Document:

POSITIVEID
CORPORATION

CONVERTIBLE
PROMISSORY NOTE

 

	$75,000 	Dated: August 25, 2016        

 

FOR
VALUE RECEIVED, the undersigned, POSITIVEID CORPORATION, a Delaware corporation (the “Company”), promises to pay to
Keith Houlihan (the “Holder”), in lawful money of the United States of America, the principal amount of seventy-five
thousand dollars ($75,000.00) (the “Principal Amount”), with interest calculated in accordance herewith, on August
25, 2017 (the “Maturity Date”).

 

	1.	Payments.

 

(a) Interest.
The Principal Amount shall bear interest at a per annum rate of five percent (5%) from this date until paid.

 

(b) Maturity. The
principal amount of this Note, together with all accrued but unpaid interest, shall be paid in cash to the Holder on
the Maturity Date.

 

(c) Manner
of Payment. Unless otherwise agreed to in writing by Holder, all payments on this Note shall be made by wire transfer of
immediately available funds to an account designated by Holder in writing. If any payment on this Note is due on a day which
is not a Business Day (defined below), such payment shall be due on the next succeeding Business Day. “Business
Day” means any day other than a Saturday, Sunday or legal holiday in the State of New York.

 

(d) Prepayments
at the Option of the Company. This Note may, at the option of the Company and upon at least three (3) Business
Days’ written notice to Holder, be prepaid in whole or in part, at any time and from time to time, with a ten percent
(10%) premium. Any prepayments made under this Section 1(d) or any other subsection of this Section 1 shall be applied first
to any accrued interest hereon and then to reduce the then outstanding Principal Amount by the amount of such
prepayment.

 

(d)
Conversion Feature. At any time after February 28, 2017, the Holder shall have the right from time to time to convert all
or any part of the outstanding and unpaid principal and interest amount of this Note into fully paid and non-assessable shares
of common stock of the Company (“Common Stock”), at the conversion price (as defined below).

 

     
	 

    	 		 

    

 

	(i)	The
    number of shares of Common Stock issuable upon conversion of any Conversion Amount shall be determined by dividing (x) such
    Conversion Amount by (y) the Conversion Price. “Conversion Amount” means the sum of (x) portion of the principal
    to be converted, redeemed or otherwise with respect to which this determination is being made and (y) all accrued and unpaid
    interest with respect to such portion of the principal amount. “Conversion Price” means, as of any Conversion
    Date or other date of determination, ninety percent (90%) of the average of the three (3) lowest daily VWAPs (volume weighted
    average price) of each of the ten (10) Trading Days prior to the day that the Holder requests conversion.
	 	 
	(ii)	The
    Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance
    of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up or down to the
    nearest whole share.
	 	 
	(iii)	To
    convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Holder shall
    deliver, for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of a written notice of conversion stipulating
    the amount or principal (in dollars) desired to be converted (the “Conversion Notice”) to the Company. The Company
    shall keep track of the amount outstanding on the Note after any Conversion, based on the Conversion Notices received.
	 	 
	(iv)	Upon
    receipt by the Company from the Holder of a Conversion Notice the Company shall issue and deliver or cause to be issued and
    delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three
    (3) business days after such receipt. If eligible for DWAC transfer, and so requested in the Conversion Notice, the Company
    shall transmit the shares via DWAC system.

 

    	-2-

    	 		 

    

 

	(v)	Any
    conversion will be limited by: (i) Holder may not make more than one conversion every ten Trading Days, and (ii) the amount
    of Conversion Shares at any conversion may not be more than the total number of shares of Common Stock traded over the ten
    Trading Days preceding the Conversion Notice multiplied by five percent (5%).
	 	 
	(vi)	The
    shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold
    pursuant to an effective registration statement under the Securities Act or (ii) the Company or its transfer agent shall have
    been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel
    in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to
    an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a
    successor rule) (“Rule 144”). Until such time as the shares of Common Stock issuable upon conversion of this Note
    have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number
    of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable
    upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold
    pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially
    in the following form, as appropriate: “NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
    NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
    OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
    ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B)
    AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
    NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.”

 

	2.	Defaults.

 

(a)
Events of Default. The occurrence and continuance of any one or more of the following events with respect to the Company
shall constitute an event of default hereunder (“Event of Default”):

 

	 	(i)	if
    the Company shall fail to pay when due any amount owed on this Note and such failure continues for five (5) Business Days
    after Holder notifies the Company thereof in writing of such failure;
	 	 	 
	 	(ii)	if
    the Company fails to perform or observe any other provision of this Note and such failure continues for thirty (30) Business
    Days after Holder notifies the Company thereof in writing of such failure;
	 	 	 
	 	(iii)	if
    there is a Change of Control (as defined in the most recently effective employment agreement between the Company and its highest
    ranking officer with an employment agreement) of the Company;
	 	 	 
	 	(iv)	if,
    pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency
    or relief of debtors (a “Bankruptcy Law”), the Company shall (i) commence a voluntary case or proceeding;
    (ii) consent to the entry of an order for relief against it in an involuntary case; (iii) consent to the appointment of a
    trustee, receiver, assignee, liquidator or similar official; (iv) make an assignment for the benefit of its creditors; or
    (v) admit in writing its inability to pay its debts as they become due; or
	 	 	 
	 	(v)	if
    a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company
    in an involuntary case, (ii)
    appoints a trustee, receiver, assignee, liquidator or similar official for the Company or substantially all of the Company’s
    properties, or (iii) orders the liquidation of the Company, and in each case the order or decree is not dismissed within 60
    Business Days.

 

    	-3-

    	 		 

    

 

(b) Notice
by Holder. Upon the occurrence of an Event of Default hereunder (unless all Events of Default have been waived by Holder
or cured), Holder may, at Holder’s option, (i) by written notice to the Company, declare the entire unpaid Principal
Amount of this Note (together with any accrued but unpaid interest thereon) immediately due and payable regardless of any
prior forbearance, and (ii) subject to the other provisions of this Note (including Section 6 hereof), exercise any and all
rights and remedies available to it under applicable law, including, without limitation, the right to collect from the
Company all sums due under this Note. The Company shall pay all reasonable costs and expenses incurred by or on behalf of
Holder in connection with Holder’s exercise of any or all of Holder’s rights and remedies under this Note,
including, without limitation, reasonable attorneys’ fees and disbursements. During the period in which an Event of
Default is occurring (and has not been waived by Holder or cured), notwithstanding the provisions of Section 1(a), the
Principal Amount shall bear interest not at 5% as provided in such section, but instead at a rate of fifteen percent
(15%).

 

	3.	Representations
    and Warranties of Holder. The Holder by his acceptance hereof represents and warrants to the Company that he or she is
    acquiring the Note for his or her own account for investment only and not with a view to distribution or resale. The Holder
    agrees not to sell or otherwise dispose of the Note in violation of the provisions of the Securities Act of 1933, as amended
    (the “Act”). The Holder understands that the Note has not been registered by reason of its issuance in
    a transaction exempt from the registration requirements of the Act. The Holder understands that the Company is under no obligation
    to register the Note under the Act or to file for or comply with an exemption from registration, and recognizes that exemptions
    from registration, in any case, are limited and may not be available if Holder may wish to sell, transfer or otherwise dispose
    of the Note. The Holder represents and warrants to the Company that he or she has such knowledge and experience in financial
    and business matters as to be capable of evaluating the merits and risk of receiving and holding this Note and is able to
    incur a complete loss of his or her investment and to bear the risk of such a loss for an indefinite period of time. The Holder
    understands that the Note is a risky and speculative investment. The Holder acknowledges that the Company has given him or
    her access to the corporate records and accounts of the Company, has made its officers available for interview and has furnished
    him or her with all documents required by him or her to make an informed decision with regard to the investment in the Note.
	 	 
	4.	Waiver
    of Presentment, Etc. The Company hereby expressly waives presentment for payment, demand, notice of dishonor, protest
    and notice of protest. Acceptance by Holder of any payment that is less than the full amount then due and owing hereunder
    shall not constitute a waiver of Holder’s right to receive payment in full at such time or at any prior or subsequent
    time.

 

    	-4-

    	 		 

    

 

	5.	Notices.
    Any notice required or permitted by this Note shall be in writing and shall be deemed received when received by fax (with
    confirmation of actual receipt), when received by express mail with signature confirmation, or seven (7) business days after
    being deposited in U.S. certified or registered mail, with postage prepaid, addressed to the party to be notified at such
    party’s address as set forth on the signature page.
	 	 
	6.	Transfers;
    Successors and Assigns. This Note shall be binding upon the Company and its successors and permitted assigns, and shall
    inure to the benefit of Holder and Holder’s heirs, successors and permitted assigns. This Note is non-negotiable and
    neither party may assign its, his or her rights or obligations hereunder without the prior written consent of the other party,
    except in connection with the sale of all or substantially all of the Company’s assets, except that the Holder may sell
    this Note in a private transaction to an accredited investor.
	 	 
	7.	Headings.
    The headings in this Note are for reference only and shall not affect the interpretation of this Note.
	 	 
	8.	Severability.
    If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality
    or unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable such term
    or provision in any other jurisdiction.
	 	 
	9.	Amendment
    and Modification. This Note may only be amended, modified or supplemented by an agreement in writing signed by each party
    hereto, and only in accordance with Section 8 of the Agreement.
	 	 
	10.	Governing
    Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida, applicable to agreements
    made and to be performed entirely within such State, without regard to the conflict of laws principles thereof.
	 	 
	11.	Entire
    Agreement. This Note, the exhibits and schedules hereto and the other documents to be delivered hereunder constitute the
    sole and entire agreement of the parties to this Note with respect to the subject matter contained herein and therein, and
    supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject
    matter.

 

[remainder
of page intentionally left blank]

 

    	-5-

    	 		 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Note to be executed as of the date first written above by their respective
officers thereunto duly authorized.

 

	 	POSITIVEID
    CORPORATION
	 	 
	 	By:	
	 	Name:
    	William
    J Caragol
	 	Title:
    	Chairman
    and CEO
	 	 	1690
    South Congress Ave., Suite 201, Delray Beach, FL 33445

 

    	-6-AGREEMENT
BY AND AMONG

POSITIVEID
CORPORATION,

SANOMEDICS,
INC. AND THERMOMEDICS, INC.

 

This
AGREEMENT is entered into as of August 25, 2016 by and among PositiveID Corporation, a Delaware corporation (the “Company”);
Sanomedics, Inc., a Delaware Corporation (“Sano”) and, Thermomedics, Inc., a Nevada corporation (“Thermo”)
(together, the “Parties”).

 

WHEREAS,
the parties hereto entered into that certain Stock Purchase Agreement, dated as of October 21, 2015 and First Amendment to such
Stock Purchase Agreement, dated as of December 4, 2015 (the “SPA”) (capitalized terms used and not otherwise defined
herein shall have the meanings given to such term in the SPA) pursuant to which the Company agreed to purchase, and Sano agreed
to sell, all of the shares of Thermo; and

 

WHEREAS,
the parties hereto entered into that certain Management Services and Control Agreement, dated as of December 4, 2015 (the “MSACA”)
pursuant to which full control of Thermo, including operational and financial benefits and responsibility for Thermo, was transferred
to the Company; and

 

WHEREAS,
in contemplation of the closing of the transactions under the SPA, the parties hereto desire to make certain agreements and to
amend and clarify certain terms of the SPA and MSACA as set forth herein.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

	1.	Amendment
    to the SPA. This Agreement is intended to amend certain terms and clarify certain deliverables under the SPA. Any
    terms in the SPA not addressed in this Agreement shall remain unchanged pursuant to the SPA.
	 	 
	2.	Termination
    to MSACA. Effective as of the date of this Agreement the MSACA is terminated. 
	 	 
	3.	Amendments
    to the SPA (section 2.03(a)). The Parties agree that Section 2.03(a)(v) of the SPA is deleted in its in its entirety
    and replaced to read as follows: Section 2.03(a) (v) Reserved. The Parties agree to amend Section 2.03(a)(viii) of the SPA.
    The amendment to Section 2.03(a)(viii) shall eliminate the need of Sanomedics to deliver any Note to the Devlin Law firm.
    Additionally, any legal expense or losses incurred by the Company after June 30, 2016 related to the Exergen litigation shall
    have the effect of reducing any future earnouts that may be owed to Sanomedics, dollar for dollar. Further, the Parties agree
    to eliminate the requirements of Section 2.03(a)(ix) of the SPA; specifically, Sanomedics will not be required to provide
    fully paid tail product liability insurance.
	 	 
