(FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) HNDEX NO. 654074/2015 NYSCEF DOC. NO. 1 RECEIVED NYSCEP: 12/07/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK SPARTA COMMERCIAL SERVICES INC., a Nevada Corporation Index No. Plaintiff, SUMMONS -against- Plaintiff designates New York County as the venue JUSTIN KEENER, an individual, doing business as JMJ FINANCIAL, a Nevada Sole Proprietorship, JERSEY STOCK TRANSFER LLC, a New Jersey Limited Liability Company, and DOES 1-10; Defendants. TO THE ABOVE NAMED DEFENDANT: YOU ARE HEREBY SUMMONED to appear in this action and to serve a copy of your answer, or, if the Complaint is not served with this Summons, to serve a notice of appearance on the Plaintiff's attorneys within twenty (20) days after service of this Summons, exclusive of the day of service (or within thirty (30) days after the service is complete if this Summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you for the relief demanded in the Complaint. Dated: Brooklyn, New York December 7, 2015 L/S Robert J. Young, Esq. LINDENBAUM & YOUNG, P.C. 1164 Manhattan Avenue, Suite 100 Brooklyn, NY 11222 718-875-8000 BLOOM, DONOHUE & YOUNG 1771 East Flamingo Road, Suite 201A Las Vegas, Nevada 89119 702-988-2300 ryoung@bdyllp.com Attorneys for Plaintiff, SPARTA COMMERICAL SERVICES, INC.(FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) eer eet eeeeeeerenel NYSCEF DOC. NO. 10 SRCO_ $165,000 PROMISSORY NOTE FOR VALUE RECEIVED, Sparta Commercial Serviees, Ine., Nevads corporation (the “Borrower”) with at least 18,000,000 Common shares issued and outstanding, promises to pay to JMJ Financial, a Novada sole proprietorship, or its Assignees (the “Lender") the Principal Sum along with the Interest Rate and any other fees according tothe terms horsin. ‘This Note wil bocome effective only upon exceution by both parties andl delivery ofthe first payment of Consideration by the Lender (the “Effective Dat”). ‘The Principal Sum is $165,000 (one hundred sixty five thousand) plus accrued and unpaid interest and any other fees. The ‘Consideration is $150,000 (one hundred fifty thousand) payable by wire (here exists a $15,000 original issue discount (ihe “OID")). ‘Tre Lender shall pay $50,000 of Consideration upon closing of this Note. The Lender may pay addtional Consideration to the Borrower in such amounts and at such dates as Lender may choose in its sole discretion, THE PRINCIPAL SUM DUE TO LENDER SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY LENDER (PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT 15 PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER INTEREST OR FEES) SUCH THAT THE BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND THE BORROWER IS NOT REQUIRED ‘TO REPAY ANY UNFUNDED PORTION OF THIS NOTE. The Maturity Date is two years from the Effective Date of each payment (the “Maturity Dato”) and is the date upon which the Principal Sum of this Note, as well as any unpaid interest and other ‘ees, sball be due and payable. The Conversion Price is the lesser of $1.20 or 70% of the average ofthe three lowest closing prices in ‘the 20 trading days previous tothe conversion (Bn the ease that conversion shares are not deliverable by DWAC an additional 10% ‘discount will apply; and if the shares are ineligible for deposit into the DTC systom and only eligible for Xelearing deposit an additional 5% discount sball apply; inthe case of both an additional cumulative 15% discount shall apply). Unless otherwise agreed in writing by both parties, at no time wil the Lender convert eny amount of the Note into common siock that would resut in the Lender owning more than 4.99% ofthe common stock outstanding, |, ZERO Percent Interest forthe First Three Months. Borrower agrees to pay to Lender a Clsing and Due Diligence Fee equal io. 8% of the amount of each payment of Consideration by the Lender under the Note. The Closing and Due Diligence Fee shall be audded to the Principal Sum of the Note as ofthe date of the payment of Consideration by the Lender and shal be incladed inthe Principal Sum forall purposes under the Note, including, without limitation, when calculating the amount of the Interest charge. ‘The Borrower may repay this Note at any time of or before 90 days fom the Effective Date ater which the Borrower may not make further payments on this Note prior tothe Maturity Date without writen approval from Leader. If the Borrower repays the Note on or before 90 days from the Effective Date, the Interest Rate sball be ZERO PERCENT (0%). If Borsower does wot repey the ‘Note on or before 90 days from the Effective Dats, a onetime Interest charge of 5% shall be applied tothe Principal Sum (im addition to the Closing and Due Diligence Fee)- Any interest payable isin addition te the OTD, and that OTD (or prorated OID, if applicable) remains payable regardless of time and manner of paymest by Borrower. 2. Conversion. The Lender has the right, at any time after the Effective Date, at its election, to convert all or part of the outstanding ‘aud unpaid Principal Sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Borrower as per this conversion formula: Number of shares receivable upon conversion equals the doliar conversion amount divided by the Conversion Price. Conversions may be delivered to Borrower by method of Lender's choice (including but not limited to emai, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Lender. If no objection is delivered from Borrower to Lender regarding any variable or calculation of the conversion notice withia 24 hours of delivery of the conversion notice, the Borrower shall have been thereafter deemed to have imevocably confirmed and irrevocably ratified such notice of conversion aod waived any objection thereto. The Borrower shell deliver the shares from eny conversion to Lender (in any name directed by Lender) within 3 (three) business days of conversion notice delivery. RECEIVED NYSCEF: 12/07/2015 3. Conversion Delays. If Borrower fails to deliver shares in accordance with the timeframe stated in Section 2, Lender, at any time prior to selling all of those shares, may rescind any portion, ia whole or in par, of that particular conversion attributable tothe unsold shares and have the rescinded conversion amount retumed to the Principal Suro withthe rescinded conversion shares returned to the Borrower (under Lender’s and Borrower's expectations that any returned conversion amounts will tack back to the original date of the Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of. conversion}, a penalty of $2,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the Principal Sum of the Note (under Lender's and ‘Borrower's expectations that any penalty amounts will tack back to the original date of the Note). 4, Reservation of Shares. At all times during which this Note is convertible, the Borrower will reserve from its authorized and unissued Common Stock to provide for the issuance of Common Stock upon the full conversion of this Note, The Borrower will a sl times reserve at least 1,200,000 shares of Common Stock for conversion. 5. Piggyback Registration Rights. The Borrower shall inckade on the next registration statement the Borrower files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Nove. Failure to do so will result in liquidated damages of 25% of the outstanding principal balanc: of this Note, but not less than $25,000, being immediately due and payable to the Lender at its election inthe form of cash payment or addition to the balance of this Note. 6. Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security with any term more favorable to the holder of such security or witha term in favor ofthe holder of such security that was not similarly provided to the Lender in this Note, then the Borrower shall notify the Lender of such additiooal or more favorable term‘and such term, at Lender's option, shall become a part of the transaction documents with the Lender. The types of terms contained in ‘another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion, iscounts, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and ‘warrant coverage, 7. Default. The following are events of default under this Note: (D the Borrower sall fail to pay any prineipal under the Note when ‘duc and payable (ar payable by conversion) thereunder; or (i) the Borrower shall fil to pay any interest or eny other amount under the Note when due and payable (or payable by conversion) thereunder; or (i) a receiver, trustee or other similar official shall be appointed over the Borrower or a material part ofits assets and such appointment sball remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (v) the Borrower shall become insolvent or generally fails to pay, ot admits in writing its inability to pay its debts as they become due, subject to applicable grace periods, if any; o (¥) the Borrower shall make a general assigament for the benefit of creditors; or (vi) the Borrower shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign) or (vi) an involuntary proceeding shall be commenced or filed against the Borrower, 6: (vii) the Borrower shall lose its status as “DTC Eligible” or the borrower's shareholders shall lose the ability to deposit either cleczonically or by physical certificates, or otherwise) shares into the DTC System; or (ix) the Borrower shall become delinquent in its filing requirements as a fully-reporting issuer registered with the SEC; or (x) the Borrower shall fail to mest all requirements to satisfy the availability of Rute 144 tothe Lender or its assigns including but not limited to timely falfllment of its fling requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL fliogs, and requirements for disclosure of financial statements on its website. 4% Remedies. Inthe event of any defuul, the outstanding principal amount of his Not, plus accrued but unpaid interes, iquidated damages, fees and other amounts owing in respect thereof through the date of acceleration, shall become, atthe Lender's elestion, immediately due and payable in cash atthe Mandatory Default Amouat. The Mandatory Default Amount means the greater of @) the outstanding principal amount ofthis Note, pus all accrued and unpaid inierst, liquidated damages, fees and otter taounts hereon, divided ty the Conversion Price on the dafe the Mandatory Default Aoount is either demanded or palin fll, whichever bas a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is ether demanded or paid in fll, whichever tas a higher VWAP, or (i) 150% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid intrest, liquidated damages, foes and other amounts hereon. Commencing five (5) days after the occurrence of any event of default that renults in the eventual acceleration of this Not, the intrest rate on tis Note sball accrue a an interest rate equal tothe lesser of 18% per annurn or the maximum rate permitted under applicable law. In connection with such acceleration deserbed bern, the Lender eed not provide, and the Borrower hereby waives, any presentment, demand, protest or olaer notice of any kind, and the Lender may ‘immediately and without expiration of aay grace period enforce any end al ofits rights and remedies hereunder and ll otter remedies available (0 it under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to paymont hereunder and the Leader shall have all rights as a holder of the note vatil such thne, if any, as the Lender receives full payment pursuant to this Section 8. No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon. Nothing herein shall limit Lender's right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower's failure to timoly deliver certificates representing shares of Common Stock upon conversion ofthe Nore as required pursuant tothe terms hereof 9. NoShorting, Lender agrees that so long as this Note from Borrower to Lender remains outstanding, Lender will not enter into or effect “short sales” of the Common Stock or hedging transaction which establishes a net short position with respect to the Common Stock of Borrower. Borrower acknowledges and agrees that upon delivery of a conversion notice by Lender, Lender immediately ‘owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales. 10, Assignabilty. The Borrower may not asign this Note. This Note will be binding upon the Borrower and its successors and will inure to the benefit of Lender and its successors and assigns and may be assigned by Lender to anyone without Borrower's approval 11. Governing Law. This Note willbe governed by, and construed and enforced in accordance with, the laws of the State of Nevada, without regard to the conflict of laws principles thereof. Any action brought by either party aginst the other concerming the transactions contemplated by this Agrecment shall be brought only inthe state courts of Florida oF in the federal cours located in Miami-Dade County, in the State of Florida, Both partios end the individuals signing this Agreement agree to submit to the |hsisdiction of such cours, 12. Delivery of Process by Lender to Borrower. In the event of any action or proceeding by Lender agsinst Borrower, and only by Lender against Borrower, service of copies of summons and/or complaint and/or any other process which may be served in any such action or proceeding may be made by Lender via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to the Borrower at its last Known attorney as set forth in its most recent SBC filing. 