Blueprint





Exhibit
10.2






 


NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


Original
Issue Date: July 11,
2018


$120,000


 



8% CONVERTIBLE PROMISSORY NOTE



DUE OCTOBER 31, 2018


 


THIS 8%
CONVERTIBLE PROMISSORY NOTE is a duly authorized and validly issued
8% Convertible Promissory Note of Premier Biomedical, Inc. (the
“Company”),
having its principal place of business at P.O. Box 25, Jackson Center, PA 16133,
designated as its 8% Convertible Note due October 31, 2018 (this
Note, the “Note”
and, collectively with the other Notes of such series, the
“Notes”).


 


FOR
VALUE RECEIVED, the Company promises to pay, in cash, to RedDiamond
Partners LLC or its registered assigns (the “Holder”), or shall have paid
pursuant to the terms hereunder, the principal sum of $120,000 on
October 31, 2018 (the “Maturity Date”) or such earlier
date as this Note is required or permitted to be repaid as provided
hereunder, and to pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Note in
accordance with the provisions hereof. This Note is subject to the
following additional provisions:


 

Section
1.                                
Definitions. For
the purposes hereof, in addition to the terms defined elsewhere in
this Note, (a) capitalized terms not otherwise defined herein shall
have the meanings set forth in the Exchange Agreement and (b) the
following terms shall have the following meanings:


 


“Alternate Consideration” shall
have the meaning set forth in Section 5(d).


 


“Alternative Conversion Price”
means 50% of the lowest traded price of the Common Stock in the
fifteen (15) Trading Days prior to the Conversion
Date.


 




 








 






 


 


 “Bankruptcy
Event” means any of the following events: (a) the
Company or any Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) thereof commences a case or other
proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is
commenced against the Company or any Significant Subsidiary thereof
any such case or proceeding that is not dismissed within 60 days
after commencement, (c) the Company or any Significant Subsidiary
thereof is adjudicated insolvent or bankrupt or any order of relief
or other order approving any such case or proceeding is entered,
(d) the Company or any Significant Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within 60
calendar days after such appointment, (e) the Company or any
Significant Subsidiary thereof makes a general assignment for the
benefit of creditors, (f) the Company or any Significant Subsidiary
thereof calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts or (g) the
Company or any Significant Subsidiary thereof, by any act or
failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the
foregoing.


 


“Base Conversion Price” shall have
the meaning set forth in Section 5(b).


 


“Beneficial Ownership Limitation”
shall have the meaning set forth in



Section 4(d).


 


“Buy-In” shall have the meaning set
forth in Section
4(c)(v).


 


“Change of Control Transaction”
means the occurrence after the date hereof of any of (a) an
acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the
Company, by contract or otherwise) of in excess of 50% of the
voting securities of the Company (other than by means of conversion
or exercise of the Notes and the Securities issued together with
the Notes), (b) the Company merges into or consolidates with any
other Person, or any Person merges into or consolidates with the
Company and, after giving effect to such transaction, the
stockholders of the Company immediately prior to such transaction
own less than 50% of the aggregate voting power of the Company or
the successor entity of such transaction, (c) the Company sells or
transfers all or substantially all of its assets to another Person
and the stockholders of the Company immediately prior to such
transaction own less than 50% of the aggregate voting power of the
acquiring entity immediately after the transaction, or (d) the
execution by the Company of an agreement to which the Company is a
party or by which it is bound, providing for any of the events set
forth in clauses (a) through (c) above.


 


“Conversion” shall have the meaning
ascribed to such term in Section 4.


 


“Conversion Date” shall have the
meaning set forth in Section 4(a).


 


“Conversion Price” shall have the
meaning set forth in Section 4(b).


 


“Conversion Schedule” means the
Conversion Schedule in the form of



Schedule 1 attached hereto.


 




 

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“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of this Note in accordance with the terms hereof.


 


“Dilutive Issuance” shall have the
meaning set forth in Section 5(b).


 


“Dilutive Issuance Notice” shall
have the meaning set forth in Section 5(b).


