Convertible Promissory Note
 
For good value, CATUITY, INC., a Delaware corporation, (“Borrower”) promises to
pay to the order of GOTTBETTER CAPITAL MASTER, LTD. (“Holder”) an amount equal
to the Principal Balance (as defined below), paid in the following manner:

 
1.
Principal Amount and Offsets. This promissory note (the “Note”) is for an amount
equal to $60,000. (the “Initial Principal Amount”).

 
2.
Purchase Price. The Holder shall purchase the Promissory Note for $50,000 (the
“Purchase Price”).

 
3.
Term and Payments. The term of this Note is for six months from the date hereof,
after which this Note shall become due and payable in full. This Note may be
prepaid at any time, in whole or in part, without penalty.

 
4.
Conversion. This Note is convertible at any time into shares of the Borrower’s
common stock at a conversion price equal to 80% of the price of the Borrower’s
common stock at the time of conversion. The Borrower agrees to make reasonable
efforts to have an adequate number of shares available at all times to satisfy
the conversion of this Note.

 
5.
Acceleration. This Note shall, at the option of the Holder hereof upon written
notice to the Borrower, become immediately due and payable in full upon the:

 
(a) Failure to make any payment within fifteen (15) days of its due date.
 
(b) Filing by the Borrower of an assignment for the benefit of creditors,
bankruptcy or other form of insolvency, or by suffering an involuntary petition
in bankruptcy or receivership not vacated within thirty (30) days.
 
(c) Any breach of the provisions of the provisions of Sections 6 or 7 of this
Note.
 

 
6.
Default. If this Note shall be in default and placed for collection, the
Borrower shall pay all reasonable attorney fees and costs of collection.
Payments shall be made to such address as may from time to time be designated by
the Holder.

 

 
7.
Security. This Note is unsecured.

 

 
8.
Waiver of Demand and Presentment. The Borrower, and all other parties to this
note, whether as endorsers, guarantors or sureties, shall remain fully bound
until this note is paid and waive demand, presentment and protest and all
notices thereto and further agree to remain bound, notwithstanding any
extension, modification, waiver, or other indulgence or discharge or release of
any obligor hereunder or exchange, substitution, or release of any collateral
granted as security for this note. No modification or indulgence by the Holder
hereof shall be binding unless in writing; and any indulgence on any one
occasion shall not be an indulgence for any other or future occasion. The rights
of the Holder hereof shall be cumulative and not necessarily successive.

 

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9.
 Governing Law; Jurisdiction; Jury Trial. This note shall take effect as a
sealed instrument under the law of the State of New York. All questions
concerning the construction, validity, enforcement and interpretation of this
Note shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 
Dated: November 1, 2007

 
BORROWER:
CATUITY INC.,
a Delaware Corporation
 
 
By: 

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Alfred H. (John) Racine
President & CEO
2340 Commonwealth Drive, Suite C
Charlottesville, VA 22901
 
HOLDER: 
GOTTBETTER CAPITAL MASTER, LTD.,
a Cayman Islands Exempted Company
 
 
By:

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Adam S. Gottbetter, Director
488 Madison Avenue, 12th Floor
New York, NY 10022
Telephone: 212.400.6990
Fax: 212.400.6999

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