Buyer Shares are not being purchased with a view to or
for the resale or distribution thereof and they have no present plans to enter
into any contract, undertaking, agreement or arrangement for such resale or
distribution.

      

      5.11           Due
Diligence:  That the Shareholders shall have completed a due diligence
review of the affairs of Buyer and are satisfied with the results of that
review.

      

      
        
          	
                  If
      to PBDH:

                	
                  Anslow
      & Jaclin, LLP

                
	 
      	
                  Att:
      Gregg E. Jaclin, Esq.

                
	 
      	
                  195
      Route 9, South, Suite 204

                
	 
      	
                  Manalapan,
      NJ 07726

                
	 
      	 
      
	 
      	 
      
	
                  With
      a copy to:

                	
                  Gregg
      E. Jaclin, Esq.

                
	 
      	
                  Anslow
      & Jaclin, LLP

                
	 
      	
                  195
      Route 9 South, Suite 204

                
	 
      	
                  Manalapan,
      NJ 07726

                
	 
      	
                  Attention:
      Gregg Jaclin

                
	 
      	
                  Tel:
      (732) 409-1212

                
	 
      	
                  Fax:
      (732) 577-1188

                
	 
      	 
      
	
                  If
      to PBDI or:

                	
                  193
      Jardin Drive, 2nd
      Fl West

                
	
                  SHAREHOLDERS

                	
                  Concord,
      ON L4K 1X5

                
	 
      	 
      

        

      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

      6.  COOPERATION,
ARBITRATION, INTERPRETATION, MODIFICATION AND ATTORNEY FEES

      

      6.1           Cooperation
of Parties:  The parties further agree that they will do all things
necessary to accomplish and facilitate the purpose of this Agreement and that
they will sign and execute any and all documents necessary to bring about and
perfect the purposes of this Agreement.

      

      6.2           Interpretation
of Agreement:  The parties agree that should any provision of this
Agreement be found to be ambiguous in any way, such ambiguity shall not be
resolved by construing such provisions or any part of or the entire Agreement in
favor of or against any party herein, but rather by construing the terms of this
Agreement fairly and reasonably in accordance with their generally accepted
meaning.

      

      6.3           Modification
of Agreement:  This Agreement may be amended or modified in any way at
any time by an instrument in writing stating the manner in which it is amended
or modified and signed by each of the parties hereto.  Any such
writing amending or modifying this Agreement shall be attached to and kept with
this Agreement.

      

      6.4           Attorney
Fees:  If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
the Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be
entitled.

      

      6.5           Entire
Agreement:  This Agreement constitutes the entire Agreement and
understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings and understandings relating to the
subject matter of this Agreement are merged herein and are superseded and
canceled by this Agreement.

      

      6.6           Counterparts:  This
Agreement may be signed in one or more counterparts.

      

      6.7           Facsimile
Transmission Signatures:  A signature received pursuant to a facsimile
transmission shall be sufficient to bind a party to this Agreement.

      

      6.8           Accounting/Legal
Fees: PBDH hereby agrees to pay for any and all reasonable and necessary
accounting and legal fees, including any audit required to comply with the
filing requirements of the Securities and Exchange Commission.

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
 

      7.
CONFIDENTIALITY AND STANDSTILL AGREEMENT

      

      7.1           Confidentiality: PBDI
acknowledges that the PBDH is a public company and has an obligation to disclose
all material information about its affairs. The Shareholders agree that they
will not trade in the securities of the PBDH while in possession of, nor will
they inform others of (except on a need to know basis), any non-disclosed
material information about the PBDH.

       

      7.2           Standstill: PBDI agrees that they
will not for a period of 90 days after execution hereof, negotiate with any
party other than the PBDH as to the disposition or development of the Business.
The parties may extend the term of this clause by mutual
agreement.

      

      

      IN
WITNESS WHEREOF, this Agreement is executed by the parties as of the date
first-above written.

      

      

      PBDH:

      

      PAY BY
THE DAY HOLDINGS, INC,

      A Nevada
corporation

      

      By  /s/                                        

      Its:
President

       

      

      PAY BY
THE DAY COMPANY INC.,

      An
Ontario corporation

      

      By: /s/                                            

      JORDAN
STARKMAN

      Its:
President

      

      

      SHAREHOLDERS

      

      By:  /s/                                                 

      JORDAN
STARKMAN

       

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

      SCHEDULE
“A”

      Allocation
of Shares

      

      Total
of  ____ shares to be issued as follows:

      

      

      

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      Schedule
B

       

      Financial
statement of PBDH as of  __, 2007

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
 

      Schedule
C

      

      Assets
and Intellectual Property of PBDI

      

      As
of __, 2007

       

      11f8k030508ex10i_megamedia.htm

    THE
SECURITIES EVIDENCED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, ANY APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION STATEMENT IS NOT REQUIRED UNDER THE SECURITIES ACT AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS.

