© Copyright Envision Corporation. 2002. All rights reserved.

Protected by the copyright laws of the United States & Canada and by international treaties. IT IS
ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER
PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

CONVERTIBLE NOTE AGREEMENT

©

C
o
p This Convertible Note Agreement ("Agreement") is made and effective the [DATE],
y
r BETWEEN: [COMPANY NAME] (the "Company"), a corporation organized and existing
i under the laws of the [STATE/PROVINCE], with its head office located at:
g
h
t
AND: [NOTE HOLDERS NAME] (the "Note Holders"), a corporation organized and
E existing under the laws of the [STATE/PROVINCE], with its head office located
n at:
v
i
s WHEREAS, Note Holders are willing to lend Company the aggregate sum of [AMOUNT] be evidenced by
i [%] Convertible Promissory Notes.
o
n In consideration of the mutual covenants and conditions herein contained, the parties hereby agree,
represent and warrant as follows:
C 1. ISSUE OF NOTES
o
r a. The Company will authorize the issue of its [%] Convertible notes (hereinafter called
p "Notes") in the aggregate principal amount of [AMOUNT] to be dated [DATE] to mature on
o [DATE] to bear interest on the unpaid principal thereof at the rate of [%] per annum until
maturity, payable on the [DAY] of [MONTH] in each year, commencing on [DATE], [YEAR],
r
and after maturity at the rate of [%] per annum until paid, and to be substantially in the form of
a Exhibit A attached hereto.
t
i b. For the purposes of calculating interest for any period for which the interest shall be
o payable, such interest shall be calculated on the basis of a [NUMBER] day month and a
n [NUMBER] day year. The Company will promptly and punctually pay to Note Holders or their
nominee the interest on any of the Notes held by Note Holders without presentment of the
. Notes. In the event that Note Holders shall sell or transfer any of the Notes, they shall notify
the Company of the name and address of the transferee. In the event the Company defaults
2 on any installment of interest or principal, then any Holder of these Notes may, at his option,
0 without notice, declare the entire principal and the interest accrued thereon immediately due
0 and payable and may proceed to enforce the collection thereof. All the Notes shall contain a
confession of judgment provision.
2
. c. The Company will also authorize the issue of [NUMBER] shares of its common stock
(hereinafter called "The Stock") and will authorize the issuance of and reserve for such
A purchase such a number of additional shares of common stock (hereinafter called the
l "Conversion Stock") as may from time to time be the maximum number required for issuance
upon conversion of the Notes pursuant to the conversion privileges hereinafter stated.
l

r
i
Convertible Note Agreement Page 1 of 7
© Copyright Envision Corporation. 2002. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS
ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER
PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

2. SALE AND PURCHASE OF NOTES AND STOCK

The Company will sell the Notes to the purchasers listed on Exhibit A, each of whom agrees to purchase
the principal amount of the Notes set opposite their names, subject to the terms and conditions hereof
and in reliance upon the representations and warranties of the Company contained herein, at the
purchase price of [%] of the principal amount.

3. REPRESENTATIONS AND WARRANTIES BY THE COMPANY

a. Company is a corporation duly organized and existing in good standing under the laws of
the State of [STATE/PROVINCE] has the corporate power to own its own property and to
carry on in the business as it is now being conducted.

b. Company has on its corporate records the names of the following individuals who each
own [NUMBER] shares of common stock which constitute all the issue and outstanding
capital stock of the Company as of this date.

c. The Company has furnished to the Note Holders an Offering Circular which is attached
hereto as Exhibit B. The financial statements contained therein are true and correct and have
been prepared in accordance with generally accepted accounting principles consistently
followed throughout the period indicated.

d. There is no action or proceeding pending or, to the knowledge of the Company,

threatened against the Company before any court or administrative agency, the determination
of which might result in any material adverse change in the business of the Company.

e. The Company has title to the respective properties and assets including the properties
and assets reflected on the financial statement for the year ending [DATE] and which assets
and properties are subject to no liens, mortgages, encumbrances or charges except a
security interest to [SPECIFY].

