SECURED CONVERTIBLE PROMISSORY NOTE

$1,000,000 PLUS INTEREST DUE & PAYABLE

DOCUMENT A-08102012

 

THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
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 OR
APPLICABLE EXEMPTION OR SAFE HARBOR PROVISION.

 

Issue Date: August 10, 2012

 

FOR VALUE RECEIVED, T3 Motion, Inc. as Obligor ("Borrower,” or “Obligor”),
hereby promises to pay to the Lender (“Lender” or “Holder”), as defined below on
the signature page, the Principal Sum, as defined below, along with the Interest
Rate, as defined below, according to the terms herein.

 

 

The "Lender" shall be:

 

JMJ Financial / Its Principal, or Its Assignees

 

 

The "Principal Sum" shall be:

 

The Consideration subject to the following adjustments: accrued, unpaid interest
and any applicable damages or penalties shall be added to the Principal Sum.

 

 

The “Consideration” shall be:

 

 

Up to $1,000,000 (one million US dollars) in the form and in such amounts as set
forth in the attached funding schedule.

 

 

The “Origination Fee” means:

 

 

The amount payable by the Borrower to the Lender pursuant to Section 2.2 of
document SPA-08102012.

 

 

The "Maturity Date" is the date upon which the Principal Sum of this Note shall
be due and payable, and that date shall be:

 

December 31, 2012.

 

 

 

The "Interest Rate" shall be:

 

10% (ten percent) annual interest charge on the Principal Sum, but not less than
3% (three percent) interest.

 

 

The "Conversion Price" shall be the following price:

 

As applied to the Conversion Formula set forth in 2.2, (i) the Conversion Price
shall be $1.31 for conversions of the Principal Sum attributable to the $525,000
of Consideration paid to Borrower as the Purchase Price at closing under
document SPA-08102012, and (ii) with respect to conversions of the Principal Sum
attributable to any other payment of Consideration under this Note as set forth
in the attached funding schedule, the Conversion Price shall be the lowest
price, at the time of payment of the Consideration, permitted by terms of the
Series I Warrants without requiring an adjustment to the Series I Warrants
exercise price, all of which Conversion Prices are subject to adjustment as
provided for herein.

 

 

DOCUMENT A-08102012

 

 

 

 

ARTICLE 1 PAYMENT-RELATED PROVISIONS

 

1.1 Interest Rate. The aggregate Interest on each payment of Consideration shall
be a minimum of 3%, with the 3% interest payable upon repayment of the
Principal. For example, if a payment of Consideration equals $100,000, but at
the time of repayment of Principal only $2,500 of Interest has accrued on such
Consideration payment, the Company will be obligated to pay $3,000 in Interest
on such Consideration payment.

 

1.2 Default. In the event of any default, the outstanding principal amount of
this Note, plus accrued but unpaid interest, liquidated damages, fees and other
amounts owing in respect thereof through the date of acceleration, shall become,
at the Holder’s election, immediately due and payable in cash at the Mandatory
Default Amount. Commencing five (5) days after the occurrence of any event of
default that results in the eventual acceleration of this Note, the interest
rate on this Note shall accrue at an interest rate equal to the lesser of 18%
per annum or the maximum rate permitted under applicable law. In connection with
such acceleration described herein, the Holder need not provide, and the
Borrower hereby waives, any presentment, demand, protest or other notice of any
kind, and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall
have all rights as a holder of the note until such time, if any, as the Holder
receives full payment pursuant to this Section 1.2. No such rescission or
annulment shall affect any subsequent event of default or impair any right
consequent thereon. The Mandatory Default Amount means the greater of (i) the
outstanding principal amount of this Note, plus all accrued and unpaid interest,
liquidated damages, fees and other amounts hereon, divided by the Conversion
Price on the date the Mandatory Default Amount is either demanded or paid in
full, whichever has a lower Conversion Price, multiplied by the VWAP on the date
the Mandatory Default Amount is either demanded or paid in full, whichever has a
higher VWAP, or (ii) 130% of the outstanding principal amount of this Note, plus
100% of accrued and unpaid interest, liquidated damages, fees and other amounts
hereon.

 

1.3 Payment. Holder may elect to reject any cash payment from Borrower in its
discretion, including any payment pursuant to Section 2.1.4 of document
SPA-08102012. Holder’s election to reject payment on the Maturity Date will not
cause Borrower to be in default under this Note and will extend the Maturity
Date for one year to December 31, 2013.