    

    
    

    
      MEGA
MEDIA GROUP, INC.

       

      9%
CONVERTIBLE PROMISSORY NOTE

    

    Amount                                $__________________

     

    Issuance
Date                      
__________________

    

    MEGA
MEDIA GROUP, INC., a Nevada corporation (the "Company") for value received,
hereby promises to pay to _______________ or
its registered assigns (the "Holder"), on the earlier of: (1) the closing by the
Company of a private placement offering of its securities, or an underwritten
public offering by the Company of its securities; or __________ (the
"Maturity Date") at the principal offices of the Company, the principal sum of
__________ in
such coin or currency of the United States of America as at the time of payment
shall be legal
tender for the payment of public and private debts and to pay interest on the
outstanding principal balance at the Maturity Date as hereinafter
provided.

    

    
      	
              1)  

            	
              Interest

            

    

    

    
      	
              i)  

            	
              Interest
      accrued during the term of this Note in its entirety on or within five (5)
      calendar days of the Maturity Date. The Note will bear interest at the
      rate of eight percent (9%) per annum on the principal balance until this
      Note shall be paid in full.

            

    

    

    
      	
              2)  

            	
              Conversion

            

    

    

    
      	
              a)  

            	
              Conversion.
        The
      Holder shall have the right from time to time, and at any time on or prior
      to the Maturity Date to convert all or any part of the outstanding and
      unpaid principal amount of this Note into fully paid and non-assessable
      shares of Common Stock, $.001 par value per share.  The number
      of shares of Common Stock to be issued upon each conversion of this Note
      shall be determined by dividing the amount of principal and accrued
      interest to be converted (“Conversion Amount”) by the applicable
      Conversion Price then in effect on the date specified in the notice of
      conversion, in the form attached hereto as Exhibit A (the “Notice of
      Conversion”).  The Conversion Price shall be equal to the
      average closing bid price of the Common Stock (as reported by Bloomberg L.P.)
      on the OTC Bulletin Board for the ten (10) trading days prior to
      the date of the Conversion Notice (the “Conversion Date”)
      multiplied by .80 provided that the Notice of
      Conversion is submitted by facsimile (or by other means resulting in, or
      reasonably expected to result in, notice) to the Company before 6:00 p.m.,
      New York, New York time on such Conversion
  Date.

            

    

    

    
      	
              b)  

            	
              Conversion Price
      Limit.  Notwithstanding the provisions in Section 2(a),
      the Conversion Price shall not exceed
$.55.

            

    

    

    
      	
              c)  

            	
              Method of
      Conversion.

            

    

     

    
      	
              i)  

            	
              Mechanics
      of Conversion.  This Note
      may be converted by the Holder in whole or in part at any time from time
      to time after the Note is issued to the Holder, by (A) submitting to
      the Company a Notice of Conversion (by facsimile or other reasonable means
      of communication dispatched on the Conversion Date prior to 6:00 p.m., New
      York, New York time) and (B) surrendering this Note at the principal
      office of the Company.

            

    

     

    
      	
              ii)  

            	
              Delivery
      of Common Stock Upon Conversion.  Upon
      receipt by the Company from the Holder of a facsimile transmission (or
      other reasonable means of communication) of a Notice of Conversion, the
      Company shall issue and deliver or cause to be issued and delivered to or
      upon the order of the Holder certificates for the Common Stock issuable
      upon such conversion within five (5) business days after such receipt
      (and, solely in the case of conversion of the entire unpaid principal
      amount hereof, surrender of this
Note).

