Exhibit 10.2

 

8% CONVERTIBLE PROMISSORY NOTE

 

Effective Date: October 24, 2014 U.S. $161,000.00

 

FOR VALUE RECEIVED, PositiveID Corp., a Delaware corporation (“Company”),
promises to pay to Blue Citi, llc, or its successors or assigns (“Investor”),
$161,000 and any interest, fees, charges and penalties in accordance with the
terms set forth herein. This Convertible Promissory Note (this “Note”) is issued
and made effective as of October 24, 2014 (the “Effective Date”). For purposes
hereof, the “Outstanding Balance” (as defined below) means the Purchase Price
(as defined below), as reduced or increased, as the case may be, pursuant to the
terms hereof for redemption, conversion or otherwise, plus any original issue
discount (“OID”), accrued but unpaid interest, collection and enforcements
costs, and any other fees or charges (including without limitation late charges)
incurred under the Note. This Note is issued pursuant to that certain Securities
Purchase Agreement dated October 24, 2014 as the same may be amended from time
to time (the “Agreement”), by and between Company and Investor.

 

The purchase price for this Note is $150,000 (the “Purchase Price”) payable by
wire transfer. The original principal amount of this Note shall include the
Purchase Price, and an $11,000.00 OID to cover due diligence fees to Brighton
Capital, Ltd. and Investor’s legal fees incurred in connection with the purchase
and sale of the Notes. Company agrees that the Note is fully paid for as of the
Effective Date.

 

This Note shall have a maturity date, which shall be the date that is twelve
(12) months from the date the Purchase Price is paid (the “Purchase Price Date”)
for the Note (the “Maturity Date”). The Purchase Price Date for the Note shall
be the Effective Date. On the Maturity Date, the Outstanding Balance shall be
due and payable.

 

1.            Interest. Company may repay this Note at any time on or before 90
days from the Purchase Price Date (the “Prepayment Opportunity Date”) by wiring
130% of all outstanding principal and interest(s) to the Investor. Company may
repay this Note at any time on or before 90 days from the Prepayment Opportunity
Date (the “Final Prepayment Date”) by wiring 140% of all outstanding principal
and interest(s) to the Investor. The Note shall accrue an interest charge of 8%,
per annum (the “Interest Charge”) from the Effective Date. Any interest payable
is in addition to any applicable OID. Any OID remains payable regardless of the
time and manner of payment by Company. Company may not prepay any balance
remaining following the Final Prepayment Date.

 

2.           Conversion. Following the 179th day after the date hereof, Investor
has the right, at its election, to convert (each instance of conversion is
referred to herein as a “Conversion”) all or any part of the Outstanding Balance
of such Note into shares (“Conversion Shares”) of fully paid and non-assessable
common stock of Company (“Common Stock”) as per the following conversion
formula: the number of Conversion Shares equals the Conversion amount divided by
60% of the average of the three (3) lowest closing bid prices in the fifteen
(15) trading days immediately preceding the Conversion Notice (as defined below)
(the “Conversion Price”). Conversion notices (each, a “Conversion Notice”) under
the Note may be effectively delivered to Company by any method of Investor’s
choice (including but not limited to facsimile, email, mail, overnight courier,
or personal delivery), and all Conversions shall be cashless and not require
further payment from Investor. If no objection is delivered from Company to
Investor regarding any calculation of the Conversion Notice within 24 hours of
delivery of the Conversion Notice, Company shall have been thereafter deemed to
have irrevocably confirmed and irrevocably ratified such Conversion Notice and
waived any objection thereto. Company shall deliver the Conversion Shares from
any Conversion to Investor within three (3) business days of Investor’s delivery
of the Conversion Notice to Company.

 

 

 

  

3.            Conversion Delays. If Company fails to deliver Conversion Shares
in accordance with the timeframes stated in Section 2, Investor, at any time
prior to selling all of those Conversion Shares, may rescind in whole or in part
that particular Conversion attributable to the unsold Conversion Shares, with a
corresponding increase to the applicable Outstanding Balance (any returned
Conversion amount will tack back to the Purchase Price Date of the applicable
Note). In addition, for each Conversion, in the event that Conversion Shares are
not delivered by the fourth business day (inclusive of the day of the
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 Conversion
Share delivery is made; and such penalty will be added to the Note being
converted (under Investor’s and Company’s expectations that any penalty amounts
will tack back to the applicable Purchase Price Date). Terms

 

4.            Default. The following are events of default under this Note: (i)
Company shall fail to pay any principal under this Note, pursuant to the terms
of this Note, on or before the Maturity Date; or (ii) Company shall fail to
deliver or threaten to withhold any Conversion Shares in accordance with the
terms hereof; or (iii) Company shall fail to pay any interest or any other
amount under this Note, pursuant to the terms of this Note, on or before the
Maturity Date; or (iv) a receiver, trustee or other similar official shall be
appointed over Company or a material part of its assets and such appointment
shall remain uncontested for ten (10) days or shall not be dismissed or
discharged within thirty (30) days; or (v) Company 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 (vi) Company
shall make a general assignment for the benefit of creditors; or (vii) Company
shall file a petition for relief under any bankruptcy, insolvency or similar law
(domestic or foreign); or (viii) an involuntary proceeding shall be commenced or
filed against Company; or (ix) Company shall become delinquent in its filing
requirements as a fully-reporting issuer registered with the SEC or shall fail
to maintain the listing of its Common Stock on at least one of the OTC tiers or
an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, the New York Stock Exchange, or the American Stock Exchange; or
(x) Company shall fail to observe or perform any covenant, obligation, condition
or agreement of Company contained herein or in the Agreement, including without
limitation all covenants to timely file all required quarterly and annual
reports and any other filings related to Rule 144 and to keep the Share Reserve
(as defined in the Agreement); or (xi) any representation, warranty or other
statement made or furnished by or on behalf of Company to Investor herein or in
connection with the issuance of the Notes shall be false, incorrect, incomplete
or misleading in any material respect when made or furnished; or (xii) the
Company effectuates a reverse split of its Common Stock without at least twenty
(20) days prior written notice to the Investor; or (xiii) the Company proposes
to replace its transfer agent, and fails to provide, prior to the effective date
of such replacement, fully executed Irrevocable Transfer Agent Instructions in a
form as initially delivered pursuant to the Purchase Agreement (including but
not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent and the Company.