	4.	Amendments
    to the SPA (Section 7.02) - Indemnification. Section 7.02 shall be amended to both amend Sections 7.02(c) and 7.02(d),
    and to add Section 7.02(e). Sections 7.02(c) through 7.02(e) shall be replaced in their entirety as follows:

 

    	 

    	 	 	 

    

 

(c)
any actual fraud committed by Seller, the Company or any of their Affiliates in connection with the transactions contemplated
by this Agreement;

 

(d)
any liability or Losses for Taxes of the Company or with respect to the Business, or the costs related to the preparation and
filing thereof, relating to periods on or prior to the Closing Date; or

 

(e)
any liability or Losses resulting from (i) product liability claims prior to December 4, 2015, (ii) Exergen litigation related
legal expenses or losses incurred after June 30, 2016, or (iii) any claims paid or settled by the Company or Thermo with any of
the parties scheduled on either Schedule 2.03(a)(v) or 2.03(a)(viii) of the Seller Disclosure Schedules to Stock Purchase Agreement,
dated October 21, 2015.

 

	5.	Finalization
    of SPA Section 2.04 – Final of Closing Net Working Capital Adjustment. The Parties agree to settle the Final
    Closing Net Working Capital. As the cash purchase price was paid, without holdback, on December 4, 2015, the Parties agree
    to settle the final adjustment through a reduction of the Preferred Series J shares to be released from escrow. As a result,
    the 125 shares of Preferred Series J stock shall be released as follows: 71 shares to Sano and 54 shares returned to the Company’s
    treasury.
	 	 
	6.	Other
    Deliverables. The Parties shall deliver all items on Exhibit A prior to closing.
	 	 
	7.	Miscellaneous.

 

a)The
Parties agree that the provisions SPA may be amended in the future to reflect the amendment and agreements made herein. Any such
amendment to the SPA shall be governed by the applicable amendment provisions of the SPA.

 

b)The
SPA and this Agreement may be further amended or modified in whole or in part only by a writing which makes reference to the SPA
and this Agreement, and any amendments thereto, as applicable, executed by the Parties. The obligations of any party hereunder
may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent
of the party claimed to have given the waiver; provided, however, that any waiver by any party of any violation of, breach of,
or default under any provision of this Agreement or any other agreement provided for herein shall not be construed as, or constitute,
a continuing waiver of such provision, or waiver of any other violation of, breach of or default under any other provision of
this Agreement or any other agreement provided for herein.

 

    	 

    	 	 	 

    

 

c)This
Agreement (together with the Schedules and the Exhibits thereto) and the other agreements and instruments expressly provided for
therein and herein, together with the SPA, and any amendments thereto, set forth the entire understanding of the parties hereto
and supersede in their entirety all prior contracts, agreements, arrangements, communications, discussions, representations, and
warranties, whether oral or written, among the parties with respect to the subject matter hereof.

 

d)This
Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together
will constitute one and the same instrument. Any facsimile copy of this Agreement will be deemed an original for all purposes.

 

[Signature
pages to follow]

 

    	 

    	 	 	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the
day and year first above written.

 

	 	SANOMEDICS,
INC.
	 	 	 
	 	By:	/s/
    David Langle
	 	Name:	 David
    Langle
	 	Title:	 Chief
    Executive Officer

 

[Sano
Signature Page to Agreement]

 

    	 

    	 	 	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the
day and year first above written.

 

	 	POSITIVEID CORPORATION
	 	 	 
	 	By:	/s/
    William J. Caragol
	 	Name:	 William
    J. Caragol
	 	Title:	 Chief
    Executive Officer

 

	 	Thermomedics, Inc
	 	 	 
	 	By:	/s/
    William J. Caragol
	 	Name:	 William
    J. Caragol
	 	Title:	 President

 

[Company
and Thermo Signature Page to Agreement]

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