BLOW & DRIVE INTERLOCK CORPORATION

PHASE 1 SECURED PROMISSORY NOTE

 

September 30, 2016 Up To $192,000

 

BLOW & DRIVE INTERLOCK CORPORATION, a Delaware corporation (“BDIC”) and BDI
MANUFACTURING, INC., an Arizona corporation (“BDIM”) (individually and
collectively referred to herein as “Borrower”), hereby jointly and severally
promise to pay to the order of THE DOHENY GROUP, LLC, a Nevada limited liability
company or its designee (“Holder” or “Lender”) the principal amount of up to ONE
HUNDRED NINETY-TWO THOUSAND AND 00/100 U.S. Dollars ($192,000.00), (the
“Principal Amount”), pursuant to the terms and conditions hereof, together with
interest thereon accruing on the outstanding principal balance hereof at a rate
per annum equal to twenty-five percent (25%) (the “Interest Rate”).

 

1. Loan and Security Agreement. This Note is provided by Borrower to Holder
pursuant to that certain Loan and Security Agreement between Borrower and Holder
dated as of September 30, 2016 (the “Loan Agreement”) with respect to the Phase
1 Loan (as defined in the Loan Agreement), and is subject to the terms and
conditions thereof. Unless otherwise defined, all capitalized terms shall have
the meanings ascribed to them in the Loan Agreement.

 

2. Purpose of Phase 1 Loan. Pursuant to the Loan Agreement, the proceeds of the
Advances pursuant to this Note shall be used by Borrower for the sole and
limited purpose of purchasing the base units and other parts required for
Borrower to manufacture 600 Devices, free and clear of any Liens (except
Permitted Liens).

 

3. Request For Advances; Funding Of Phase 1 Loan. All requests for Advances by
Borrower under this Note shall be made pursuant to the terms and conditions of
the Loan Agreement. All Advances to be made under this Phase 1 Note shall be
paid to the Designated Account pursuant to the terms of the Loan Agreement.

 

4. Interest. Interest shall accrue at the rate of the Interest Rate on the
unpaid Principal amount of this Note outstanding from time to time from and
after the date hereof, or (if less) at the highest rate then permitted under
applicable law (“Interest”) until the Principal is indefeasibly paid in full.

 

5. Payments.

 

(a) Unless sooner due pursuant to the terms and conditions hereof, all accrued
interest shall be payable in monthly installments on the 1st day of each
calendar month commencing November 1, 2016 and each calendar month thereafter
until the Phase 1 Maturity Date.

 

(b) Unless sooner due pursuant to the terms and conditions hereof, all
Principal, Interest and costs and expenses due hereunder shall be immediately
due and payable to Holder in full on the earlier of an occurrence of a Default,
or September 30, 2019 (the “Phase 1 Maturity Date”), without any requirement of
demand, notice or presentment.

 

(c) Borrower may prepay all or any portion of the outstanding Principal and/or
Interest of the Note prior to the date then due, without prior written consent
of Holder and without cost or expense.

 

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(d) All payments by Borrower hereunder shall be made in the lawful money of the
United States of America in immediately available funds on the date specified
herein.

 

(e) All payments due hereunder shall be delivered to Holder as follows:

 

(i) If via wire transfer: pursuant to wire instructions provided from time to
time by Holder for deposit into an account designated from time to time by
Holder for Holder’s benefit; provide, however, that (i) such funds are received
no later than 11:00 a.m. (Los Angeles time) on the date specified herein, and
(ii) any payment received by Holder later than 11:00 a.m. (Los Angeles time)
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such following
Business Day.

 

(ii) If via check: to the following address: THE DOHENY GROUP, LLC,
________________________, Los Angeles, CA 9____, Attention: David Haridim,
Managing Member, or to such other address or to the attention of such other
person as specified by prior written notice to Borrower; provided, however, that
any payment received by Holder later than such date specified herein shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.

 

6. No Advances. Pursuant to the Loan Agreement, Holder shall have no obligation
to advance any loans or additional monies, make any additional loans or
otherwise extend any additional credit except as expressly provided pursuant to
the terms and conditions of the Loan Agreement. By way of illustration only,
Holder shall have no obligation to make any Advance (a) in excess of the
Principal Amount, (b) if the borrowing procedures are not followed as set forth
in the Loan Agreement, (c) if conditions precedent to Advances as set forth in
the Loan Agreement are not satisfied or waived by Holder in its sole and
absolute discretion, and/or (d) from and after the occurrence of a Default.

 

7. Security Interest. Pursuant to the Loan Agreement, Borrower has granted to
Holder the Security Interest in the Collateral. Borrower agrees to execute any
and all documents necessary to grant Holder a continuing first priority
perfected security interest in the Collateral.

 

8. Events of Default.

 

(a) Definition. For purposes of this Note, a Default shall have the meaning as
set forth in the Loan Agreement.

 

(b) Consequences of Events of Default.

