Document:

Continued
AMENDED TERMS OF SERIES A CONVERTIBLE PREFERRED STOCK

 

Preferred
Stock that are issued on or around February 13, 2017.

 

B.
Additional Sections to Section 3 (Dividends) of the Filed Certificate. Sections 3(X-a), (X-b), and (X-c), respectively,
and shall relate only to those 52,500 shares of the Series A Convertible Preferred Stock that were issued on or around July 7,
2017.

 

(X-a)
From and after July 7, 2017 (the “Initial Issuance Date”), each holder of a Preferred Share (each, a “Holder”
and collectively, the “Holders”) shall be entitled to receive dividends (the “Dividends”),
which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject to the conditions and other
terms hereof, in shares of Common Stock or cash on the Stated Value (as defined below) of such Preferred Share at the Dividend
Rate (as defined below), which shall be cumulative and shall continue to accrue whether or not declared and whether or not in
any fiscal year there shall be net profits or surplus available for the payment of dividends in such fiscal year. Dividends on
the Preferred Shares shall commence accumulating on the Initial Issuance Date and shall be computed on the basis of a 365-day
year and actual days elapsed. Dividends shall be payable on the following dates (each, a “Dividend Date”):
(1) the first (1st) Dividend Date being October 5, 2017; and (ii) and each subsequent Dividend Date shall be solely
in connection with and concurrently with Installment Redemption Payments. Notwithstanding anything to the contrary contained herein,
unless otherwise agreed to by the Company and the Holders, the Company shall pay Cash Dividends (as defined below) to the Holders
on the first (1st) Dividend Date.

 

(X-b)
Dividends shall be payable on each Dividend Date, to the Holders of record of the Preferred Shares on the applicable Dividend
Date, in shares of Common Stock (the “Dividend Shares”) so long as there has been no Equity Conditions Failure
and so long as the delivery of Dividend Shares would not violate the provisions of Section 4; provided, however,
that the Company may, at its option, pay Dividends on any Dividend Date in cash (the “Cash Dividends”) or in
a combination of Cash Dividends and, so long as there has been no Equity Conditions Failure, Dividend Shares. The Company shall
deliver a written notice (each, a “Dividend Election Notice”) to each Holder two (2) Trading Days prior to
each Dividend Date (the date such notice is delivered to all of the Holders, the “Dividend Notice Date”), which
notice (1) notifies the then-record Holders that the Company has elected to pay the accrued Dividends as Cash Dividends, Dividend
Shares, or as a combination of Dividend Shares and Cash Dividends and, in any event, specifies the amount of the to-be-paid Dividends,
if any, as Cash Dividends and the amount of the to-be-paid Dividends, if any, as Dividend Shares and (2) certifies that there
has been no Equity Conditions Failure as of such time, if the Company has elected to pay any portion of the to-be-paid Dividends
as Dividend Shares. Notwithstanding anything herein to the contrary, if no Equity Conditions Failure has occurred as of the Dividend
Notice Date but an Equity Conditions Failure occurs at any time prior to the date on which a to-be-paid Dividend Shares are to
be issued, (A) the Company shall provide each Holder with a subsequent notice to that effect and (B) unless such Holder waives
the Equity Conditions Failure, such to-be-paid Dividends shall be paid as Cash Dividends. Dividends that are to be paid to each
Holder in Dividend Shares shall be paid in a number of fully paid and non-assessable shares (rounded to the nearest whole share,
with 0.50 or more of a share being rounded up to the nearest whole share and 0.49 or less of a share being rounded down to the
nearest whole share) of Common Stock equal to the quotient of (1) the amount of Dividends payable to such Holder on such Dividend
Date less any Cash Dividends paid and (2) the lesser of (i) the Redemption Price in effect on the applicable Dividend Date, and
(ii) the VWAP on the Trading Day immediately preceding the Dividend Date.