13, Attorney Fees. In the event any attomey is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default ‘or misrepresentation in connection with any of the provisions of this Note, the prevailing party in such proceeding will be entitled 10 recover from the other party reasonable attorneys! fees and other costs and expenses incurred, in addition 10 any other relief to which the prevailing party may be entitled 14, Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right to have any such opinion provided by its counsel. Lender also has the right to have any such opinion provided by Borrower's counsel15, Notices. Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or emai, and if by overnight courier the business day aftr such notice is deposited with the courier service for dalivery. Lh fmt - Aioay Havers Walaa Sparia Counmerial Services, ne. ts Principal (Cher Exentve Omeer ow February “1, LOL m= _2[22}1 {[Signanure Page to $165,000 Promissory Note]AMENDMENT ‘TO THE $165,000 PROMISSORY NOTE DATED AUGUST 14, 2012 AND. ‘TO THE $165,000 PROMISSORY NOTE DATED APRIL 24, 2013] The parties agree that tho $165,000 Promissory Note, dated August |4, 2012, by and between Sparta Commercial Services, Inc. (the “Borrower”) and IMI Financial (the “Lender”) and the $165,000, Promissory Note, dated April 24, 2013, by and between the Borrower and the Lender (collectively, the “Notes”) are hereby amended as follows: 1, Payment. The Lender shall make a payment to the Borrower of $50,000 of Consideration under a Rew $165,000 note on or before February 21, 2014. 2. Independent Transactions. The Borrower understands and agrees that the Notes sets forth the terms for a series of independent transactions in which the Lender may elect to make a payment of Consideration to the Borrower with each payment of Consideration creating a separate obligation of the Borrower to the Lender with the terms sot forth in the Notes. Accordingly, the Maturity Date of each Payment of Consideration, and the repayment terms for each payment of Consideration, are as set forth in the Notes, 3. Nevada. The Borrower acknowledges that the Lender has become a Nevada sole proprietorship. In recognition of this, and because of the cash payment being made to the Borrower pursuant to Section I of this Amendment, the Borrower agrees that the first sentence of Section 11 of each of the Notes shall be amended by replacing the word “Florida” with the word “Nevada.” The word Florida shall not be replaced in any other place in Section 11. This change to Section 11 shall upply to all actions commenced after the date of this Amendment regardless of whether the event or events that gave rise to the cause of action, including the closing of the Notes and any past or future payments of Consideration, occurred before or after the date of this Amendment. ALL OTHER TERMS AND CONDITIONS OF THE NOTE REMAIN IN FULL FORCE AND EFFECT, Please indicate acceptance and approval of this amendment dated February 11, 2014 by signing below: ‘Anthony Havens Ma i Sparta Commercial Services, Ine. Its Principal Chief Executive Officer84/12/2016 O4:1a 19732152740 JERSEY TRANSFER PAGE eL SPARTA COMMERETAC SERVICE wow spartacormereal com April 14, 2014 Jersey Stock Transfer LLC 201 Bloomfield Ave. Verona, NJ 07044 ‘Ladies and Gentlemen: Sparta Cammercial Services, Inc, x Nevade corporation (the *Compeny") and JMJ Financial (he “Tavestor") entered into a $165,000 Promissory Note (the “Noto") dated February 20, 2014. A Copy of the Note is attached hereto. You should familiarize yourself with your issuance and delivery obligations, as Transfer Agent, contained thercin. The shares to be issued are to be registered in the names of the registered holder of the securities submitted for eocversion. ‘You are hereby irrevocably authorized and iostructed to reserve a sufficient number of shares of common stock ("Common Stock”) of the Company (at least 400,000 (Four hundred. shares of Corarmon stock for the Note which should be held in reserve for the Investor as of this date) for issuence upon full conversion of the Note in accordance with the terms thereof. ‘The ability to process a notice of conversion under the Note (a “Conversion Notice” in «timely ‘tanner is a material cbligation ofthe Company pursuant to the Note. Your firm is hereby {nrevocably authorized und instructed to issue shares of Common Stock of the Company (without any restrictive legend) to the Investor without any further action or confirmation by the Company: upon yout receipt from the Investor of () a Conversion Notice executed by the Investor; aad ({) an opinion of counsel of the Investor, in form, substance and scope customary {or opinions of counsel in comparable trananctions (and satisfactory tothe transfer agent), o the offect thatthe shares of Common Stock of the Company issued tothe Investor pursuant to the Conversion Notice are not "restricted securities” as defined in Rule 144 and should be issued to the Investor without aay restrictive legend. ‘The Coropany heeeby requests that your fim act immediately, without delay and without the need {or any action or coufirmation by the Company with respect tothe issuance of Common Stock Pursuant to any Conversion Notices received from the Investor. ‘The Company shall indemnify you and your officers, directors, principals, partaers, agents and ‘representatives, and bold each of them lirrless from aud against auy and all loss, ibility, arage; claim oF expoase (including the reasonable foes and disbursements ofits atorneys) incurred by or asserted against you or any of them arising out of or in coanection the instructions Jpling ofa court of competent jurisdiction), You shall have no liability to the Company in respect to any action taken or any failure to actin respect of this if such action was taken or omitted te be ‘tlcen in good faith, and you shall be entitied to rely inthis ropard on the adviee of counsel, Fa, feud of Directors of the Company has approved the foregoing tvevocable instructions and ‘oes bereby extend the Company's irevocable agreement to indemnity your firm forall lows 379 Lexington Avenue, Suite 1901 New York, NY 10019 ‘Tl: 800-582-0778 Fax: 212-239-2822a4/12/2014 e4:18 19732152740 JERSEY TRANSFER PAGE @2 liability oF expense in carrying out the authority and direction herein contained on the terms ‘herein set forth. ‘Hf the Company's account iain arrears with the Transfer Agent, the Transfer Agent shall not bave ‘ny abligation to act upon these instructions: however the Investor shall have the option to cure the outstanding balance with the Transfer Agent. ‘The Conmpany agrees that inthe event thatthe Transfor Agent resigns as the Company's transfer agent, or if the Company decides to switch or terminate the current Transfer Agent, the Company shall engage 8 suitable replacement transfer agent that will agree to serve as transfer ageat for the Company and be bound by the terms and conditions ofthese Irrevocable Instructions within five ©) business days, ‘The Investor is intended to be ond is third party beneficiary hereof, and no amendment oF ‘modification to the instructions set forth herein may be anade without the consent of the Investor. Very tuly yours, Sparta Commercial Services, Inc. » fl “Anthony Havens Chief Executive Offcar Jersey Stock Transfer LLC, By: Namal Ce y phan Title: Inavaing ohare 370 Lexington Avenue, Suite 1901 New York, NY 10019 Tel 800-882-0778 Pax: 212-239-2822(FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) aden taleadtecetendtbe fond NYSCEF DOC. NO. 9 RECEIVED NYSCHF: 12/07/2015 AMENDMENT ‘TO THE $165,000 PROMISSORY NOTE DATED FEBRUARY 20, 2014 The parties agree that the $165,000 Promissory Note, dated February 20, 2014, by and between Sparta Comercial Services, Inc. and JM) Financial is hereby amended as follows: Payments of Consideration. The fourth sentence of the second paragraph of the Note, which states “The Lender may pay additional Consideration to the Borrower in such ‘amounts and at such dates as Lender may choose in its sole discretion” shall be amended and replaced in its entirety with the following sentence: “At any time on or before two years from the Effective Date, the Lender may pay additional Consideration to the Borrower in such amounts and at such dates as Lender may choose in its sole discretion.” ALL OTHER TERMS AND CONDITIONS OF THE $165,000 PROMISSORY NOTE REMAIN IN FULL FORCE AND EFFECT. Please indicate acceptance and approval of this amendment dated November 19, 2014 by signing below: Anthony L. Havens ‘Sparta Commercial Services, Inc. Chief Executive Officer(FILED: NEW NYSCEF DOC. NO. 20 YORK COUNTY CLERK 12/07/2015 07:28 PM INDEX RO. 654074/2015 2 RECEIVED NYSCHF: 12/07/2015 SUPREME COURT OF THE STATE OF NEW YORK Index No. COUNTY OF NEW YORK SPARTA COMMERCIAL SERVICES. INC... | Complaint for: Nevada Corporation: I. Injunctive Relief PI 2. Recession Paints 3. Breach of Good Faith and Vair Dealing : 4. Praud.~ Intentional Misrepresentation 5. Declaratory Action JUSTIN KEENER, an individual. doing business as IMJ FINANCIAL, a Nevada Sole Proprietorship, JERSEY STOCK TRANSIER LLC, a New Jersey Limited Liability Company, nd DOES 1-10 Defendants, Plaintiff, SPARTA COMMERCIAL SERVICES, INC, ('SPARTA”), by and through its attomey Robert J. Young, Fsq., of Bloom, Donohue, Young, hereby complains for judgment against Defendants, IMJ FINANCIAL a Nevada Sole Proprietorship, Jersey Stock ‘Transfir LLC, a New Jersey Limited Liability Company, and DOES 1-10, as follows GE pRAL ALLE S 1. Plaintiff, SPARTA COMMERCIAL SERVICES, INC. (°SPARTA”), is a Nevads corporation, organized and existing under the laws of the State of Nevada, and is authorized to do, and is doing, business in the State of New York, transacting business relevant to this Action in the County of New York, State of New York. SPARTA is a is public company under the Securities and Exchange Act of 1933 (Securities Act”) as amended, listed over the counter and carried on a national exehange thattrades daily and reports the price of the shares daily: and, it entered into a contract through a contract with Defendant Jersey Stock ‘Transfer (“Jersey”) to be its stock transfer agent. 3. Based upon information and belief, SPARTA alleges that Defendant, JUSTIN KEENER, is an individual, doing business as JMJ FINANCIAL, a Nevada Sole Proprietorship, Inc., (collectively “JMJ”) which now is, and at all relevant times was, a sole proprietorship, organized and existing under the laws of the State of Nevada, and has transacted business relevant to this Action and has caused injury to SPARTA in the County of New York, State of New York, JMG is not licensed to do business in the State of New York: 4. Based upon information and belief, SPARTA alleges that JMJ is neither a bank, a savings gs and loun association; rather, itis an bank, a savings and loan association, nor a federal say entity that makes Toxic Debt Loans around the country. 5. Based upon information and belief, SPARTA alleges that Defendant Jer y Stock Transfer, LLC (“lersey” is a stock transfer company located in Mount Freedom, New Jersey: and, has transacted busines relevant to this Action in the County of New York, State of New York, who is joined as in this case as a necessary and indispensable party, in the absence of which complete relief cannot be obtained. 