 


“DTC” means the Depository Trust
Company.


 


“DTC/FAST
Program” means the
DTC’s Fast Automated Securities Transfer
Program.


 


“DWAC
Eligible” means that (a)
the Common Stock is eligible at DTC for full services pursuant to
DTC’s Operational Arrangements, (b) the Company has been
approved (without revocation) by the DTC’s underwriting
department, (c) the Transfer Agent is approved as an agent in the
DTC/FAST Program, and (d) the Transfer Agent does not have a policy
prohibiting or limiting delivery of the Conversion Shares via
DWAC.


 


“Event of
Default” shall have the
meaning set forth in Section
6(a).


 


“Exchange Agreement” means the
Exchange Agreement, dated as of August 8, 2017
between the Company and the original Holder, as amended, modified
or supplemented from time to time in accordance with its
terms.


 


“Fundamental Transaction” shall
have the meaning set forth in Section 5(d).


 


“Late Fees” shall have the meaning
set forth in Section
2(c).


 


“Mandatory Default Amount” means
the payment of 130% of the outstanding principal amount of this
Note and accrued and unpaid interest hereon, in addition to the
payment of all other amounts, costs, expenses and liquidated
damages due in respect of this Note.


 


“New York Courts” shall have the
meaning set forth in Section 7(d).


 


“Note Register” shall have the
meaning set forth in Section 2(b).


 


“Notice of Conversion” shall have
the meaning set forth in Section 4(a).


 


“Original Issue Date” means the
date of the first issuance of this Note, regardless of any
transfers of any Note and regardless of the number of instruments
which may be issued to evidence such Notes.


 


“Registration Statement” means a
registration statement covering the resale of the Underlying Shares
by each Holder.


 




 

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“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.


 


“Share Delivery Date” shall have
the meaning set forth in Section 4(c)(ii).


 


“Successor Entity” shall have the
meaning set forth in Section 5(d).


 

Section
2.               
Interest.


 


a)           Payment
of Interest in Cash or Kind. The Company shall pay interest
to the Holder on the aggregate unconverted and then outstanding
principal amount of this Note at the rate of 8% per annum, which
interest amount shall be guaranteed. All interest payments
hereunder will be payable in cash or Common Stock in the
Holder’s discretion. Accrued and unpaid interest shall be due
and payable on each Conversion Date and on the Maturity Date, or as
otherwise set forth herein.


 


b)           Interest
Calculations. Interest shall be calculated on the basis of a
360-day year, consisting of twelve 30 calendar day periods, and
shall accrue daily commencing on the Original Issue Date until
payment in full of the outstanding principal, together with all
accrued and unpaid interest, liquidated damages and other amounts
which may become due hereunder, has been made. Interest hereunder
will be paid to the Person in whose name this Note is registered on
the records of the Company regarding registration and transfers of
this Note (the “Note
Register”).


 


c)           Late
Fee. All overdue accrued and unpaid interest to be paid
hereunder shall entail a late fee at an interest rate equal to the
lesser of 8% per annum or the maximum rate permitted by applicable
law (the “Late
Fees”) which shall accrue daily from the date such
interest is due hereunder through and including the date of actual
payment in full.


 


d)           Prepayment.
At any time upon ten (10) days written notice to the Holder, the
Company may prepay any portion of the principal amount of this Note
and any accrued and unpaid interest. If the Company exercises its right to prepay the
Note, the Company shall make payment to the Holder of an amount in
cash equal to the sum of the then outstanding principal amount of
this Note and interest multiplied by 130%. The Holder may
continue to convert the Note from the date notice of the prepayment
is given until the date of the prepayment.


 


Section
3.                      Registration
of Transfers and Exchanges.


 


a)           Different
Denominations. This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized
denominations, as requested by the Holder surrendering the same. No
service charge will be payable for such registration of transfer or
exchange.


 


b)           Investment
Representations. This Note has been issued subject to
certain investment representations of the original Holder set forth
in the Exchange Agreement and may be transferred or exchanged only
in compliance with the Exchange Agreement and applicable federal
and state securities laws and regulations.


