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PROMISSORY NOTE
<br /> $25,000 Elk River, Minnesota
<br /> February 2008
<br /> THE UNDERSIGNED WARRANT THAT THE PROCEEDS FROM THIS NOTE SHALL BE
<br /> USED SOLELY FOR BUSINESS PURPOSES.
<br /> FOR VALUE RECEIVED, the undersigned, Nicole's Finishing Touch Salon Inc., a Minnesota
<br /> corporation,promises to pay to the order of the Economic Development Authority of the City of Elk River(the
<br /> "Lender"), at its office in Elk River, Minnesota, or at such other place as any present or future holder of this Note
<br /> may designate from time to time, the principal sum of twenty-five thousand and no/100 Dollars ($25,000) (the
<br /> "Principal Balance"), plus interest thereon at a fixed rate of Three percent `3%) per annum. Interest shall be
<br /> computed on the basis of the actual number of days elapsed in a 360-day year.
<br /> The outstanding principal balance and accrued interest shall be due and payable in arrears in monthly
<br /> installments of$ 1,074.53, commencing on March 8, 2008 and on the first day of each month thereafter up to and
<br /> including March 8, 2010. The entire unpaid principal balance hereof and all accrued and unpaid interest hereon
<br /> shall,if not earlier paid,be fully due and payable on March 8,2010.
<br /> This Note is secured by a Guaranty made by Nicole Ashley Fox("Guarantor"),all of even date herewith.
<br /> Installment payments hereunder shall be applied first to accrued but unpaid interest, and then to the
<br /> reduction of principal then due and owing. The undersigned may prepay this Note in whole or in part at any time
<br /> without penalty. No prepayment, however, shall suspend any required payments of either principal or interest under
<br /> this Note or reduce the amount of any scheduled monthly payment. Any prepayment shall be applied first to accrued
<br /> but unpaid interest and the remainder to the principal portions of the monthly installments in the inverse order such
<br /> monthly installments become due.
<br /> If any installment or payment is paid more than ten (10) days after the due date thereof, the undersigned
<br /> agree to pay a late payment charge of eight percent (8%) of the installment or payment to cover the expenses of
<br /> collection. This provision shall not be deemed to excuse a late payment or be deemed a waiver of any other rights
<br /> the holder hereof may have,including the right to declare the Principal Balance and interest thereon immediately due
<br /> and payable.
<br /> The occurrence of any of the following events shall constitute an Event of Default under this Note: (i) any
<br /> breach or default in the payment of this Note; or(ii) any breach or default under the terms of the Guaranty or under
<br /> any other note, obligation, mortgage, guaranty, other agreement, or other writing heretofore, herewith or hereafter
<br /> existing to which any maker,endorser, any guarantor or surety of this Note or any other person providing security for
<br /> this Note or for guaranty of this Note is a party; or (iii) the insolvency, death, dissolution, liquidation, merger or
<br /> consolidation of any such maker, endorser, guarantor, surety or other person; or(iv) any appointment of a receiver,
<br /> trustee or similar officer of any property of any such maker, endorser, guarantor, surety or other person; or(v) any
<br /> assignment for the benefit of creditors of any such maker, endorser, guarantor, surety or other person; or (vi) any
<br /> commencement of any proceeding under any bankruptcy, insolvency,receivership,dissolution,liquidation or similar
<br /> law by or against any such maker, endorser, guarantor, surety or other person; or (vii) the sale, lease or other
<br /> disposition(whether in one transaction or in a series of transactions) to one or more persons of all or a substantial
<br /> part of the assets of any such maker, endorser, guarantor, surety or other person; or(viii) any such maker, endorser,
<br /> guarantor, surety or other person takes any action to revoke or terminate any agreement, liability or security in favor
<br /> of the Lender; or(ix)the entry of any judgment or other order for the payment of money in the amount of$5,000.00
<br /> or more against any such maker, endorser, guarantor, surety or other person; or(x) the issuance or levy of any writ,
<br /> warrant, attachment, garnishment, execution or other process against any property of any such maker, endorser,
<br /> guarantor, surety or other person; or(xi) the attachment of any tax lien to any property of any such maker, endorser,
<br /> guarantor, surety or other person; or (xii) any statement, representation or warranty made by any such maker,
<br /> endorser, guarantor, surety or other person(or any representative of any such maker, endorser, guarantor, surety or
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