PROMISSORY NOTE

FOR VALUE RECEIVED, pursuant to this promissory note (this "Note"), the undersigned, Internal Fixation Systems, Inc. (the "Maker"), whose address is 10I00 NW 166 Way Suite 18, Miami, Florida 33178 promises to pay to the order of AHA Holdings, LLC (the "Payee"), whose address is 5866 S,W. 107th Street, Miami, FL 33156 in lawful money of the United States of America, the principal sum of One Hundred THOUSAND AND 00/100 Dollars ($100,000.00), in accordance with the terms below.

The Maker anticipates entering into a Transaction (the "Proposed Transaction") pursuant to which Maker will become a publicly traded company or a subsidiary of a publicly traded company within the next year after the launch of its new product line. Maker needs additional financing in the form ol' a Bridge Loan in order to manufacture inventory and purchase the necessary instruments and surgical sets. This Bridge Loan will be no less than Two Hundred Thousand Dollars and no more than Five Hundred Thousand Dollars in total. Notwithstanding the immediately preceding sentence, Payee shall have no obligation to lend or advance ftinds to Maker beyond the principal amount set forth in the initial paragraph of this Note.

1.1   PRINCIPAL. Upon Closing of the Proposed Transaction the principal due hereunder shall be payable to the Payee within Fifteen (15) working days after the Closing Date. If the Proposed Transaction does not occur before November 30, 2010, the Principal and any accrued interest shall be due and payable on December 15, 2010.

1.2   INTEREST — Interest will accrue at 9% APR. Interest will be paid and compounded quarterly.

 

1.3   ADDITIONAL CONSIDERATION — As an additional inducement to alter into this Promissory Note, Maker shall issue Warrants for Payee to acquire Maker's Common Stock such that warrants to acquire one (1) share of Maker's Common Stock will be issued for each one dollar ($1,00) of face value of this Promissory Note as described above (the "Warrant Shares"). Maker represents that there are Ten Million shares of Common Stock authorized and Three Million shares outstanding immediately prior to the issuance of this bridge Loan.

 

Each Warrant will expire if unexercised on the earlier to occur of the following dates: {a) twenty-four 24 months after the Closing of the Proposed Transaction or (b) thirty-six (36) months after the effective date of this Note. The exercise price of each Warrant is ten cents ($.10) per share, which the Maker and Payee acknowledge is a good faith estimate of the current per share valuation of Maker's Common Stock. Payee may exercise the Warrants to acquire the Warrant Shares in whole or in part at any time by providing written notice to Maker accompanied by payment of the exercise price therethr; or alternatively, such notice may indicate that Payee has elected to convert and apply a portion of the principal outstanding under this Note to payment of the Warrant exercise price.

 

 

The provisions of this Note shall apply, to the HI extent set forth herein with respect to the Warrant. Shares, to any and all Common Stock of Maker that may be issued in. respect of, in exchange fir, or in substitution of the Warrant Shares and shall be appropriately adjusted for any distributions, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof

5.1   EVENTSOF DEFAULT. The occurrence of any one or more of the following events with respect to the Maker shall constitute an event of default hereunder ("Event of Default"):

(a) The thilure of Maker to make any payment to Payee due hereunder within three (3) days after such amount is due;

(b) The failure by Maker to perform any other covenant or obligation of Maker under this Note which is not cured within ten (10) days after written notice thereof by Payee to Maker:

(c) Any representation and warranty made by Maker in this Note not being materially true and correct on the date of this Note:

(d) The filing of any petition under the federal Bankruptcy Code or any similar federal or state statute by or against the Maker and such petition is not discharged within tell (10) days after filing

(e)The appointment of a receiver for, the making of a general assignment for the benefit of creditors by, or the insolvency of the Maker and any of same is not discharged within ten (10) days after the occurrence thereof; or

 

(f)The consummation of either the sale, assignment, transfer or other disposition of any of the issued and outstanding membership interest, voting interests or equity interests of the Maker, if the proceeds received by the Maker up to and including the amount of the outstanding principal under this Note are not paid to Payee within three (3) business days after the consummation of such transaction.

 

Upon the occurrence and during the continuance of an Event of Default hereunder, the Payee may, by written notice to the Maker, accelerate the indebtedness evidenced by this Note whereupon the outstanding principal amount of this Note shall forthwith become due and payable, without presentation, demand, protest or further notice of any kind, all of which are hereby expressly waived.

 

Upon the occurrence and during the continuance of au Event of Default hereunder, Payee may, at its option, declare all indebtedness secured hereby immediately due and payable without demand or notice of any kind and the same thereupon shall immediately become and be due and payable without demand or notice. Payee shall have and may exercise from time to time any and all rights and remedies of a secured party under the Uniform Commercial Code and any and all other rights and remedies available to it under any other applicable law, including the right to foreclose the security interest. granted by this Note upon any and all collateral securing this Note. After a default occurs and upon request or demand of Payee, Maker shall, at Maker's expense, assemble the collateral and make it available to the Payee. Maker shall promptly pay al l: (a) costs of Payee of collection of any and all of the indebtedness and enforcement of rights hereunder following an Event of Default, including reasonable attorneys' fees, paralegal fees, legal expenses and court costs, including such fees, expenses and costs incurred in bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals and any anticipated post-judgment collection services-, and (b) reasonable expenses of any necessary repairs to any realty or other property to which any of the collateral may be affixed or be a part other than arising as a result of Payee's negligence or willful misconduct. Expenses of retaking, holding, preparing for sale, selling, or the like, shall include reasonable costs and attorneys' fees incurred by Payee to the full extent provided in the preceding sentence.

 

The failure to exercise the option to accelerate the maturity of this Note or any other right, remedy or recourse available to the Payee upon the occurrence of an Event of Defivult hereunder shall not constitute a waiver of the right of the Payee to exercise the same at that time or at any subsequent time with respect to such Event of Default or any other Event of Default. The rights, remedies and recourses of the Payee, as provided in this Note, shall be cumulative and concurrent and may be pursued separately, successively or together. The acceptance by the Payee of any payment under this Note which is less than the payment in full of all amounts due and payable at the time of such payment shall not (i) constitute a waiver of or impair, reduce, release or extinguish any right, remedy or recourse of the Payee, or nullifY any prio r exercise of any such right, remedy of recourse, or (ii) impair, reduce, release or extinguish the obligations of any party liable under this Note.

6.   NOTICE BY THE MAKER. The Maker shall notify the Payee in writing within five (5) days after the occurrence of any Event of Default of which the Maker acquires knowledge.

IN WITNESS WHEREOF, the Maker has executed and delivered this Note as of the date first stated above.