 

(i) If any Default has occurred or with the passing of time will occur, Holder
shall have such rights and remedies as set forth in the Loan Agreement. By way
of illustration and not of limitation, upon a Default, among other things,
Holder may declare all or any portion of the outstanding principal amount of
this Note (together with all accrued interest thereon and all other amounts due
and payable with respect thereto) to be immediately due and payable and may
demand immediate payment of all or any portion of the outstanding principal
amount of this Note (together with all such other amounts then due and payable)
owed by Holder. If Holder or any holders of this Note demand immediate payment
of all or any portion of this Note, Borrower shall immediately pay to Holder or
other such holders all amounts due and payable with respect to the Note.

 

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(ii) Holder and any subsequent holder of this Note shall also have any other
rights which such holder may have been afforded under any contract or agreement
at any time and any other rights which such holder may have pursuant to
applicable law. By way of illustration and not of limitation, (1) Borrower
agrees to pay all costs of collection, including attorneys’ fees, if any payment
under this Note is not paid when due or suit is brought, and (2) any accrued
interest which for any reason has not theretofore been paid shall be paid in
full on the date on which the final principal payment on this Note is made.

 

(iii) Borrower hereby waives diligence, presentment, protest, right of offset,
and demand and notice of protest and demand, dishonor and nonpayment of this
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time by Holder in its sole and absolute discretion, and
without waiving any rights to payment due hereunder, and that Holder hereof may
accept additional security for this Note or release any and all security for
this Note, all without in any way affecting the liability of Borrower hereunder.
Borrower hereby waives the benefits of the statute of limitations to the maximum
extent allowed by law.

 

9. Amendment and Waiver/Assignment. The provisions of this Note may be amended
only if Borrower has obtained the prior written consent of Holder in its sole
and absolute discretion. Holder may not assign this Note, and its rights
hereunder, without the prior written consent of Borrower; provided, however,
that Holder may assign this Note and its rights hereunder without Borrower’s
consent to a related party of Holder and/or Affiliate of Holder in connection
with tax or estate planning considerations in whole or in part from time to
time, upon written notice to Borrower.

 

10. Usury Laws. It is the intention of Borrower and Holder to conform strictly
to all applicable usury laws now or hereafter in force, and any interest payable
under this Note shall be subject to reduction to the amount not in excess of the
maximum legal amount allowed under the applicable usury laws as now or hereafter
construed by the courts having jurisdiction over such matters. If the maturity
of this Note is accelerated by reason of an election by Holder resulting from an
Event of Default, or otherwise, then earned interest may never include more than
the maximum amount permitted by law, computed from the date hereof until
payment, and any interest in excess of the maximum amount permitted by law shall
be canceled automatically and, if theretofore paid, shall at the option of
Holder either be rebated to Borrower or credited on the principal amount of this
Note, or if this Note has been paid, then the excess shall be rebated to
Borrower. The aggregate of all interest (whether designated as interest, service
charges, points or otherwise) contracted for, chargeable, or receivable under
this Note shall under no circumstances exceed the maximum legal rate upon the
unpaid principal balance of this Note remaining unpaid from time to time. If
such interest does exceed the maximum legal rate, it shall be deemed a mistake
and such excess shall be canceled automatically and, if theretofore paid,
rebated to Borrower or credited on the principal amount of this Note, or if this
Note has been repaid, then such excess shall be rebated to Borrower.

 

11. No Waiver. No delay by Holder in exercising any power or privilege
hereunder, nor any single or partial exercise of any power or privilege
hereunder, shall preclude any other or further exercise thereof, the exercise of
any other power or privilege hereunder.

 

12. Date for Payment. If any payment on this Note shall become due on a
Saturday, Sunday, or legal holiday under the laws of the United States or the
State of California, then payment shall be made on the next succeeding Business
Day.

 

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13. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given and received if delivered pursuant to the notice terms
described in the Loan Agreement.

 

14. Construction. The headings in the paragraphs of this Note are for
convenience only and shall not constitute a part hereof. Whenever the context so
requires, the masculine shall include the feminine and the neuter, the singular
shall include the plural, and conversely. The terms and all parts of this Note
shall in all cases be interpreted simply and according to their plain meaning
and neither for nor against any party hereto.

 

15. Time of the Essence. Time is hereby expressly declared to be of the essence
of this Note and of every provision hereof.

 

16. Governing Law. This Note shall be governed by and construed, interpreted and
enforced in accordance with the internal laws of the State of Nevada without
giving effect to conflict of laws principals, and shall not be construed
strictly against the drafter hereof.;

 

(Signatures on Next Page)

 

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IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
September 30, 2016.

 

  BLOW & DRIVE INTERLOCK CORPORATION,   a Delaware corporation         By:    
Laurence Wainer, President         BDI MANUFACTURING, INC.,   an Arizona
corporation                                  By:       Laurence Wainer,
President

 

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