 


 




 

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c)           Reliance
on Note Register. Prior to due presentment for transfer to
the Company of this Note, the Company and any agent of the Company
may treat the Person in whose name this Note is duly registered on
the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or
not this Note is overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.


 


Section
4.                      Conversion.


 


a)           Voluntary
Conversion. At any time after the date of this Note, this
Note shall be convertible, in whole or in part, into shares of
Common Stock at the option of the Holder, from time to time
(subject to the conversion limitations set forth in Section 4(d) hereof). The
Holder shall effect conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as
Annex A (each, a
“Notice of
Conversion”), specifying therein the principal amount
of this Note to be converted and the date on which such conversion
shall be effected (such date, the “Conversion Date”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is
deemed delivered hereunder. No ink-original Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Conversion form be
required. To effect
conversions hereunder, the Holder shall not be required to
physically surrender this Note to the Company unless the entire
principal amount of this Note, plus all accrued and unpaid interest
thereon, has been so converted. Conversions hereunder shall have
the effect of lowering the outstanding principal amount of this
Note in an amount equal to the applicable conversion. The Holder
and the Company shall maintain a Conversion Schedule showing the
principal amount(s) converted and the date of such conversion(s).
The Company may deliver an objection to any Notice of Conversion
within one (1) Business Day of delivery of such Notice of
Conversion. In the event of any dispute or discrepancy, the records
of the Holder shall be controlling and determinative in the absence
of manifest error. The Holder, and
any assignee by acceptance of this Note, acknowledge and agree
that, by reason of the provisions of this paragraph, following
conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note may be less than the amount stated on
the face hereof.


 


b)           Conversion
Price. The conversion price (the “Conversion Price”) in effect on
any Conversion Date shall be equal to 60% of the lowest traded
price of the Common Stock in the fifteen (15) Trading Days prior to
the Conversion Date; provided that, except in the event the
Alternative Conversion Price is applicable pursuant to the
following sentence, the Conversion Price shall not be lower than
$0.00005. Notwithstanding anything herein to the contrary, at any
time after the occurrence of any Event of Default the Holder may
require the Company to, at such Holder’s option and otherwise
in accordance with the provisions for conversion herein, convert
all or any part of this Note into Common Stock at the Alternative
Conversion Price. All such foregoing determinations will be
appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction that
proportionately decreases or increases the Common Stock during such
measuring period. Nothing herein shall limit a Holder’s right
to pursue actual damages or declare an Event of Default pursuant to
Section 6 hereof
and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.


 




 

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c) 

Mechanics of
Conversion.






 


i.           Conversion
Shares Issuable Upon Conversion of Principal Amount. The
number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the
outstanding principal amount of this Note to be converted and any
accrued and unpaid interest to be converted by (y) the Conversion
Price.


 


ii.           Delivery
of Certificate Upon Conversion. Not later than three (3)
Trading Days after each Conversion Date (the “Share Delivery Date”), the Company
shall deliver, or cause to be delivered, to the Holder (A) a
certificate or certificates representing the Conversion Shares
which, on or after the date on which such Conversion Shares are
eligible to be sold under Rule 144 without the need for current
public information and the Company has received an opinion of
counsel to such effect reasonably acceptable to the Company (which
opinion the Company will be responsible for obtaining) shall be
free of restrictive legends and trading restrictions (other than
those which may then be required by the Exchange Agreement)
representing the number of Conversion Shares being acquired upon
the conversion of this Note, and (B) payment in the amount of
accrued and unpaid interest (if the Company has elected or is
required to pay accrued interest in cash). All certificate or
certificates required to be delivered by the Company under this
Section 4(d) shall
be delivered electronically through the Depository Trust Company or
another established clearing corporation performing similar
functions. If the Conversion Date is prior to the date on which
such Conversion Shares are eligible to be sold under Rule 144
without the need for current public information the Conversion
Shares shall bear a restrictive legend in substantially the
following form, as appropriate:


 



“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE 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 (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.”