 

ARTICLE 2 CONVERSION RIGHTS

 

The Holder will have the right to convert the Principal Sum under this Note into
Shares of the Borrower's Common Stock as set forth below.

 

2.1 Conversion Rights and Cashless Exercise. The Holder will have the right at
its election at any time to convert all or part of the outstanding and unpaid
Principal Sum into shares of fully paid and nonassessable shares of common stock
of T3 Motion, Inc. (as such stock exists on the date of issuance of this Note,
or any shares of capital stock of T3 Motion, Inc. into which such stock is
hereafter changed or reclassified, the "Common Stock") as per the Conversion
Formula set forth in Section 2.2. Any such conversion shall be cashless, and
shall not require further payment from Holder. Unless otherwise agreed in
writing by both the Borrower and the Holder, at no time will the Holder convert
any amount of the Note into common stock that would result in the Holder owning
more than 4.99% of the common stock outstanding of T3 Motion, Inc.

 

 

DOCUMENT A-08102012

 

 

 

 

2.2. Conversion Formula. The number of shares issued through conversion is the
conversion amount identified in writing by the Holder divided by the Conversion
Price, as illustrated below. The Holder and the Borrower shall maintain records
showing the amount(s) converted and the date of such conversion(s). If no
objection is delivered from Borrower to Holder regarding any variable or
calculation of the conversion notice within 24 (twenty-four) hours of delivery
of the conversion notice, the Borrower shall have been thereafter deemed to have
irrevocably confirmed and irrevocably ratified such Notice of Conversion and
waive any objection thereto. The Company acknowledges and agrees that, absent a
duly delivered objection notice as required above, the Holder shall materially
rely on the confirmation and ratification of the conversion price and,
notwithstanding subsequent information to the contrary that such computation was
made in error, such deemed conversion price shall thereafter be the conversion
price for purposes of such conversion.

 

# Shares = Conversion Amount

       Conversion Price

 

2.3. This section 2.3 intentionally left blank.

 

2.4. This section 2.4 intentionally left blank.

 

2.5 Reservation of Shares. As set forth in Section 3.2 of document SPA-08102012,
as of the issuance date of this Note and for the remaining period during which
the conversion right exists, the Borrower will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the full conversion of this Note. The Borrower represents
that upon issuance, such shares will be duly and validly issued, fully paid and
non-assessable. The Borrower agrees that its issuance of this Note constitutes
full authority to its officers, agents and transfer agents who are charged with
the duty of executing and issuing shares to execute and issue the necessary
shares of Common Stock upon the conversion of this Note.

 

2.6. Delivery of Conversion Shares. If permitted by applicable securities laws
(i.e., the shares are not restricted securities at the time of issuance), shares
from any such conversion will be delivered to Holder by 2:30pm EST within 2
(two) business days of conversion notice delivery (see 4.1) by “DWAC/FAST”
electronic transfer (such date, the “Share Delivery Date”). For example, if
Holder delivers a conversion notice to Borrower at 5:15 pm eastern time on
Monday January 1st, Borrower’s transfer agent must deliver shares to Holder’s
broker via “DWAC/FAST” electronic transfer by no later than 2:30 pm eastern time
on Wednesday January 3rd. If those shares are not delivered in accordance with
this timeframe stated in this Section 2.6, or for any other reason at Holder’s
discretion (including but not limited to a decrease in share price), Holder, at
any time prior to selling those shares (in whole or in part), may rescind that
particular conversion (in whole or in part) and have the conversion amount (in
whole or in part) returned to the note balance with the conversion shares (in
whole or in part) returned to the Borrower (under Holder and Borrower’s
expectation that any returned conversion amounts will tack back to the original
date of the note). The Company will use commercially reasonable efforts to
deliver shares to Holder same day / next day.

 

 

DOCUMENT A-08102012

 

 

 

  

2.6.1 Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder (including election to pursue its rights under this
Section 2.6 and subsections), at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the
Borrower’s failure to timely deliver certificates representing shares of Common
Stock upon conversion of the Note as required pursuant to the terms hereof.

 

2.6.2 Conversion Delay Penalties. Holder may assess, at its election, penalties
or liquidated damages (both referred to herein as “penalties”) as follows.

