THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. 
 

 

CONVERTIBLE NOTE

FOR VALUE RECEIVED, bioMETRX, Inc., a Delaware Corporation (hereinafter called
"Borrower"), hereby promises to pay to __________________, (the "Holder") or its
registered assigns or successors in interest or order, without demand, the sum
of [______] Dollars ($_________) (“Principal Amount”), with simple and unpaid
interest thereon, 24 months from closing date of June __, 2006 (the "Maturity
Date"), if not sooner paid.

This Note has been entered into pursuant to the terms of a Securities Purchase
Agreement between the Borrower, the Holder and certain other holders (the “Other
Holders”) of convertible promissory notes (the “Other Notes”), dated of even
date herewith (the “Subscription Agreement”), and shall be governed by the terms
of such Securities Purchase Agreement. Unless otherwise separately defined
herein, all capitalized terms used in this Note shall have the same meaning as
is set forth in the Securities Purchase Agreement. The following terms shall
apply to this Note:

ARTICLE I

INTEREST; AMORTIZATION

1.1.    Interest Rate. Subject to Section 5.7 hereof, interest payable on this
Note shall accrue at a rate per annum (the "Interest Rate") of eight percent
(8%). Interest on the Principal Amount shall accrue from the date of this Note
and shall be payable quarterly. The Company shall issue the first year’s
interest to the Holder in shares of Common Stock at the Closing Date.

1.2    Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default, which, if susceptible to cure is not cured
within twenty (20) days, otherwise then from the first date of such occurrence,
the annual interest rate on this Note shall (subject to Section 5.7)
automatically be increased to fifteen percent (15%).

 
 

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ARTICLE II

CONVERSION REPAYMENT

2.1.    No Effective Registration. Notwithstanding anything to the contrary
herein, no amount payable hereunder may be paid in shares of Common Stock by the
Borrower without the Holder’s consent unless (a) either (i) an effective current
Registration Statement covering the shares of Common Stock to be issued in
satisfaction of such obligations exists, or (ii) an exemption from registration
of the Common Stock is available pursuant to Rule 144(k) of the 1933 Act, and
(b) no Event of Default hereunder (or an event that with the passage of time or
the giving of notice could become an Event of Default), exists and is
continuing, unless such event or Event of Default is cured within any applicable
cure period or is otherwise waived in writing by the Holder in whole or in part
at the Holder's option.

2.2.    Optional Redemption of Principal Amount. Provided that (i) an Event of
Default or an event which with the passage of time or the giving of notice could
become an Event of Default has not occurred, whether or not such Event of
Default has been cured, and (ii) an effective current Registration Statement
covering the shares of Common Stock to be issued upon conversion of the Notes
exists, the Borrower will have the option of prepaying the outstanding Principal
amount of this Note ("Optional Redemption"), in whole or in part, by paying to
the Holder a sum of money equal to one hundred and twenty percent (125%) of the
Principal amount to be redeemed, together with accrued but unpaid interest
thereon and any and all other sums due, accrued or payable to the Holder arising
under this Note or any Transaction Document through the Redemption Payment Date
as defined below (the "Redemption Amount"). Borrower’s election to exercise its
right to prepay must be by notice in writing (“Notice of Redemption”). The
Notice of Redemption shall specify the date for such Optional Redemption (the
"Redemption Payment Date"), which date shall be no sooner than ten (10) days
after the date of the Notice of Redemption (the "Redemption Period"). A Notice
of Redemption shall not be effective with respect to any portion of the
Principal Amount for which the Holder has a pending election to convert, or for
conversions initiated or made by the Holder during the Redemption Period if the
Redemption Period is based on thirty days prior notice. On the Redemption
Payment Date, the Redemption Amount, less any portion of the Redemption Amount
against which the Holder has exercised its conversion rights, shall be paid in
good funds to the Holder. In the event the Borrower fails to pay the Redemption
Amount on the Redemption Payment Date as set forth herein, then (i) such Notice
of Redemption will be null and void, (ii) Borrower will have no right to deliver
another Notice of Redemption, and (iii) Borrower’s failure may be deemed by
Holder to be a non-curable Event of Default. A Redemption Notice may be given
only at a time a Registration Statement is effective. A Notice of Redemption may
not be given nor may the Borrower effectuate a Redemption without the consent of
the Holder, if at any time during the Redemption Period an Event of Default or
an Event which with the passage of time or giving of notice could become an
Event of Default (whether or not such Event of Default has been cured), has
occurred or the Registration Statement registering the Registrable Securities is
not effective each day during the Redemption Period.