 

    	 

    	 

    

 

(X-c)
When any Dividend Shares are to be paid to any Holder, the Company shall (i) (A) provided that (x) the Company’s transfer
agent (the “Transfer Agent”) is participating in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer Program and (y) either a Registration Statement for the resale by the applicable Holder of the Dividend
Shares or such Dividend Shares to be so issued are otherwise eligible for resale pursuant to Rule 144 (as defined in the Securities
Purchase Agreement), credit such aggregate number of Dividend Shares to which such Holder shall be entitled to such Holder’s
or its designee’s balance account with DTC through its Deposit and Withdrawal at Custodian system, or (B) if either of the
immediately preceding clauses (x) or (y) is not satisfied, issue and deliver on the applicable Dividend Date, to the address set
forth in the register maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address
as specified by such Holder in writing to the Company at least two (2) Business Days prior to the applicable Dividend Date, a
certificate, registered in the name of such Holder or its designee, for the number of Dividend Shares to which such Holder shall
be entitled and (ii) with respect to each such payment of a Dividend, pay to such Holder, in cash by wire transfer of immediately
available funds, the amount of any Cash Dividend. The Company shall pay any and all taxes that may be payable with respect to
the issuance and delivery of Dividend Shares.

 

C.
Additional Sections to Section 3 (Dividends) of the Filed Certificate. Sections 3(Y-a), (Y-b), and (Y-c), respectively,
and shall relate only to the first 131,250 shares of the Series A Convertible Preferred Stock that are sold and issued subsequently
to the date of this Amendment No 1.

 

(Y-a)
From and after July 28, 2017 (the “Initial Issuance Date”), each holder of a Preferred Share (each, a “Holder”
and collectively, the “Holders”) shall be entitled to receive dividends (the “Dividends”),
which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject to the conditions and other
terms hereof, in shares of Common Stock or cash on the Stated Value (as defined below) of such Preferred Share at the Dividend
Rate (as defined below), which shall be cumulative and shall continue to accrue whether or not declared and whether or not in
any fiscal year there shall be net profits or surplus available for the payment of dividends in such fiscal year. Dividends on
the Preferred Shares shall commence accumulating on the Initial Issuance Date and shall be computed on the basis of a 365-day
year and actual days elapsed. Dividends shall be payable on the following dates (each, a “Dividend Date”):
(1) the first (1st) Dividend Date being October 5, 2017; and (ii) and each subsequent Dividend Date shall be solely
in connection with and concurrently with Installment Redemption Payments. Notwithstanding anything to the contrary contained herein,
unless otherwise agreed to by the Company and the Holders, the Company shall pay Cash Dividends (as defined below) to the Holders
on the first (1st) Dividend Date.

 

    	 	2	 

    	 

    

 

(Y-b)
Dividends shall be payable on each Dividend Date, to the Holders of record of the Preferred Shares on the applicable Dividend
Date, in shares of Common Stock (the “Dividend Shares”) so long as there has been no Equity Conditions Failure
and so long as the delivery of Dividend Shares would not violate the provisions of Section 4; provided, however,
that the Company may, at its option, pay Dividends on any Dividend Date in cash (the “Cash Dividends”) or in
a combination of Cash Dividends and, so long as there has been no Equity Conditions Failure, Dividend Shares. The Company shall
deliver a written notice (each, a “Dividend Election Notice”) to each Holder two (2) Trading Days prior to
each Dividend Date (the date such notice is delivered to all of the Holders, the “Dividend Notice Date”), which
notice (1) notifies the then-record Holders that the Company has elected to pay the accrued Dividends as Cash Dividends, Dividend
Shares, or as a combination of Dividend Shares and Cash Dividends and, in any event, specifies the amount of the to-be-paid Dividends,
if any, as Cash Dividends and the amount of the to-be-paid Dividends, if any, as Dividend Shares and (2) certifies that there
has been no Equity Conditions Failure as of such time, if the Company has elected to pay any portion of the to-be-paid Dividends
as Dividend Shares. Notwithstanding anything herein to the contrary, if no Equity Conditions Failure has occurred as of the Dividend
Notice Date but an Equity Conditions Failure occurs at any time prior to the date on which a to-be-paid Dividend Shares are to
be issued, (A) the Company shall provide each Holder with a subsequent notice to that effect and (B) unless such Holder waives
the Equity Conditions Failure, such to-be-paid Dividends shall be paid as Cash Dividends. Dividends that are to be paid to each
Holder in Dividend Shares shall be paid in a number of fully paid and non-assessable shares (rounded to the nearest whole share,
with 0.50 or more of a share being rounded up to the nearest whole share and 0.49 or less of a share being rounded down to the
nearest whole share) of Common Stock equal to the quotient of (1) the amount of Dividends payable to such Holder on such Dividend
Date less any Cash Dividends paid and (2) the lesser of (i) the Redemption Price in effect on the applicable Dividend Date, and
(ii) the VWAP on the Trading Day immediately preceding the Dividend Date.

