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. 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              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: 

              
                

              

              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:
                

              
                

              

              Adam
                S. Gottbetter, Director

              488
                Madison Avenue, 12th
                Floor

              New
                York, NY 10022

              Telephone:
                212.400.6990

              Fax:
                212.400.6999