            

    

     

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

    
      	
              3)  

            	
              Concerning the
      Shares.  The shares of Common Stock issuable upon
      conversion of this Note may not be sold or transferred
      unless  (i) such shares are sold pursuant to an effective
      registration statement under the Act or (ii) the Borrower or its transfer
      agent shall have been furnished with an opinion of  counsel
      (which opinion shall be in form, substance and scope customary for
      opinions of counsel in comparable transactions) to the effect that the
      shares to be sold or transferred may be sold or transferred pursuant to an
      exemption from such registration or (iii) such shares are sold or
      transferred pursuant to Rule 144 under the Act (or a successor rule)
      (“Rule
      144”).  Until such time as the shares of Common Stock
      issuable upon conversion of this Debenture have been registered under the
      Act or otherwise may be sold pursuant to Rule 144 without any restriction
      as to the number of securities as of a particular date that can then be
      immediately sold, each certificate for shares of Common Stock issuable
      upon conversion of this Debenture that has not been so included in an
      effective registration statement or that has not been sold pursuant to an
      effective registration statement or an exemption that permits removal of
      the legend, shall bear a legend substantially in the following form, as
      appropriate:

            

    

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.  THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT  UNLESS SOLD PURSUANT TO
RULE 144 OR REGULATION S UNDER SAID ACT.”

     

    The
legend set forth above shall be removed and the Borrower shall issue to the
Holder a new certificate therefor free of any transfer legend if (i) the
Borrower or its transfer agent shall have received an opinion of counsel, in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Common Stock
may be made without registration under the Act and the shares are so sold or
transferred, (ii) such Holder provides the Borrower or its transfer agent with
reasonable assurances that the Common Stock issuable upon conversion of this
Debenture (to the extent such securities are deemed to have been acquired on the
same date) can be sold pursuant to Rule 144 or (iii) in the case of the Common
Stock issuable upon conversion of this Debenture, such security is registered
for sale by the Holder under an effective registration statement filed under the
Act or otherwise may be sold pursuant to Rule 144 without any restriction as to
the number of securities as of a particular date that can then be immediately
sold.  Nothing in this Debenture shall (i) limit the Borrower’s
obligation under the Registration Rights Agreement or (ii) affect in any way the
Holder’s obligations to comply with applicable prospectus delivery requirements
upon the resale of the securities referred to herein.

     

    
      	
              4)  

            	
              Transfers of Note to
      Comply with the Securities Act of 1933. As Amended. The Holder
      agrees that the Note may not be sold, transferred, pledged, hypothecated
      or otherwise disposed of except as follows: (1) to a person who, in the
      opinion of counsel to the Company, is a person to whom the Note may
      legally be transferred without registration and without the delivery of a
      current prospectus under the Securities Act of 1933, as amended, and then
      only against receipt of any agreement of such person to comply with the
      provisions of this Section 3 with respect to any resale or other
      disposition of the Note; or (ii) to any person upon delivery of a
      prospectus then meeting the requirements of the Securities Act of 1933, as
      amended, relating to such Note and the offering thereof for such sale or
      disposition, and thereafter to all successive
  assignees.

            

    

    

    
      	
              5)  

            	
              Prepayment. The
      principal amount of this Note with interest due thereon to the date of
      prepayment may be prepaid by the Company, in whole or in part, without
      premium or penalty, at any time.

            

    

    

    
      	
              6)  

            	
              Events of
      Default.

            

    

    

    
      	
              a)  

            	
              This
      Note shall become and be due and payable upon written demand made by the
      Holder hereof if one or more of the following events, herein called
      "events of default", shall happen and be continuing and such default shall
      not be cured by the Company within 30 days of written notice of such
      default:

            

    

    

    
      	
              b)  

            	
              Default
      in the payment of the principal and interest on this Note when and as the
      same shall become due and payable, whether by acceleration or
      otherwise;

            

    

    

    
      	
              c)  

            	
              Application
      for, or consent to, the appointment of a receiver, trustee or liquidator
      of the Company or of its property;

            

    

    

    
      	
              d)  

            	
              General
      assignment by the Company for the benefit of
  creditors;

            

    

    

    
      	
              e)  

            	
              Filing
      by the Company of voluntary petition in bankruptcy or a petition or an
      answer seeking reorganization or an arrangement with creditors;
      or

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    
      	
              f)  

            	
              Entering
      against the Company of a court order approving a petition filed against it
      under the Federal bankruptcy laws, which order shall not have been vacated
      or set aside or otherwise terminated within 120
  days.

            

    

    

    
      	
              g)  

            	
              Upon
      receipt by the Company of evidence reasonably satisfactory to it of the
      loss, theft, destruction or mutilation of this Note, and (in the case of
      loss, theft or destruction) of reasonably satisfactory indemnification,
      and upon surrender and cancellation of this Note, if mutilated, the
      Company shall execute and deliver a new Note of like tenor and date. Any
      such new Note executed and delivered shall constitute an additional
      contractual obligation on the part of the Company, whether or not this
      Note so lost, stolen, destroyed or mutilated shall be at any time
      enforceable by anyone.

