EXHIBIT 10.3

 

PROMISSORY NOTE

 

$20,000.00

 

Dated: May 1, 2014

 

 

 

 

 

 

FOR VALUE RECEIVED, the undersigned, VERITEQ CORPORATION (f/k/a DIGITAL ANGEL
CORPORATION), a Delaware corporation (the “Company”), promises to pay to Ned L.
Siegel (the “Holder”), in lawful money of the United States of America, the
principal amount of Twenty Thousand Dollars ($20,000.00) (the “Principal
Amount”), with interest calculated in accordance herewith, on May 1, 2015 (the
“Maturity Date”).

 

1.

Payments.

 

(a)     Interest. The Principal Amount shall bear interest at a per annum rate
of nine percent (9%) from this date until paid, except as otherwise provided by
Section 2(b).

 

(b)     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.

 

(c)     Prepayments at the Option of the Company. This Note may, at the option
of the Company and upon at least five (5) Business Days’ written notice to
Holder, be prepaid in whole or in part, at any time and from time to time,
without premium or penalty. Any prepayments made under this Section 1(c) 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)     Springing Conversion Feature. At any such time as would not cause a
change to, or a right to change, the economics of any outstanding Warrants or
Other Debt (as defined and more fully set forth in subsection (iv) below), this
Note shall be automatically amended to (i) issue a warrant, as compensation for
certain services for the Company, which warrant will be a warrant to acquire
100,000 shares of Common Stock at an exercise price of $0.35 per share, and
which shall be in the form attached hereto as Exhibit A, and (ii) allow the
Holder to convert this Note, or any part thereof, into validly issued, fully
paid and non-assessable shares of common stock of the Company (“Common Stock”)
in accordance with the following provisions:

 

 
 

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(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 (the “Conversion Rate”). “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, $0.35,
adjusted for any stock splits, reverse stock splits or similar transactions.

 

 

(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 (whether via facsimile or
otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date,
a copy of an 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)

Notwithstanding anything herein to the contrary, the provisions of this Section
1(d) are not valid or binding, and shall not be deemed to be a part of this
Note, so long as their existence would trigger a reduction in the exercise price
or other change in the terms of any warrant issued by the Company to any person,
other than to an officer or director (a “Warrant”), or would trigger a default
or the change in the conversion or other economic terms under any indebtedness
or securities or related agreements of the Company (“Other Debt”), or would give
the holder of any such Warrant or Other Debt the right to alternative pricing or
economics as a result of the existence of the terms contained in this Section
1(d). The provisions of this Section 1(d) are intended and shall be interpreted
as to comply with and neither contravene nor trigger the provisions of Section 2
of the Warrants issued on November 13, 2013 and Section 7 of the Notes issued
November 13, 2013.

 

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;

 

 
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(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, 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

 

(iv)     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.

 

(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 its 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 its 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 9% as provided in such section, but instead at a rate
equal to the lesser of (i) eighteen percent (18%) or (ii) the highest amount
permitted by applicable law.

 

3.

Representations and Warranties of Holder. The Holder by his acceptance hereof
represents and warrants to the Company that he is acquiring the Note for its 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 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 its 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
it access to the corporate records and accounts of the Company, has made its
officers available for interview by it and has furnished it with all documents
required by it to make an informed decision with regard to its investment in the
Note.

 

 
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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.

 

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 its successors and permitted assigns. This Note is non-negotiable and
neither party may assign its 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.

 

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.

 

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.

 

 
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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.

 

VERITEQ CORPORATION

       

By:

/s/ Michael Krawitz

     

Name: Michael Krawitz

     

Title: Chief Legal and Financial Officer

       

Address:

 

220 Congress Park Drive

Suite 200

Delray Beach, FL 33445

     

Facsimile No: 561-846-7001

   

NED L. SIEGEL

       

By:          /s/ Ned L. Siegel

Ned L. Siegel

3835 N.W. Boca Raton Blvd. 
Suite 300 
Boca Raton, FL 33431 

 

 
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FORM OF WARRANT

 

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 TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

 

VeriTeQ Corporation

 

Warrant To Purchase Common Stock

 

Warrant No.:

 

Date of Issuance: __________ ___, 2014 (“Issuance Date”)

 

VeriTeQ Corporation (f/k/a Digital Angel Corporation), a Delaware corporation
(the “Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Ned Siegel, the
registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, upon exercise of this Warrant
to Purchase Common Stock (including any Warrants to Purchase Common Stock issued
in exchange, transfer or replacement hereof, the “Warrant”), at any time or
times on or after the Issuance Date, but not after 11:59 p.m., New York time, on
the Expiration Date (as defined below), 100,000 fully paid and non-assessable
shares of Common Stock (as defined below) (the “Warrant Shares”, and such number
of Warrant Shares, the “Warrant Number”). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in
Section 16.

 

 

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1.

EXERCISE OF WARRANT.