 




 

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Notwithstanding
the foregoing, commencing on such date that the Conversion Shares
are eligible for sale under Rule 144 subject to current public
information requirements, the Company, upon request of the Holder,
shall obtain a legal opinion to allow for such sales under Rule
144.


 


iii.           Failure
to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date,
the Holder shall be entitled to elect by written notice to the
Company at any time on or before its receipt of such certificate or
certificates, to rescind such Conversion, in which event the
Company shall promptly return to the Holder any original Note
delivered to the Company and the Holder shall promptly return to
the Company the Common Stock certificates issued to such Holder
pursuant to the rescinded Conversion Notice.


 


iv.           Obligation
Absolute; Partial Liquidated Damages. The Company’s
obligations to issue and deliver the Conversion Shares upon
conversion of this Note in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any
obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to the Holder in connection with the issuance of such
Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the event the Holder of
this Note shall elect to convert any or all of the outstanding
principal or interest amount hereof, the Company may not refuse
conversion based on any claim that the Holder or anyone associated
or affiliated with the Holder has been engaged in any violation of
law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and or enjoining conversion
of all or part of this Note shall have been sought and obtained,
and the Company posts a surety bond for the benefit of the Holder
in the amount of 150% of the outstanding principal amount of this
Note, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the
underlying dispute and the proceeds of which shall be payable to
the Holder to the extent it obtains judgment. In the absence of
such injunction, the Company shall issue Conversion Shares or, if
applicable, cash, upon a properly noticed conversion. If the
Company fails for any reason to deliver to the Holder such
certificate or certificates pursuant to Section 4(c)(ii) by the Share
Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, $500 per Trading Day for
each Trading Day after such Share Delivery Date until such
certificates are delivered or Holder rescinds such conversion.
Nothing herein shall limit a Holder’s right to pursue actual
damages or declare an Event of Default pursuant to Section 6 hereof for the
Company’s failure to deliver Conversion Shares within the
period specified herein and the Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.


 


 




 

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v.           Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the
Holder, if the Company fails for any reason to deliver to the
Holder such certificate or certificates by the Share Delivery Date
pursuant to Section
4(c)(ii), and if after such Share Delivery Date the Holder
is required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which
the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a “Buy-In”), then the Company shall
(A) pay in cash to the Holder (in addition to any other remedies
available to or elected by the Holder) the amount, if any, by which
(x) the Holder’s total purchase price (including any
brokerage commissions) for the Common Stock so purchased exceeds
(y) the product of (1) the aggregate number of shares of Common
Stock that the Holder was entitled to receive from the conversion
at issue multiplied by (2) the actual sale price at which the sell
order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of the
Holder, either reissue (if surrendered) this Note in a principal
amount equal to the principal amount of the attempted conversion
(in which case such conversion shall be deemed rescinded) or
deliver to the Holder the number of shares of Common Stock that
would have been issued if the Company had timely complied with its
delivery requirements under Section 4(c)(ii). For example,
if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted
conversion of this Note with respect to which the actual sale price
of the Conversion Shares (including any brokerage commissions)
giving rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, the Company
shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of
this Note as required pursuant to the terms hereof.


 


vi.           Reservation
of Shares Issuable Upon Conversion. The Company covenants
that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock a number of shares
of Common Stock at least equal to 300% of the Required
Minimum for
the sole purpose of issuance upon conversion of this Note and
payment of interest on this Note, each as herein provided, free
from preemptive rights or any other actual contingent purchase
rights of Persons other than the Holder (and the other holders of
the Notes), not less than such aggregate number of shares of the
Common Stock as shall (subject to the terms and conditions set
forth in the Exchange Agreement) be issuable (taking into account
the adjustments and restrictions of Section 5) upon the conversion
of the then outstanding principal amount of this Note and payment
of interest hereunder. The Company covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and
nonassessable.


 


vii.           Fractional
Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Note.
As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.


 




 

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viii.           Transfer
Taxes and Expenses. The issuance of certificates for shares
of the Common Stock on conversion of this Note shall be made
without charge to the Holder hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or
delivery of such certificates, provided that, the Company shall not
be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder
of this Note so converted and the Company shall not be required to
issue or deliver such certificates unless or until the Person or
Persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid. The
Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion.


