Blueprint





Exhibit
10.1






 


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


$60,000


 



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
SEG-RedaShex, LLC or its registered assigns (the
“Holder”), or
shall have paid pursuant to the terms hereunder, the principal sum
of $60,000 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.


 


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


 




 

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“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.


 




 

Page 15 of
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d) 


 

e) 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.


 

f) 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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g) 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.


 

h) 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.


 

i) 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.


 

j) 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)

 


 




 

Page 17 of
18








 






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,


	
 

	

with a
copy to bal@clydesnow.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 $60,000 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