6, ‘That the true names and capacities, whether individual, corporate, associate, or otherwise, of the Defendants named herein as DOES | through 10, inclusive, are unknown to SPARTA at this time and SPARTA, therefore, sues said Defendants by sueh fictitious names. SPARTA is informed and believes and therefore alleges, that each of the Defendants designated herein as “Doe” are responsible in some manner for the events and happenings referred to and caused damages proximately to SPARTA as herein alleged. Defendants DOE are individuals, ns, corporations, partnerships, or other entities which may have in some way caused, contributed or were responsible for SPART/ injure and may have in some way caused or28 contributed to SPAR'TA’s damages as herein alleged. The names of these Defendants are currently unknown to SPARTA, Therefore, SPARTA sues Defend ints under fictitious names, 7. The unlawful and improper acts and omissions by the Defendants as alleged herein have caused SPARTA to suffer harm within the County of New York, State of New York. 8. Defendants, directly and indirectly, singly or in concert, made use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, or of the mails in connection with the acts, practices and courses of conduct alleged in this Complaint, which occurred within the State of New York 9. Based on the solicitation by the Defendants and their representations as to that solicitation, SPARTA executed loan agreements with IMI in New York County, New York, related to JMJ lending monies to SPARTA (“Agreements”). Each of the Agreements first provided that the Jaws of the State of Florida would be the governing law for the transaction, which was later amended to insert Nevada as the governing law, both of which, and along with New York, as more fully set forth herein, prohibited the conduct and usurious loans made by JMJ 10 SPARTA, See Exhibit A. 10. IMJ did not fully pay the consideration to which it agreed to loan, but after each initial traunche, would compel and cocrece SPARTA to execute an additional and new note, all resulting in further of its stock set aside as additional shares so reserved, thus denying SPARTA of its use and benefit of these additional reserved shares. 11. Thereafter, IMJ, wired monies to SPARTA into New York County, New York 12. Pursuant to the actions of the D ondants, jurisdiction is proper pursuant to N.Y. CPLR Section 301 and venue is proper pursuant to N.Y. CVP, Section 503. 13. The Convertible Notes are all the same forms and state that JMJ could, but are not required to do so, xequire common stock of SPARTA to be issued to JMJ at a substantialdiscount from the market rate for that common stock in lieu of repayment by SPARTA of the money JMJ lent to SPARTA, 14, Added to the agreements is the right to demand isstance of common stock of SPARTA to be issued to the Defendants at a substantial discount from the market rate for that common stock in lieu of repayment by SPARTA of the money lent to SPARTA by the Defendants. Said demand constitutes the right to obtain interest at a rate far in excess of the amount indicated in the promissory note and failed to disclose New York State law prohibiting interest over the rate of 16% per year. ‘The Convertible Note and all other agreements signed by the parties are to be governed by Nevada Law according to their terms as amended 15. In addition, based upon information and belief, SPARTA alleges that by virtue of the terms of the Agreements, the loans made by JMJ were, and are, high interest loans governed and prohibited by Chapter 604 of the Nevada Revised Statutes. 16. Based upon information and belief, SPARTA alleges that before a party can offer a high interest rate loan , that party must be duly licensed by the commissioner of Financial Institutions of the Department of Business for the State of Nevada, 17, Based upon information and belief, SPARTA alleges that IMJ has never been duly licensed by the Commissioner of Financial Institutions of the Department of Business for the State of Nevada. 18. Jersey in the past has issued to JMJ common stock of SPARTA at a substantial discount from the market rate for that common stock pursuant to the demands of the Defendants and upon information and belief will do so again, this time to JMJ, unless enjoined by the Court 19. In addition, based upon information and belief, SPARTA alleges that by virtue of the terms of the Agreements, the loans made by JMJ to SPARTA were and are high interest rate Joans that are governed by New York General Obligations Laws Sections 5-501, et seq., and the10 i 13 4 15 New York Banking Law Section I4-a. SPARTA incurred annualized interest of 60.5 % on the Defendants’ loans to the Plaintitt 20, Based upon information and belief, SPARTA alleges that before a party can offer a high interest rate loan to 8 New York resident, either an individual or a corporate entity, that party must be duly licensed as a securities lender under the Department of Financial Servives for the State of New York pursuant to Article 9 of the New York Banking Law 21. Based upon information and belief, SPARTA alleges that JMJ has never been, duly licensed by the Department of Financial Services as a lender in the State of New York to offer Toans in the State of New York. 22. Bused upon information and belief, SPARTA alleges that all tim ss pertinent hereto that IMI is not qualified to do business in the State of New York, 23. Based upon information and belief, SPARTA alleges that none of the Defendants are allowed to offer pans in the State of New York, but authorized their companies, themselves and enlisted their counsel to do so in knowing violation of the laws of the State of New York. 24. JMJ, and their associates, have in the past, and after the inception of the JMJ loan, converted shares of common stock of SPARTA acquired pursuant to the Agreements, at a rate and in such quantity that the market eannot absorb them; and, as such, have caused, and will continue to cause, the market rate of the common stock of SPARTA to be artificially deflated and manipulated by IMJ. ARTA has requested that the Defendants stop converting, selling and dumping onto the market, the shares of common stock of SPARTA acquired pursuant to the Agreements; but, to sell them at a rate and in such quantity that the market cannot absorb them thereby preventing the market rate of the common stock of SPARTA from being artificially deflated and manipulated by IMJ.26. IMJ refuses to agree to stop converting, selling and dumping onto the market, the shares of common stock of SPARTA wequired pursuant to these Agreements; and, continues to sell them at a rate and in such quantity that the market cannot absorb them, which continues to cause, the market rate of the common stock of SPARTA to be artificially deflated and manipulated by IMI. 27. Furthermore, JMJ have made demand on Jersey to issue JMJ additional common stock pursuant to the Agre nents in the past and will do so in the future, 28, SPARTA has informed Jersey not to honor the demands of the Defendants to issue IMI additional common stock pursuant to the Agreements. 29, Jersey is faved with competing instructions regarding the issuance to IMF of additional shares of common stock in SPARTA pursuant to the Agreements, and is in need of a court order to resolve the issues created by the competing instructions. 30, The conduct of IMJ and Jersey have caused, and continues to cause, SPARTA to be damaged in amounts difficult to assess as well as the loss of its good will. Further the conduct of JMJ threatens the market value of SPARTA’s common stock, which could cause SPARTA to cease 1o maintain its share price on the market. 31. Additionally, as a result of the conduct of JMJ, SPARTA’s business interests have been, adversely impacted, and its shareholders have lost a substantial value of their investment; also. the conduct of JMJ. is interfering with SPARTA’s relationship with its customers and potential customers. Moreover, the conduct of JMJ is ongoing, and is a continuing threat and harm to SPARTA’s business interests. 32. In fact, if the Defendants convert shares of the Plaintiff and sell the same as threatened on or after December 7, 2015, SPARTA as a company will be destroyed and will have to cease operations as a going concern.33. MJ has ind continue to act wrongfully, and have substantially harmed SPARTA’s business, its good will and value as well as caused SPARTA to suffer damages in an amount that is not easily calculated and which has not yet been fully ascertained, but is in excess of $10,000. the exact amount of which will be the subject to proof at the time of trial 34, Based upon information and belief, SPARTA alleges that the conduct of JMJ as alleged herein, was done intentionally and/or fraudulently, with malice and oppression, or with a total and reckless disregard of the rights of SPARTA, and with knowledge of the substantial certainty that SPARTA would suffer harm, Additionally, as a result of the wrongful conduct of JMJ, SPARTA has been forced to retain counsel to prosecute this action and to protect its rights; and, SPARTA has. incurred, and will continue to incur, attorney's fees and costs, which SPARTA should be able to recover as an additional item of their damages. FU CAUSE OF ACTION NC IVE 36, The above-referenced allegations are incorporated herein as though more fully set forth at length. 37. The wrongful conduct of JMJ unless restrained and enjoined by the Court will cause irreparable injury to SPARTA’s business interests for which there is no plain, speedy, or adequate remedies at law 38. Based upon information and belief, SPARTA alleges that it is entitled (o a court order restraining and enjoining the Defendants [rom converting SPARTA common stock, from selling and dumping onto the market the shares of common stock of SPARTA they acquired pursuant to the Agreements; and further, direeting the Defendants to return to SPARTA the remaining shares of common stock of SPARTA that the Defendants acquired pursuant to the Agre39. Based upon information and belief, SPARTA alleges that it is entitled to a court order restraining and enjoining Jersey from transferring to the Defendants, or to any of their representatives, agents, assignees, nominees or affiliates, any further shares of common stock of SPARTA, SECOND CAUSE OF ACTION RECISSION OR IN THE ALTERNATIVE, VOIDING, SURRENDERING OR CANCELING THE LOAN AGREEMENTS 40, The above-referenced allegations are incorporated herein as though more fully set forth at length 41, Based upon information and belief, SPARTA alleges that the Agreements JMJ entered into with SPARTA for loans violated the usury laws of the State of New York, and in particular, N.Y, Gen, Oblig. §5-501(1) and §5-511(2), as well as the usury laws of the State of Nevada. 42, Based upon information and belief, SPARTA alleges that because the Loan Agreements IMJ entered into with SPARTA violated N.Y. Gen. Oblig. §5-501(1) and §5-511(1), and violated NRS Chapter 604A, SPARTA is thus entitled to have those Loan Agreements voided, surrendered and/or cancelled. 43, Based upon information and belief, SPARTA alleges that because the Loan Agreements. IMI entered into with SPARTA violated said N. Y. Gen, Oblig. Laws and the New York Banking laws, as well as the NRS, all as heretofore alleged, SPARTA is also entitled to have those Agreements rescinded. 44, Based upon information and belief, SPARTA alleges that because the Loan Agreements IMI entered into with SPARTA violated said N, Y. Gen, Oblig. Laws and the New York Banking laws, as heretofore alleged, SPARTA is further entitled 1o recover its actual andconsequential damages as & result of the conduct of the Defendants and is allowed to have an accounting of the records of the Defendants to determine those damages, 45. Based upon information and belief, SPARTA alleges that because the Loan Agreements IMJ entered into with SPARTA violated said N.Y. Gen. Oblig. Laws and the New York Banking laws, as well as the NRS, all as heretofore alleged, SPARTA is further entitled to recover punitive damages for the Defendants’ wanton and flagrant disregard of the laws governing their lending business THIRD CAUSE OF ACTION ~ BREACH OF GOOD FAITH AND FAIR DEALING 46, The above-referenced allegations are incorporated herein as though more fully set forth at length 47, Based upon information and belief, SPARTA alleges that every contract entered into in the State of New York contains sn implied covenant of good faith and fair dealing 48, Based upon information and belief, alternatively, SPARTA alleges that the Loan Agreements between SPARTA and JMJ at issue herein contain an obligation of good faith and fair dealing, Said term obligated the Defendants to refrain from taking any action which would otherwise interfere with the lawful and legal rights of SPARTA. Further, suid term required that the Defendants to reftain from irying out any acts which would cause hardship or harm to SPARTA. 49. The Defendants, by their actions as set forth in the Complaint, have breached the covenant of good faith and fair dealing implied in the Loan Agreements. 50, Asa direct and proximate cause of the breach of the covenant of good faith and fair dealing implied in the Loan Agreements between SPARTA and JMJ at issue herein, SPARTA has been damaged in an amount in excess of $25,000.00, the exact amount of which will be the subject to proof at the time of trialFOURTH CAUSF. OF ACTION FRAUD INTENTIONAL MISREPRE NTATION AND OMISSION 51. The above: ferenced allegations are incorporated herein as though more fully set forth at length s that the Defendant IMJ is a 52. Based upon information and belief, SPARTA all sophisticated investor and lender, knowledgeable of the requirements of the SEC and PINRA as well as sta ¢ laws regarding the loaning of money to companies via convertible notes and conversion of stock via their companies, JMJ (as well as others), which is known as ‘Toxic Debt Lending. 