 


d)           Holder’s
Conversion Limitations. The Company shall not effect any
conversion of principal and/or interest of this Note, and a Holder
shall not have the right to convert any principal and/or interest
of this Note, to the extent that after giving effect to the
conversion set forth on the applicable Notice of Conversion, the
Holder (together with the Holder’s Affiliates, and any
Persons acting as a group together with the Holder or any of the
Holder’s Affiliates) would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon conversion of
this Note with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which are
issuable upon (i) conversion of the remaining, unconverted
principal amount of this Note beneficially owned by the Holder or
any of its Affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company subject to a limitation on conversion or exercise analogous
to the limitation contained herein (including, without limitation,
any other Notes) beneficially owned by the Holder or any of its
Affiliates. Except as set forth in the preceding sentence, for
purposes of this Section
4(d), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. To the extent that the
limitation contained in this Section 4(d) applies, the
determination of whether this Note is convertible (in relation to
other securities owned by the Holder together with any Affiliates)
and of which principal amount of this Note is convertible shall be
in the sole discretion of the Holder, and the submission of a
Notice of Conversion shall be deemed to be the Holder’s
determination of whether this Note may be converted (in relation to
other securities owned by the Holder together with any Affiliates)
and which principal amount of this Note is convertible, in each
case subject to the Beneficial Ownership Limitation. To ensure
compliance with this restriction, the Holder will be deemed to
represent to the Company each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such
determination.
In addition, a determination as to any
group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining
the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as stated
in the most recent of the following: (i) the Company’s most
recent periodic or annual report filed with the Commission, as the
case may be, (ii) a more recent public announcement by the Company,
or (iii) a more recent written notice by the Company or the
Company’s transfer agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a
Holder, the Company shall within two Trading Days confirm orally
and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Note, by the Holder or its Affiliates since the date as of which
such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of this
Note held by the Holder. The Holder, upon not less than 61
days’ prior notice to the Company, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon
conversion of this Note held by the Holder and the Beneficial
Ownership Limitation provisions of this Section 4(d) shall continue to
apply. Any such increase or decrease will not be effective until
the 61st
day after such notice is delivered to the Company. The Beneficial
Ownership Limitation provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 4(d) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Note.


 


 




 

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Section
5.               
Certain
Adjustments.


 


a)           Stock
Dividends and Stock Splits. If the Company, at any time
while this Note is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions payable in shares
of Common Stock on shares of Common Stock or any Common Stock
Equivalents (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon conversion of, or
payment of interest on, the Notes), (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, (iii)
combines (including by way of a reverse stock split) outstanding
shares of Common Stock into a smaller number of shares or (iv)
issues, in the event of a reclassification of shares of the Common
Stock, any shares of capital stock of the Company, then the
Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
any treasury shares of the Company) outstanding immediately before
such event, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to this Section 5 shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or
re-classification.


 


b)           Subsequent
Equity Sales. If, at any time while this Note is
outstanding, the Company or any Subsidiary, as applicable, sells or
grants any option to purchase or sells or grants any right to
reprice, or otherwise disposes of or issues (or announces any sale,
grant or any option to purchase or other disposition), any Common
Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock at an effective price per share that is
lower than the then Conversion Price (such lower price, the
“Base Conversion
Price” and such issuances, collectively, a
“Dilutive
Issuance”) (if the holder of the Common Stock or
Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which are issued in
connection with such issuance, be entitled to receive shares of
Common Stock at an effective price per share that is lower than the
Conversion Price, such issuance shall be deemed to have occurred
for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the
Base Conversion Price. Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will
be made under this Section 5(b)
in respect of an Exempt
Issuance. The Company shall notify the Holder in writing, no
later than the Trading Day following the issuance of any Common
Stock or Common Stock Equivalents subject to this Section 5(b), indicating
therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such
notice, the “Dilutive
Issuance Notice”). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section
5(b), upon the occurrence of any Dilutive Issuance, the
Holder will be entitled to receive a number of Conversion Shares
based upon the Base Conversion Price on or after the date of such
Dilutive Issuance, regardless of whether the Holder accurately
refers to the Base Conversion Price in the Notice of
Conversion.