 

2.6.2.A. For each conversion, Borrower agrees to deliver share issuance
instructions to its transfer agent same day or next day. In the event that the
share issuance instructions are not delivered to the Borrower’s transfer agent
by the next day, a penalty of $2,000 per day will be assessed for each day until
share issuance instructions are delivered to the transfer agent ($2,000 per day
inclusive of the day of conversion); and such penalty will be added to the
principal balance of the Note (under Holder and Borrower’s expectation that any
penalty amounts will tack back to the original date of the note).

 

2.6.2.B. For each conversion, in the event that shares are not delivered by the
third business day (inclusive of the day of conversion), a penalty of $2,000 per
day will be assessed for each day after the third business day (inclusive of the
day of the conversion) until share delivery is made; and such penalty will be
added to the principal balance of the Note (under Holder and Borrower’s
expectation that any penalty amounts will tack back to the original date of the
note). Borrower will not be subjected to any penalties once its transfer agent
processes the shares to the DWAC system.

 

Except as set forth in this paragraph, in the event that any Conversion Shares
are restricted securities at the time of issuance, the timing obligations and
subsequent penalties set forth in this Section 2.6 will not be applicable to the
Company. In such a circumstance, the Company will use commercially reasonable
efforts to promptly deliver the Conversion Shares that are restricted securities
to the Holder within five business days (inclusive of the day of exercise), and
the Company shall pay the Holder in cash a penalty of $2,000 per day for each
day after the fifth business day (inclusive of the day of exercise) until share
delivery is made. The Company will not be subject to any further penalties once
its transfer agent represents that such Conversion Shares have been given to
Federal Express, or some other nationally recognized overnight service, for next
business day delivery to Holder.

 

2.6.3 If failure to deliver Conversion Shares occurs as follows, Holder may
elect to enforce one or more of these remedies at its sole election.

 

2.6.3.A. In addition to any other rights available to the Holder, if the
Borrower fails to cause its transfer agent to transmit to the Holder the shares
on or before the Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or if the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the shares which the Holder
anticipated receiving upon such conversion (a “Buy-In”), then the Borrower shall
(A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions and other fees, if any)
for the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Shares that the Borrower was required to deliver
to the Holder in connection with the conversion at issue times (2) the price at
which the sell order giving rise to such purchase obligation was executed, and
(B) at the option of the Holder, either (x) reinstate the portion of the Note
and equivalent number of shares for which such conversion was not honored (in
which case such conversion shall be deemed rescinded), (y) deliver to the Holder
the number of shares of Common Stock that would have been issued had the
Borrower timely complied with its conversion and delivery obligations hereunder,
or (z) pay in cash to the Holder the amount obtained by multiplying (1) the
number of Shares that the Borrower was required to deliver to the Holder in
connection with the conversion at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed. The Holder shall
provide the Borrower written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Borrower, evidence of the
amount of such loss.

 

 

 DOCUMENT A-08102012

 

 

 

 

2.6.3.B. If the Borrower fails for any reason to deliver to the Holder the
Shares by DWAC/FAST electronic transfer (such as by delivering a physical stock
certificate) and if the Holder incurs a Market Price Loss, then at any time
subsequent to incurring the loss the Holder may provide the Borrower written
notice indicating the amounts payable to the Holder in respect of the Market
Price Loss and the Borrower must make the Holder whole by either of the
following options at Holder’s election:

 

Market Price Loss = [(High trade price on the day of conversion) x (Number of
shares receivable from the conversion)] – [(Sales price realized by Holder) x
(Number of shares receivable from the conversion)].

 

Option A – Pay Market Price Loss in Cash. The Borrower must pay the Market Price
Loss by cash payment, and any such cash payment must be made by the third
business day from the time of the Holder’s written notice to the Borrower.

 

Option B – Add Market Price Loss to Principal Sum. The Borrower must pay the
Market Price Loss by adding the Market Price Loss to the balance of the
Principal Sum (under Holder’s and the Borrower’s expectation that any Market
Price Loss amounts will tack back to the original date of issue of this Note).

 

2.6.3.C. If the Borrower fails for any reason to deliver to the Holder the
Shares within 2 (two) business days of the Share Delivery Date and if the Holder
incurs a Failure to Deliver Loss, then at any time subsequent to incurring the
loss the Holder may provide the Borrower written notice indicating the amounts
payable to the Holder in respect of the Failure to Deliver Loss and the Borrower
must make the Holder whole as follows:

 

 

DOCUMENT A-08102012

 

 

 

  

Failure to Deliver Loss = [(High trade price at any time on or after the day of
conversion) x (Number of shares receivable from the conversion)].

