Exhibit 10.3

SECURED CONVERTIBLE PROMISSORY NOTE

$315,000 PLUS INTEREST DUE & PAYABLE

DOCUMENT A-06042012

 

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:  June 4, 2012

FOR VALUE RECEIVED, Silver Falcon Mining, 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:

$315,000 (three hundred fifteen thousand US Dollars) Subject to the following:
accrued, unpaid interest shall be added to the Principal Sum.

The “Consideration” shall be:

$300,000 (three hundred thousand US dollars) paid to Borrower as the Purchase
Price at closing under document SPA-06042012.

The "Interest Rate" shall be:

5% (five percent) one time interest charge on the Principal Sum.  No interest or
principal payments are required until the Maturity Date, but both principal and
interest may be included in conversion prior to maturity date.

The "Conversion Price" shall be the following price:

As applied to the Conversion Formula set forth in 2.2, 80% (eighty percent) of
the average of the three lowest daily average trade prices in the 15 trading
days previous to the conversion.  See Exhibit X for an example of this
conversion calculation.

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

December 4, 2013.

Registration Rights shall be:

Piggyback Registration Rights as set forth in document SPA-06042012.

The “Prepayment Terms” shall be:

Prepayment prior to the Maturity Date is not permitted without written consent
of the Holder.

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ARTICLE 1 PAYMENT-RELATED PROVISIONS

1.1 Interest Rate. Subject to the Holder's right to convert, interest payable on
this Note will accrue interest at the Interest Rate and shall be added to the
Principal Sum.

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.

ARTICLE 2 CONVERSION RIGHTS

The Holder will have the right to convert the Principal Sum and accrued interest
under this Note into shares of Class A Common Stock of the Borrower as set forth
below.

2.1 Conversion Rights and Cashless Exercise.  The Holder will have the right at
its election from and after the Effective Date, and then at any time, to convert
all or part of the outstanding and unpaid Principal Sum and accrued interest
into fully paid and nonassessable shares of Class A Common Stock of Silver
Falcon Mining, Inc. (as such stock exists on the date of issuance of this Note,
or any shares of capital stock of Silver Falcon Mining, 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 Silver Falcon
Mining, Inc.  Shares from any such conversion will be delivered to Holder (in
any name directed by Holder) by 2:30pm EST within 2 (two) business days of
conversion notice delivery (see 3.1) by “DWAC/FAST” electronic transfer.

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2.2. Conversion Formula. The number of shares issued through conversion is the
conversion amount divided by the conversion price, as illustrated below.  The
Holder and the Borrower shall maintain records showing the principal 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 2.2 of document SPA-06042012,
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.  Shares from any such conversion will be
delivered to Holder by 2:30pm EST within 2 (two) business days of conversion
notice delivery (see 3.1) by “DWAC/FAST” electronic transfer (such date, the
“Share Delivery Date”) if the Company is authorized to issue the Shares without
a restrictive legend pursuant to an effective registration statement or pursuant
to Rule 144 under the Securities Act of 1933, and otherwise the Shares will be
delivered in certificate form by overnight delivery to the address specified by
the Holder.  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 (or, if
applicable, certificates to Holder) 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 make its best efforts to deliver shares to
Holder same day / next day.

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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.

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

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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.

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) when the Borrower is eligible to do so pursuant to an effective
registration statement or pursuant to Rule 144 under the Securities Act of 1933,
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:

Failure to Deliver Loss = [(High trade price at any time between the Share
Delivery Date and the date the Shares were actually delivered) x (Number of
shares receivable from the conversion)].

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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 MISCELLANEOUS

3.1. 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.

3.2 Subsequent Equity Sales or Agreements.  The Borrower shall provide the
Holder, whenever the Holder requests at any time while this Note is outstanding,
a schedule of all issuances of Common Stock or any debt, preferred stock, right,
option, warrant or other instrument that is convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock (a “Common Stock Equivalent”) since the date of issuance of this Note,
including the applicable issuance price, or applicable reset price, exchange
price, conversion price, exercise price and other pricing terms.  The term
issuances shall also include all agreements to issue, or prospectively issue
Common Stock or Common Stock Equivalents, regardless of whether the issuance
contemplated by such agreement is consummated.  The Borrower shall notify the
Holder in writing of any issuances within twenty-four (24) hours of such
issuance.

3.3. 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.

3.4. 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 to
anyone of its choosing without Borrower’s approval.

3.5. 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.

3.6. 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.

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3.7. No Rights as Stockholder Until Conversion.  This Note does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the
Company prior to the conversion hereof as set forth in Section 2.1.  So long as
this Note is unconverted, this Note carries no voting rights and does not convey
to the Holder any “control” over the Company, as such term may be interpreted by
the SEC under the Securities Act or the Exchange Act, regardless of whether this
Note is currently convertible.

3.8. 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.

3.9. 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.

3.10. 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.

3.11. 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.

3.12. 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 has the right to have any such opinion
provided by Borrower’s counsel.

3.13. 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.

3.14. 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 Silver Falcon Mining, Inc.
 Borrower acknowledges and agrees that upon submission of conversion notice as
set forth in Section 3.1 (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.

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BORROWER[S]:

SILVER FALCON MINING, INC.

By: ____________________________

Pierre Quilliam

Chief Executive Officer

LENDER/HOLDER:

____________________________

JMJ Financial / Its Principal

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EXHIBIT X

 

For the last 15 trading days, calculate the average trade price for each day by
summing the high trade price with the low trade price and dividing by two for
each day.  Then take the average of the three lowest average daily trading
prices as calculated above.

For this example, we will use only the last five trading days:

Day

High Trade Price

Low Trade Price

Daily Average

Trade Price

 

1

$10

$8

$9.00

 

2

$9

$8

$8.50

 

3

$11

$9

$10.00

 

4

$9

$7

$8.00

 

5

$10

$7

$8.50

       

Three lowest daily average trade prices are $8, $8.50, and $8.50

 

Average of three lowest daily average trade prices is $8.33

 

80% of the average of the three lowest daily average trade prices is $6.664

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