 


c)           Subsequent
Rights Offerings. In addition
to any adjustments pursuant to Section 5(a)
above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to
purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Note
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).


 


 




 

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d)           Fundamental
Transaction. If, at any time while this Note is outstanding,
(i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company
with or into another Person, (ii) the Company, directly or
indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any,
direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to
which holders of Common Stock are permitted to sell, tender or
exchange their shares for other securities, cash or property and
has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or
more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Note, the Holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction
(without regard to any limitation in Section 4(d) on the conversion
of this Note), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the
“Alternate
Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Note is convertible immediately prior
to such Fundamental Transaction (without regard to any limitation
in Section 4(d) on
the conversion of this Note). For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1)
share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note
following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Note and
the Exchange Agreement in accordance with the provisions of this
Section 5(d)
pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the holder of this Note, deliver to the
Holder in exchange for this Note a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Note which is convertible for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon conversion of this Note (without regard to any
limitations on the conversion of this Note) prior to such
Fundamental Transaction, and with a conversion price which applies
the conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of this Note immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Note and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Note and
the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.


 


e)           Calculations.
All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares
of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock
(excluding any treasury shares of the Company) issued and
outstanding.


 


f)           Notice
to the Holder.


 


i.           Adjustment
to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 5, the Company shall
promptly deliver to each Holder a notice setting forth the
Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.


 


 




 

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ii.           Notice
to Allow Conversion by Holder. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E)
the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall
cause to be filed at each office or agency maintained for the
purpose of conversion of this Note, and shall cause to be
delivered to the Holder at its last
address as it shall appear upon the Note Register, at least twenty
(20) calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange, provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to convert this Note during the 20-day
period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be
expressly set forth herein.

 




Section
6.             
Events of
Default.


 


a)           “Event
of Default” means, wherever used herein, any of the
following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative
or governmental body):


 


i.           any
default in the payment of (A) the principal amount of any Note or
(B) interest, liquidated damages and other amounts owing to a
Holder on any Note, as and when the same shall become due and
payable (whether on a Conversion Date or the Maturity Date or by
acceleration or otherwise) which default, solely in the case of an
interest payment or other default under clause (B) above, is not
cured within 3 Trading Days;


 


ii.           the
Company shall materially fail to observe or perform any other
material covenant or material agreement contained in the Notes
(other than a breach by the Company of its obligations to deliver
shares of Common Stock to the Holder upon conversion, which breach
is addressed in clause (ix) below) which failure is not cured, if
possible to cure, within the earlier to occur of (A) 5
Trading Days after notice of such failure sent by the Holder or by
any other Holder to the Company
and (B) 10 Trading Days after the Company has become or should have
become aware of such failure;


 




 

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iii.           a
default or event of default (subject to any grace or cure period
provided in the applicable agreement, document or instrument) shall
occur under (A) any of the Transaction Documents or (B) any other
material agreement, lease, document or instrument to which the
Company or any Subsidiary is obligated (and not covered by clause
(vi) below);


 


iv.           any
representation or warranty made
in this Note, any other Transaction Documents, any written
statement pursuant hereto or thereto or any other report, financial
statement or certificate made or delivered to the Holder or any
other Holder shall be untrue or incorrect in any material respect
as of the date when made or deemed made;


 


v.           the
Company or any Significant Subsidiary (as such term is defined in
Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;


 


vi.           the
Company or any Subsidiary shall default on any of its obligations
under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which
there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long
term leasing or factoring arrangement that (a) involves an
obligation greater than $100,000, whether such indebtedness now
exists or shall hereafter be created, and (b) results in such
indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and
payable;


 


vii.           the
Common Stock shall not be eligible for listing or quotation for
trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days
or the transfer of shares of Common Stock through the Depository
Trust Company System is no longer available or
“chilled”;