 

(Y-c)
When any Dividend Shares are to be paid to any Holder, the Company shall (i) (A) provided that (x) the Company’s transfer
agent (the “Transfer Agent”) is participating in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer Program and (y) either a Registration Statement for the resale by the applicable Holder of the Dividend
Shares or such Dividend Shares to be so issued are otherwise eligible for resale pursuant to Rule 144 (as defined in the Securities
Purchase Agreement), credit such aggregate number of Dividend Shares to which such Holder shall be entitled to such Holder’s
or its designee’s balance account with DTC through its Deposit and Withdrawal at Custodian system, or (B) if either of the
immediately preceding clauses (x) or (y) is not satisfied, issue and deliver on the applicable Dividend Date, to the address set
forth in the register maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address
as specified by such Holder in writing to the Company at least two (2) Business Days prior to the applicable Dividend Date, a
certificate, registered in the name of such Holder or its designee, for the number of Dividend Shares to which such Holder shall
be entitled and (ii) with respect to each such payment of a Dividend, pay to such Holder, in cash by wire transfer of immediately
available funds, the amount of any Cash Dividend. The Company shall pay any and all taxes that may be payable with respect to
the issuance and delivery of Dividend Shares.

 

    	 	3	 

    	 

    

 

D.
Amendment No. 1 to Section 5 (Mandatory Installment Redemptions; Triggering Events) of the Filed Certificate. Section 5(b)
of the Filed Certificate shall be entitled Section 5(W-b) and shall relate only to those 315,000 shares of the Series A Convertible
Preferred Stock that are issued on or around February 13, 2017.

 

E.
Additional Section to Section 5 (Mandatory Installment Redemptions; Triggering Events) of the Filed Certificate. Section
5(X-b) shall relate only to those 52,500 shares of the Series A Convertible Preferred Stock that were issued on or around July
7, 2017.

 

X-(b)
Mandatory Installment Redemption.

 

(i)
On January 8, 2018, the Company shall redeem the Fifty-two Thousand Five Hundred Dollars ($52,500) of Preferred Shares and any
accrued but unpaid Dividends thereon on such date (the “Installment Redemption Payment”). The Installment Redemption
Payment shall be made, at the Company’s option (subject to the Company’s compliance with the Equity Conditions (i.e.,
there is no Equity Conditions Failure)) in (i) cash at a price equal to the product of (A) the applicable Installment Redemption
Payment multiplied by (B) the Redemption Premium or (ii) in shares of Common Stock (the “Installment Redemption Shares”)
at a price equal to the product of (A) the applicable Installment Redemption Payment multiplied by (B) the Redemption Premium
divided by the lesser of (x) the Redemption Price (subject to adjustment for any share dividend, share split, share combination,
reclassification or similar transaction that proportionately decreases or increases the Common Stock) or (y) the VWAP during the
period commencing five (5) Trading Days prior to the Installment Redemption Payment (the “Installment Redemption Price”).
In the event that the Company elects to not pay the Installment Redemption Payment in cash and the Equity Conditions are not met
(i.e., there is an Equity Conditions Failure), then each Holder shall be entitled to the redemption of the applicable Installment
Redemption Payment at a price equal to the Triggering Event Redemption Price until such time that the Equity Conditions Failure
is cured. For the avoidance of doubt, if Holder defers the receipt of Installment Redemption Shares due to the limitations set
forth in Section 4, Holder shall remain entitled to such shares as originally calculated, i.e., any weekly VWAP increase
subsequent to the Installment Redemption Payment shall not decrease the amount of shares due to the Holder. However, if Holder
defers the receipt of Installment Redemption Shares due to the limitations set forth in Section 4 and any VWAP for the Installment
Redemption Shares the VWAP during any Subsequent Installment Redemption Paymentdue to the limitations set forth in Section 4,
then such portion shall be subject to the pricing period of the Subsequent Installment Redemption Payment.

