Exhibit 10.5

 

VeriTeQ Corporation

 

Form of Lock-Up Agreement

 

November 13, 2013

 

VeriTeQ Corporation
(f/k/a Digital Angel Corporation)
220 Congress Park Drive
Suite 200
Delray Beach
Florida 33445

 

Re VeriTeQ Corporation (f/k/a Digital Angel Corporation) – Lock-Up Agreement

 

Dear Sirs:

 

This Lock-Up Agreement is being delivered to you in connection with the
Securities Purchase Agreement (the “Purchase Agreement”), dated as of November
13, 2013 (the “Subscription Date”), by and among VeriTeQ Corporation (f/k/a
Digital Angel Corporation), a Delaware corporation with offices located at 220
Congress Park Drive, Suite 200, Delray Beach, Florida 33445 (the “Company”) and
the investors party thereto (the “Buyers”), with respect to the issuance of (i)
secured convertible notes (the “Notes”) which will, among other things, be
convertible into shares of the Company's common stock, par value $0.01 per share
(the “Common Stock”) and (ii) warrants which will be exercisable to purchase
shares of Common Stock. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Purchase Agreement.

 

In order to induce the Buyers to enter into the Purchase Agreement, the
undersigned agrees that during the period commencing on the Subscription Date
and ending on the earlier of (x) the date no Notes remain outstanding and (y)
[the first anniversary of the Closing Date][February 1, 2014], the undersigned
will not (i) sell, offer to sell, contract or agree to sell, hypothecate,
pledge, grant any option to purchase, make any short sale or otherwise dispose
of or agree to dispose of, directly or indirectly, any securities of the
Company, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Securities and Exchange Act of 1934, as amended and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder with respect to
any securities of the Company owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the Securities and Exchange
Commission or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
any securities of the Company, owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the Securities and Exchange
Commission, whether any such transaction is to be settled by delivery of such
securities, in cash or otherwise, (collectively, the “Undersigned’s
Securities”).

 

 
 

--------------------------------------------------------------------------------

 

 

The foregoing restriction is expressly agreed to preclude the undersigned or any
affiliate of the undersigned from engaging in any hedging or other transaction
which is designed to or which reasonably could be expected to lead to or result
in a sale or disposition of the Undersigned’s Securities even if the
Undersigned’s Securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would include,
without limitation, any short sale or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to any of
the Undersigned’s Securities or with respect to any security that includes,
relates to, or derives any significant part of its value from the Undersigned’s
Securities.

 

[INSERT OTHER THAN FOX HOLLOW: Notwithstanding the foregoing, the undersigned
may transfer the Undersigned’s Securities (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein or (ii) to any trust for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned, provided
that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value.][INSERT FOX HOLLOW ONLY: Notwithstanding the foregoing,
the undersigned may transfer the Undersigned’s Securities (i) to any person on
any Trading Day, provided, that such amount of the Undersigned’s Securities
transferred on any one Trading Day does not to exceed 500 shares of Common Stock
(as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations and similar events) or (ii) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein.] For purposes of this Lock-Up Agreement,
“immediate family” shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin. The undersigned now has, and, except as
contemplated by clauses (i) and (ii) above, for the duration of this Lock-Up
Agreement will have, good and marketable title to the Undersigned’s Securities,
free and clear of all liens, encumbrances, and claims whatsoever. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
Undersigned’s Securities except in compliance with the foregoing restrictions.

 

[INSERT IN OPTION STOCKHOLDERS ONLY: Notwithstanding the foregoing, if the
option to purchase ________ shares of Common Stock of the undersigned as set
forth in the Option Agreement (as defined in the Securities Purchase Agreement),
dated [ ], by and between the undersigned with Hudson Bay Master Fund Ltd (or
its successor or assigns) has not been exercised in full on or prior to the
sixty-first (61st) calendar day after the Closing Date (as defined in the
Securities Purchase Agreement), on the sixty-second (62nd) calendar day after
the Closing Date, this Lock-Up Agreement shall automatically terminate with
respect to such shares of Common Stock of the undersigned that are subject to
such Option and have not been exercised pursuant to such Option on or prior to
such date.]

 

 
 

--------------------------------------------------------------------------------

 

 

The undersigned understands and agrees that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors, and assigns.

 

This Lock-Up Agreement may be executed in two counterparts, each of which shall
be deemed an original but both of which shall be considered one and the same
instrument.

 

This Lock-Up Agreement will be governed by and construed in accordance with the
laws of the State of New York, without giving effect to any choice of law or
conflicting provision or rule (whether of the State of New York, or any other
jurisdiction) that would cause the laws of any jurisdiction other than the State
of New York to be applied. In furtherance of the foregoing, the internal laws of
the State of New York will control the interpretation and construction of this
Lock-Up Agreement, even if under such jurisdiction's choice of law or conflict
of law analysis, the substantive law of some other jurisdiction would ordinarily
apply.

 

 

 

 
 

--------------------------------------------------------------------------------

 

 

 

Very truly yours,

 

______________________________

Exact Name of Securityholder

 

______________________________

Authorized Signature

 

______________________________

Title

 

 

 

Agreed to and Acknowledged:

 

VERITEQ CORPORATION
(f/k/a Digital Angel Corporation)

 

 

By: _______________________

       Name:

       Title: