Exhibit 10.31
 
November 28, 2012
 
COLLATERAL SUPPLEMENT AGREEMENT
 
 
This Agreement (the "Agreement”) is to confirm and set forth the terms and
conditions between Location Based Technologies, Inc., a Nevada corporation (the
"Company"), and Bridge Loans, LLC (“Bridge”).
 
WHEREAS, the Company is a publicly-held corporation with its common stock traded
on the OTC Market under the symbol LBAS; and
 
WHEREAS, the Bridge intends to invest up to One Million Dollars ($1,000,000) in
the Company in accordance with the Form of Note, the Securities Purchase
Agreement and the Security Agreement all of which are dated November 28, 2012
and all of which are entered into by and between the Company and Bridge
(collectively the, “Loan Documents); and
 
WHEREAS, the Company intends to provide Bridge with sufficient collateral to
cause Bridge to invest in the Company;
 
NOW THEREFORE, in consideration of the promises and the mutual covenants and
agreements of the services rendered by the Bridge to the Company, the following
terms and conditions hereinafter set forth shall apply, and the parties hereto
covenant and agree as follows:
 
The recitals herein are acknowledged as true and correct and are incorporated by
this reference.
 
Obligations of the Bridge.
 
The Bridge shall use best efforts to cause Bridge Loans, LLC to invest up to One
Million Dollars ($1,000,000) in Company at terms that are mutually acceptable to
both the Company and Bridge.
 
Obligations of the Company.
 
Pursuant to the Loan Documents, the Company is hereby obligated to cause Bridge
to become the first lien holder on Patent Number 7598855, “Apparatus and method
for locating individuals and objects using tracking devices” (the “Patent”). In
the event the Bridge is unable to become the first lien holder on the Patent
within two weeks from the date of the signing of the Loan Documents, the Company
shall issue to Bridge shares of restricted common stock in an amount equal to
three times the amount of money lent by Bridge to the Company divided by the
closing price of the Company’s stock on the day prior to the shares being
issued.  These shares are to be used as collateral for the Loan (the, “Shares”)
until Bridge holds a first lien position on the patent.

The Shares shall be returned to the Company if either: a) The loan is fully
satisfied during the term by repayment and/or conversion, or b) Bridge becomes
the first lien holder on the Patent.

In the event of default, if Bridge liquidates the Shares in order to fulfill the
Company’s debt obligation, Bridge shall return to the Company any excess shares
which are not required to satisfy the principal and interest owed to Bridge in
accordance with the Loan Docs.
 
Term and Termination of Agreement.
 
 
a.
This Agreement shall remain in full force and effect during the Term of the
Loan.

 
 
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b.
Notwithstanding anything to the contrary, if either party materially breaches
this agreement, the non-breaching party may, at his or its election, immediately
terminate the agreement thereby relieving the non-breaching party of any
obligation there under. Alternatively, the non-breaching party may proceed with
performance without waiving any rights under the agreement. A material breach
will mean and refer to a party's failure to comply with any covenants or
obligation specified in this agreement.

 
 
c.
In the event of a dispute arising between parties the dispute shall be submitted
to mediation before the Judicial Arbitration and Mediation Services ("JAMS") in
Orange County, California. The parties shall bear the costs of mediation equally
In the event that either party refuses to participate in mediation said party
shall be prohibited from recovering attorney fees notwithstanding anything to
the contrary in this agreement.

 
Confidential Information. The parties understand and acknowledge that each of
them (and their respective employees, consultants and subcontractors) may have
disclosed to them, in connection with the rendition of services and performance
of their obligations of this agreement, confidential and/or proprietary
information of the other party. The parties hereto agree that said confidential
or proprietary information shall be held strictly confidential, and that should
legal action become necessary to enforce this clause, the non-breaching party
shall recover costs and attorney's fees as expressed herein.
 
Assignment. Neither party hereto may assign this Agreement without the prior
written consent of the other party signed by such other party's duly authorized
representative, which consent may be given or withheld in the sole discretion of
the applicable party whose consent is requested.
 
Indemnity. The Company hereby agrees to hold harmless and indemnify the Bridge,
including its agents, representatives, officers, directors, affiliates,
employees and attorneys (collectively "Affiliates") against and in respect to
any and all assessments, losses, damages, liabilities, claims, demands,
proceedings, causes of action, judgments, settlements, taxes or penalties,
interest, casts and expenses incurred in the investigation defense (including
legal fees) and settlement of any claims covered hereunder, whether or not a
legal action has been commenced and any enforcement of its indemnity
(hereinafter collectively referred to as 'damages") which Company or its
Affiliates may suffer or incur by reason or result of any breach by the Bridge
of any of the covenants, representations or warranties made by the Bridge in
this agreement, including any default of this agreement.
 
Governing Law. This agreement is entered into in Young County, Texas, and shall
be construed in accordance with and governed by the laws of the State of Texas
applicable to contracts made and to be performed in Texas. Further, the parties
agree that venue shall rest solely and exclusively in Young County, Texas, and
any challenge or objection thereto is hereby waived.
 
Other Agreements Superseded: Waiver and Modification. This Agreement supersedes
all prior agreements or understandings, written or oral, of the Bridge relating
to dealing between the parties and incorporates the entire understanding of the
parties with respect thereto. This agreement may be amended or supplemented only
by written instrument signed by the party against whom the amendment or
supplement is sought to be enforced. The party benefited by any condition or
obligation may waive the same, but such waiver shall not be enforceable by
another party unless made by written instrument signed by the waiving party.
 
 
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Severability. In case any provision of this agreement or any application thereof
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
 
Legal Counsel; Waiver of Conflict of Interest. The parties have had the
opportunity to review the terms of this Agreement with their legal counsel and
have either obtained the advice of legal or do hereby expressly waive their
right to seek such legal counsel in connection with this transaction.
 
Recovery of Litigation Costs. If any legal action nor arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any
provision of this agreement, the successful or prevailing party shall be entitle
to recover reasonable attorney fees and cost incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
 
Headings. The headings used in this Agreement have been inserted for convenience
only and are not to be considered in construing the meaning of the Agreement.
 
Notices. All notices in connection with this agreement shall be deemed given as
of the day they are sent by electronic transmission, sent by facsimile or
deposited with a commercial courier for delivery to other party at the following
addresses:
 
Company:              Location Based Technologies, Inc. 49 Discovery - #260
Irvine, CA 92618
Phone: (888) 600-1044
Fax: (714) 200-0287
E-Mail: greg.harrison@pocketfinder.com

Bridge:                   Alfred G. Allen III
PO Box 930
Graham, Texas 76450
Phone: 940-549-3456
Fax:  940-549-5691
aga@turnerandallen.com
 
Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements, understandings, representations and
statements, if any, whether oral or written, No modification of this Agreement
shall be valid or binding unless in writing and signed by both parties.
 
Counterparts.   This Agreement may be executed in counterparts by each of the
Unit Holders, all of which taken together shall be deemed one original, binding
on all parties, notwithstanding that all parties are not signatories to the
original or the same counterpart.
 
{Signature Page to Follow}

 
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By:                                                                           
Name: David M. Morse
Company: Location Based Technologies, Inc.
Title: CEO

By:                                                                                             
  Name: Alfred G. Allen III
  Title: Bridge

 
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