 

    	 	4	 

    	 

    

 

In
the event that the Installment Redemption Price from the immediately prior Installment Redemption Payment, if any, is greater
than the VWAP for the Installment Redemption Payment, then the Company shall make one make-whole payment to such Holder in additional
shares of Common Stock (“Installment Redemption Price Make-Whole Shares”) to compensate the Holder for the
loss of value for the immediately previous Installment Redemption Payment. The number of Installment Redemption Price Make-Whole
Shares shall be determined by the quotient of (A) the Installment Redemption Payment (including the Redemption Premium) divided
by (B) the VWAP calculated during the Make-Whole VWAP Period (the “Make-Whole VWAP Price”); and then subtracting
from such result the number of shares of Common Stock issued in connection with the Installment Redemption Payment. Such Installment
Redemption Price Make-Whole Shares shall be delivered to Holder by no later than the next Installment Redemption Payment or, if
such Installment Redemption Price Make-Whole Shares relates to the final Installment Redemption Payment, then Installment Redemption
Price Make-Whole Shares shall be delivered to Holder by no later than three Trading Days following the last Trading Day of the
relevant Make-Whole VWAP Period. For the avoidance of doubt, the Make-Whole VWAP Period for the final Installment Redemption Payment
shall be the

 

The
Company’s obligations to deliver the Installment Redemption Price Make-Whole Shares shall continue even though a Triggering
Event has occurred (for the avoidance of doubt, in such event the Redemption Price that is utilized shall be the Triggering Event
Redemption Price in lieu of the Installment Redemption Price). For the avoidance of doubt, if Holder defers the receipt of Installment
Redemption Price Make-Whole Shares due to the limitations set forth in Section 4, Holder shall remain entitled to the amount of
the Installment Redemption Price Make-Whole Shares as originally calculated, i.e., any weekly VWAP increase subsequent
to the Make-Whole VWAP Period shall not decrease the amount of Installment Redemption Price Make-Whole Shares due to the Holder.
However, if Holder defers the receipt of Installment Redemption Price Make-Whole Shares due to the limitations set forth in Section
4 and any VWAP for the the VWAP during any Subsequent Make-Whole Perioddue to the limitations set forth in Section 4, then such
portion shall be subject to the pricing period of the Subsequent Make-Whole VWAP Period. Further, the Holder may demand the receipt
of any portion of the Installment Redemption Price Make-Whole Shares prior to the receipt of the next Installment Redemption Payment.
In such event, the Company shall deliver a separate Redemption Notice to the Holder with respect to the next Installment Redemption
Payment.

 

    	 	5	 

    	 

    

 

(ii)
On the Business Day immediately prior to each Installment Redemption Payment, the Company shall deliver to each Holder a written
notice of each Installment Redemption Payment by facsimile or electronic mail in the form attached to the Filed Certificate as
Exhibit II, which shall (A) certify that there has been no Equity Conditions Failure and (B) state the aggregate
amount of the Preferred Shares which is being redeemed in such Installment Redemption Payment from such Holder and all of the
other Holders of the Preferred Shares pursuant to this Section 5(b). Redemptions made pursuant to this Section 5(b) shall be made
in accordance with Section 5(d).

 

(iii)
Pursuant to the limitations set forth in Section 4, each Holder may defer all or any portion of any Installment Redemption Payment
(including without limitation, any Installment Redemption Price Make-Whole Shares) and have it be paid simultaneously with any
future Installment Redemption Payment(s) or on any other date. For the avoidance of doubt, if a Holder defers all or any portion
of any Installment Redemption Payment (including without limitation, any Installment Redemption Price Make-Whole Shares) due to
the limitations set forth in Section 4, such deferral alone shall not be deemed a Triggering Event.

 

F.
Additional Section to Section 5 (Mandatory Installment Redemptions; Triggering Events) of the Filed Certificate. Section
5(Y-b) shall relate only to first 131,250 shares of the Series A Convertible Preferred Stock that are sold and issued subsequently
to the date of this Amendment No. 1.

 

    	 	6	 

    	 

    

 

Y-(b)
Mandatory Installment Redemption.

 

