SECURED CREDIT NOTE

 

$326,000.00 Naperville, Illinois Issue Date: April 27, 2012 Maturity Date: On or
before June 21, 2012

 

FOR VALUE RECEIVED, Q LOTUS HOLDINGS, INC., a Nevada corporation (the
“Borrower”), hereby promises to pay on or before JUNE 21, 2012 (the “Maturity
Date”), to the order of MW BUSINESS CREDIT, LLC, a Nevada limited liability
company (together with its successors and assigns, the “Holder”), at its office
located at 710 East Ogden Avenue, Suite 500, Naperville, Illinois 60563, or at
such other location as the Holder may otherwise direct in writing from time to
time, the principal amount of THREE HUNDRED AND TWENTY-SIX THOUSAND DOLLARS
($326,000.00) in lawful money of the United States, payable in accordance with
the provisions of this Secured Credit Note (this “Note”).

 

Article 1.                 Security Agreement. This Note is the “Note” of the
Borrower referred to in that certain Security Agreement of even date herewith
(the “Security Agreement”) by and between the Holder and the Borrower. This Note
is subject to the terms and conditions of the Security Agreement, and
capitalized terms not expressly defined herein shall have the respective
meanings ascribed to such terms in the Security Agreement.

 

Article 2.                 Payments of Principal. Borrower covenants and agrees
that it will duly and punctually pay the principal sum of THREE HUNDRED AND
TWENTY-SIX THOUSAND DOLLARS ($326,000.00), or such lesser principal balance as
may be due and owing from time to time under this Note, in accordance with the
provisions hereof.

 

Article 3.                 Payments of Interest. No interest shall be payable on
the principal sum of this Note.

 

Article 4.                 Monthly Payments. Subject to the remaining terms and
conditions of this Note, no payments shall be due on this Note until the
Maturity Date.

 

Article 5.                 Loan Fee. Borrower acknowledges and agrees that a
loan fee of SIXTEEN THOUSAND DOLLARS ($16,000.00) (the "Loan Fee") has been
included in the principal balance of this Note and that the Loan Fee shall be
deemed fully earned and non-refundable as of the date of this Note.

 

Article 6.                 Secured Obligations. This Note is secured by the
Collateral. The Security Agreement grants the Holder certain rights with respect
to the Collateral upon the occurrence and continuance of an Event of Default.

 

Article 7.                 Events of Default. The occurrence of any of the
events set out below as (a)-(b) or a default under the Security Agreement
(collectively “Events of Default”) shall, at the option of Holder, make the
principal balance of this Note as immediately due and payable, without notice of
default, presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind.

 

 

 

 

(a) Payments. The Borrower fails to make any installment of principal or other
amounts due pursuant to this Note whether at stated maturity, upon acceleration
or otherwise.

 

(b) Insolvency. An order for relief is entered against the Borrower by any
United States Bankruptcy Court; the Borrower does not generally pay its debts as
they become due (within the meaning of 11 U.S.C. 303(h)); the Borrower makes an
assignment for the benefit of creditors; the Borrower applies for or consents to
the appointment of a custodian, receiver, trustee or similar officer for it or
for all or any substantial part of its assets, or such a custodian, receiver,
trustee or similar officer is appointed without the application or consent of
the Borrower; the Borrower institutes (by petition, application, answer, consent
or otherwise) any bankruptcy, insolvency, reorganization, moratorium,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; any such
proceeding is instituted (by petition, application or otherwise) against the
Borrower; or any judgment, writ, warrant of attachment, execution or similar
process is issued or levied against a material portion of the assets of the
Borrower.

 

Article 8.                 Fees and Expenses. All fees and expenses incurred by
the Holder (including, without limitation, attorneys’ fees and expenses) in
collecting amounts due under this Note shall be paid by the Borrower to the
Holder upon demand therefore.

 

Article 9.                 Waiver of Presentment, Demand and Dishonor.

 

(a)                The Borrower hereby waives presentment for payment, protest,
demand, notice of protest, notice of non-payment and diligence with respect to
this Note, and waives and renounces all rights to the benefit of any statute of
limitations or any moratorium, appraisement, exemption or homestead now provided
or that hereafter may be provided by any federal or applicable state statute,
including, but not limited to, exemptions provided by or allowed under the U.S.
Bankruptcy Code (or similar state laws affecting creditors’ rights) and any
successors thereto), both as to itself and as to all of its property, whether
real or personal, against the enforcement and collection of the obligations
evidenced by this Note and any and all extensions, renewals and modifications
hereof.

 

(b)               No failure on the part of the Holder to exercise any right or
remedy hereunder with respect to the Borrower, whether before or after the
happening of an Event of Default, shall constitute a waiver of any future Event
of Default or of any other Event of Default. No failure to demand the debt of
the Borrower evidenced hereby by reason of an Event of Default or indulgence
granted from time to time shall be construed to be a waiver of the right to
insist upon prompt payment thereafter; or shall be deemed to be a novation of
this Note or a reinstatement of such debt evidenced hereby or a waiver of such
right of demand or any other right, or be construed so as to preclude the
exercise of any right the Holder may have, whether by the laws of the state
governing this Note, by agreement or otherwise; and the Borrower hereby
expressly waives the benefit of any statute or rule of law or equity that would
produce a result contrary to or in conflict with the foregoing.

 

Article 10.             Governing Law; Consent to Jurisdiction. This Note shall
be governed by, and construed in accordance with, the internal laws of the State
of Illinois, without reference to the choice of law principles thereof. Any
legal action, suit or proceeding arising out of or relating to this Note shall
only be instituted, heard and adjudicated (excluding appeals) in a state or
federal court located in Chicago, Illinois, and each party hereto knowingly,
voluntarily and intentionally waives any objection which such party may now or
hereafter have to the laying of the venue of any such action, suit or
proceeding, and irrevocably submits to the exclusive personal jurisdiction of
any such court in any such action, suit or proceeding. Service of process in
connection with any such action, suit or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under the Security Agreement. Notwithstanding the foregoing to the
contrary, the Holder may institute and prosecute any action, suit or proceeding
in any court of competent jurisdiction it shall deem advisable in connection
with the enforcement of its rights hereunder.

 

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Article 11.             Amendment; Waiver. No modification, alteration, waiver
or change of any of the provisions hereof shall be effective unless in writing
and signed by the Borrower and the Holder and, then, only to the extent set
forth in such writing.

 

Article 12.             No Jury Trial. Borrower acknowledges and agrees that any
controversy that may arise under this Note is likely to involve complicated and
difficult issues. Accordingly, BORROWER hereby KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY irrevocably and unconditionally waives any right BORROWER may have
to a trial by jury in respect to any litigation directly or indirectly arising
out of or relating to this NOTE. Borrower certifies and acknowledges that (i)
the Holder has not represented, expressly or otherwise, that it would not, in
the event of litigation, seek to enforce the foregoing waiver, (ii) Borrower
understands and has considered the implications of this waiver, and (iii) the
Holder has been induced to accept this Note by, among other things, the waivers
and certifications in this Article.

 

Article 13.             Use of Proceeds. Borrower acknowledges that this Note is
executed as part of a commercial transaction and that the proceeds of this Note
will not be used for any personal or consumer purpose.

 

IN WITNESS WHEREOF, the Borrower has executed and delivered this Secured Credit
Note this 27th day of April, 2012.

 

  BORROWER:         Q LOTUS HOLDINGS, INC.             : By: /s/ Gary Rosenberg
    Name: Gary Rosenberg     Title: Chief Executive Officer

 

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