 

The Borrower must pay the Failure to Deliver Loss by cash payment, and any such
cash payment must be made by the third business day from the time of the
Holder’s written notice to the Borrower.

 

2.7. This section 2.7 intentionally left blank.

 

ARTICLE 3 ADJUSTMENTS

 

3.1 Stock Dividends and Splits. If the Company, at any time while this Note is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
conversion of this Note), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to
this Section 3.1 shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification.

 

3.2 Series I Warrants. In the event that the Company completes one or more
transactions that (i) do not result in an adjustment to the Conversion Price but
(ii) do result in a change in the then applicable exercise price as of the date
hereof for the currently outstanding Series I Warrants, then the Conversion
Price will be adjusted in a proportionate amount (i.e., on a percentage basis)
as the adjustment to the Series I Warrants exercise price (i.e., if the Series I
Warrants exercise price is reduced by 10%, then the Conversion Price will be
reduced by 10%). Adjustments under this Section 3.2 may not result in an
increase to the Conversion Price over the amount as of the date hereof.

 

3.3 Subsequent Rights Offerings. In addition to any adjustments pursuant to
Section 3.1 or 3.2 above, if at any time the Borrower grants, issues or sells
any Common Stock or other security giving the holder thereof the right to
acquire Common Stock or rights to purchase stock, warrants, securities or other
property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which
the Holder could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Note (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights (provided,
however, to the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (or beneficial ownership of such shares of Common
Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).

 

 

 DOCUMENT A-08102012

 

 

 

  

3.4 Pro Rata Distributions. If the Borrower, at any time while this Note is
outstanding, shall distribute to all holders of Common Stock (and not to the
Holder) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock (which shall be subject to Section 3.3), then in each such
case the Conversion Price shall be adjusted by multiplying the Conversion Price
in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or
evidence of indebtedness or rights or warrants so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in
good faith. In either case the adjustments shall be described in a statement
provided to the Holder of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

 

3.5 Terms of Future Financings. Unless approved in advance by the Holder, so
long as this Note is outstanding, upon any issuance by the Borrower or any of
its subsidiaries of any Common Stock or other security giving the holder thereof
the right to acquire Common Stock in connection with any transaction or series
of transactions entered into by the Company with the primary goal of capital
raising, and such issuances have any term more favorable to the holder of such
security or with a term in favor of the holder of such security that was not
similarly provided to the Holder in this Note, then the Borrower shall notify
the Holder of such additional or more favorable term and such term, at Holder’s
option, shall become a part of this Note. In particular, without limiting the
foregoing, so long as this Note is outstanding, if the Borrower issues any Note,
or enters into any agreement providing rights to its security holders, that
contains anti-dilution or price adjustment provisions (except for customary
adjustments as a result of stock dividends, stock splits, combinations of
shares, reorganizations, recapitalizations, reclassifications or other similar
events) then such anti-dilution or price adjustment provisions, at Holder’s
option, shall become a term of this Note.

 

3.6 Notice to Holder. Whenever the Conversion Price is adjusted pursuant to any
provision of this Article 3, the Borrower shall promptly notify the Holder by
written notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.

 

 

DOCUMENT A-08102012

 

 

 

 

ARTICLE 4 MISCELLANEOUS

 

4.1. Notices. Any notice required or permitted hereunder must be in writing and
either personally served, sent by facsimile or email transmission, or sent by
overnight courier. Notices will be deemed effectively delivered at the time of
transmission if by facsimile or email, and if by overnight courier the business
day after such notice is deposited with the courier service for delivery.
Notices to the Company shall be sent to both the chief executive officer and
chief financial officer of the Company.

 

4.2. Amendment Provision. The term "Note" and all reference thereto, as used
throughout this instrument, means this instrument as originally executed, or if
later amended or supplemented, then as so amended or supplemented. This Note may
only be amended in a writing signed by the Company and the Holder. Any provision
of this Note may be waived by a party, provided that such waiver is in writing.

 

4.3. Assignability. The Borrower may not assign this Note. This Note will be
binding upon the Borrower and its successors, and will inure to the benefit of
the Holder and its successors and assigns, and may be assigned by the Holder
subject to the provisions of document SPA-08102012.

 

4.4. Governing Law. This Note will be governed by, and construed and enforced in
accordance with, the laws of the State of Florida, without regard to the
conflict of laws principles thereof. 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 Florida or in the federal courts located in
Miami-Dade County, in the State of Florida. Both parties and the individuals
signing this Agreement agree to submit to the jurisdiction of such courts.

 

4.5. Delivery of Process by Holder To Borrower. In the event of any action or
proceeding by Holder against Borrower, and only by Holder against Borrower,
service of copies of summons and/or complaint and/or any other process which may
be served in any such action or proceeding may be made by Holder via U.S. Mail,
overnight delivery service such as FedEx or UPS, email, fax, or process server,
or by mailing or otherwise delivering a copy of such process to the Borrower at
its last known address or to its last known attorney set forth in its most
recent SEC filing.

 

4.6. Maximum Payments. Nothing contained herein may 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 will be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

 

4.7. Attorney Fees. In the event any attorney is employed by either party to
this Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding will be
entitled to recover from the other party reasonable attorneys' fees and other
costs and expenses incurred, in addition to any other relief to which the
prevailing party may be entitled.

 

 

 DOCUMENT A-08102012

 

 

 

  

4.8. Nonwaiver. No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice the Holder’s rights, powers or remedies.

 

4.9. No Public Announcement. Except as required by securities law, no public
announcement may be made regarding this Note, payments, or conversions without
written permission by both Borrower and Holder.

 

4.10. Opinion of Counsel. In the event that an opinion of counsel is needed for
any matter related to this Note, Holder has the right to have any such opinion
provided by its counsel. Holder also may request any such opinion to be provided
by Borrower’s counsel, with any such request not to be unreasonably denied by
the Company.

 

4.11. Director’s Resolution. Once effective, Borrower will execute and deliver
to Holder a copy of a Board of Director’s resolution resolving that this note is
validly issued, paid, and effective.

 

4.12. Representation by the Holder. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Note and, upon any exercise
hereof, will acquire the Conversion Shares issuable upon such conversion, for
its own account and not with a view to or for distributing or reselling such
Conversion Shares or any part thereof in violation of the Securities Act or any
applicable state securities law, except pursuant to sales registered or exempted
under the Securities Act.

 

4.13. No Shorting. Holder agrees that so long as any Notes from Borrower to
Holder remain outstanding, Holder will not enter into or effect any “short
sales” of the common stock or hedging transaction which establishes a net short
position with respect to the common stock of T3 Motion, Inc. Borrower
acknowledges and agrees that upon submission of conversion notice as set forth
in Section 4.1 (up to the amount of cash paid in under the Note), Holder
immediately owns the common shares described in the conversion notice and any
sale of those shares issuable under such conversion notice would not be
considered short sales.

 

*           *           *

 

 

 

 

BORROWER:

 

T3 MOTION, INC.

 

 

By: /s/ Rod Keller                          

Rod Keller

Chief Executive Officer

 

 

DOCUMENT A-08102012 

 

 

 

 

LENDER/HOLDER:

 

 

          s/ Justin Keener          

JMJ Financial / Its Principal

 

 

 

 

[Secured Convertible Promissory Note Signature Page]

 

 

 

DOCUMENT A-08102012

 

 

 

  

FUNDING SCHEDULE

 

• $525,000 paid to Borrower as the Purchase Price at closing under document
SPA-08102012 by (i) delivering $250,000 in cash (less any origination fees) and
(ii) surrendering for cancellation the Secured Promissory Note Agreement dated
July 10, 2012 between the Borrower and the Lender in which the Borrower promised
to pay to the Lender $275,000 on or before July 31, 2012.     • $475,000 in such
amounts and dates after initial closing subject to Lender’s sole discretion
after considering such factors that include, but are not limited to, Borrower’s
sales and profitability, the price and trading volume of Borrower’s common
stock, the Borrower’s common stock being listed on NYSE MKT, the existence of an
event of default under any agreement between the Borrower and the Lender, the
Borrower’s business development initiatives, any disagreements among the
officers or directors of the Borrower, and whether Borrower is DTC eligible.    
• The Borrower understands and agrees that other than the payment of the
Purchase Price above, any additional payments that may be made are solely at
Lender’s election.  Lender does not guarantee that it will make any additional
payments.     • The Principal Sum on the Note shall be increased based on any
additional amounts actually funded by Lender.

 

 

DOCUMENT A-08102012