THIS
NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT”)


 


US
$66,150.00 


 


POSITIVEID
CORP.


10%
CONVERTIBLE REDEEMABLE NOTE


DUE
JULY 7, 2017


 


FOR
VALUE RECEIVED, PositiveID Corp. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized
successors and Permitted Assigns, defined below, (“Holder”), the aggregate principal face amount of Sixty Six
Thousand One Hundred Fifty Dollars exactly (U.S. $66,150.00) on July 7, 2017 (“Maturity Date”) and to pay interest
on the principal amount outstanding hereunder at the rate of 10% per annum commencing on July 7, 2016. The interest will be paid
to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this
Note. This Note contains a 5% OID such that the purchase price is $63,000.00. The principal of, and interest on, this Note are
payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company
as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding
principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the
Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company.
The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy
and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest
shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein. Permitted Assigns means any Holder assignment,
transfer or sale of all or a portion of this Note accompanied by an Opinion of Counsel as provided for in Section 2(f) of the
Securities Purchase Agreement.


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This
Note is subject to the following additional provisions:


 


1.
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 made for such registration or transfer or exchange,
except that Holder shall pay any tax or other governmental charges payable in connection therewith. To the extent that Holder
subsequently transfers, assigns, sells or exchanges any of the multiple lesser denomination notes, Holder acknowledges that
it will provide the Company with Opinions of Counsel as provided for in Section 2(f) of the Securities Purchase
Agreement.


 


2.
The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable
laws.


 


3.
This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended
(“Act”), applicable state securities laws and Sections 2(f) and 5(f) of the Securities Purchase Agreement.
Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for
transfer 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 Company’s records as the owner hereof for all other purposes, whether or not this Note be overdue,
and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note
electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in
Section 4(a), and any prequalified prospective transferee of this Note, also is required to give the Company written
confirmation that this Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit
A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date. All
notices of conversion will be accompanied by an Opinion of Counsel.


 


4.
(a) The Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount
of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) at a price
(“Conversion Price”) for each share of Common Stock equal to 65% of the lowest closing bid
of the Common Stock as reported on the National Quotations Bureau OTC Markets exchange which the Company’s shares are
traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for the
fifteen prior trading days including the day upon which a Notice of Conversion is received
by the Company (provided such Notice of Conversion is delivered together with an Opinion of Counsel, by fax or other electronic
method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include
the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded.
Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days
of receipt by the Company of the Notice of Conversion. Accrued, but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value
per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the
lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event
the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 55% instead of 65%
while that “Chill” is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion,
along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the
outstanding shares of the Common Stock of the Company.


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(b).
Interest on any unpaid principal balance of this Note shall be paid at the rate of 10% per annum. Interest shall be paid by
the Company in Common Stock (“Interest Shares”). Holder may, at any time, send in a Notice of Conversion to the
Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest
Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date
of such notice.


 


(c).
The Notes may be prepaid with the following penalties: (i) if the note is prepaid within 90 days of the issuance date, then
at 120% of the face amount plus any accrued interest; (ii) if the note is prepaid within 91 days after the issuance date but
less than 180 days after the issuance date, then at 135% of the face amount plus any accrued interest. This Note may not be
prepaid after the 180th day. Such redemption must be closed and funded within 3 days of giving notice of
redemption of the right to redeem shall be null and void.


 





(d).
Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or
series of related transactions, (ii) a reclassification, capital reorganization (excluding an increase in authorized capital)
or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock
dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is
not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of
Common Stock) (each of items (i), (ii) and (iii) being referred to as a “Sale Event”), then, in each case, the
Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid
interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal
amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior
to such Sale Event at the Conversion Price.


 


(e).
In case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in
connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that
the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the
kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately
prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration
received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the
Company or successor person or entity acting in good faith.


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5.
No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.


 


6.
The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest,
notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts
called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing
hereto.


 


7.
The Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be
incurred by the Holder in collecting any amount due under this Note.


 


8.
If one or more of the following described “Events of Default” shall occur:


 


(a).
The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the
Company; or


 


(b).
Any of the representations or warranties made by the Company herein or in any certificate or financial or other written
statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of
this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect;
or


 


(c).
The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or
obligation of the Company under this Note or any other note issued to the Holder; or


 


(d).
The Company shall (1) become insolvent (which does not include a “going concern opinion); (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence
proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or
for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such
petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as
applicable; or


 


(e).
A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty (60) days after such appointment; or


 


(f).
Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody
or control of the whole or any substantial portion of the properties or assets of the Company; or


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(g).
One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars
($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall
remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or


 


(h).
Defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed
to cure such default within the appropriate grace period; or


 


(i).
The Company shall have its Common Stock delisted from an exchange (including the OTC Markets exchange) or, if the Common
Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases
to file its 1934 act reports with the SEC;


 


(j).
If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of
the Board;


 


(k).
The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within
3 business days of its receipt of a Notice of Conversion which includes an Opinion of Counsel expressing an opinion which
supports the removal of a restrictive legend; or


 


(l).
The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the
Holder.


 


(m).
The Company shall be delinquent in its periodic report filings with the Securities and Exchange Commission; or


 


(n).
The Company shall cause to lose the “bid” price for its stock in a market (including the OTC marketplace or
other exchange).


 


Then,
or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option
of the Holder and in the Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without
presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly
waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or
any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24%
per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the
10th day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%.
In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not
paid at maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs
or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price
during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency
period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per
share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.





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If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.


 


Make-Whole
for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the
conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder
incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable
to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:


 


Failure
to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]


 


The
Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day
from the time of the Holder’s written notice to the Company.


 


9.
In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum
extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected
or impaired thereby.


 


10.
ither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument
signed by the Company and the Holder. This Note may not be assigned without the prior written consent of the
Compan


 


11.
Company represents that it is not a “shell” issuer and that if it previously has been a “shell” issuer
that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a “shell
issuer.


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12.
The Company shall issue irrevocable transfer agent instructions reserving 2,467,000 shares of its Common Stock for
conversions under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the
Share Reserve shall be cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the
share certificates to the Holder, as well as maintaining the Share Reserve. If such amounts are to be paid by the Holder, it
may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount
of shares required if the note would be fully converted. The Holder may reasonably request increases from time to time to
reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder
in connection with its conversions.


 


13.
The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock
splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.


 


14.
This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to
be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder
and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State
of New York or in the Federal courts sitting in the county or city of New York. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.


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IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.


 


Dated:
________________


 


	 	POSITIVEID
    CORP
	 	 
	 	By:	                              
	 		 
	 	Title:	 


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EXHIBIT
A


 





NOTICE
OF CONVERSION


 


(To
be Executed by the Registered Holder in order to Convert the Note)


 


The
undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of PositiveID
Corp. (“Shares”) according to the conditions set forth in such Note, as of the date written below.


 


If
Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.


 


	Date
    of Conversion:	 





	Applicable
    Conversion Price:	 





	Signature:	 
	[Print
    Name of Holder and Title of Signer]


 





	Address:	 
	 	 







 


	SSN
    or EIN:	 





	Shares
    are to be registered in the following name:	 


 


	Name:	 





	Address:	 





	Tel:	 





	Fax:	 





	SSN
    or EIN:	 


 


Shares
are to be sent or delivered to the following account:


 


	Account
    Name:	 





	Address:	 


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