(i)
Beginning on the earlier of the effectiveness of a Registration Statement and January 28, 2018, and so long as any Preferred Shares
are outstanding, with respect to any Holder, the Company shall redeem Twenty-six Thousand Two Hundred Fifty Dollars ($26,250)
of the outstanding amount of Preferred Shares and any accrued but unpaid Dividends thereon on the first (1st) Business
Day of each week (each, an “Installment Redemption Payment”) for five (5) consecutive weeks. Each Installment
Redemption Payment shall be made, at the Company’s option (subject to the Company’s compliance with the Equity Conditions
(i.e., there is no Equity Conditions Failure)) in (i) cash at a price equal to the product of (A) the applicable Installment
Redemption Payment multiplied by (B) the Redemption Premium or (ii) in shares of Common Stock (the “Installment Redemption
Shares”) at a price equal to the product of (A) the applicable Installment Redemption Payment multiplied by (B) the
Redemption Premium divided by the lesser of (x) the Redemption Price (subject to adjustment for any share dividend, share split,
share combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock) or (y)
the VWAP during the period commencing five (5) Trading Days prior to the Installment Redemption Payment (the “Installment
Redemption Price”). Notwithstanding the foregoing, the Holder shall have the option to demand payment of one (1) Installment
Redemption Payment in shares of Common Stock at price equal to the Installment Redemption Price, in lieu of the receipt of cash;
provided, that the Holder shall give the Company at least one (1) week’s notice prior to the applicable Installment Redemption
Payment. In the event that the Company elects to not pay an Installment Redemption Payment in cash and the Equity Conditions are
not met (i.e., there is an Equity Conditions Failure), then each Holder shall be entitled to the redemption of the applicable
Installment Redemption Payment at a price equal to the Triggering Event Redemption Price until such time that the Equity Conditions
Failure is cured. For the avoidance of doubt, if Holder defers the receipt of Installment Redemption Shares due to the limitations
set forth in Section 4, Holder shall remain entitled to such shares as originally calculated, i.e., any weekly VWAP increase
subsequent to the original Installment Redemption Payment shall not decrease the amount of shares due to the Holder. However,
if Holder defers the receipt of Installment Redemption Shares due to the limitations set forth in Section 4 and any VWAP for the
Installment Redemption Shares the VWAP during any Subsequent Installment Redemption Paymentdue to the limitations set forth in
Section 4, then such portion shall be subject to the pricing period of the Subsequent Installment Redemption Payment.

 

    	 	7	 

    	 

    

 

In
the event that the Installment Redemption Price from the immediately prior Installment Redemption Payment is greater than the
VWAP for the Installment Redemption Payment, then the Company shall make one make-whole payment to such Holder in additional shares
of Common Stock (“Installment Redemption Price Make-Whole Shares”) to compensate the Holder for the loss of
value for the immediately previous Installment Redemption Payment. The number of Installment Redemption Price Make-Whole Shares
shall be determined by the quotient of (A) the Installment Redemption Payment (including the Redemption Premium) divided by (B)
the VWAP calculated during the Make-Whole VWAP Period (the “Make-Whole VWAP Price”); and then subtracting from
such result the number of shares of Common Stock issued in connection with the Installment Redemption Payment. Such Installment
Redemption Price Make-Whole Shares shall be delivered to Holder by no later than the next Installment Redemption Payment or, if
such Installment Redemption Price Make-Whole Shares relates to the final Installment Redemption Payment, then Installment Redemption
Price Make-Whole Shares shall be delivered to Holder by no later than three Trading Days following the last Trading Day of the
relevant Make-Whole VWAP Period. For the avoidance of doubt, the Make-Whole VWAP Period for the final Installment Redemption Payment
shall be the

 

The
Company’s obligations to deliver the Installment Redemption Price Make-Whole Shares shall continue even though a Triggering
Event has occurred (for the avoidance of doubt, in such event the Redemption Price that is utilized shall be the Triggering Event
Redemption Price in lieu of the Installment Redemption Price). For an example of the issuance of Installment Redemption Price
Make-Whole Shares, see Exhibit I attached hereto. For the avoidance of doubt, if Holder defers the receipt of Installment
Redemption Price Make-Whole Shares due to the limitations set forth in Section 4, Holder shall remain entitled to the amount of
the Installment Redemption Price Make-Whole Shares as originally calculated, i.e., any weekly VWAP increase subsequent
to the Make-Whole VWAP Period shall not decrease the amount of Installment Redemption Price Make-Whole Shares due to the Holder.
However, if Holder defers the receipt of Installment Redemption Price Make-Whole Shares due to the limitations set forth in Section
4 and any VWAP for the the VWAP during any Subsequent Make-Whole Perioddue to the limitations set forth in Section 4, then such
portion shall be subject to the pricing period of the Subsequent Make-Whole VWAP Period. Further, the Holder may demand the receipt
of any portion of the Installment Redemption Price Make-Whole Shares prior to the receipt of the next Installment Redemption Payment.
In such event, the Company shall deliver a separate Redemption Notice to the Holder with respect to the next Installment Redemption
Payment.

