Exhibit 10.3


 








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 UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT”)


 








	 	US
$50,000.00 













 


POSITIVEID CORP.


8% CONVERTIBLE REDEEMABLE NOTE


DUE SEPTEMBER 15, 2015


BACK END NOTE


 





FOR VALUE RECEIVED,
PositiveID Corp. (the “Company”) promises to pay to the order of UNION CAPITAL, LLC and its authorized successors and
permitted assigns ("Holder"), the aggregate principal face amount of Fifty Thousand Dollars exactly (U.S. $50,000.00)
on September 15, 2015 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the
rate of 8% per annum commencing on September 15, 2014. 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. The principal of, and interest on, this Note are
payable at 338 Crown Street, 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.


 


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.


 





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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") and applicable state securities
laws. 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 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.


 


4.(a)The Holder of this Note
is entitled, at its option, after the expiration of the requisite Rule 144 holding period (which shall in no event be less than
183 days after the date of issuance of this Note) and after full cash payment for the promissory note issued by the Holder to the
Company simultaneously with the issuance by the Company of this Note (the “Holder Issued Note”)) , 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") without restrictive legend of any nature, at a price ("Conversion Price") for each share of Common
Stock equal to 60% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau
OTCQB 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 ten prior trading days including the day upon which a Notice of Conversion
is received by the Company (provided such Notice of Conversion is delivered 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. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to
the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and
accompanied by proper assignment hereof in blank. 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. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall
be decreased to 50% instead of 60% while that “Chill” is in effect. In the event the Company is not “Current”
in its SEC filings at the time this note is cash funded, the discount shall be decreased to 40%. 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 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest
Shares"). The 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)This Note may not be prepaid,
except that if the $50,000 Rule 144 convertible redeemable note issued by the Company of even date herewith is redeemed by the
Company within 6 months of the issuance date of such Note, all obligations of the Company under this Note and all obligations of
the Holder under the Holder Issued Note will each be automatically be deemed satisfied and this Note and the Holder Issued Note
will be automatically be deemed cancelled and of no further force or effect.


 


(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 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.


 


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.


 





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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 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 and not cure such breach within 10 days; or


 


(d)The Company shall (1) become
insolvent; (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


 


(g)One or more money judgments,
writs or warrants of attachment, or similar process, in excess of one hundred thousand dollars ($100,000) 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)The Company shall have 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


 





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(i)The Company shall have its Common
Stock delisted from an exchange (including the OTCBB 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;


 


(j)Intentionally Deleted;


 


(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; or


 


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


 


(m) The Company’s Common
Stock has a closing bid price of less than $0.02 per share for at least 5 consecutive trading days; or


 


(n) The aggregate dollar trading
volume of the Company’s Common Stock is less than fifty thousand dollars ($50,000.00) in any 5 consecutive trading days;
or


 


(o) The Company shall cease to
be “current” in its filings with the Securities and Exchange Commission.


 


Then, or at any time thereafter, unless
cured (except for 8(m) and 8(n) which are incurable defaults, the sole remedy of which is to allow the Holder to cancel
both this Note and the Holder Issued Note, 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 be 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. Further, if the
Note becomes due and payable, the Holder may use the outstanding principal and interest due under the Note to offset any payment
obligations it may have to the Company. In the event of a breach of 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.


 


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.


 





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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.Neither 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.


 


11.The Company represents that
it is not a “shell” issuer and has never been a “shell” issuer or 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. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow for salability
of the conversion shares or (ii) accept such opinion from Holder’s counsel.





 


12.Prior to cash
funding of this Note, The Company will issue irrevocable transfer agent instructions reserving 4x the number of shares of Common
Stock necessary to allow the holder to convert this note based on the discounted conversion price set forth in Section 4(a) herewith.
The reserve shall be replenished as needed to allow for conversions of this Note. Upon full conversion of this Note, the reserve
representing this Note shall be cancelled. The Company will pay all transfer agent costs associated with issuing and delivering
the shares. Once cash funded, 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.


 





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. 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:  9/18/14                             


 





	 	POSITIVEID CORP.
	 	 
	 	By: 	/s/ William
    J. Caragol
	 	 
	 	Title: 	CEO













 


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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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