 

(a)     Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day on or after the Issuance Date
(an “Exercise Date”), in whole or in part, by delivery (whether via facsimile or
otherwise) of a written notice, in the form attached hereto as Exhibit A (the
“Exercise Notice”), of the Holder’s election to exercise this Warrant. Within
one (1) Trading Day following an exercise of this Warrant as aforesaid, the
Holder shall deliver payment to the Company of an amount equal to the Exercise
Price in effect on the date of such exercise multiplied by the number of Warrant
Shares as to which this Warrant was so exercised (the “Aggregate Exercise
Price”) in cash or via wire transfer of immediately available funds if the
Holder did not notify the Company in such Exercise Notice that such exercise was
made pursuant to a Cashless Exercise (as defined in Section 1(c)). The Holder
shall not be required to deliver the original of this Warrant in order to effect
an exercise hereunder. Execution and delivery of an Exercise Notice with respect
to less than all of the Warrant Shares shall have the same effect as
cancellation of the original of this Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares.
Execution and delivery of an Exercise Notice for all of the then-remaining
Warrant Shares shall have the same effect as cancellation of the original of
this Warrant after delivery of the Warrant Shares in accordance with the terms
hereof. On or before the tenth (10th) Trading Day following the date on which
the Company has received such Exercise Notice, the Company shall issue or DWAC
the shares so acquired. Upon delivery of an Exercise Notice, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant
Shares (as the case may be). If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then, at the request of the
Holder, the Company shall as soon as practicable issue and deliver to the Holder
(or its designee) a new Warrant (in accordance with Section 4(d)) representing
the right to purchase the number of Warrant Shares purchasable immediately prior
to such exercise under this Warrant, less the number of Warrant Shares with
respect to which this Warrant is exercised. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but rather the number of
shares of Common Stock to be issued shall be rounded up to the nearest whole
number.

 

(b)     Exercise Price. For purposes of this Warrant, “Exercise Price” means
$0.35, subject to adjustment as provided herein.

 

 
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(c)     Cashless Exercise. Notwithstanding anything contained herein to the
contrary (other than Section 1(f) below), if at the time of exercise hereof a
Registration Statement is not effective for the resale by the Holder of Warrant
Shares, then the Holder may, in its sole discretion, exercise this Warrant in
whole or in part and, in lieu of making the cash payment of the Aggregate
Exercise Price otherwise contemplated to be made to the Company upon such
exercise, elect instead to receive upon such exercise the “Net Number” of shares
of Common Stock determined according to the following formula (a “Cashless
Exercise”):

 

 

 [image.jpg]

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B = the average Closing Sale Price over the 10 days preceding the Exercise
Notice

 

C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

(e)     Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the number of Warrant Shares to
be issued pursuant to the terms hereof, the Company shall promptly issue to the
Holder the number of Warrant Shares that are not disputed and resolve such
dispute in accordance with Section 13.

 

2.

ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.

 

The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section 2.

 

(a)     Stock Dividends and Splits. Without limiting any provision of
Section 2(b) or Section 4, if the Company, at any time on or after the date of
the Securities Purchase Agreement, (i) pays a stock dividend on one or more
classes of its then outstanding shares of Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its then outstanding shares of Common Stock
into a larger number of shares or (iii) combines (by combination, reverse stock
split or otherwise) one or more classes of its then outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

 

(b)     Calculations. All calculations under this Section 2 shall be made by
rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issuance or sale of Common
Stock.

 

 
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3.

WARRANT HOLDER NOT DEEMED A STOCKHOLDER.

 

Except as otherwise specifically provided herein, the Holder, solely in its
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in its capacity as the Holder of this Warrant, any of
the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which it is then entitled to receive upon the due exercise of this Warrant. In
addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same notices and other information (that are not filed with or furnished
to the SEC) given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.

 

4.

REISSUANCE OF WARRANTS.

 

(a)     Transfer of Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 4(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 4(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

 

(b)     Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 4(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.

 

(c)     Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 4(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, no warrants for fractional shares of
Common Stock shall be given.

 

 
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(d)     Issuance of New Warrants. Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be
of like tenor with this Warrant, (ii) shall represent, as indicated on the face
of such new Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant to
Section 4(a) or Section 4(c), the Warrant Shares designated by the Holder which,
when added to the number of shares of Common Stock underlying the other new
Warrants issued in connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an issuance date,
as indicated on the face of such new Warrant which is the same as the Issuance
Date, and (iv) shall have the same rights and conditions as this Warrant.

 

5.

NOTICES.

 

Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given to the Company at its principal
address or to the Holder at the address on record for Holder prodded to the
Company.

 

6.

AMENDMENT AND WAIVER.

 

Except as otherwise provided herein, the provisions of this Warrant (other than
Section 1(f)) may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Required Holders.
The Holder shall be entitled, at its option, to the benefit of any amendment of
(a) any other similar warrant issued under the Securities Purchase Agreement or
(b) any other similar warrant. No consideration shall be offered or paid to the
Holder to amend or consent to a waiver or modification of any provision of this
Warrant unless the same consideration is also offered to all of the holders of
the other SPA Warrants. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.

