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Exhibit 10.4
 
 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (II) UNLESS SOLD OR ELIGIBLE TO
BE SOLD PURSUANT TO AN EXEMPTION UNDER, OR IN A TRANSACTION NOT SUBJECT TO, SAID
ACT.
 
Q BIOMED, INC.
 
CONVERTIBLE NOTE
 
ORIGINAL ISSUE DATE: __________,
2016                                                                                                                     
U.S. $_______
 
THIS CONVERTIBLE NOTE, (this “Note”) provided, dated and made effective as of
_____________ (the “Effective Date”).
 
FROM:
Q BIOMED, INC., a company incorporated under the laws of the State of Nevada,
U.S.A., and having an address for notice and delivery located at c/o SOVR Law,
501 Madison Avenue – 14th Floor, New York, NY 10022 (the “Borrower”);

 
TO
___________________, having an address for notice and for delivery located at,
_______________________________including its successors or assigns, the
“Lender”);

 
(the Borrower and the Lender being hereinafter singularly also referred to as a
“Party” and collectively referred to as the “Parties” as the context so
requires).
 
FOR VALUE RECEIVED, and subject to the other terms and conditions hereof, the
Borrower hereby promises to pay to the Lender the aggregate sum of
_______________________ (U.S.$____________), in lawful money of the United
States (hereinafter referred to as the “Principal Sum”) or in Shares (as defined
in Section 1(a) of this Note) or a combination thereof on or prior to the
18-month anniversary of the Effective Date (“Maturity Date”).
 
1. Material Terms.
 
(a)           Conversion. Subject to subparagraph (1)(a)(3) hereof, until the
Maturity Date, the Lender has the exclusive right to elect conversion of any
amount due under this Note, including the entire Principal Sum and Interest
(each, a “Conversion”), into shares of the Borrower’s common stock (“Shares”) at
a conversion price per share equal to:
 
(1)           the lesser of: (A) a forty percent (40%) discount to the average
closing price for the ten (10) consecutive trading days immediately preceding
the date a notice of Conversion (Exhibit A) is delivered via email or (B) one
dollar fifty-five cents ($1.55) per share, but in no event shall the Conversion
ever be lower than one dollar twenty-five cents ($1.25) per share (“Floor
Price”); or
 

 
Exhibit 10.4, 1

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(2)           five dollars ($5.00) per share if the average VWAP (as defined
below) as calculated using the arithmetic average of the VWAPs for the ten (10)
Trading Days immediately preceding the Maturity Date and shall automatically
convert into such Shares on the Maturity Date.
 
(3)           If the Borrower’s Shares are up-listed to senior exchange such as
the AMEX or NASDAQ, all monies due under this Note, including Principal Sum and
Interest, shall automatically convert into Shares pursuant to the applicable
formula in sub-paragraph (1) or (2) above.
 
(4)           If the average VWAP (as defined below) as calculated using the
arithmetic average of the VWAPs for the ten (10) Trading Days immediately
preceding the Maturity Date is less than one dollar twenty-five cents ($1.25)
per share, then the Lender has the right to demand repayment of all monies due
under this Note, including Principal and Interest.
 
(b) Interest. The Principal shall accrue at an annual interest rate of 10%
(“Interest”).
 
(c) Payment with Shares. If a payment is to be made in Shares by way of a
Conversion, then the number of Shares paid shall be in an amount equal to the
amount of the Principal Sum and/or any accrued interest thereon that Lender
elects to have paid in Shares divided by the Conversion Price. Pursuant to the
prior provisions regarding Conversion, all Shares shall be delivered to Lender
or its designated broker within five Trading Days of the date on which the
Lender notifies the Borrower of its election to convert all or a portion of this
Note (the “Conversion Date”).
 
(d) Failure to deliver Shares.  If the Lender informs the Borrower that a
payment is to be made in Shares by way of a Conversion and the Lender or its
counsel provides the Borrower’s transfer agent with an opinion that such Shares
may be delivered without transfer restrictions, but the Borrower fails to
deliver the Shares in accordance herewith (a “Delivery Failure”) AND the
Borrower fails to cure such Delivery Failure within 10 business days from the
date of such Delivery Failure, then such shall constitute a default hereunder,
and, in addition to delivering such Shares, the Borrower shall also deliver to
Lender additional Shares equal to 1% of all the Shares that were to be delivered
hereunder for each additional ten-Trading-Day period during which the Shares are
not so delivered (collectively, the “Additional Shares).  If a Delivery Failure
occurs, the Lender may rescind its decision to receive payment in Shares at any
time prior to delivery of the Shares; provided that in such case, Borrower shall
still be required to deliver all Additional Shares that accrued prior to such
rescission. Delivery of any Additional Shares shall not reduce the outstanding
balance of this Note and none of the remedies provided to the Lender in this
subsection shall limit any other remedies of the Lender hereunder or under any
other agreement.
 
