Unassociated Document


     

    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR “BLUE
SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

     

    10%
SENIOR SECURED CONVERTIBLE BRIDGE NOTE

    DUE
___________, 2011

    


    PUBCO(1)

     

    Date:
______________,
2010                                                                                                                                  US$_________

     

    FOR VALUE RECEIVED, in cash
and other consideration, Pubco., a Nevada
corporation (“Borrower”), hereby
promises to pay to ____________, or its registered assigns (“Holder”), the sum of
_________________ Dollars (US$_________) (the “Principal”).

     

    (1)           Payments
of Principal.  On the Maturity Date, unless an Event of Default
shall have occurred, Borrower shall pay to Holder the entire principal
amount (the “Principal
Amount”) under this Secured Promissory Note (this “Note”) plus all
accrued and unpaid interest (i) in cash, or (ii) at the option of the Holder, in
whole or in part, in securities to be issued by Borrower in the Financing at the
same price paid by other investors (the “Conversion
Option”).  The “Maturity Date” shall be the
earlier of (A) the date Borrower completes a financing transaction (the “Financing”) for the
offer and sale of shares of Borrower’s common stock (the “Common Stock”),
including securities convertible into or exercisable for Common Stock, in an
aggregate amount of no less than 125% of the principal amounts evidenced by this
Note and a series of identical notes issued on the date hereof (collectively,
the “Notes”),
and (B) __________, 2011 [twelve months from the date
hereof].  Borrower may prepay all
or any portion of the amounts owing under this Note at any time without fee,
charge or premium.

    


    (2)           Interest.  This
Note shall bear interest at the rate of 10% per annum payable in full on the
Maturity Date.

    

       

        
          

        

      

    

    (1)           Name
of debtor will be disclosed immediately prior to completion of the transaction
contemplated hereunder.

     

    
      
         

      

      
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    (3)           Issuance
of Additional
Securities.

    


    (a)           In
addition to the repayment of the principal amount and all accrued interest
hereunder, whether or not such amounts shall have been prepaid as permitted
hereunder, on the Maturity Date, Borrower shall issue to Holder, at Holder’s
option, (i) three year warrants (the “Warrants”) to
purchase that number of shares of Common Stock equal to the Principal Amount
plus all accrued and unpaid interest divided by the per share purchase price of
the Common stock offered and sold in the Financing (the “Offering Price”)
which Warrants shall be exercisable at the Offering Price and shall include
cashless exercise provisions commencing 18 months from the date of issuance of
the Warrants if there is not at that time an effective registration statement
covering the shares of Common Stock exercisable upon exercise of the Warrants,
or (ii) that number of shares of Common Stock equal to the product arrived at by
multiplying (x) the Principal Amount plus all accrued and unpaid interest
divided by the Offering Price and (y) 0.33 (the “Share
Option”).

    


    (b)           Borrower
shall not issue to Holder shares of Common Stock whether upon exercise of the
Share Option or the Warrants, and the Holder shall not have the right to
exercise the Share Option or the Warrants, to the extent that after giving
effect to such exercise, Holder (together with Holder’s affiliates) would
beneficially own in excess of 4.99% of the shares of Common Stock outstanding
immediately after giving effect to such exercise.  For purposes of
this paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended.  For
purposes of exercise of the Share Option or the Warrants, in determining the
number of outstanding shares of Common Stock, Holder may rely on the number of
outstanding shares of Common Stock as reflected in Borrower’s most recent
reports filed with the Securities and Exchange Commission.  The
limitation of this Section (3)(b) may not be waived by Holder except on no less
than 61-day prior written notice.

    


    (4)           Security
Interest.  Borrower’s performance of the obligations and
covenants of this Note, including but not limited to repayment, shall be secured
by a first priority lien and security interest in all of Borrower’s assets as
set forth in that certain pledge and security agreement of even date herewith
among Borrower and the holders of the Notes.

    


    (5)           Event of
Default.

     

    (a)           Event of
Default.  Each of the following events shall constitute an
“Event of
Default” hereunder: 

     

    (i) Borrower's
failure to pay to the Holder any amount when and as due under this Note for a
period of ten (10) Business Days after notice of such failure;
or

     

    (ii) Borrower
shall either (i) fail to pay, when due, or within any applicable grace
period, any payment in respect of any Indebtedness in excess of $100,000,
individually or in the aggregate, due to any third party, other than, with
respect to unsecured indebtedness only, payments contested by the Borrower in
good faith by proper proceedings and with respect to which adequate reserves
have been set aside for the payment thereof, or otherwise be in breach or
violation of any agreement for monies owed or owing in respect of any
indebtedness in an amount in excess of $250,000, individually or in the
aggregate, which breach or violation permits the other party thereto to declare
a default or otherwise accelerate amounts due thereunder, or (ii) suffer to
exist any other circumstance or event that would, with or without the passage of
time or the giving of notice, result in a default or event of default under any
agreement binding Borrower, which default or event of default would or is likely
to have a material adverse effect on the business, operations, properties,
prospects of financial condition of Borrower or any of its Subsidiaries,
individually or in the aggregate;

     

    
      
         

      