 

7.

GOVERNING LAW.

 

This Warrant shall be governed by and construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State
of Florida, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Florida or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Palm Beach County,
Florida, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Nothing contained herein shall be deemed or
operate to preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s
obligations to the Holder or to enforce a judgment or other court ruling in
favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

 
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8.

CONSTRUCTION; HEADINGS.

 

This Warrant shall be deemed to be jointly drafted by the Company and the Holder
and shall not be construed against any Person as the drafter hereof. The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant. Terms used in this
Warrant but defined in the other Transaction Documents shall have the meanings
ascribed to such terms on the Closing Date (as defined in the Securities
Purchase Agreement) in such other Transaction Documents unless otherwise
consented to in writing by the Holder.

 

9.

CERTAIN DEFINITIONS.

 

For purposes of this Warrant, the following terms shall have the following
meanings:

 

(a)     “Bloomberg” means Bloomberg, L.P.

 

(b)     “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

 

(c)     “Closing Sale Price” means, for any security as of any date, the last
closing trade price for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for such security by Bloomberg, the average of the ask prices of any
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 13.
All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.

 

 
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(d)     “Common Stock” means (i) the Company’s shares of common stock, $0.01 par
value per share, and (ii) any capital stock into which such common stock shall
have been changed or any share capital resulting from a reclassification of such
common stock.

 

(e)     “Eligible Market” means The New York Stock Exchange, the NYSE MKT, the
Nasdaq Capital Market, the Nasdaq Global Select Market, the Nasdaq Global Market
or the Principal Market.

 

(f)     “Expiration Date” means the date that is the second (2nd) anniversary of
the Issuance Date or, if such date falls on a day other than a Business Day or
on which trading does not take place on the Principal Market (a “Holiday”), the
next date that is not a Holiday.

 

(g)     “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

 

(h)     “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency
thereof.

 

(i)     “Principal Market” means the OTCQB Market.

 

(j)     “Successor Entity” means the Person (or, if so elected by the Holder,
the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into.

 

(k)     “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded, provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time) unless such day is otherwise designated
as a Trading Day in writing by the Holder.

 

(l)     “Voting Stock” of a Person means capital stock of such Person of the
class or classes pursuant to which the holders thereof have the general voting
power to elect, or the general power to appoint, at least a majority of the
board of directors, managers or trustees of such Person (irrespective of whether
or not at the time capital stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).

 

 
-12-

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

 

 

VERITEQ CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 
-13-

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EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK

 

VERITEQ CORPORATION

  

The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of VeriTeQ Corporation (f/k/a
Digital Angel Corporation), a Delaware corporation (the “Company”), evidenced by
Warrant to Purchase Common Stock No. _______ (the “Warrant”). Capitalized terms
used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

 

1.     Form of Exercise Price. The Holder intends that payment of the Aggregate
Exercise Price shall be made as:

 

 

____________

a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

 

____________

a “Cashless Exercise” with respect to _______________ Warrant Shares.

 

In the event that the Holder has elected a Cashless Exercise with respect to
some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that (i) this Exercise Notice was executed by the
Holder at __________ [a.m.][p.m.] on the date set forth below and (ii) if
applicable, the Bid Price as of such time of execution of this Exercise Notice
was $________.

 

If this Exercise Notice is being delivered on any Alternate Exercise Date, check
here if Holder is electing to use the following Alternate Exercise
Price:____________.

 

2.     Payment of Exercise Price. In the event that the Holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

 

3.     Maximum Percentage Representation. Notwithstanding anything to the
contrary contained herein, this Exercise Notice shall constitute a
representation by the Holder of the Warrant submitting this Exercise Notice
that, after giving effect to the exercise provided for in this Exercise Notice,
such Holder (together with its affiliates) will not have beneficial ownership
(together with the beneficial ownership of such Person’s affiliates) of a number
of Common Shares which exceeds the Maximum Percentage (as defined in the
Warrant) of the total outstanding shares of Common Stock of the Company as
determined pursuant to the provisions of Section 1(f) of the Warrant.

 

 
-14-

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4.     Delivery of Warrant Shares. The Company shall deliver to Holder, or its
designee or agent as specified below, __________ Warrant Shares in accordance
with the terms of the Warrant. Delivery shall be made to Holder, or for its
benefit, as follows:

 

Check here if requesting delivery as a certificate to the following name and to
the following address:

 

Issue to:

                 

 

 

 

 

Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:

 

DTC Participant:

     

DTC Number:

     

Account Number:

     

 

 

Date: _____________ __,        

                                                                Name of
Registered Holder     By:_____________________

Name:
Title:

 

Tax ID:_____________________

 

Facsimile:___________________

 

 

-15-