f. The Company is not a party to any contract or agreement or subject to any restriction
which materially and adversely affects its business, property or assets, or financial condition,
and neither the execution nor delivery of this Agreement, nor the confirmation of the
transactions contemplated herein, nor the fulfillment of the terms hereof, nor the compliance
with the terms and provisions hereof and of the Notes, will conflict with or result in the breach
of the terms, conditions or provisions or constitute a default, under the Articles of
Incorporation or Code of Regulations of the Company or of any Agreement or instrument to
which the Company is now a party.

g. The Company has not declared, set aside, paid or made any dividend or other
distributions with respect to its capital stock and has not made or caused to be made directly
or indirectly, any payment or other distribution of any nature whatsoever to any of the holders
of its capital stock except for regular salary payments for services rendered and the
reimbursement of business expenses.

h. All of the equipment and automobiles of the Company are in good condition and repair.

i. There are no outstanding options or rights to purchase shares of the Company and no
outstanding securities with the right of conversion into shares of the Company.

Convertible Note Agreement Page 2 of 7

 © Copyright Envision Corporation. 2002. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS
ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER
PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

j. The Company owns or possesses adequate licenses or other rights to use, all patents,
trademarks, trade names, trade secrets, and copyrights used in its business. No one has
© asserted to the Company that its operations infringe on the patents, trademarks, trade secrets
or other rights utilized in the operation of its business.
C k. Neither the Company nor any agent or employee acting in its behalf has offered the
o Notes or the Stock or any portion thereof for sale to or solicited in any offer to buy the same
p or any thereof from any person or persons other than the purchasers listed in the attached
y Exhibit A and [NUMBER] other persons, and neither the Company nor any agent or employee
r acting in its behalf will sell or offer for sale the Notes or Stock or any portion thereof to or
solicit any offer to buy the Notes or the Stock from any person or persons so as to bring the
i issuance or sale thereof within the provisions of Section [NUMBER] of the [ACT].
g
h
t 4. REPRESENTATIONS AND WARRANTIES BY THE NOTE HOLDERS

The Note Holders represent and warrant that:

E
n a. The Note Holders are subscribing for the Notes and Stock for investment purposes and
v not with the view to or for sale in connection with any distribution thereof and that they have
i no present intent to sell, give or otherwise transfer the Notes or Stock.
s
b. The Note Holders state that they are and residents of the State of [STATE/PROVINCE].
i
o c. The Note Holders understand that this is a highly speculative investment in a Company
n which is insolvent both from a legal and an equity standpoint.

C d. Individuals represent and warrant that they have a net worth in excess of [AMOUNT]
o exclusive of their residences and that they are sophisticated investors who are
r knowledgeable about the [SPECIFY] business.
p e. Note Holders state that they will be active in the affairs of the business of the Company.
o
r
a 5. PREPAYMENT OF THE NOTES
t
Company shall have the right to make prepayments on principal of the Notes at any time on [NUMBER]
i
days written notice. Such prepayment shall be accompanied by a payment of all accrued interest to date.
o There shall be no premium for the amount so prepaid.
n
.
6. CONVERSION
2
a. The Holder of any of the Notes at any time up to and including the maturity date (or, as to
0 any of the Notes to which notice of prepayment shall have been given, at any time up to the
0 close of business on the third business day prior to the day fixed for prepayment) but not
2 thereafter may convert the Notes in whole or in part into as many fully paid and non-
. assessable shares of Common Stock of the Company as the principal amount of the Note so
converted in a multiple of [SPECIFY] per share, and upon surrender of the certificate
representing the Notes to the Company at its principal office in the City of [CITY]. If any of the
A Notes shall be converted in part, the Company shall, at its option and without charge to the
l Holder, either (I) execute and deliver to the Holder Notes for the balance of the principal
l amount so converted, or (ii) make note thereon of the principal of the amount converted.

r Convertible Note Agreement Page 3 of 7

i
© Copyright Envision Corporation. 2002. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS
ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER
PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

b. Upon conversion of any of the Notes, all accrued and unpaid interest on the principal
amount converted shall be paid to the Holder by the Company.