(e)           Most Favored Nations. Regardless of the Floor Price, during the
period from the date of this Note through the Maturity Date, the Borrower shall
not enter into any additional, or modify any existing, agreements with any
existing or future investors of the Borrower that establish rights or otherwise
benefit such investor(s) resulting in material rights or benefits more favorable
to such investor in relation to the Lender, unless, in any such case, the Lender
has been provided with such rights and benefits. However, in no event shall the
conversion of any promissory note issued with terms materially the same as this
Note whether it be issued prior or subsequent to the issuance of this Note,
trigger the protections afforded herein.
 

 
Exhibit 10.4, 2

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2. Events of Default. Unless waived in writing by the Lender, the Borrower shall
be in default of this Note, the Principal Sum and all other amounts outstanding
hereunder will become immediately due and payable on demand by the Lender, and
the Borrower shall become liable to the Lender for all of Lender’s reasonable
legal expenses (as determined by the Borrower’s current auditor, in the event of
a dispute) in enforcing the terms of this Note, in any of the following events:
 
(a) if an order is made or a resolution is passed or a petition is filed for the
winding-up, dissolution, liquidation or amalgamation of the Borrower;
 
(b) if the Borrower makes an assignment or proposal or a bankruptcy petition is
filed or presented against the Borrower or the Borrower otherwise becomes
subject to the provisions of any legislation for the benefit of its creditors or
otherwise acknowledges its insolvency;
 
(c) if any execution, sequestration, extent or any other process of any kind
becomes enforceable against the Borrower and is not satisfied within 30 calendar
days;
 
(d) if the Borrower ceases or demonstrates an intention to cease to carry on the
Borrower’s business;
 
(e) if the Borrower carries on any business that it is restricted from carrying
on by its charter documents or by law;
 
(f) if the Borrower fails to make any payment as set out in this Note, including
without limitation failing to deliver Shares within the timeframe set forth
therein;
 
(g) if the Borrower fails to comply with or perform under any other provision of
this Note; or
 
(h) if the Borrower materially defaults on the terms of any other debt that is
currently outstanding or that is subsequently issued to the Lender or any third
party.
 
(i) The Borrower or any subsidiary of the Borrower shall make an assignment for
the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business, or such a receiver or trustee shall otherwise be appointed.
 
(j) Any money judgment, writ or similar process shall be entered or filed
against the Borrower or any subsidiary of the Borrower or any of its property or
other assets for more than $150,000, and shall remain unvacated, unbonded or
unstayed for a period of twenty (20) days unless otherwise consented to by the
Holder, which consent will not be unreasonably withheld
 
(k) Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief under any bankruptcy law or
any law for the relief of debtors shall be instituted by or against the Borrower
or any subsidiary of the Borrower.
 

 
Exhibit 10.4, 3

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(l) The Borrower shall fail to maintain the listing of the Common Stock on at
least one of the OTC Markets (which shall include OTCPink, OTCQB and OTCQX)  or
the equivalent replacement exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
 
(m) The Borrower shall fail to comply in any material respect with the reporting
requirements or obligations of the Exchange Act; and/or the Borrower shall cease
to be subject to the reporting requirements or obligations of the Exchange Act.
 
(n) Any dissolution, liquidation, or winding up of Borrower or any substantial
portion of its business.
 
(o) Any cessation of operations by Borrower or Borrower admits it is otherwise
generally unable to pay its debts as such debts become due, provided, however,
that any disclosure of the Borrower’s ability to continue as a “going concern”
shall not be an admission that the Borrower cannot pay its debts as they become
due.
 
(p) The failure by Borrower to maintain any material intellectual property
rights, personal, real property or other assets which are necessary to conduct
its business (whether now or in the future).
 
(q) The restatement of any financial statements filed by the Borrower with the
SEC for any date or period from two years prior to the Issue Date of this Note
and until this Note is no longer outstanding, if the result of such restatement
would, by comparison to the unrestated financial statement, have constituted a
material adverse effect on the rights of the Holder with respect to this Note.
 
(r) The Borrower effectuates a reverse split of its Common Stock without twenty
(20) days prior written notice to the Holder.
 
(s) In the event that the Borrower proposes to replace its transfer agent, the
Borrower fails to provide, prior to the effective date of such replacement, a
fully executed Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to section 1.3 on the note (including but not limited to the
provision to irrevocably reserve shares of Common Stock in the Reserved Amount)
signed by the successor transfer agent to Borrower and the Borrower.
Additionally, In the event that the Share Reserve has been depleted and Borrower
Fails to cause the increase of the number of shares within 3 business days of
the reserve being depleted.
 

 
Exhibit 10.4, 4

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(t) Notwithstanding anything to the contrary contained in this Note or the other
related or companion documents, a breach or default by the Borrower of any
covenant or other term or condition contained in any of the Other Agreements,
after the passage of all applicable notice and cure or grace periods, shall, at
the option of the Holder, be considered a default under this Note and the Other
Agreements, in which event the Holder shall be entitled (but in no event
required) to apply all rights and remedies of the Holder under the terms of this
Note and the Other Agreements by reason of a default under said Other Agreement
or hereunder. “Other Agreements” means, collectively, all agreements and
instruments between, among or by: (1) the Borrower, and, or for the benefit of,
(2) the Holder and any affiliate of the Holder, including, without limitation,
promissory notes; provided, however, the term “Other Agreements” shall not
include the related or companion documents to this Note. Each of the loan
transactions will be cross-defaulted with each other loan transaction and with
all other existing and future debt of Borrower to the Holder.
 
