Exhibit 10.3 







		
	$495,000

        
	San Diego, California

May 27, 2008 








PEPPERBALL
TECHNOLOGIES, INC. 



PROMISSORY NOTE 



        PepperBall
Technologies, Inc., a Delaware corporation (the “Company”), for value
received, hereby acknowledges the receipt from Security With Advanced Technology, Inc., a
Colorado corporation (“Holder”), of Four Hundred Ninety-Five Thousand
Dollars and no/100 ($495,000). This promissory note (this “Note”) is
issued by the Company in connection with that certain Agreement and Plan of Merger and
Reorganization of even date herewith among the Company, the Holder and PTI Acquisition
Corp., a Delaware corporation (the “Agreement”). Capitalized terms not
otherwise defined herein shall have the meanings given them in the Agreement. 



        1.    Payment.
The Company shall only be obligated to repay the amount of this           Note in the
event the Merger is not consummated due to either (i) the           Company’s
failure to obtain the Company Stockholder Approval, or (ii) the           Company Board
Recommendation is withdrawn (the occurrence of (i) or (ii) is           referred to
herein as a “Repayment Event”). The amount of this           Note shall
be payable to the Holder within 90 days of a Repayment Event (the           “Repayment
Period”).  




        2.    Forgiveness.
All obligations of the Company under this Note, including           without limitation
the Company’s obligation repay any amount under this           Note, shall, without
any further action by the Company or the Holder, be           automatically forgiven if
the Merger is not consummated for any reason other           than the occurrence of a
Repayment Event.  




        3.    License.
Upon the occurrence of a Repayment Event, the Holder may, by           written notice
delivered to the Company prior to the expiration of the Repayment           Period, waive
the return of $250,000 of the amount of this Note in exchange for           (x) a mutual
settlement of all claims and matters relating to Case No.           ‘07CV 0672 JAH
POR, PepperBall Technologies, Inc. v. Security With Advanced           Technology, Inc.,
Vizer Group, Inc. and Avurt International, Inc., pending in           the United States
District Court, Southern District of California, and (y) a           non-exclusive
worldwide license to use the Company’s intellectual property           rights for
projectiles and any technology contained in the launchers or           subsequent
versions of such launchers the Holder is having produced by Tiberius           Arms (the
“License”). The License shall have an initial term of           five
years (with the Holder having the right to renew for additional five year           terms
unless the Holder is in default under the License), carry a royalty equal           to 3%
of the Holder’s net sales of non-lethal projectiles and launchers           (subject
to a $100,000 per year royalty maximum) and provide for the Holder to           pay the
Company $250,000 upon the signing of the License (which shall be paid by           the
Holder’s waiver of the return of $250,000 of the principal amount of           this
Note as described above), with 50% of such payment to be treated as a           royalty
prepayment.  




        4.    Interest.
This Note shall not bear interest.  




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        5.    Default.
If the Company fails to pay any amount when due hereunder, the           Holder may
elect, by written notice delivered to the Company, to take at any           time any or
all of the following actions: (i) declare this Note to be forthwith           due and
payable, whereupon the entire unpaid principal amount of this Note shall           become
forthwith due and payable, without presentment, demand, protest or any           other
notice of any kind, all of which are hereby expressly waived by the           Company,
anything contained herein to the contrary notwithstanding, and (ii)           exercise
any and all other remedies provided hereunder or available at law or in           equity.
If the Company fails to pay any amount when due hereunder, the Company           agrees
to pay, in addition to the principal amount of this Note, reasonable           attorneys’ fees
and any other reasonable costs and expenses incurred by the           Holder in
connection with its pursuit of its remedies under this Note.  




        6.    Miscellaneous.  




        
        6.1  
Transfer of Note. This Note shall not be transferable or assignable in any manner
without the express written consent of the Company, and any such attempted disposition of
this Note or any portion hereof shall be of no force or effect.  




        
        6.2  
Titles and Subtitles. The titles and subtitles used in this Note are for
convenience only and are not to be considered in construing or interpreting this Note.  




        
        6.3  
Notices. Any notice required or permitted under this Note shall be given in
writing in accordance with the Agreement.  




        
        6.4  
Amendments and Waivers. Any term of this Note may be amended and the observance of
any term of this Note may be waived (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of the Company and the
Holder. No delay or omission by the Holder in exercising any of its rights, remedies,
powers or privileges hereunder or at law or in equity and no course of dealing between
the Holder and the Company or any other party shall be deemed a waiver by the Holder of
any such rights, remedies, powers or privileges, even if such delay or omission is
continuous or repeated, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise thereof by the Holder or the
exercise of any other right, remedy, power or privilege by the Holder.  




        
        6.5  
Severability. If one or more provisions of this Note are held to be unenforceable
under applicable law, such provision shall be excluded from this Note and the balance of
the Note shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.  




        
        6.6  
Governing Law. This Note shall be governed by and construed and enforced in
accordance with the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within California.  




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intentionally left blank] 



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        IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by its officer,
thereunto duly authorized as of the date first above written. 









		
		PEPPERBALL TECHNOLOGIES, INC.





By: /s/ Eric P. Wenaas 







ACKNOWLEDGED AND AGREED: 



SECURITY WITH ADVANCED TECHNOLOGY,
INC. 




By: /s/ Jeffrey McGonegal  
















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