 


viii.           the
Company shall be a party to any Change of Control Transaction or
Fundamental Transaction or shall agree to sell or dispose of all or
in excess of 50% of its assets in one transaction or a series of
related transactions (whether or not such sale would constitute a
Change of Control Transaction);


 


ix.           the
Company does not meet the current public information requirements
under Rule 144;


 


x.           the
Company fails to file with the Commission any required reports
under Section 13 or 15(d) of the Exchange Act such that it is not
in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if
applicable);


 




 

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xi.           if
the Company or any Significant Subsidiary shall: (i) apply for or
consent to the appointment of a receiver, trustee, custodian or
liquidator of it or any of its properties, (ii) admit in writing
its inability to pay its debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated
bankrupt or insolvent or be the subject of an order for relief
under Title 11 of the United States Code or any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute of any other jurisdiction or foreign
country, or (v) file a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with
creditors or to take advantage or any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or
statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law, or
(vi) take or permit to be taken any action in furtherance of or for
the purpose of effecting any of the foregoing;


 


xii.           if
any order, judgment or decree shall be entered, without the
application, approval or consent of the Company or any Significant
Subsidiary, by any court of competent jurisdiction, approving a
petition seeking liquidation or reorganization of the Company or
any Subsidiary, or appointing a receiver, trustee, custodian or
liquidator of the Company or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree
shall continue unstayed and in effect for any period of sixty (60)
days;


 


xiii.           the
occurrence of any levy upon or seizure or attachment of, or any
uninsured loss of or damage to, any property of the Company or any
Subsidiary having an aggregate fair value or repair cost (as the
case may be) in excess of $100,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be
set aside, bonded or discharged within thirty (30) days after the
date thereof;


 


xiv.           the
Company shall fail to maintain sufficient reserved shares pursuant
to Section
4(c)(vi); or


 


xv.           any
monetary judgment, writ or similar final process shall be entered
or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and
such judgment, writ or similar final process shall remain
unvacated, unbonded or unstayed for a period of 45 calendar
days.


 




 

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b)           Remedies
Upon Event of Default. Subject to the Beneficial Ownership
Limitation as set forth in Section 4(d), if any Event of
Default occurs, then the outstanding principal amount of this Note,
plus accrued but unpaid interest, liquidated damages and other
amounts owing in respect thereof through the date of acceleration,
shall become, at the Holder’s election, immediately due and
payable in cash at the Mandatory Default Amount. After 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 additional interest rate equal to the lesser of 2% per
month (24% per annum) or the maximum rate permitted under
applicable law. Upon the payment in full of the Mandatory Default
Amount, the Holder shall promptly surrender this Note to or as
directed by the Company. In connection with such acceleration
described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand, protest or other notice of
any kind, and the Holder 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 Holder at
any time prior to payment hereunder and the Holder shall have all
rights as a holder of the Note until such time, if any, as the
Holder receives full payment pursuant to this Section 6(b). No such
rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.


 

Section
7.             
Miscellaneous.


 


a)           Notices.
Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address
set forth above, or such other facsimile number or address as the
Company may specify for such purposes by notice to the Holder
delivered in accordance with this Section 7(a). Any and all
notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by
facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number or address
of the Holder as set forth in the Exchange Agreement or as
appearing on the books of the Company, or such other facsimile
number or address as the Holder may specify for such purposes by
notice to the Company delivered in accordance with this
Section 7(a). Any
notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages
attached hereto prior to 12:00 p.m. (New York City time) on any
date, (ii) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto
on a day that is not a Trading Day or later than 12:00 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (iv) upon actual receipt by
the party to whom such notice is required to be given.


 


b)           Absolute
Obligation. Except as expressly provided herein, no
provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency,
herein prescribed. This Note is a direct debt obligation of the
Company. This Note ranks pari passu with all other Notes now
or hereafter issued under the terms set forth herein.