2.3.    Mandatory Conversion. Provided an Event of Default has not occurred,
unless such Event of Default has been cured at least twenty (20) days prior to
the delivery of written notice by Borrower as hereinafter described, then,
commencing after the Actual Effective Date, the Borrower will have the option by
written notice to the Holder (“Notice of Mandatory Conversion”) of compelling
the Holder to convert all or a portion of the outstanding and unpaid principal
of the Note and accrued interest, thereon, into Common Stock at the Conversion
Price then in affect (“Mandatory Conversion”). The Notice of Mandatory
Conversion, which notice must be given on the first day following a consecutive
ten (10) day trading period during which the closing bid price for the Company’s
Common Stock as reported by Bloomberg, LP for the Principal Market shall be more
than $2.50 each day and the daily average trading volume is not less than
100,000 shares. The date the Notice of Mandatory Conversion is given is the
“Mandatory Conversion Date.” The Notice of Mandatory Conversion shall specify
the aggregate principal amount of the Note which is subject to Mandatory
Conversion, which amount may not exceed in the aggregate, for all Holders who
received Notes similar in term and tenure as this Note, the dollar volume of
Common Stock traded on the Principal Market during the seven (7) trading days
immediately preceding the Mandatory Conversion Date. Mandatory Conversion
Notices must be given proportionately to all Holders of Notes who received Notes
similar in term and tenure as this Note. The Borrower shall reduce the amount of
Note principal and interest subject to a Notice of Mandatory Conversion by the
amount of Note Principal and interest for which the Holder had delivered a
Notice of Conversion to the Borrower during the twenty (20) trading days
preceding the Mandatory Conversion Date. Each Mandatory Conversion Date shall be
a deemed Conversion Date and the Borrower and the Holder will be required to
comply with Section 2.1 above.

 
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ARTICLE III

CONVERSION RIGHTS

3.1.    Holder's Conversion Rights. Subject to Section 3.2, the Holder shall
have the right, but not the obligation at all times, to convert all or any
portion of the then aggregate outstanding Principal Amount of this Note, into
shares of Common Stock, subject to the terms and conditions set forth in this
Article III at the rate of $1.00 per share of Common Stock (“Fixed Conversion
Price”) as same may be adjusted pursuant to this Note and the Subscription
Agreement. The Holder may exercise such right by delivery to the Borrower of a
written Notice of Conversion pursuant to Section 3.3.

3.2.    Conversion Limitation. The Holder shall not be entitled to convert on a
Conversion Date that amount of the Note in connection with that number of shares
of Common Stock which would be in excess of the sum of (i) the number of shares
of Common Stock beneficially owned by the Holder and its affiliates on a
Conversion Date, (ii) any Common Stock issuable in connection with the
unconverted portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made on a Conversion Date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock of the Borrower on such Conversion Date. For
the purposes of the provision to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate conversions of only
4.99% and aggregate conversion by the Holder may exceed 4.99%. The Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section 3.2 will limit any conversion hereunder and to the extent that
the Holder determines that the limitation contained in this Section applies, the
determination of which portion of the Notes are convertible shall be the
responsibility and obligation of the Holder. The Holder may waive the conversion
limitation described in this Section 3.2, in whole or in part, upon and
effective after 61 days prior written notice to the Borrower. The Holder may
allocate decide whether to convert a Note or exercise Warrants to achieve an
actual 4.99% ownership position.

 
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3.3.    Mechanics of Holder's Conversion.

(a)    In the event that the Holder elects to convert any amounts outstanding
under this Note into Common Stock, the Holder shall give notice of such election
by delivering an executed and completed notice of conversion (a "Notice of
Conversion") to the Borrower, which Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and
amounts being converted. The original Note is not required to be surrendered to
the Borrower until all sums due under the Note have been paid. On each
Conversion Date (as hereinafter defined) and in accordance with its Notice of
Conversion, the Holder shall make the appropriate reduction to the Principal
Amount, accrued interest and fees as entered in its records. Each date on which
a Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a "Conversion Date." A form of Notice
of Conversion to be employed by the Holder is annexed hereto as Exhibit A.