(u) the Borrower fails to remain current in its filings with the SEC for more
than 30 days after the filing deadline.
 
(v) after 12 months following the date the Borrower no longer deems itself a
shell as reflected in a ’34 Act filing on the Securities and Exchange’s Edgar
filing system, the Lender is unable to convert this Note  into free trading
shares for any reason, including, but not limited to, the Lender’s inability to
sell the Borrower’s free trading shares on the market, and is not remedied
within 30 days after such event arises.
 
(w) if, at any time, the Borrower fails to maintain the amount of Reserved
shares, as specified in the Reserve Letter.
 
(x) Fundamental Change of Management.  In the event that Denis Corin is no
longer a senior officer, director or “Affiliate” as defined in the Exchange Act
of 1934, the Lender shall have the right to accelerate payment of all unpaid
monies due under this Note.
 
The Lender may waive in writing any default by the Borrower in the observance or
performance of any covenant, agreement or condition contained in this Note or
any other event which without such waiver would cause the Principal Sum and
Interest hereby to be immediately due and payable but no such waiver or other
act or omission of the Lender will extend to or affect any subsequent default or
event or the rights resulting therefrom.
 

 
Exhibit 10.4, 5

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3. Covenants. The Borrower will at all times until payment in full of this Note
and all interest due thereon:
 
(a) give to the Lender any information which it may reasonably require relating
to the business of the Borrower, and upon request furnish access to its books
and accounts and records at all reasonable times;
 
(b) maintain and preserve its charter and corporate organization in good
standing and, subject to all the provisions herein contained, diligently
preserve all the rights, powers, privileges and goodwill owned by the Borrower;
 
(c) conduct the Borrower’s business in a proper and businesslike manner; and
 
(d) take all action necessary to at all times have authorized, and reserved for
the purpose of issuance, such number of Shares as shall be necessary to effect
the full conversion of this Note.
 
4. Miscellaneous.
 
(a) The Lender agrees to pay for or reimburse any reasonable legal fees (as
determined by the Borrower’s current auditor in the event of a dispute) incurred
by the Borrower related to converting or collecting upon this Note.

 
5. Definitions.
 
For purposes of this Note:
 
“Trading Day” means any day on which the Borrower’s common stock is traded on
the OTCQB, or, if the OTCQB is not the principal trading market for the common
stock, then on the principal securities exchange or securities market on which
the common stock is then traded, provided that “Trading Day” shall not include
any day on which the common stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the common stock is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading Day in
writing by the Lender.
 
“VWAP” means, for the common stock of the Borrower as of any date, the dollar
volume-weighted average price for such security on the principal market (or, if
the principal market is not the principal trading market for such security, then
on the principal securities exchange or securities market on which such security
is then traded) during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its
“Volume at Price” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC).
 

 
Exhibit 10.4, 6

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5. Assignment. This Note and all its terms and conditions will enure to the
benefit of the Lender and its successors and assigns, and will be binding upon
the Borrower and the Borrower’s successors and assigns.  The Lender may not
assign this Note without the written permission of the Borrower.
 
6. Governing Law. This Note shall be construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and
performance of this Note shall be governed by, the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. The Borrower hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in New York County, New
York, for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
 

 
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of
the Effective Date set out above.
Q BIOMED, INC.
 
By: _________________________________
Name: Denis Corin
Title: President

 
IN WITNESS WHEREOF, the Lender has caused this Note to be duly executed as of
the Effective Date set out above.
Lender
 
By: _________________________________
Name:
Title:

 

 
Exhibit 10.4, 7

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Exhibit A

NOTICE OF CONVERSION
 
The undersigned, the holder of the Promissory Note dated ___________, 2015 in
the principal amount of $______________, hereby surrenders such Note for
conversion into ___________ shares of the restricted Common Stock of Q BioMed
Inc., in exchange of the principal balance of the Note and any and all unpaid
and accrued interest thereon representing ____% of the total unpaid principal
and interest amount of such Note, and requests that the certificates for such
shares be issued in the name of, and delivered to:
 
Name: ________________________________
 
Delivery Address:
________________________________________________________________
 
Shareholder SSN or TIN: ________________________________
 
As a result, the outstanding balance including principal and interest is now
$______________ and the note shall be amended and reissued as of the date of
this notice.
 
Dated:
 

 
__________________________
Name:
(Signature must conform in all respects to name of Holder as specified on the
face of the Note)
 

 
Agreed to and Accepted this ___________ day of ______, 20__
 
 
 
 
Q BIOMED INC.
 

 
By:_________________________
     Denis Corin, President

Exhibit 10.4, 8

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