53. Based upon information and belief, SPARTA alleges that said Defendant knew that it was not allowed to offer loans to any companies in the State of New York and that if they did so such an activity would be illegal and thal any setivity taken thereto, such as the conversion of stock, as well as its coercion to have SPARTA sign additional notes before it would fulfill its obligations under the previous note, would also be illegal 54, Based upon information and belief, SPARTA alleges that the Defendant JMJ, knowing that they were not allowed to do so, nonetheless offered such loans to companies in New York. such as the Plaintiff (first under the guise of the laws of the State of Florida, then amended to the laws of the Stale of Nevada, both States which also as New York prohibit such usurious loans), and then converted the stock of the Plaintif? without legal authority to do so, but representing to the Plaintiff that they did in fact had the authority to take every action that they undertook, 55, Bused upon information and belief, SPARTA alleges that the Defendant JMJ intended to induce the Plaintiff to act on their misrepresentations and omissions. 56. The Plaintiff justifia bly relied to its detriment upon the representations of the Defendant as to their authority to operate and that they were in compliance with all applicable laws.37. Plaintiff contacted JM, to request that they not convert the stock because it was harming the company’s business and valuation. 58, Plaintt? justifiably relied upon the representation of the Defendant in this regard. 59, However, JMJ did not stop the conversion and sale of the Plaintiff" stock, despite their representations that they would do so ‘60. Asa result of the Defendants’ conversion and sale of stock, the Plaintiff cannot raise the capital necessary to pay the current JMJ loan, 61. Asa direct and proximate cause of the Defendant's wrongful conduct, SPARTA has suffered damages in an amount that is not easily calculated and which has not yet been ascertained, but is in excess of $25,000, the exact amount of which will be the subject to proof at the lime of trial. 62. Based upon information and belief, SPAR'TA alleges that the conduct of the Defendant as described herein was done intentionally and/or fraudulently. with malice and oppression, or with total and reckless disregard of the rights of SPARTA, and with knowledge of the substantial certainty that SPARTA would suffer harm, thereby jus {ying an award of punitive damages FIFTH CAUSE OF ACTION — DECLARATORY JUDGMENT 63, The above-referenced allegations are incorporated herein as though more fully set forth at length. 64. A dispute now exists between SPARTA and Defendants as to the r hts and obligations of those parties vor cerning the above mentioned allegations. Therefore, under NY CPLR Section 3001, SPARTA is entitled to have this Court enter a declaratory judgment setting forth the respective rights, duties and obligations of the parties hereto concerning said allegations as well as that SPARTA is entitled to rescind the Agreements at issue herein, or have them eit10 voided, surrendered or cancelled, and that the Defendants are liable for their wrongful conduct thereby entitling SPARTA, to recover damages as a result upon an accounting and proof at the time of trial. PRAYER FOR RELIEF WHEREFORE, Plaintiff, SPARTA COMMERCIAL SERVICL INC., respectfully requests that the Court grant the following relief: 1 For a temporary restraining order to be ied by the Court until such time as the hearing for a preliminary injunction can be heard, prohibiting the Defendants from issuing, converting, disposing, selling, transferring and/or trading any common stock of SPARTA COMMERCIAL SERVICES, INC Fora preliminary injunetion, pending final adjudication and permanent relief, restraining and enjoining the Defendants from prohibiting the Defendants from issuing, converting, disposing, selling, transferring and/or trading any common stock of SPARTA COMMERCIAL SERVICES, INC., that said Defendants have acquired pursuant to the Loan Agreements at issue herein, or may be contemplating acquiring; and further, directing said Defendants, to retum to Plaintiff, SPARTA COMMERCIAL SERVICES, INC., the remaining shares of common stock of Plaintiff, SPARTA COMMERCIAL SERVICES, INC., that said Defendants acquired pursuant to said Loan Agreements 3. Fora preliminary injunetion, pending final adjudication and permanent relief, restraining and enjoining Defendant, Jersey Stock Transfer, L1.C, from transferring to Defendants, or to any of their representatives, agents, assignees, nominees or affiliates, any shares of common stock of Plaintiff, SPARTA COMMERCIAL SERVICES, INC., pursuant to the Loan Agreements at issue her For a declaratory judgment setting forth the respective rights, duties and obligations ofaoe the parties hereto as weil as that the Plaintiff is entitled to reseind the Ioan Agreements at issue herein, and/or have the same voided, surrendered or cancelled, and that the Defendants, are liable for their wrongful conduct thereby entitling Plaintiff, SPARTA COMMERCIAL SERVICES INC., to recover damages as a result; 5. Foran order directing the Defendants to account for all sums of money, profits and gains which they have made as a result of the sale, disposition, transfer and/or assignment of free trading and restricted shares of SPARTA COMMERCIAL SERVICES, INC., common stock: 6. For an order requiring the Defendants to account for all sums of money and gains which they have made as a result of their wrongful conduct and to disgorge the same to the Plaintift in. an amount in excess of For compensatory, incidental and consequential damages $25,000.00, according to proof 8. For punitive damages; 9. For reasonable attomey’s fees and expenses: 10. For costs of suit incurred herein; and, 11, For sueh other anc further relief as the Court may deem just and proper DATED this 7th day of December, 2015. Robert J LINDENBAUM & YOUNG, P.C 1164 Manhattan Avenue, Suite 100 Brooklyn, NY 11 718-875-8000) BLOOM, DONOHUE & YOUNG 1771 East Flamingo Road, Suite 201A Las Vegas, Nevada 89119 702-988-2300 Attomeys for Plaintiff, SPARTA COMMERICAL SERVICKS, INC(FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) aden taleadtecetendtbe fond NYSCEF DOC. NO. 3 RECEIVED NYSCHF: 12/07/2015 VERIFICATION Anthony L. Havens, being duly sworn, deposes and says the following under penalties of perjury: 1 | am the Chief Executive Officer of plaintiff, SPARTA COMMERCIAL SERVICES INC. 2. [have read the foregoing complaint and know the contents thereof to be true except as to those facts alleged upon information and belief and to those facts | believe them to be true. ANTHONY L. HAVENS hd ‘Sworn to before me this '7_ day of December, 2015 LENNIN YANEZ otary Public - State of New York No. OTYASZTB4ARE In Nassau ee anés 2/07/2015 07:28 PM) INDEX NO, 654074/2015, NYSCEF Doc. NO. 4 RECEIVED NYSCEP: 12/07/2015 SRCO Interest free if paid in full $150,000 CONVERTIBLE NOTE iolehdn'3 heute FOR VALUE RECEIVED, Sparta Commercial Serviees, Inc, a Nevaia corporation (ihe “Issue: of this Secu) with at last 26,000,000 common shares issued and outstanding, issues this Security and promises to pay to JM Finaacial, a Nevada sole propnitorshp, or ts Assiguees (the “Investor”) the Prinipal Sum along with the Interest Rate and any other fees according to the {erms hereia, This Note will become effective only upon execution by both partis and delivery ofthe fist payment of Consideration by the Invesior (he "Effective Date”) ‘The Principal Sum is $150,000 (one hundred fifty thousand) plus accrued and unpaid interest and any other foes. The Consideration is $135,000 (one hundred thirty-five thousand) payable by wire (there exists a $15,000 original issue discount (the “OID")). The Investor shall pay $25,000 of Consideration upon closing of this Note, ‘The Investor may pay additional Consideration to the Issuer in such amounts and at such dates as the Investor may choose in its sole discretion. THE PRINCIPAL SUM DUE TO THI INVESTOR SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY INVESTOR (PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT IS PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE INVESTOR AS WELL AS ANY OTHER INTEREST OR FEES) SUCH THAT THE ISSUER 18 ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND THE ISSUER IS NOT REQUIRED TO REPAY ANY UNFUNDED PORTION OF THIS NOTE. The Maturity Date is two years from the Effective Date of each payment (the “Maturity Date”) and is the date upon which the Principal Sum of this Note, as Well as any unpaid interest and other fees, shall be due and Payable, The Conversion Price is 70% of the average of the three lowest closing prices in the 20 trading days previous to the Conversion (In the case that conversion shares are not deliverable by DWAC an additional 10% discount will apply; and ifthe shares are ineligible for deposit into the DTC system and only eligible for Xclearing deposit an additional 5% discount shall apply; in the case of both an additional cumulative 15% discount shall apply), Unless otherwise agreed in writing by both parties, at no time will the Investor convert any amount of the Note into commou stock that would result in te Luvestor Owaiing miore than 4.99% of the ‘common stock outstanding, 1. ZERO Percent Interest for the First Three Months. The Issuer may repay this Note at any time on or before 90 days from the [Effective Date, after which the Issuer may not make further payments on this Note prior to the Maturity Date without written approval from the Investor. If the Issuer repays a payment of Consideration on or before 90 days from the Effective Date of that payment, the Interest Rate on that payment of Consideration shall be ZERO PERCENT (0%). Ifthe Issuer does not repay & payment of Consideration on or before 90 days from its Effective Date, a one-time Interest charge of 5% shall be applied to the ‘Principal Sum. Any interest payable is in addition to the OID, and that OID (or prorated OID, if applicable) remains payable regardless of time and manner of payment by the Issuer, 2. Conversion. The lavestor fas the right, at any time after the Effective Date, at its eleetio, o convert all or pert ofthe outstanding and unpaid Principal Sum and accrued intrest (and any othor fees) into shares of fully paid and non-assesable shares of common stock ofthe Isuer as per this conversion formula: Number of shares receivable upon conversion equals the dollar conversion ammount divided by the Conversion Price. Conversions may be delivered tothe Issuer by method of the Investor's choice (including, but not limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Investor. If no objection is delivered from the Issuer to the Investor regarding any variable or calculation of the conversion notice within 24 houts of delivery of the conversion notice, the Issuer shall have been thereafter deemed to have ‘evocably confirmed and irevocably ratified such notice of conversion and waived any objection thereto, The Issuer shall deliver the shaves fut ay eouversion 1p the Envestr (in ay name aectea by the Investor) within + (hres) Business days of conversion notice delivery. 