 


c)           Lost
or Mutilated Note. If this Note shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated
Note, or in lieu of or in substitution for a lost, stolen or
destroyed Note, a new Note for the principal amount of this Note so
mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of
the ownership hereof, reasonably satisfactory to the
Company.


 




 

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d)           Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflict
of laws thereof. Each party agrees that all legal proceedings
concerning the interpretation, enforcement and defense of the
transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the
City of New York, Borough of Manhattan (the “New York Courts”). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of
the New York Courts for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), 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 such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that
such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by applicable law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Note or the transactions
contemplated hereby. If any party shall commence an action or
proceeding to enforce any provisions of this Note, then the
prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs
and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.


 


e)           Waiver.
Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of
any other provision of this Note. The failure of the Company or the
Holder to insist upon strict adherence to any term of this Note on
one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence
to that term or any other term of this Note on any other occasion.
Any waiver by the Company or the Holder must be in
writing.


 


 




 

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f)           Severability.
If any provision of this Note is invalid, illegal or unenforceable,
the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder violates the applicable law
governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of
interest permitted under applicable law. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as
contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of
this Note, and the Company (to the extent it may lawfully do so)
hereby expressly waives all benefits or advantage of any such law,
and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the
Holder, but will suffer and permit the execution of every such as
though no such law has been enacted.


 


g)           Remedies,
Characterizations, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under
this Note and any of the other Transaction Documents at law or in
equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the
Holder’s right to pursue actual and consequential damages for
any failure by the Company to comply with the terms of this Note.
The Company covenants to the Holder that there shall be no
characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation
thereof) shall be the amounts to be received by the Holder and
shall not, except as expressly provided herein, be subject to any
other obligation of the Company (or the performance thereof). The
Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any such
breach or any such threatened breach, without the necessity of
showing economic loss and without any bond or other security being
required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Note.


 


h)           Next
Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business
Day.


 


i)           Headings.
The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or
affect any of the provisions hereof.


 


*********************


 



(Signature Pages Follow)

 


 




 

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IN
WITNESS WHEREOF, the Company has caused this Note to be duly
executed by a duly authorized officer as of the date first above
indicated.


 


 


	
 

	

PREMIER
BIOMEDICAL INC.


 


 


	
 

	

By:
/s/ William A.
Hartman                                  




     Name:
William A. Hartman


     Title:
President


Email
for delivery of Notices:


w.hartman@premierbiomedical.com,


	
 

	
 


	
 

	
 









 

Page 18 of
18








 







ANNEX A


 



NOTICE OF CONVERSION


 


 


The
undersigned hereby elects to convert principal under the 8%
Convertible Promissory Note due October 31, 2018 of Premier
Biomedical Inc. (the
“Company”), into
shares of common stock (the “Common Stock”), of the Company
according to the conditions hereof, as of the date written below.
If shares of Common Stock are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the holder for any
conversion, except for such transfer taxes, if any.


 


By the
delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock
does not exceed the amounts specified under Section 4 of this Note, as
determined in accordance with Section 13(d) of the Exchange
Act.


 


The
undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection
with any transfer of the aforesaid shares of Common
Stock.


 


Conversion
calculations:


Date to
Effect Conversion:


 


Principal Amount of
Note to be Converted:


 


Payment
of Interest in Common Stock __ yes __ no


If yes,
$_____ of Interest Accrued on Account of Conversion at
Issue.


 


Number
of shares of Common Stock to be issued:


 


 


Signature:


 


Name:


 


Delivery
Instructions:


 


 


 




 








 







Schedule 1


 



CONVERSION SCHEDULE


 


This 8%
Convertible Promissory Note due on October 31, 2018 in the original
principal amount of $120,000 is issued by Premier Biomedical
Inc. This Conversion
Schedule reflects conversions made under Section 4 of the above
referenced Note.


 


Dated:


 


	

 


Date of
Conversion


(or for
first entry, Original Issue Date)

	

 


Amount
of Conversion

	

 


Aggregate
Principal Amount Remaining Subsequent to Conversion


(or
original Principal Amount)

	

 


Company
Attest