c. The Company shall take all necessary steps to maintain the registration for the shares
held subject to the conversion privilege as described in this section.

d. In the case the Company shall issue or sell any share of its Common Stock (other than
the Stock Shares issued upon conversion of any of the Notes) without consideration or for
consideration per share less than the conversion price of [PRICE] per share, then forthwith
upon such issuance or sale, the conversion price shall be adjusted to a price (computed to
the nearest cent) determined by dividing (i) an amount equal to the sum of the number of
shares of Common Stock outstanding immediately prior to such issue or sale multiplied by
[SPECIFY] and the consideration, if any, received by the Company upon such issue or sale,
by (ii) the total amount of shares of Common Stock immediately outstanding after such issue
or sale.

e. In case the Company shall at any time divide its outstanding shares of Common Stock
into a greater number of shares, the conversion price in effect immediately prior to such
subdivision should be proportionately reduced, and, conversely, in the case of outstanding
shares of Common Stock of the Company shall be combined into a smaller number of
shares, the actual conversion price in effect immediately prior to such combination shall be
proportionately increased.

f. In case the Company shall declare a dividend or make a distribution of any Stock of the
Company payable in Common Stock or in Convertible Securities, the aggregate maximum
number of shares of Common Stock issuable in payment of such dividend or distribution, or
upon conversion of or in exchange for such Convertible Securities issuable in payment of
such dividend or distribution, shall be deemed to have been issued or sold without
consideration.

g. No fractional share of Common Stock shall be issued upon conversion of any of the
Notes. If any Holder of the Notes shall have converted all the Notes held by him other than a
principal amount so small that less than a whole share of Common Stock would be issuable
upon conversion thereof, the Company may elect to prepay such balance, with interest
accrued thereon to the date fixed for prepayment, or leave the same outstanding until the
maturity of the Note.

h. In any reclassification or change of outstanding shares of Common Stock issuable upon

conversion of the Notes (other than a change in stated value or from no par to par value) or in
the case of any consolidation or merger of the Company with any other corporation, or in the
case of the sale and conveyance to another to another corporation or person of the property
of the Company in its entirety or substantially as an entirety, the Company shall, as a
condition precedent to such transaction, case effective provisions to be made that each
Holder of the Notes then outstanding shall have the right thereafter to convert the Notes into
the kind and amount of shares of Stock and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance by a Holder of the
number of shares of Common Stock in the Company into which such Notes might have been
converted immediately prior to such reclassification, change, consolidation, merger, sale or
conveyance.

Convertible Note Agreement Page 4 of 7

© Copyright Envision Corporation. 2002. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS
ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER
PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

7. COVENANTS

a. The Company covenants that so long as the Notes are in existence, it will deliver to the
Holders thereof (i) as soon as practical, in any event within [NUMBER] days after the end of
such quarterly period, in each fiscal year, consolidated income and surplus statements of the
Company; (ii) as soon as practical , and in any event within [NUMBER] days after the end of
each fiscal year, a consolidated income and surplus statement of the Company, and (iii) with
reasonable promptness, such other financial data as the Holders may request in writing.
b. The Company covenants that, so long as any of the Notes are outstanding, it will permit
any Holder of the Notes to visit and inspect, at the Holder's expense, any of the property of
the Company, including its books and records, and to discuss affairs, finances and accounts
with its officers.

c. The Company covenants that, without the written consent of the Holders of [SPECIFY] in
principal amount of the Notes, it will not:

i Create or suffer to exist any mortgage, pledge, encumbrance, lien or charge of

any kind on any of its properties or assets, whether now owned or hereafter acquired
except for (i) mortgages, encumbrances, liens or charges which are now in existence; (ii)
mortgages, liens, charges and encumbrances (a) for taxes, assessments or
governmental charges or levies on property of the Company if the same shall not be due
or delinquent or thereafter can be paid without penalty, or being contested in good faith
and by appropriate proceedings; (b) of mechanics and material men for sums not yet due
or being contested in good faith and by appropriate proceedings; or (c) in connection with
workers' compensation, unemployment insurance and other state employment legislation.