3. Conversion Delays. If the Issuer fails to deliver shares in accordance with the timeframe stated in Section 2, the Investor, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the tusold shares and have the rescinded conversion amount retumed to the Principal Sum with the rescinded conversion shares returned to the Issuer (under the Investor's and the Issuer's expectations that any returned conversion amounts will tack back to the original date of the Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $2,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the Principal Sum of the Note (under the Investor's nd the Issuer's expectations that any penalty amounts will tack back to the original date of the Note}, 4. Reservation of Shares. At all times during which this Note is convertible, the Issuer will reserve from its authorized and unissued ‘Common Stock to provide for the issuance of Common Stock upon the full conversion of this Note. The Issuer will at all times reserve at least 2,000,000 shares of Common Stock for each $27,5000 principal amount outstanding, or portion thereof for conversion 5. Piguybtck Resistation Rights, The Issuer shall include on the next registration statement the Issuer files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion ofthis Note. Failure +0 do so will result in liquidated damages oF 25% of the ontstanding, principal balance of this Note, but not less than $25,000, being immediately due and payabie to the Investor at its election in the form of cash payment or addition to the balance ofthis Note. 6. ‘Terms of Future Finaneings. So long as this Note is outstanding, upon any issuance by the Issuer or any ofits subsidiaries of any security with any term more favorable tothe holder of such security or with a term in favor of the bolder of such security that was not similarly provided to the Investor in this Note then the Issuer shall notify the Investor of such additional or more favorable term and such term, atthe Investor's option, shall become @ part ofthe transection documents with the Investor, ‘The types of terms containedDocuSign Envelope ID: 53102288-8802-4053-A580-59F43781F533 in another security that may be more favorable to the holder of such security include, but are not limited to, terms adéressing conversion discounts, conversion lookback periods, interest rates, originel issue discounts, stock sale price, private placement price per share, and warrant coverage, 7 Dafa The following arn events af default under this Note: (i the Tuer shal fall a pay say principal under the Note when dive and payable (or payable by conversion) thereunder; or (i) the Issuer shall fail to pay any interest or any other amount under the Note ‘when due and payable (or payable by conversion) thereunder; or (ii) receiver, trustee or other similar official shall be appointed over the Issuer ora material part ofits assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed ‘or discharged within sixty (60) days; or (fv) the Issuer shall become insolvent or generally fails to pay, or atts in writing its inability to pay, its debts as they becorne due, subject to applicable grace periods, if any; or (v) the Issuer shall make a general assignment for the benefit of oreditors; or (vi) the Issuer shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign; or (vi) an involuntary proceeding shall be commenced or filed against the Issuer, or (vii) the Issuer shall lose its status as “DTC Eligible” or the Issuer’s shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System; or (x) the Issuer shall become delinquent in is filing requirements as a fully reporting iasuer registered wit the SEC; or (x) the Issuer shal fail to meet all requirements to satisfy the availability of Rule 144 to the lavestor or its assigns including but not limited to timely falfllment of its filing requirements as a fully-eporting issuer registered with the SEC, requirements for XBRL filings, and requirements for disclosure of finazcialstaternens on its website, 8. Remedies. In the event of any default, the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated Gamages, fees and other amounts owing int respect thereof through the date of acceleration, shall hocome, at the Investor's election, ‘immediately due and payable in cash at the Mandatory Default Amount. The Mandatory Default Amount means the greater of (i) the outstanding principal amount of this Note, plus all acerued and unpaid interest, liquidated damages, fees and other amounis bereon, divided by the Conversion Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has # lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a higher VWAP, or (ii) 150% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest, liquidated damages, fees and other amounts hereon. Commencing five (5) days after the occurrence of any event of default that results inthe eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser of 18% pot annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Investor need not provide, and the issuer hereby waives, any presentment, demand, pratest or other notice of any kind, and the Investor may immediately and without expiration of any grace period enforce any and all ofits rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by the Investor at any time prior to payment hereunder and the Investor shall have all rights as a holder of the no‘e until such time, if any, as the Investor receives full payment pursuant to this Section 8, No such rescission ot annulment shall affect any subsequent event of default or impair any right cousequent thereon, Nothing herein shall limit the Investor’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer's failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof, 9. No Shorting. The Investor agrees that so long as this Note from the Issuer to the Investor remains outstanding, the Investor will ‘not enter into or effect “short sales” of the Common Stock or hedging transaction which establishes a net short position with respect to ‘he Common Stock of the Issuer. The Issuer acknowledges and agrees that upon delivery of a conversion notice by the Investor, the Investor immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under sucl eyuveasiuu uutice would wot be considered short sales, 10, Assignabllty. The Issuer may not assign this Note. This Note will be binding upon the Issuer and its successors and will inure 10 the benefit of the Investor and its successors and assigns and may be assigned by the Investor to anyone without the Issuet’s approval 11 Governing Law. This Note will be governed by, and construed and enforced in accordance with, the laws ofthe State of Nevade, without regard to the conflict of laws principles thereof. Any action brought by either party against the other conceming the transactions contemplated by this Agreement shall be brought only in the stale courts of Florida or in the federal courts Jocated in Miami-Dade County, in the State of Florida. Both parties and the individuals signing this Agreement agree to submit to the {jurisdiction of such courts, 12, Delivery of Process by the Investor 1 the Issuer. Inthe event of any action or proceeding by the Investor against the Issuer, and only by the Investor agains the Issuer, service of copies af summons and/or complaint and/or any other process which may be served in any such action or proceeding may be made by the Investor via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fix, or process secver, or by mailing or otherwise delivering & copy of such process to the Issuer at its last known attomey as set forth jin ts most recent SEC fling 13. Attomey Fees. If any attomey is employed by either party with regard to any legal or equitable action, arbitration or other proceeding brought by such party for enforcement of this Note or because of an alleged dispute, breach, default or misrepreseatation in connection with any of the provisions ofthis Note, the prevailing party will be entitled to recover from the other party reasonable saorueys’ fees and other costs and expenses Incurred, in addition to any otter rellef w which the prevailing party may be entitled, 14. Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, the Investor has the right to have any suck opinion provided by its counsel. Investor also has the right to have any such opinion provided by Issuer's counsel 15. Notices. Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the timeDocuSign Envelope ID: 53102288-8802-4053-A580-59F43781F533 of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier servie for delivery. Al the ~ ‘any ave ‘Sha Fnac ‘Spa Comecil Savi, Ine. Is Paacipal, Chet Exeatve cer 2/2aj201s vue 02123 /2015 [Signature Page to $150,000 Convertible Note]DocuSign Envelope ID: 53102288-8002-4853-A590-S9F43781F533 ‘www aparacommercal com February 23, 2015 Jersey Stock Transfer LLC P.O. Box 606 ‘Mount Freedom, NJ 07970-0606 Ladies and Gentlemen: Sparta Commercial Services, Inc, a Nevada corporation (the "Company”) and JMJ Financial (the “Investor") entered into a $150,000 Promissory Note (the “Note”) dated February 23, 2015. A. copy of the Note is attached hereto. You should familiarize yourself with your issnance and delivery obligations, as Transfer Ageat, contained therein. The shares to be issued are to be ‘registered in the names of the registered holder of the securities submitted for conversion, ‘Upon receipt of an opinion of counsel and board resolution, you are hereby irrevocably authorized and instructed to reserve a sufficient mumber of shares of common stock (“Common ‘Stock") of the Company (intially, 2,000,000 shares of Common Stock which should be presently reserved forthe Investor) for issuance upon full conversion ofthe Note in accordance with the ‘teams thereof (the “Reserved Shares”). The initial opinion of Company counsel will also ‘authorize the amount of Common Stock so reserved to be increased, from time to time, by written instructions of the Company and the Investor without further need for a board resolution or ‘opinion liter from Company counsel ‘The ability to process a notice of conversion under the Note (a “Conversion Notice”) in a timely ‘manner is a material obligation ofthe Company pursuant to the Note. Your firm is hereby isrevocably authorized and instructed to issue shares of Common Stock of the Company (without ‘any restrictive legend) to the Investor without any further action or confirmation by the ‘Company: upon your receipt from the Investor of (i) a Conversion Notice executed by the Investor; and (i?) an opinion of counsel ofthe Investor, in form, substance and scope customary for opinions of counsel in comparable transactions (and satisfactory to the transfer agent, tn the effect thatthe shares of Common Stock of the Company issued to the Investor pursuant to the ‘Conversion Notice are not "restricted secarites" as defined in Rule 144 and should be issued to the Investor without any restrictive legend, ‘The Company hereby requests that your firm act immediately, without delay and without the need for any action or confirmation by the Company with respect to the issuance of Common Stock Pursuant to any Conversion Notices received from the Investor. ‘The Company shall indemnify you and your officers, directors, principals, paituers, agents and representatives, and hold each of them harmless from and against any and all loss, lisbility, damage, claim or expense (including the reasonable fees and disbursements of its attorneys) incurred by or asserted against you or any of them arising out of or in connection the instructions set forth herein, the performance of your duties hereunder and otherwise in respect hereof, ‘including the costs and expenses of defending yourself or themselves against any claim or liability hereunder, except that the Company shall not be liable hereunder as to matters in respect ‘of which itis determined that you have acted with gross negligence or in bad faith (which gross Degligence or bad faith must be determined by a final, non-appealable order, judgment, decree or suling of a court of competent jurisdiction). ‘You shall have no liability to the Company in respect. ‘to any action taken or any failure to act in respect of this if such action was taken or omitted to be ‘taken in good faith, and you shall be entitled to rely in tis regard on the advice of counsel 370 Lexington Avenue, Suite 1901 New York, NY 10019 Te: $00-887-0778 Fax: 212-239-2822DocuSign Envelope ID: 53102288-8802-4053-A580-59F43781F533 "The Board of Directors ofthe Company has approved the foregoing (irrevocable instructions) and does hereby extend the Company's irevocable agreement to indemnify your firm forall loss, liability or expense in carrying out the authority and direction herein coptained on the terms hhorein set forth. If the Company's account is in arears with the Transfer Agent, the Transfer Agent shall not have ‘any obligation to act upon these instructions; however the Investor shall have the option to cure ‘the outstanding balance with the Transfer Agent ‘The Compeny agrees that in the event that the Transfer Agent resigns as the Company’s transfer agent, or ifthe Company decides to switch or terminate the current Transfer Agent, the Company shall engage a suitable replacement transfer agent that will agree to serve as transfer agent for the ‘Company and be bound by the terms and conditions of these Irrevocable Instructions within five (5) business days. ‘The Investor is intended to be and is third party beneficiary hereof, and no amendment or ‘modification tothe instructions set forth herein may be made without the consent of the Investor. ‘Very truly yours, ‘Anthony Havens Chief Executive Officer Acknowledged and Agreed: = IMJ Financial / Its Principal Jersey Stock Transfer LLC. 370 Lexington Avenue, Suite 1901 New York,NY 10019 Tel: 800-882-0778 Fax: 212-239-2802(FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) eer eeceneerseeanel NYSCBP DOC. NOW 5 RacerveD wyscue: 12/07/2028 SRED Interest free if paid in full $165,000 PROMISSORY NOTE oe FOR VALUE RECEIVED, Sparta