(b)    Pursuant to the terms of a Notice of Conversion, the Borrower will issue
instructions to the transfer agent accompanied by an opinion of counsel, if so
required by the Borrower's transfer agent and shall cause the transfer agent to
transmit the certificates representing the Conversion Shares to the Holder by
crediting the account of the Holder's designated broker with the Depository
Trust Corporation ("DTC") through its Deposit Withdrawal Agent Commission
("DWAC") system within three (3) business days after receipt by the Borrower of
the Notice of Conversion (the "Delivery Date"). In the case of the exercise of
the conversion rights set forth herein the conversion privilege shall be deemed
to have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of such shares of Common Stock, unless the Holder provides the
Borrower written instructions to the contrary. Notwithstanding the foregoing to
the contrary, the Borrower or its transfer agent shall only be obligated to
issue and deliver the shares to the DTC on the Holder’s behalf via DWAC (or
certificates free of restrictive legends) if the registration statement
providing for the resale of the shares of Common Stock issuable upon the
conversion of this Note is effective and the Holder has complied with all
applicable securities laws in connection with the sale of the Common Stock,
including, without limitation, the prospectus delivery requirements. In the
event that Conversion Shares cannot be delivered to the Holder via DWAC, the
Borrower shall deliver physical certificates representing the Conversion Shares
by the Delivery Date.

3.4.    Conversion Mechanics.

(a)    The number of shares of Common Stock to be issued upon each conversion of
this Note pursuant to this Article III shall be determined by dividing that
portion of the Principal Amount and interest and fees to be converted, if any,
by the then applicable Fixed Conversion Price.

 
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(b)    The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion shall be subject to adjustment from time
to time upon the happening of certain events while this conversion right remains
outstanding, as follows:

A.    Merger, Sale of Assets, etc. If the Borrower at any time shall consolidate
with or merge into or sell or convey all or substantially all its assets to any
other corporation, this Note, as to the unpaid principal portion thereof and
accrued interest thereon, shall thereafter be deemed to evidence the right to
purchase such number and kind of shares or other securities and property as
would have been issuable or distributable on account of such consolidation,
merger, sale or conveyance, upon or with respect to the securities subject to
the conversion or purchase right immediately prior to such consolidation,
merger, sale or conveyance. The foregoing provision shall similarly apply to
successive transactions of a similar nature by any such successor or purchaser.
Without limiting the generality of the foregoing, the anti-dilution provisions
of this Section shall apply to such securities of such successor or purchaser
after any such consolidation, merger, sale or conveyance.

B.    Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result of
such change with respect to the Common Stock immediately prior to such
reclassification or other change.

C.    Stock Splits, Combinations and Dividends. If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Conversion Price shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of combination
of shares, in each such case by the ratio which the total number of shares of
Common Stock outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.

D.    Share Issuance. If the Borrower shall issue any Common Stock except for
the Excepted Issuances (as defined in the Securities Purchase Agreement), prior
to the complete conversion or payment of this Note, for a consideration less
than the Fixed Conversion Price that would be in effect at the time of such
issue, then, and thereafter successively upon each such issuance, the Fixed
Conversion Price shall be reduced to such other lower issue price. For purposes
of this adjustment, the issuance of any security or debt instrument of the
Borrower carrying the right to convert such security or debt instrument into
Common Stock or of any warrant, right or option to purchase Common Stock shall
result in an adjustment to the Fixed Conversion Price upon the issuance of the
above-described security, debt instrument, warrant, right, or option and again
upon the issuance of shares of Common Stock upon exercise of such conversion or
purchase rights if such issuance is at a price lower than the then applicable
Conversion Price. The reduction of the Fixed Conversion Price described in this
paragraph is in addition to the other rights of the Holder described in the
Securities Purchase Agreement.

 
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(c)    Whenever the Conversion Price is adjusted pursuant to Section 3.4(b)
above, the Borrower shall promptly mail to the Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a statement of the
facts requiring such adjustment.

3.5.    Reservation. During the period the conversion right exists, Borrower
will reserve from its authorized and unissued Common Stock not less than one
hundred seventy-five percent (175%) of the number of shares to provide for the
issuance of Common Stock upon the full conversion of this Note. Borrower
represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. Borrower agrees that its issuance of this Note
shall constitute full authority to its officers, agents, and transfer agents who
are charged with the duty of executing and issuing stock certificates to execute
and issue the necessary certificates for shares of Common Stock upon the
conversion of this Note.

3.6    Issuance of Replacement Note. Upon any partial conversion of this Note, a
replacement Note containing the same date and provisions of this Note shall, at
the written request of the Holder, be issued by the Borrower to the Holder for
the outstanding Principal Amount of this Note and accrued interest which shall
not have been converted or paid, provided Holder has surrendered an original
Note to the Company. In the event that the Holder elects not to surrender a Note
for reissuance upon partial payment or conversion, the Holder hereby indemnifies
the Borrower against any and all loss or damage attributable to a third-party
claim in an amount in excess of the actual amount then due under the Note.