      
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    (iii) Borrower
or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S.
Code, or any similar Federal, foreign or state law for the relief of debtors
generally (collectively, “Bankruptcy Law”),
(A) commences a voluntary case, (B) consents to the entry of an order
for relief against it in an involuntary case, (C) consents to the
appointment of a receiver, trustee, assignee, liquidator or similar official for
substantially all of its assets (a “Custodian”),
(D) makes a general assignment for the benefit of its creditors or
(E) admits in writing that it is generally unable to pay its debts as they
become due;

     

    (iv) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that (A) is for relief against Borrower or any of its Subsidiaries in an
involuntary case, (B) appoints a Custodian of Borrower or any of its
Subsidiaries for substantially all of its assets, or (C) orders the
liquidation of Borrower or any of its Subsidiaries;

     

    (v) a final
judgment or judgments for the payment of money aggregating in excess of $250,000
are rendered against Borrower or any of its Subsidiaries and which judgments are
not, within sixty (60) days after the entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within sixty (60) days after
the expiration of such stay; provided, however, that any judgment which is
covered by insurance or an indemnity from a credit worthy party shall not be
included in calculating the $250,000 amount set forth above; and

     

    (vi) Borrower
breaches any covenant or other term or condition or any material representation
or warranty of any of the Transaction Documents, except, in the case of a breach
of a covenant or other term or condition which is curable, and provided that
Borrower delivers prompt notice of such breach to the Holder, only if such
breach continues for a period of at least ten (10) consecutive Business
Days.

    


    (b)           Acceleration.  Upon
the occurrence of an Event of Default under this Note, Holder shall have, at its
option, the right, without further notice or demand, which Borrower hereby
expressly waives, to declare the unpaid principal and interest immediately due
and payable and to exercise any other rights and remedies that Holder may
have.  Holder’s failure to accelerate the payment of this Note upon
the occurrence of one or more events of default shall not constitute a waiver of
Holder’s right to exercise such options at any subsequent time with respect to
the same or any other event of default.  Holder’s acceptance of any
payment under this Note which is less than payment in full of all amounts then
due and payable shall not constitute a waiver by Holder of any right to declare
a default hereunder or to pursue any remedy available under this Note, at law or
in equity, or under any other agreement, instrument or document entered into by
and between Borrower and Holder. 

    


    
      
         

      

      
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    (6)           Registration
Rights.

    


    (a)           Definitions.  As
used in this Section 6, the following terms shall have the following
meanings.

     

    (i) The
term “Holder”
shall mean Holder or any of Holder’s permitted transferees.

    


    (ii) The
terms “register,” “registered” and “registration” refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or order of
effectiveness of such registration statement or document. 

    


    (iii) The
term “Registrable
Securities” shall mean: (i) Common Stock issued to Holder upon exercise
of the Conversion Option, (ii) shares of Common Stock issuable upon exercise of
the Warrants, and (iii) shares issuable upon exercise of the Share Option, provided, however, that
securities shall only be treated as Registrable Securities if and only for so
long as they (A) have not been disposed of pursuant to a registration statement
declared effective by the SEC; (B) have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
so that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale; (C) are held by Holder or a
permitted transferee of Holder pursuant to this Section 6; and (D) may not be
disposed of under Rule 144 without restriction.

    


    (b)           Shelf
Registration.  If at any time Borrower shall propose the filing
of a Registration Statement on an appropriate form under the Securities Act of
any of Borrower’s securities, but excluding
Registration Statements relating to any employee benefit plan or a corporate
reorganization, then Borrower shall give Holder notice of such proposed
registration and shall include in any Registration Statement relating to such
securities all or a portion of Holder’s Registrable Securities as Holder shall
request, by notice given by Holder to Borrower within twenty (20) days after the
giving of such notice by Borrower, to be so included.  In the event of
the inclusion of Registrable Securities pursuant to this Section 6, Borrower
shall bear all of the costs and expenses of such registration excluding (i)
legal expenses of the Holder and (ii) underwriting discounts and commissions
relating to Registrable Securities.  In the event the distribution of
securities of Borrower covered by a Registration Statement referred to in this
Section 5 is to be underwritten, then Borrower’s obligation to include
Registrable Securities in such Registration Statement shall be subject, at the
option of the Borrower, to the following further conditions:

    


    (i) The
distribution for the account of the Holder shall be underwritten by the same
underwriters who are underwriting the distribution of the securities for the
account of Borrower and/or any other persons whose securities are covered by
such Registration Statement, and the holder will enter into an agreement with
such underwriters containing customary provisions;

     

    (ii) If the
underwriting agreement entered into with the aforesaid underwriters contains
restrictions upon the sale of Borrower’s securities, other than the securities
which are to be included in the proposed distribution, for a period not
exceeding one hundred eighty (180) days from the effective date of the
Registration Statement, then such restrictions will be binding upon the Holder
and, if requested by Borrower, the Holder will enter into a written agreement to
that effect; and

     

    
      
         

      

      
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    (iii) If the
underwriters state in writing that they are unwilling to include any or all of
the Holder’s securities in the proposed offering because such inclusion will
materially interfere with the orderly sale and distribution of the securities
being offered by Borrower, then the number of the Holder’s Registrable
Securities to be included will be reduced in accordance with such statement by
the underwriters. 