Commercial Services, Ine., a Nevada corporation (the “Borrower") with at least 1,000,000 ‘common shares issued and outstanding, promises to pay to IMI Financial, a Nevada sole proprietorship, ar its Assignees (the “Lender’) the Principal Sum along with the Interest Rate and any other fees according to the terms herein, This Note will become effective only upon execution by both parties and delivery of the first payment of Consideration by the Lender (ihe “Effective Date”) ‘The Principal Sum is $165,000 (one hundred sixty five thousand) plus accrued and unpaid interest and any other fees. The Consideration is $150,000 (one hundred fifty thousand) payable by wire (there exists 2 $15,000 original issue discount (the “OID")). ‘The Lender shall pay’ $50,000 of Consideration upon closing of this Note. The Lender may pay additional Consideration to the ‘Borrower in such amounts and at such dates as Lender may choose in its sole discretion. THE PRINCIPAL SUM DUE TO LENDER SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY LENDER (PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT IS PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER INTEREST OR FEES) SUCH THAT THE. BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND THE BORROWER IS NOT REQUIRED TO REPAY ANY UNFUNDED PORTION OF THIS NOTE. The Maturity Date is two years from the Effective Date of exch payment (the “Maturity Date”) and is the date upon which the Principal Sum of this Note, as well as any uopaid interest and other fees, shall be due and payable. The Conversion Price is the lesser of $1.20 or 70% of the average of he three lowest closing prices in the 20 trading days previous fo the conversion (Kn the case that conversion shares are not deliversble by DWAC an additional 10% discount will apply; and if the shares are ineligible for deposit into the DTC system and only eligible for Xelearing deposit an additional 5% discount shall apply; in the case of both an additional cumulative 15% discount shall apply). Unless otherwise agreed in writing by both parties, at no time will the Lender convert any amount of the Note into common siock that would result in the ‘Lender owning more than 4.99% of the common stock outstanding, 1, ZERO Percent Interest forthe First Thres Months. Borrower agrees to pay to Lender a Closing and Due Diligence Fee equal to 8% of the amount of each payment of Consideration by the Lender under the Note. ‘The Closing and Due Diligence Fee shall bo ‘added to the Principal Sum of the Note as ofthe date of the payment of Consideration by the Lender and shall be included in the Principal Sum for all purposes under the Note, including, without limitation, when calculating the amount of the Interest charge. ‘The Borrower may repay this Note at any time on or before 90 days from the Effective Date, after which the Borrower may not make further payments on this Note prior to the Maturity Date without written approval from Lender. If the Borrower repays the Note on or before 90 days from the Effective Date, the Interest Rate shall be ZERO PERCENT (0%). If Borrower does not repay the Note on or before 90 days from the Effective Date, a one-time Interest charge of 5% shall be applied tothe Principal Sum (in addition to the Closing and Due Diligence Fee). Any interest payable isin addition to the OID, and that OID (or prorated OID, if applicable) remains payable regardless of time and manner of payment by Borrower. 2. Conversion. The Lender has the right, at any time afer the Ffective Date, a its election, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Borrower as per this conversion formula: Number of shares receivable upon conversion equals the dollar conversion ‘amount divided by the Conversion Price. Conversions may be delivered to Borrower by method of Lender's choice (including but not limited to email, facsimile, mail, overnight couricr, or personal delivery), and all conversions sball be casbless and not require further payment from the Lender. If no objection is delivered from Borrower to Lender regarding any variable or calculation of the conversion notice within 24 hours of delivery of the conversion notice, the Borrower shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratifiod such notice of conversion and waived any objection thereto. The Borrower shall oliver the shares from any conversion to Lender (in any name directed by Lender) within 3 (ree) business days of conversion notice delivery. 3. Conversion Delays. If Borrower fails to deliver shares in accordance with the timeframe stated in Section 2, Lender, at any time prior to seling all of those shares, may rescind any portion, in whole or ia part, ofthat particular conversion atributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum withthe rescinded conversion shares returned tothe Borrower (under Lender's and Bocrower’s expectations that any retumed conversion amounts will tack back to the orginal date ofthe Note). In addition, for each conversion, inthe event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $2,000 per day will be assessed for each day afier the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the Principal Sum of the Note (under Lender's and Borrower's expectations that any penalty amounts will tack back tothe original date of the Note). 4, Reservation of Shares. At all times during which this Note is convertible, the Borrower will reserve from its authorized and ‘unissued Common Stock to provide for the issuance of Common Stock upon the full conversion of this Note, The Borrower will at all times reserve atleast 1,200,000 shares of Common Stock for conversion. ‘5. Piggyback Registration Rights. The Borrower shal! include on the next registration statement the Borrower files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon coaversion of this Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than $25,000, being immediately due and payable to the Lender at its election in the form of cash payment or addition to the balance of this Note. 6. Texms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security with any term more favorable othe holder of such security oc witha term in favor of the holder of such security that was not similariy provided tothe Lender inthis Note, then the Borrower shall notify the Lender of such additional or more favorable txand such term, at Lender's option, shall become a part of the transaction documents with the Lender. The types of terms contained in another security that may be more favorable o the holder of such security include, but are not limited to, terms addressing conversion ‘iscounts, conversion Jookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and ‘warrant coverage. 7. Default. The following are events of default under this Note: (i) the Borrower shall fail to pay any principal under the Note when due and payable (or payable by conversion) thereunder; or (ii) the Borrower shall fail to pay any interest or any other amount under the Note when due and payable (or payable by conversion) thereunder; or (ii) a receiver, trustee or other similar official shall be appointed over the Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (iv) the Borrower shall become insolvent or generally fails to pay, or ‘admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; or (v) the Borrower shall make a general assignment for the benefit of creditors; or (vi) the Borrower shall fle @ petition for relief under any benkruptcy, insolvency or similar law (domestic or foreign); oF (vii) an involuntary proceeding shall be commenced or filed against the Borrower, ‘ot (vii) the Borrower shall lose its status as “DTC Eligible” or the borrower's shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System: or (ix) the Borrower shall become delinquent it its filing requirements as a fully-reporting issuer registered with the SEC; or (x) the Borrower shall fail to meot all requirements to satisly the availability of Rule 144 tothe Lender or its assigns including but not limited to timely fulfliment ofits filing requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL. filings, and requirements for disclosure of financial statements on its website, 8. Remedies. In the event of any default, the outstandiog principal amount of this Note, plus acerued but unpaid interest, liquidated damages, fees and other amounts owing in respect thereof through the date of acceleration, shall become, at the Lender's election, ‘immediately due and payable in cash at the Mandatory Default Amoust, The Mandatory Default Amount means the greater of (i) the outstanding principal amount of this Note, plus all accrued and unpaid interest, liquidated damages, fees and other amounts hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a higher VWAP, or (il) 150% of the outstanding principal amount of this Note, plus 100% of accrued and unpaid interest, liquidated damages, fees and other amounts hereon, Commencing five (5) days after the occurrence of any event of defwalt that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal tothe lesser of 18% per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Lender ‘need not provide, and the Borrower hereby waives, any presentinent, demand, protest or other notice of any kind, and the Lender may immediately and without expiration of any grace period enforce any and al ofits rights and remedies hereunder and all other remedies svailable to it under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hhereunder and the Lender shal have all rights as a holder of the note until such time, if any, es the Lender receives full payment pursuant to this Section 8. No such rescission or annulment shall affect any subsequent event of default or impair any’ right consequent thereon. Nothing herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without imitation, a decree of specific performance and/or injunctive relief with respect to the Borrower’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof. 9. NoShorting, Lender agrees that so long as this Note from Borrower to Lender remains outstanding, Lender will not enter into or effect “short sales” of the Common Stock or hedging transaction which establishes 2 net short position with respect to the Common Stock of Borrower. Borrower acknowledges and agrees that upon delivery of a conversion notice by Lender, Lender immediately ‘owas the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice would not be considered short sales. 10. Assignabilty. The Borower may not assign this Note. This Note will be binding upon the Borrower and its successors and will inure to the benefit of Lender and its successors and assigns and may be assigned by Lender to anyone without Borrower's approval 11. Governing Law. ‘This Note wil be governed by, and construed and enforced in accordance with, the laws ofthe State of Nevada, without regard to the conilit of laws principles thereof. Any action brought by either party against the other concering the ‘wansactions contemplated by this Agreement shall be brought only in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such cours. 12, Delivery of Provess by Lender io Borrower. In the event of any action or proceeding by Lender against Borrower, and only by Lender aginst Borrower, service of copies of summons andor complaint andor any other prooess which may be served in any such action or proceeding may be made by Lender via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such pracess to the Borrower at its last known attorney as set forth in its most recent SEC filing, 13, Attorney Fees. In the eveat any attorney is employed by either party to this Note with regard to any legal or equitable action, arbivation or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions ofthis Note, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled. 14. Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right 10 have any such opinion provided by its counsel. Lender also has the right to have any such opinion provided by Borrower's counsel,15. Notices. Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited withthe courier service for delivery, verona Z f Lender: rihony Paves Na Finacial Spam Commarea Seics, ne ls Principal Chie Beesuve Oes vw _Febrvan 7, 2014 ome 2/2}] [Signature Page o $165,000 Promiscry Note](FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) See eeenereeey NYSCEF DOC. NO. 6 RECEIVED NYSCHF: 12/07/2015 RC Interest free $165,000 PROMISSORY NOTE within 3 onthe FOR VALUE RECEIVED, Sparta Commercial Services, Inc., a Nevada corporation (the “Borrower") with at Teast 9,000,000 common shares issued and outstanding, promises to psy to JMJ Pinancial or its Assignees (the “L.ender”}the Principal Summ along with the Interest Rate and any other fees according to the terms hersin, This Note will become effective only upon execution by both parties and delivery of the first payinent of Consideration by the Lender (the "Effective Date”), ‘The Principal Sum is $165,000 (one hundred sixty five thousand) plus accrued and unpaid interest and any other fees. The Consideration is $150,000 (one hundred fifty thousand) payable by wire (there exists 2 $15,000 orginal issue discount (the “OLD")) ‘The Lender shal! pay $50,000 of Consideration upon closing of this Note. The Lender may pay additional Consideration to the Borrower in such amounts and at such dates as Lender nay choose in its sole discretion. THE PRINCIPAL SUM DUE TO. LENDER SHALL BY PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY LENDER (PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT IS PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER INTEREST OR FEES) SUCH THAT THE. BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND THE BORROWER IS NOT REQUIRED TO REPAY ANY UNFUNDED PORTION OF THIS NOTE. The Meturity Date is one year from the Effective Date of each payment (the “Maturity Date”) and is the date upon which the Principal Sum of this Note, as well as any unpaid interest and other ess, shall be due and payable. ‘The Conversion Price is the lesser of $1.20 or 70% of the average af the three lowest closing prices Guring the 20 trading days immediately previous to the day the conversion notice is delivered to the Borrower (In the ease that conversion shares are not dliverabie by DWAC an additional 5% discount will apply; and ifthe shares ate chilled for deposit into the DTC system and only eligibie for Xclearing deposit an additional 7.5% discount shall apply). Unless otherwise agreed in writing by both parties, ano time will the Lender convert any amount of the Note into common stock that would result in the Lender owning, more than 4.99% of the common stock outstanding, 1, ZERO Percent Interest for the First Three Months. The Borrower may repay this Note at any time on or before 90 days from the Effective Date, efter which the Borrower may not make further payments on this Note prior to the Maturity Dute without written spproval trom Lender. If the Borrower repays the Note on or before 90 days from the Effective Date, the Interest Rate shall be ZERO PERCENT (0%). If Borrower does not repay the Note on or before 90 days fom the Effective Date, a one-time Interest ‘charge of 5% shall be epplied to the Principal Sum. Any interest payeble is in addition to the OID, and that OLD (or prorated OID, if applicable} remains payable regardless of time and manner of payment by Borrower. 2. Conversion, The Lender has the right, at any time after the Effective Date, at its election, to convert all or part of the outstanding and unpeid Principal Sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Borrower as per this conversion formula: “Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price, Conversions may be delivered to Borrower by method of Lender's choice (inchiding but not limited to email, facsimie, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment ftom the Lender, “If no objection is delivered from Borrower to Lender regarding any variable or calculation of the ‘onversiga notice within 24 hours of delivery of tie conversion notice, the Borrower ‘shall have beaa thereafter deemed to have imevocably confirmed and irrevocably ratified such notice of conversion and waived any objection thereto, The Borrower shall deliver the shares from any conversion to Lender (in any name directed by Lender) within 3 (hres) business days of conversion notice delivery, 3. Conversion Delays. If Borrower fails to deliver shares in accordance with the timefizame stated in Section 2, Lender, at any time Prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable to the unsold shares and have the rescinded conversion emount returned to the Principal Sum with the rescinded conversion shares retumed to the Borrower (under Lender's and Borrower's expectations that any retuned conversion amounts will tack back to the original date of the ‘Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $2,000 per day will be assessod for each day after the third business day (inclusive of the day of the conversion) unit share delivery is made; and such penalty will be added to the Principal Suim of the Note (ander Lender's and Borrower's expectations that any penalty amounts will tack back tothe original date ofthe Note), 4. Reservation of Shares, At all times during which this Note is convertible, the Borrower will reserve from its authorized and ‘unissued Common Stock to provide for the issuance of Common Stock upon the full conversion ofthis Note. The Borrower will at all times reserve atleast 625,000 shares of Common Stock for conversion. 5. Pigwvback Registration Rights, The Borrower shall include on the next registration statement the Borrower files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note, Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than $25,000, being immediately due and payabie to the Lender at its election in the form of eash payment or addition tothe balance of this Note. 6, ‘Torms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security, which security or instrument governing such security shall have been issued subsequent to the date hereof (the “Post Date Security”) with any term more favorable to the holder of such security or with a term in favor of the holder of such Post Date Sccurity that was not simmitarly provided to the Lender in this Note, then the Borrower shall notify the Lender of such additional or ‘ore favorable term and such term, at Lender's option, shall become a part ofthe transaction documents with the Lender. The types of terms contained in another Post Date Security that may be more favorable to the holder of such Post Date Security include, but are in fu‘not limited to, terms addressing conversion discounts, conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage, 7. Bfult. The following are events of default under this Note: (I) the Borrower shall fil to pay any principal under the Note when due and payable (or payable by conversion) thereunder; or i) the Borrower shall fel to pay any intrest or any other amount under the Note when due and payable (or payable by conversion) thereunder; or (ii) a receiver, (ustee or other similar official shall be appointed over the Borrower or a material part of is assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (iv) the Borrower fils to pay, or admits in writing its inability to pay, its debts s they become due, subject to applicable grace periods, ifany; or (v) the Borcower shall make a general assignment for the benefit of ereitor, or (v) the Borrower shall flea petition for relief undee any bankrupt, insolvency or similar law {domestic or foreign); or (vif) an involuntary proceeding shall be commenced or filed against the Borrower; ot (vil) the Borrower shall lose its status as “DTC Eligible” or the borrower's shareholders shall lose the ability 1o deposit (ether electronically or by physical catificates, or otherwise) shares into the PTC Systems; or (fx) the Borrower shall bocome delinquent in its filing requirements as a fully-reporting issuer registered with the SEC. The Borrower expects it will receive a qualified opinion from its euditors with respect {0 its prior fiscal year end and, after giving effect to the transactions contemplated by this Agreement, anticipates that its auditors may issue a qualified opinion in respect ofits eurrent fiscal year. 8. Remedies. In the event of any default, the outstending principal amount of this Note, plus accrued but unpaid interest, liquidated damages, fees and other amounts owing in respect thereof through the date of acceleration, shall become, at the Lender's election, immediately due and payable in cash at the Mandatory Defwult Amount. The Mandatory Default Amount means the greater of (3) the outstanding principal amount of this Note, plus all acerued and unpaid interest, liquidated damages, fees and other amocmts hereon, divided by the Conversion Price on the date the Mandatory Default Amount ia either demanded or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either demended or paid in full, whichever hhas a higher VWAP, or (fi) 150% of the outstanding principal amount of this Note, plus 100% of acorsed and unpaid interest, Tiquidated damages, fees and other amounts hereoa. Commencing five (5) days afler the occurrence of any event of default that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to the lesser oF 189% per annum or the maximum rate permitted under applicable Jaw. In connection with such acceleration deseribed herein, the Lender ‘neal not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Lender may immediately and without expiration of any grace period enforce any and al ofits rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and the Lender shall have all rights as @ holder of the note untit such time, if any, as the Leader receives full payment pursuant to this Section 8. No such rescission or annulment shall affect any subsequent event of default or impair any right ‘consequent thereon, Nothing herein shall limit Lender’s right wo pursue any other remedies available to it st law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Borrower's failure to timely oliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof. 9. No‘Shorting: Lender agrees that so iong as this Note ftom Borrower to Lender remains outstanding, Lender will ct enter into ot effect "short sales” of the Commnon Stock or hedging transaction which establishes a net short position with respect to the Common Stock of Borrower. Borrower acictowledges and agrees that upon delivery of a conversion notice by Lender, Lender immediately’ ‘owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable wnder such conversion notice would not be considered short sales. 10. Assignability. The Borrower may not assign this Note. This Note will be binding upon the Borrower and its successors and will inure fo the bencfit of the Lender and its successors and assigns and may be assigned by the Lender to anyone of its choosing without Borrower's approval 11. Governing Law, This Note will be governed by, and construed and enforced in accordance with, the laws ofthe State of Florida, without regard f the conflice of laws principles thereof. Any action brought by either party ageinst tho other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Florida or in the federal courts located in Miami-Dade County, in the Site of Florida. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such couets. 12, Delivery of Process by Lender to Borrower. In the event of any action or proceeding by Lender against Borrower, and only by ‘Lender against Borrower, service of copies of summons and/or complaint and/or any other process which may be served in any such ‘action or proceeding may be made by Lender via U.S. Mail, overnight delivery service such as FedEx or UPS, email, fax, ar process server, of by mailing or otherwise delivering a copy of such process to the Borrower at its lst known attorney as set forth in its mast recent SEC filing, 13, Attomey Fees. In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party forthe enforcement of this Note or because of an alleged dispute, breach, default ‘or misrepresentation in conection with any of the provisions of this Note, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled, 14. Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Lender has the right to bhave any such opinion provided by its counsel. Lender also has the right to have any such opinion provided by Borrower's counsel.1s. ices. Any notice required or permitted hereunder (including Conversion Notices) must be ia writing and eit er personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered atthe time of transmission if by facsimile or email, and if by overnight courier the business day afler such notice is deposited with the courier service for delivery sane Sparta Comercial Sevens, le UsPrincipal (Chit ExerutiveOffeer ome So fayh ow 8 fA ee [Signature Page to $165,000 Promissory Note](FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) eer neeteneeraeeaeal NYSCEF DOC. NO. 7 RECEIVED NYSCHF: 12/07/2015 ‘SRCO legs | Anterest free f paid in full $165,000 PROMISSORY NOTE San ene FOR VALUE RECEIVED, Sac Commer Serve, ne, « Nevada eration he “Bozoye?1 wa al TSROD common shares issued and outsanieg, promises to pay to JM Fianna or hs Assignee (Ihe “Lende) the Principal Som slong the intrest ate aad ay ote es according tthe ets hercn. Tis Note wil become fete only upon enecon bs both etn and delivery ofthe fist payment of Consieration bythe Lender (he "Etfestive Date) ‘The Principal Sum is $165,000 (one hundred sixty five thousand) plus accrued and unpaid interest and any other fees. The Cons is $150,000 (one hundred fifty thousand) payable by wire (there exist a $15,000 origival issue digeoust (the “OID")). The Lender shalt pay $50,000 of Consideration upon closing of this Note. The Lender may pay additional Consideration to the Borrower in such amounts and at such dates as Lender may choose in ts sole discretion. THE PRINCIPAL SUM DUE TO LENDER SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY LENDER (PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT IS PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER INTEREST OR FEES) SUCH THAT THE BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND THE BORROWER IS NOT REQUIRED TO REPAY ANY UNFUNDED PORTION OF THIS NOTR. The Maturity Date is one year from the Effective Date of each payment (the “Marurity Date”) and isthe date upon which the Principal Sum of this Note, as well ns any unpaid interest and other fees, shall be du and payable, The Conversion Price is the lesser 0f $1.20 or 70% of the average of the three lowest closing prices during the 20 trading days immediately previous to the day the conversion notice is delivered to the Bomower (In the case that conversion shares are not deliverable by DWAC an additional 5% discount will apply: and ifthe shares are chilled for deposit into the DTC system and only eligible for Xelearing deposit an additional 7.5% discount shall apply). Unless otherwise agreed in writing by both parties, at no time will the Lender convert any amount of the ‘Note into common stock that would resutin the Lender owning more than 4.99% ofthe common stock outstanding, 1._ ZERO Percent Interest forthe First Thuee Months, The Borrower may repay this Note at any time on or before 90 days from the [Effective Dat, after which the Borrower may not make further payments on this Note prior to the Maturity Date without written approval from Lender. If the Borrower repays the Note on or before 90 days from the Effective Date, the Interest Rate shall be ZERO. PERCENT (0%). If Borrower does not repay the Note on or before 90 days ftom the Effective Date, a one-time Interest charge of 5% all be applied to the Principal Sum. Any interest payable isin addition to the OID, and that OID (or prorated OID, if applicable) remains payable regardless of time and manner of payment by Borrower. 2. Conversion. The Lender has the right, st any time after the Effective Date, at is election, to convert all or part of the outstanding and unpaid Principal Sum ané accrued interest (and any other fees) into shares of fully paid and non assessable shares of common stock ‘ofthe Borrower as per this conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. ‘Conversions may be delivered to Borrower by method of Lender's choice (including but net limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be eashless and not require further payracnt from the Lender. If no objection is delivered from Borrower t9 Lender regarding any variable or calculation of the conversion notice \within 24 hours of delivery ofthe conversion notice, the Borrower shall have been thereafter deemed to have itrevoeably confirmed and lnrevocably ratified such notice of conversion and waived any objection thereto. The Borrower shall deliver the shares from any conversion to Lender (in any name directed by Lender) within 3 (three) business days of conversion notice delivery, 3 iframe stated in Section 2, Lender, at any time eration 5. Conversion Delays. If Borrower fails to deliver shares in accordance with the prior to selling al) of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable tothe unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Borrower (under Lender's and Borrower's expectations thet any retumed conversion ammouns will tack back tothe orignal date ofthe Note). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), 2 penalty of $2,000 per day willbe assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added 0 the Principal Sum of the Note (uncer Lender's and Borrower's expectations that any penalty amounts will tack back to the original date of the Note). 4. Reservationof Shares. Atall times during which this Notes convertible, the Borrower will reserve from its authorized and unissved ‘Common Stock to provide for the issuance of Common Stock upon the full conversion of this Note, The Borrower will stall limes reserve at least 625,000 shares of Common Stock for conversion. 5. Biguyback Registration Rights. The Borrower shall include on the next registration statement the Borrower files with SEC (or on the subsequent registration statement if such registration statement is withdraven) all shares issuable upon conversion of thie Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than $25,000, being immediately due and payable to the Lencer at its election in the form of cash payment or addition to the balance of this Note, 6. ‘Terms of Future Finaneings. $0 long as this Note is outstanding, upon any issuance by the Borrower or any of ils subsiivies of any security, which security or instrument governing such security shall have been issued subsequent to the date hereof (the “Post Date ‘Scourity”) with any term more favorable tothe holder of such security or with & term in favor of the holder of such Post Date Security that was not similarly provided to the Lender in this Note, then the Borrower shall notify the Lender of such additional or more favorable term and such term, a Lender's option, shall become & part ofthe transaction documents with the Lender. The types of terms contained in another Post Date Security that may be more favorable tothe holder of such Post Date Security include, but are not limited t, terms addressing conversion discounts, conversion lookback periods interest rate, original issue discount, stoek sal pric private placemmont price per share, and warrant coverage,7 ‘The following are evens of default under this Note: (i) the Borrower shal fail to pay any principal under the Note when {ue and payable (or payable by conversion) thereunder; or (i) the Borrower shal fail to pay any interest or any other amount under the Note wien due and payable (or payable by conversion) thereunder: or (ii) a receiver, trustee or other similar official shall be appointed over the Borrower or a material part ofits assets and such appointmeat shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; o (iv) the Borrower shall bocome insolvent or generally falls to pay, or admits in writing its inability to pay. its debts as they become due, subject to applicable grace periods, if any; or (v) the Borrower shall make a general ‘assignment forthe benefit of creditors; or (vi) the Borrower shal ile a petition for relief under eny bankruptcy, insolvency or silar law (domestic or foreign); or (vii) an involuntary proceeding shall be commenced or filed agains: the Borzower, or (vii) the Borrower Sal Jose is status as “DIC Eligible” or tte borrower's shareholders shall lose the ability to deposit (either electronically or by paysical ‘certificates, of otherwise) shares into the DTTC System ar (ix) the Borrower shall become delinguent in its filing requirements as a flly reporting issuer registered wih the SEC. 8. Remedies. In the even! of any default, the outstanding principal amount ofthis Not. pls acnued but unpaid interes, igidaed damages, ees and other astouns owing i respect thereof ough the date of acceleration, thall became, at tho Landers election, immediately due and payable in cash atthe Mandatory Defauk Amount. The Mandatory Detauk Amount meas the pester of G) ing outstanding principal amour ofthis Not, pus allacrued and unpaid interest, liquidated damage, fees and other amcunts hereon, divided by the Conversion Prie onthe date the Maneatory Default Amount i either demand arpa in fll whisbeves has ¢lowey Conversion Price, ultiplied by the VWAP onthe date the Mendatory Default Acnoust i either demanded or paid inl, whichever has higher VWAP, o (i 150% ofthe outstanding principal amount of this Note, plus 100% of eccued and anpa interes ligated damages, foes ad other amounts hereon, Commencing Ave (3) days alr the occurrence of any even of default that result the eventual acceleration ofthis Not, the interest ate on this Note sal serue at an ierest ate equa ote lesser of 18% per anata or ‘he maximum rte permilted under applicable lew. In connection with sch acceleration described horn the Lender noe aot pov ice, anu the Borrower hereby vives, ony presentment, demand, rots or other notice of any kind ad tae Lender mat lnsediasly ond without expiration of any grae period enforce any and al of rights and remedies hereunder and all ober remeaies avaiable ‘o R uwer applicable law. Such acceleration may be rescinded and annulled by Lender at ay time prior to peyment hereunder and ihe Lender sll have all rights as a holder ofthe note unt such time, if any, asthe Lendr receives fll payment purus w his Secon 8. Nosuch scission or anaulnent shall affect any subsequent event of dafalorimpar any eight consequent thereon, Nothing horeia shall init Lenders right to pursue any oter remedies avaiable ita aor in equity inluting, without lititaten, adores afspeeife perfomance ardor injanetive elif wit respect wo the Bortower's faire to tively deliver eefesesrepreseting shares of Common Stock upon conversion ofthe Note as required pursuant the terms hereot 9._ No Shorting. Lender agrees that so long as this Note from Borrower to Lender remsine outstanding, Lender will ot enter ino or effect “short sales” of the Common Stock or hedging transaction which establishes @ net short position with respect to tke Common, Stock of Borrower. Borrower acknowledges and agrees that upon delivery of @ conversion notice by Leoder, Lender immediately owns the shares of Common Stock described in the conversion notice and any sale of those shares issuable under such conversion notice ‘would not be consisered short sales, 16. Assignability. The Borrower may pot assign this Note. This Note will be binding upon the Borrower and its suesessors and will inure to the benefit ofthe Lender end its successors and assigns and shay be assigned by the Lender o anyone of its choosing without Borrower's approval 11, Governing Law. This Note will be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to the conflict of laws principles thereof. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought omly in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida. Both partss and the individuals signing this Agreement agroc to subrait to the jurisdiction of such courts, 12, Delivery of Process by Lender to Borrowsr, In the event of any action or proceeding by Lender against Borrower, and only by Lender against Borrower, service of copies of summons andior complaint and/or any other process which may be served in any such action or proceeding may be made by Lender via U.S. Mai, overnight delivery sorvice such as FedEx or UPS, emi, ax, or process server, or by mailing or otherwise delivering a copy of such process to the Borrower a its lst known attomey as set forth in its most recent SEC filing. 13. Adtomey Fees, In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party forthe enforcement of this Note or because of an alleged dispute, breach, defeult tr misrepresentation in conection with any of the provisions of this Note, the prevailing partyin such proceeding will be entitled to recover from the other party reasonable attorneys’ fees and other costs wad expenses incurred, in addition to any other relief to wich the prevailing party may be entitled. 14. Opinion of Counsel. [nthe event that en opinion of counsel is needed for any matter related to this Note, Lender hes the right to have any such opinion proviced by its counsel. Lender also bs the right to have ay such opinion provided by Borrower's counsel 15. Natiges, Any notice required or permitted hereunder (including Conversion Notices) must be in writing and either personally Served, seat by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered atthe time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery, (Signature Page to Follow][Signature Page to $165,000 Pramissory Nose}(FILED: NEW YORK COUNTY CLERK 12/07/2015 07:28 PM) aden taleadtecetendtbe fond NYSCEF DOC. NO. 8 RECEIVED NYSCHF: 12/07/2015 NOTE TERMINATION AGREEMENT ‘The parties agree that both the $165,000 Promissory Note dated August 14, 2012 and the $165,000 Promissory Note dated April 24, 2013, each by and between Sparta Commercial Services, Inc. and JMJ Financial, are hereby cancelled and terminated with no remaining obligations by either party. Please indicate acceptance and approval of this Note Termination Agreement dated November 19, 2014 by signing below: Anthony L. Havens Sparta Commercial Services, Inc. Chief Executive Officer