 

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5.            Remedies. In addition to the rights of the Investor described in
Section 2 above, in the event of any default under the Note, Investor may at any
time thereafter accelerate the Note, with the Outstanding Balance of the Note
becoming immediately due and payable in cash at the Mandatory Default Amount (as
defined hereafter). Notwithstanding the foregoing, upon the occurrence of any
event of default described in clauses (iv), (v), (vi), (vii) or (viii) of
Section 0, the Outstanding Balance as of the date of acceleration shall become
immediately and automatically due and payable in cash at the Mandatory Default
Amount, without any written notice required by Investor. The “Mandatory Default
Amount” means the greater of (i) the applicable Outstanding Balance 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 (ii) 140% multiplied by the applicable
Outstanding Balance (the “Default Effect”), provided that the Default Effect may
only be applied with respect to the first two (2) events of default that occur.
Commencing five (5) days after the occurrence of any event of default, interest
shall accrue on the Outstanding Balance of each Note at an interest rate equal
to the lesser of 22% per annum or the maximum rate permitted under applicable
law. In connection with such acceleration described herein, Investor need not
provide, and Company hereby waives, any presentment, demand, protest or other
notice of any kind, and Investor may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law. Such acceleration may be
rescinded and annulled by Investor at any time prior to payment hereunder and
Investor shall have all rights as a holder of the Note until such time, if any,
as Investor receives full payment pursuant to this Section 0. No such rescission
or annulment shall affect any subsequent event of default or impair any right
consequent thereon. Nothing herein shall limit 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 Company’s failure to timely deliver certificates representing
Conversion Shares upon Conversion of the Note as required pursuant to the terms
hereof.

 

6.            No Offset. Company acknowledges that this Note is an
unconditional, valid, binding and enforceable obligation of Company not subject
to offset, deduction or counterclaim of any kind. Company hereby waives any
rights of offset it now has or may have hereafter against Investor, its
successors and assigns, and agrees to make the payments or conversions called
for herein in accordance with the terms of the Notes.

 

7.            Ownership Limited to 4.99% of Common Stock Outstanding.
Notwithstanding anything to the contrary contained in the Note (except as set
forth below in this Section), the Note shall not be convertible by Investor, and
Company shall not effect any conversion of the Note or otherwise issue any
shares of Common Stock pursuant to Section 2 hereof, to the extent (but only to
the extent) that Investor together with any of its affiliates would beneficially
own in excess of 4.99% (the “Maximum Percentage”) of the Common Stock
outstanding. To the extent the foregoing limitation applies, the determination
of whether a Note shall be convertible (vis-à-vis other convertible, exercisable
or exchangeable securities owned by Investor or any of its affiliates) and of
which such securities shall be convertible, exercisable or exchangeable (as
among all such securities owned by Investor and its affiliates) shall, subject
to such Maximum Percentage limitation, be determined on the basis of the first
submission to Company for conversion, exercise or exchange (as the case may be).
No prior inability to convert a Note, or to issue shares of Common Stock,
pursuant to this Section shall have any effect on the applicability of the
provisions of this Section with respect to any subsequent determination of
convertibility. For purposes of this Section, beneficial ownership and all
determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined in accordance with
Section 13(e) of the 1934 Act (as defined below) and the rules and regulations
promulgated thereunder. The provisions of this Section shall be implemented in a
manner otherwise than in strict conformity with the terms of this Section to
correct this Section (or any portion hereof) which may be defective or
inconsistent with the intended Maximum Percentage beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such Maximum Percentage limitation. The
limitations contained in this Section shall apply to a successor holder of this
Note and shall be unconditional, irrevocable and non-waivable. For any reason at
any time, upon the written or oral request of Investor, Company shall within one
(1) business day confirm orally and in writing to Investor the number of shares
of Common Stock then outstanding, including by virtue of any prior conversion or
exercise of convertible or exercisable securities into Common Stock, including,
without limitation, pursuant to this Note.

 

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8.            Opinion of Counsel. In the event that an opinion of counsel is
needed for any matter related to any Note, Investor has the right to have any
such opinion provided by its counsel and Company agrees that it shall not
unreasonably withhold acceptance of any such opinion. Investor acknowledges that
Company requires an opinion of counsel independent of Company for all sales of
its restricted common stock.

 

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IN WITNESS WHEREOF, Company has caused this Note to be duly executed as of the
Effective Date set out above.

 

  COMPANY:       PositiveID Corp.       By: /s/ William Caragol

  Printed Name: William Caragol

  Title: CEO

 

 

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

INVESTOR:

 

By: BLUE CITI, LLC

 

By: /s/ Robert Malin   Name: Robert Malin   Title: Managing Member