ii Make any loan or advance to any person, firm or corporation.

iii Assume, guarantee, endorse or otherwise become liable in connection with the
obligations, stock or dividends of any person, firm or corporation except in the ordinary
course of business by endorsement of a negotiable instrument in the course of collection.

iv Merge or consolidate with any other corporation or sell, lease or transfer or

otherwise dispose of all or a substantial part of its assets to any person, firm or
corporation.

v Enter into any material transaction in which any stockholder owning of record or
beneficially more than [%] of the Common Stock of the Company shall have, at the time,
a beneficial interest, direct or indirect.

8. EVENT OF DEFAULT

a. The breach of any of the events or conditions contained in Section 7 of this Agreement
shall constitute an event of default under this Agreement. Any one or more of the Holders of
the Notes may give written notice of such breach and if the Company shall within [NUMBER]
days after receipt of such written notice have failed to correct such occurrence or condition,
then the Holder of any one of the Notes may, at its option and without notice, declare the
entire principal and interest accrued thereon immediately due and payable and may proceed
with collection.

Convertible Note Agreement Page 5 of 7

© Copyright Envision Corporation. 2002. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS
ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER
PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

b. If the Company has made a material misrepresentation in connection with this Agreement
or with the transactions contemplated by this Agreement, or if the Company makes an
assignment for the benefit of creditors, or a trustee or receiver is appointed for the Company;
or if any proceeding involving the Company is commenced under any bankruptcy,
reorganization, arrangement, insolvency, statute or law, such event shall be deemed a default
which will immediately entitled Holders of the Notes, at their option and without notice, to
declare the entire amount of interest accrued thereon immediately due and payable and
proceed to enforce the collection thereof.

c. In case of default in the payment of any installment or principal, the Holders of the Notes
may, at their option and without notice, declare the entire principal and the interest accrued
thereof immediately due and payable and may proceed to enforce the collection thereof.

9. MISCELLANEOUS

a. Any and all notices, approvals or other communications to be sent to the parties shall be
deemed validly and properly given if made in writing and delivered by hand or by registered
or certified mail, return receipt requested, and addressed to the Company at its principal
office or to the Holders of the Notes at the addresses given to the Company by such Note
Holders.

b. This Agreement may not be modified, amended or terminated except by written

agreement executed by all the parties hereto.

c. The waiver of any breach or default hereunder shall not be considered valid unless in
writing and signed by the party giving such notice and no waiver shall be deemed a waiver of
any subsequent breach or default of same.

d. The paragraph headings contained herein are for the purpose of convenience only and
are not intended to define or limit the contents of such.

e. The validity, construction, interpretation and enforceability of this Agreement and the
Notes executed pursuant to this Agreement shall be determined and governed by the laws of
the State of [STATE/PROVINCE].

f. This Agreement shall be binding upon and inure to the benefit of the company and its
successors and assigns.

g. This Agreement may be executed in one or more counterparts, each of which shall be
deemed an original.

IN WITNESS WHEREOF, Company and Note Holders have executed this agreement at [DESIGNATE
PLACE OF EXECUTION] on [DATE].

COMPANY NOTE HOLDERS

Convertible Note Agreement Page 6 of 7

© Copyright Envision Corporation. 2002. All rights reserved. Protected by the copyright laws of the United States & Canada and by international treaties. IT IS
ILLEGAL AND STRICTLY PROHIBITED TO DISTRIBUTE, PUBLISH, OFFER FOR SALE, LICENSE OR SUBLICENSE, GIVE OR DISCLOSE TO ANY OTHER
PARTY, THIS PRODUCT IN HARD COPY OR DIGITAL FORM. ALL OFFENDERS WILL BE SUED IN A COURT OF LAW.

Authorized Signature Authorized Signature

Print Name and Title Print Name and Title

Convertible Note Agreement Page 7 of 7