     

    (c)           Furnish
Information.  It shall be a condition precedent to the
obligation of Borrower to take any action pursuant to this Section 6 with
respect to the Registrable Securities of the Holder that Holder shall furnish to
Borrower such information regarding the Holder, the Registrable Securities held
by the Holder, and the intended method of disposition of such securities as
shall be reasonably required by Borrower to effect the registration of Holder’s
Registrable Securities.

    


    (7)           Notices;
Payments.

    


    (a)           Notices.  Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto prior to 5:30 p.m. (Pacific time) on a Business Day, (b)
the next Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a Business Day or later
than 5:30 p.m. (Eastern time) on any Business Day, (c) the
2nd  Business Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given.  The address
for such notices and communications shall be as set forth below:

     

    If to
Borrower:

    


    8929 Aero
Drive, Suite E

    San
Diego, CA 92123

    Attn.:
Dennis Becker

    Fax:
(619) 725-0958

     

    With a
copy to:

    


    Louis A.
Brilleman, Esq.

    1140
Avenue of the Americas, 9th
Floor

    New York,
NY 10036

    Facsimile:
(646) 380-6899

    


    
      
         

      

      
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    If to
Holder:

    


    With a
copy to:

     

    (b)            Payments.  Whenever
any payment of cash is to be made by Borrower to any Person pursuant to this
Note, such payment shall be made in lawful money of the United States of America
by a check drawn on the account of Borrower and sent via overnight courier
service to such Person at the address provided for notice pursuant to Section
13(a) above, or as subsequently provided to the other party in writing; provided
that the Holder may elect to receive a payment of cash via wire transfer of
immediately available funds by providing Borrower with prior written notice
setting out such request and the Holder's wire transfer
instructions.  Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a Business Day, the same shall instead
be due on the next succeeding day which is a Business Day.

    


    (8)           Cancellation.  After
all principal, interest and other
amounts at any time owed on this Note have been indefeasibly paid in full, this
Note shall automatically be deemed canceled, shall be surrendered to Borrower
for cancellation and shall not be reissued, and the security interest granted in
the Collateral shall terminate.  The Holder agrees to promptly
execute, file and/or deliver any and all documents reasonably required or
requested to further evidence such termination.

     

    (9)           Waivers
by
Borrower.  Borrower (a) waives diligence, grace, demand, presentment
for payment, exhibition of this Note, protest, notice of protest, notice of
dishonor, notice of demand, notice of nonpayment, and any or all other notices
whatsoever, and any and all exemption rights against the indebtedness evidenced
by this Note; (b) agrees to any and all extensions or renewals from time to time
without notice and to any partial payments of this Note; (c) consents to offsets
of any sums owed to Borrower by Holder at any time and to any release of all or
any part of the security for this Note, or to any release of any party liable
for payment of this Note; and (d) agrees that any such waiver, extension,
renewal, release, consent, or partial payment may be made without notice to
Borrower or any other party and shall not release or discharge any one or all of
them from the obligation of payment of this Note or any installment of this Note
or any other liability under this Note.  Any security given for the
obligations of Borrower may be waived, exchanged, surrendered or otherwise dealt
with by Holder without affecting the liability of Borrower or any other party
who might subsequently become liable hereon.

     

    (10)           Governing
Law; Jurisdiction; Severability; Jury Trial.  This Note shall
be construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Note shall be
governed by, the internal laws of the State of California, without giving effect
to any choice of law or conflict of law provision or rule that would cause the
application of the laws of any jurisdictions other than the State of
California.  Borrower hereby irrevocably submits to the exclusive
jurisdiction of the Commercial Court sitting in the City of San Diego, 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.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  In the event that any provision of
this Note is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Note.  Nothing contained herein shall be
deemed or operate to preclude the Holder from bringing suit or taking other
legal action against Borrower in any other jurisdiction to collect on Borrower's
obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of
the Holder.

    


    
      
         

      

      
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    (11)           Usury
Savings.  Borrower and Holder intend to contract in compliance
with all state and federal usury laws governing the loan evidenced by this
Note.  Holder and Borrower agree that none of the terms of this Note
shall be construed to require payment of interest at a rate in excess of the
maximum interest rate allowed by any applicable state, federal or foreign usury
laws.  If Holder receives sums which constitute interest that would
otherwise increase the effective interest rate on this Note to a rate in excess
of that permitted by any applicable law, then all such sums constituting
interest in excess of the maximum lawful rate shall at Holder’s option either be
credited to the payment of principal or returned to Borrower.  The
provisions of this Section 9 control the other provisions of this Note and any
other agreement between Borrower and Holder.

    


    (12)           Severability.  All
provisions hereof are severable.  If any provision hereof is declared
invalid for any reason, that invalidity shall not affect any other provision of
this Note, all of which shall remain in full force and effect.

     

    [Signature
Page Follows]

    


    
      
         

      

      
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    IN
WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the set
forth above.

    


    Borrower:

    


    PUBCO

     

    By:
________________________

      

    
      
         

      

      
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