ARTICLE IV

EVENTS OF DEFAULT

The occurrence of any of the following events of default ("Event of Default")
shall, at the option of the Holder hereof, make all sums of principal and
interest then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable, upon demand, without presentment, or grace period,
all of which hereby are expressly waived, except as set forth below:

4.1    Failure to Pay Principal or Interest. The Borrower fails to pay any
installment of Principal Amount, interest or other sum due under this Note or
any Transaction Document when due and such failure continues for a period of
five (5) business days after the due date.

4.2    Breach of Covenant. The Borrower breaches any material covenant or other
term or condition of the Securities Purchase Agreement, this Note or Transaction
Document in any material respect and such breach, if subject to cure, continues
for a period of ten (10) business days after written notice to the Borrower from
the Holder.

4.3    Breach of Representations and Warranties. Any material representation or
warranty of the Borrower made herein, in the Securities Purchase Agreement,
Transaction Document or in any agreement, statement or certificate given in
writing pursuant hereto or in connection herewith or therewith shall be false or
misleading in any material respect as of the date made and the Closing Date.

 
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4.4    Receiver or Trustee. The Borrower or any Subsidiary of Borrower shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for them or for a substantial part of their
property or business; or such a receiver or trustee shall otherwise be
appointed.

4.5    Judgments. Any money judgment, writ or similar final process shall be
entered or filed against Borrower or any subsidiary of Borrower or any of their
property or other assets for more than $25,000 and shall remain unvacated,
unbonded or unstayed for a period of forty-five (45) days.

4.6    Non-Payment. The Borrower shall have received a notice of default, which
remains uncured for a period of more than twenty (20) business days, on the
payment of any one or more debts or obligations aggregating in excess of $25,000
beyond any applicable grace period;

4.7    Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower or any Subsidiary of
Borrower and if instituted against them are not dismissed within sixty (60) days
of initiation.

4.8    Delisting. Failure of the Common Stock to be quoted or listed on the
Principal Market; failure to comply with the requirements for continued listing
on the Bulletin Board for a period of seven consecutive trading days; or
notification from the Bulletin Board or any Principal Market that the Borrower
is not in compliance with the conditions for such continued listing on the
Principal Market.

4.9    Stop Trade. An SEC or judicial stop trade order or Principal Market
trading suspension with respect to Borrower’s Common Stock that lasts for five
or more consecutive trading days.

4.10    Failure to Deliver Common Stock or Replacement Note. Borrower's failure
to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note or the Securities Purchase Agreement, and, if requested by
Borrower, a replacement Note, and such failure continues for a period of five
(5) business days after the due date.

4.11    Non-Registration Event. The occurrence of a Non-Registration Event as
described in the Securities Purchase Agreement.

4.12    Reverse Splits. The Borrower effectuates a reverse split of its Common
Stock without twenty days prior written notice to the Holder.

4.13    Cross Default. A default by the Borrower of a material term, covenant,
warranty or undertaking of any Transaction Document or other agreement to which
the Borrower and Holder are parties, or the occurrence of a material event of
default under any such other agreement which is not cured after any required
notice and/or cure period.

 
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ARTICLE V

MISCELLANEOUS

5.1    Failure or Indulgence Not Waiver. No failure or delay on the part of
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.

5.2    Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i)

5.3    Amendment Provision. The term "Note" and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.

5.4    Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.

5.5    Cost of Collection. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.

5.6    Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of New York, without regard to conflicts of laws
principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the State of
New York. The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs. In the event that any provision of
this Note is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or unenforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.

 
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5.7    Maximum Payments. Nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

5.8.    Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.

5.9    Redemption. This Note may not be redeemed or called without the consent
of the Holder except as described in this Note.

5.10    Shareholder Status. The Holder shall not have rights as a shareholder of
the Borrower with respect to unconverted portions of this Note. However, the
Holder will have the rights of a shareholder of the Borrower with respect to the
Shares of Common Stock to be received after delivery by the Holder of a
Conversion Notice to the Borrower.
 
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an
authorized officer as of the ____ day of June, 2006.
 

        bioMETRX, Inc.  
   
   
    By:      

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Name:   Title: 

 

WITNESS:                       

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NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)
 
The undersigned hereby elects to convert $_________ of the principal and
$_________ of the interest due on the Note issued by bioMETRX, Inc. (the
"Borrower") on June ____, 2006 into Shares of Common Stock of the Borrower
according to the conditions set forth in such Note, as of the date written
below.

Date of
Conversion:_________________________________________________________________

Conversion
Price:______________________________________________________________________

Number of Shares of Common Stock Beneficially Owned on the Conversion Date: Less
than 5% of the outstanding Common Stock of Borrower

Shares To Be
Delivered:_________________________________________________________________

Signature:_________________________________________________________________

Print Name:________________________________________________________________

Address:__________________________________________________________________

_________________________________________________________________________

 
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