            

    

    

    
      	
              h)  

            	
              The
      Common Stock shall cease to be quoted for trading or listed for trading on
      either the Nasdaq OTC Bulletin Board (“OTC”), Nasdaq
      Capital Market, New York Stock Exchange, American Stock Exchange or the
      Nasdaq National Market (each, a “Subsequent
      Market”) and shall not again be quoted or listed for trading
      thereon within five (5) Trading Days of such
  delisting;

            

    

    

    
      	
              i)  

            	
              The
      Company shall fail for any reason to deliver Common Stock certificates to
      a Holder prior to the fifth (5th)
      Trading Day after a Conversion Date or the Company shall provide notice to
      the Holder, including by way of public announcement, at any time, of its
      intention not to comply with requests for conversions of this Note in
      accordance with the terms hereof;

            

    

    

    
      	
              7)  

            	
              Miscellaneous

            

    

    

    
      	
              a)  

            	
              The
      Company may consider and treat the person in whose name this Note shall be
      registered as the absolute owner thereof for all purposes whatsoever
      (whether or not this Note shall be overdue) and the Company shall not be
      affected by any notice to the contrary. The registered owner of this Note
      shall have the right to transfer it by assignment, subject to the
      provisions contained herein, and the transferee thereof shall, upon his
      registration as owner of this Note, become vested with all the powers and
      rights of the transferor. Registration of any new owner shall take place
      upon presentation of this Note to the Company at its principal offices. In
      case of transfer by operation of law, the transferee agrees to notify the
      Company of such transfer and of his address, and to submit appropriate
      evidence regarding the transfer so that this Note may be registered in the
      name of the transferee. This Note is transferable only on the books of the
      Company by the Holder hereof, in person or by his attorney, on the
      surrender hereof, duly endorsed. Communications sent to any registered
      owner shall be effective as against all holders or transferees of the Note
      not registered at the time of sending the
  communication.

            

    

    

    
      	
              b)  

            	
              Upon
      receipt by the Company of evidence reasonably satisfactory to it of the
      loss, theft, destruction or mutilation of this Note, and (in the case of
      loss, theft or destruction) of reasonably satisfactory indemnification,
      and upon surrender and cancellation of this Note, if mutilated, the
      Company shall execute and deliver a new Note of like tenor and date. Any
      such new Note executed and delivered shall constitute an additional
      contractual obligation on the part of the Company, whether or not this
      Note so lost, stolen, destroyed or mutilated shall be at any time
      enforceable by anyone.

            

    

    

    
      	
              c)  

            	
              This
      Note shall be construed and enforced in accordance with the laws of the
      State of Nevada.

            

    

    

    

    (Signature
Page Follows)

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, the Company has
caused this Note to be duly executed as of the Issuance Date set out
above.

     

    

    
      	
              MEGA
      MEDIA GROUP, INC.

            
	 
	 
	
              By:        

            
	
              Name:

            
	
              Title:

            

    

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    

     

    MEGA
MEDIA GROUP, INC.

     

    CONVERSION
NOTICE

     

    Reference
is made to the Convertible Note (the "Note") issued to the
undersigned by MEGA MEDIA GROUP INC. (the "Company").  In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated
below into shares of Common Stock par value $0.001 per share (the "Common Stock") of the Company,
as of the date specified below.

     

    

    
      	
              Date
      of Conversion:

            	 
      
	 	 
	
              Aggregate
      Conversion Amount to be converted:

            	 
      
	 
	
              Please
      confirm the following information:

            
	 	 
	
              Conversion
      Price:

            	 
      
	 	 
	
              Number
      of shares of Common Stock to be issued:

            	 
      
	 
	
              Please
      issue the Common Stock into which the Note is being converted in the
      following name and to the following address:

            
	 	 
	
              Issue
      to:

            	 
      
	 
      	 
      
	 
      	 
      
	 	 
	
              Facsimile
      Number:

            	 
      
	 	 
	
              Authorization:

            	 
      
	 	 
	
              By:

            	 
      
	 	 
	
              Title:

            	 
      
	 	 
	
              Dated:

            	 
      
	 	 
	
              Account
      Number:

            	 
      
	
                (if
      electronic book entry transfer)

            	 
      
	 	 
	
              Transaction
      Code Number:

            	 
      
	
                (if
      electronic book entry transfer)

            	 
      

    

    

    5

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