SENIOR CONVERTIBLE PROMISSORY
NOTE
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$250,000
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Orange County,
California
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July 24, 2009
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FOR VALUE RECEIVED, the undersigned, Location
Based Technologies, Inc., a Nevada corporation (referred to herein
as the “Borrower” or “Company”), hereby
unconditionally promises to pay to the order of CGM Custodian for
the IRA of David S. Nagelberg, its endorsees, successors and
assigns (the “Holder” or “Lender”), in
lawful money of the United States, the principal sum of Two-Hundred
Fifty Thousand Dollars ($250,000) on the Maturity Date.
1.
Terms of Repayment and Conversion . Principal of
and interest on this Note shall be due six months from date of
issuance or, if earlier at the option of the holder, upon a minimum
of two million five hundred thousand dollars ($2,500,000) net being
received by the Borrower in any debt, equity or other financing
from the date of this Note.
a. Upon
the execution and delivery of this Note, the Holder shall disburse
to the Borrower the sum of $250,000, which is the principal amount.
All remaining amounts outstanding under this Note shall mature and
become due and payable in full on January 24, 2010 (the "Maturity
Date"), subject to any prior payment required by this
Note.
b. At
any time and from time to time this Note shall be convertible, in
whole or in part, into shares of the Company’s Common Stock
(“Conversion Shares”) at the option of the
Holder. The Holder shall effect conversions by
delivering written notice to the Company specifying therein the
principal amount of this Note to be converted. The
number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the
outstanding principal amount of this Note to be converted plus any
accrued but unpaid interest thereon, by (y) the Conversion Price,
where the “Conversion Price” shall equal
$1.00. The Conversion Price shall be appropriately and
equitably adjusted following any stock splits, stock dividends,
spin-offs, distributions and similar events. The
Conversion Shares shall be duly and validly issued, fully paid and
non-assessable and, following the applicable Rule 144 holding
period, freely tradable. The Holder shall receive the
stock certificate(s) within ten (10) business days following the
date of conversion.
2.
Interest Rate. This Note shall accrue interest
on the principal for a period of six (6) months from the date of
this Note at a rate of twelve percent (12%) per annum (the
“Interest Rate”). Interest shall be
calculated on the basis of a 365-day year for the actual number of
days elapsed. All payments hereunder shall be paid in
cash and to be appli
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