 

(ii)
On the Business Day immediately prior to each Installment Redemption Payment, the Company shall deliver to each Holder a written
notice of each Installment Redemption Payment by facsimile or electronic mail in the form attached hereto as Exhibit II,
which shall (A) certify that there has been no Equity Conditions Failure and (B) state the aggregate amount of the Preferred Shares
which is being redeemed in such Installment Redemption Payment from such Holder and all of the other Holders of the Preferred
Shares pursuant to this Section 5(b). Redemptions made pursuant to this Section 5(b) shall be made in accordance with Section
5(d).

 

    	 	8	 

    	 

    

 

(iii)
Pursuant to the limitations set forth in Section 4, each Holder may defer all or any portion of any Installment Redemption Payment
(including without limitation, any Installment Redemption Price Make-Whole Shares) and have it be paid simultaneously with any
future Installment Redemption Payment(s) or on any other date. For the avoidance of doubt, if a Holder defers all or any portion
of any Installment Redemption Payment (including without limitation, any Installment Redemption Price Make-Whole Shares) due to
the limitations set forth in Section 4, such deferral alone shall not be deemed a Triggering Event.

 

G.
Application of Subsections 5(c) and 5(d) of Section 5 (Mandatory Installment Redemptions; Triggering Events) of the Filed Certificate.
Subsections 5(c) and 5(d) of Section 5 of the Filed Certificate shall apply both to the 367,500 shares of the Series A Convertible
Preferred Stock that are issued and outstanding as of the date of this Amendment No. 1 and to those shares of the Series A Convertible
Preferred Stock that are sold and issued subsequently to the date of this Amendment No. 1, in each case without amendment or modification
hereby.

 

H.
Application of Subsection 5(qq) of Section 5 (Certain Defined Terms) of the Filed Certificate. “Subscription Date:
as defined in Subsection 5(qq) of Section 5 of the Filed Certificate shall mean (i) February 13, 2017 as to the 315,000 shares
of the Series A Convertible Preferred Stock that are issued and outstanding as of the date of this Amendment No. 1, (ii) July
7, 2017, as to the 52,500 shares of the Series A Convertible Preferred Stock that are issued and outstanding as of the date of
this Amendment No. 1, and (iii) July 28, 2017, as to the first 131,250 shares of Series A Convertible Preferred Stock that are
sold and issued subsequently to the date of this Amendment No. 1.

 

    	 	9	 

    	 

    

 

IN
WITNESS WHEREOF, the Corporation has caused this Amendment No. 1 to Certificate of Designations of Series A Convertible Preferred
Stock of nFüsz, Inc. to be signed by its Chief Executive Officer on this 28th day of July, 2017.

 

	 	nFŰSZ, INC.
	 	 	 
	 	By:	 
	 	Name:	Rory
    J. Cutaia
	 	Title:	Chief
    Executive Officer

 

    	 	10Exhibit
4.1

 

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
$55,000.00 

 

POSITIVEID
CORP.

12%
CONVERTIBLE REDEEMABLE NOTE

DUE
AUGUST 8, 2018

 

FOR
VALUE RECEIVED, PositiveID Corp. (the “Company”) promises to pay to the order of FIDELIS CAPITAL, LLC, and its authorized
successors and Permitted Assigns, defined below, (“Holder”), the aggregate principal face amount of Fifty Five
Thousand Dollars exactly (U.S. $55,000.00) on August 8, 2018 (“Maturity Date”) and to pay interest on the principal
amount outstanding hereunder at the rate of 12% per annum commencing on August 8, 2017. 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 181 New Road, Suite 304, Parsippany, NJ, 07054, 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.

 

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.

 ____

Initials

 

    	 	 	 

    	 

    

 

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 62.5% 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 twenty 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 52.5% instead of 62.5% 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 12% 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)       During
the first 180 days this Note is in effect, the Company may redeem this Note by paying to the Holder an amount equal to 125% of
the unpaid principal amount of this Note along with any prepaid and 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.

 

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.

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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

 

(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

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(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.

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    	 	5 	 

    	 

    

 

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 = [(Highest VWAP price for the 30 trading days 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.       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. This Note may not be assigned without the prior written consent of the Company.

 

11.       The
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.

 

12.       The
Company shall issue irrevocable transfer agent instructions reserving 19,500,000 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
Holder. 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 six 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.

 ____

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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.       If
it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable provision shall automatically be revised to equal the maximum rate of interest or other amount deemed interest
permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim
or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal or interest
on this Note.

 

15.       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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    	 	7 	 

    	 

    

 

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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    	 	8 	 

    	 

    

 

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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    	 	9

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