NEITHER
THIS PROMISSORY NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS
CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS
AMENDED (THE "SECURITIES ACT") OR ANY OTHER SECURITIES LAWS AND
HAVE BEEN ISSUED
IN RELIANCE UPON THE
EXEMPTION FROM SUCH REGISTRATION CONTAINED IN REGULATION S
UNDER THE SECURITIES ACT. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY
NOT BE OFFERED, SOLD OR TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF,
ANY "U.S. PERSON" (AS SUCH TERM IS DEFINED IN REGULATION
S) EXCEPT IN
ACCORDANCE WITH REGULATION S, PURSUANT TO A REGISTRATION UNDER
THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE
SECURITIES ACT.
CONVERTIBLE PROMISSORY NOTE
$368,715.51
August 29, 2005
FOR VALUE RECEIVED,
DERMISONICS, INC., a Nevada corporation having an office at
Four Tower
Bridge, 200 Bar-Harbor Drive, West Conshohoken, Pennsylvania,
19428-2977 U.S.A. (the "Company"), hereby promises to pay to VEM
AKTIENBANK AG),
an Investment
Bank which maintains its principal
offices at Rosental 5, 80331
Munchen, Germany,
or its duly registered assigns (each
a "Holder"), on August
29, 2007, or earlier upon prepayment of this Note as provided herein,
the
principal sum
of Three Hundred Sixty-eight Thousand Seven Hundred Fifteen
Dollars and
Fifty-one Cents
($368,715.51), together with interest (computed on
the basis of a 360-day year of twelve 30-day
months and compounded monthly) on
the unpaid
principal balance at the rate of ten percent
(10%) per annum, from
the date hereof until the principal hereof
and all interest thereon shall have
been paid at Munchen, Germany or at such other point-of-payment as may
be
designated by
the Holder or any assignee of the Holder as provided for
hereunder.
The
principal amount of this Note and all
accrued interest thereon may be
prepaid by
the Company, without premium or
penalty, at any time upon ten (10)
day's prior written notice to the Holder. Upon any prepayment of this Note,
all
accrued but unpaid
interest on the principal amount shall be paid to the Holder
on the date of prepayment. All payments hereunder shall be
applied first to
interest then
to principal.
All
payments of principal
and interest shall be made in lawful currency of
the United
States of America in immediately
available funds before 11:00 a.m.
New York time on the
due date thereof at the coordinates for the Holder on file
with the Company, or in such other manner
or at such other place as the Holder
of this Note designates in
1
<PAGE>
writing.
Subject to and in compliance with the provisions hereof, the Holder
may, on
the due date hereof or on any prepayment date hereunder,
convert all or any
portion of the
outstanding principal balance of this Note as of such payment
or
prepayment date,
and all or any portion
of the interest accrued hereon to such
date, into shares ("Conversion Shares") of the common stock, $.001
par value, of
the Company (the
"Common Stock"), at a conversion price equal to eighty percent
(80%) of the average closing bid price per share of Common Stock
(as reported by
the National
Quotation Bureau, Inc.) during the five (5) trading days
immediately prior to
any such conversion provided that, in any event, the total
number of Conversion Shares which the Company may issue
to the Holder upon
a
conversion of
the outstanding principal balance of
this Note shall not exceed
six hundred
fifty-three thousand
fifty-three (653,053) shares of Common Stock.
The Holder hereof
shall communicate its intention to convert all or any portion
of the principal
amount of this Note and all or any portion of interest accrued
through such
conversion date by surrendering this Note, with the Form of
Notice
of Election to Convert attached hereto duly completed and signed,
to the Company
at its address for notice set forth elsewhere herein.
In
the event of a conversion by the Holder of all
or any portion of the
outstanding principal
balance of this Note and all or any portion
of accrued
interest thereon
into shares of the Common Stock, the Company
will issue and
deliver to
the Holder, as soon as
practical after the Company's receipt of the
Notice of Election a
certificate evidencing the shares of Common Stock issuable
upon any such conversion.
If
the Holder elects to convert less than the
entire principal amount of
this Note and interest accrued to the date of such conversion, the
Company shall
issue or cause to be issued and delivered
to the Holder, at its expense, a new
promissory note
evidencing
the outstanding amount of principal
due hereunder
after giving
effect to the amount applied to the conversion, which such
promissory note
shall, except as to
the principal amount thereof, be identical
to this Note in all respects.
The Company
covenants that it will
at all times reserve and keep available out
of the aggregate of
its authorized but unissued and otherwise unreserved Common
Stock, solely
for the purpose of enabling it to issue
Conversion Shares upon
conversion of
this Note as herein provided, the number of
Conversion Shares
which are then issuable and deliverable upon the conversion of the
entire amount
due under this Note, free from preemptive rights or any other contingent
purchase rights of persons other than the Holder. The Company
covenants that all
Conversion Shares so issuable and deliverable shall, upon issuance
in accordance
with the terms hereof, be duly and validly authorized, issued and
fully paid and
nonassessable.
2
<PAGE>
Except as provided elsewhere herein, if the Company
shall fail to make a
payment of
principal or interest when due and such
failure shall continue for
ten (10) days after
notice of such failure; or shall make an assignment for the
benefit of creditors, file a petition in bankruptcy, be adjudicated
insolvent or
bankrupt, suffer an
order for relief under any federal bankruptcy law, petition
or apply to any tribunal for the appointment of a
custodian, receiver or any
trustee for the Company or any substantial part of its assets, or
shall commence
any proceeding
under any bankruptcy,
reorganization, arrangement, readjustment
of debt, dissolution or liquidation law or
statue of any jurisdiction, whether
now or hereafter in
effect; or if there shall have been filed any such petition
or application,
or any such proceeding shall have been
commenced against the
Company, which remains
undismissed, unstayed or unbonded for a period of thirty
(30) days or more; or if the Company, by any act or
omission shall indicate
consent to,
approve or acquiescence in any such petition, application or
proceeding or the appointment of a custodian, receiver or any
trustee for all or
any substantial
part of its properties, or if the Company shall allow
such
custodianship,
receivership, or
trusteeship to continue undischarged, unstayed
or unbonded
for a period of thirty (30) days or
more, or the Company violates
any term or provision of this Note and same remains uncured
for a period of
thirty (30)
days after notice thereof by the Holder
o
