Exhibit 10.2


 





NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE 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.  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.


	Principal Amount: $147,058.83	Issue Date: November 25, 2015
	 	 
	Purchase Price: $125,000.00	 


 


CONVERTIBLE PROMISSORY NOTE


 


FOR
VALUE RECEIVED, VERITEQ CORP., a DELAWARE corporation (hereinafter called the “Borrower”), hereby promises
to pay to the order of Magna Equities II, LLC, a New York corporation, or registered assigns (the “Holder”)
the sum of ONE HUNDRED FORTY SEVEN THOUSAND FIFTY EIGHT DOLLARS AND EIGHTY THREE CENTS ($147,058.83), on November 25, 2016 (the
“Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%) (the
“Interest Rate”) per annum from the date hereof (the
“Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or
otherwise, compounded on a monthly basis.  This Note may not be prepaid in whole or in part except as otherwise explicitly
set forth in Section 1.9 hereof. Any amount of principal or interest on this Note which is not paid when due shall bear interest
at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”).  Interest
shall commence accruing on the Issue Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed.  All
payments due hereunder (to the extent not converted into common stock, (the “Common Stock”) in accordance with the
terms hereof) shall be made in lawful money of the United States of America.  All payments shall be made at such address
as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note.  Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead
be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on
which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date.  As used in this Note, the term “business day”
shall mean any day other than a Saturday, Sunday or a day on which
commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.  Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).


 


This Note is free from
all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.


 






    	1



    	 



    

 





The following terms shall
apply to this Note:


 


ARTICLE I. CONVERSION RIGHTS


 


1.1           Conversion
Right.  The Holder shall have the right from time to time, and at any time during the period beginning on the date
of this Note and ending on the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in
Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note
to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares
of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower
into which such Common Stock shall hereafter be changed or reclassified at the conversion price  (the “Conversion
Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall
the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the
sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or
unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations
contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect
to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates
of more than 4.99% of the outstanding shares of Common Stock.  For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such
proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon,
at the election of the Holder, not less than 61 days’ prior
notice to the Borrower and the provisions of the conversion limitation shall continue to apply until such 61st day (or
such later date, as determined by the Holder, as may be specified in such notice of waiver).  The number of shares of
Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below)
by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto
as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below;
provided that the Notice of Conversion is submitted by facsimile (or by other means resulting in, or reasonably expected to result
in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”).  The
term “Conversion Amount” means,
with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion
plus (2) at the Borrower’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates
provided in this Note to the Conversion Date, provided, however, that the Company shall have the right to pay any or all interest
in cash plus (3) at the Borrower’s option, Default Interest, if any, on the amounts referred to in the immediately
preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof.







1.2           Conversion
Price.


 


(a)          Calculation
of Conversion Price.  The conversion price (the “Conversion Price”) shall be the lesser of i) $0.015
per share or ii) the “Variable Conversion Price” (as defined herein)(subject to equitable adjustments for stock splits,
stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary
of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events).  The
“Variable Conversion Price” shall
mean a 40% Discount from the average of the three (3) lowest daily Trading Prices in the ten (10) Trading Days prior to the day
that the Holder requests conversion. “Trading Price”
means, for any security as of any date, the lowest trading price
on the Over-the-Counter Bulletin Board, or applicable trading market (the “OTCQB”) as reported by a reliable reporting
service (“Reporting Service”) mutually acceptable to Borrower and Holder (i.e. Bloomberg). If the Trading Price cannot
be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as
mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation
of the Trading Price is required in order to determine the Conversion Price of such Notes.  “Trading Day”
shall mean any day on which the Common Stock is traded for any
period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then being
traded. If the Issuer’s Common stock is chilled for deposit at DTC and/or becomes chilled at any point while this Agreement
remains outstanding, an additional 8% discount will be attributed to the Conversion Price defined hereof. If the Borrower
is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized and unissued
shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default, provided
that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of directors,
where applicable to raise the number of authorized shares to satisfy the Notice of Conversion.


 






    	2



    	 



    

 


(b)          Conversion
Price During Major Announcements.  Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event
the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger
in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or
substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces
a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement
referred to in clause (i) or (ii) is hereinafter referred to as the  “Announcement Date”), then the Conversion
Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement
Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date,
the Conversion Price shall be determined as set forth in this Section 1.2(a).  For purposes hereof,  “Adjusted
Conversion Price Termination Date” shall
mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated
by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or
entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction
or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.


 


1.3          Authorized
Shares.  The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from
its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement.  The Borrower is required
at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of
the Note (based on the Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”).  The
Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations pursuant to Section 4(g)
of the Purchase Agreement.  Commencing on the expiration of the first month from the issue date of this Note, the Reserved
Amount shall be recalculated each month based upon the Variable Conversion Price and the Company shall notify the Transfer Agent
and the Holder in writing by the fifth day of the following month of the new Reserved Amount. In the event the Company does not
notify the Transfer Agent of the new Reserved Amount in a timely manner, the Holder shall have the absolute right to notify the
Transfer Agent, without any further action by the Company. Notwithstanding the foregoing, in no event shall the Reserved Amount
be lower than the initial Reserved Amount, regardless of any prior conversions. The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable.  In addition, if the Borrower shall issue any
securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes
shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter
there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion
of the outstanding Notes.  The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue
certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall
constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.


 


If, at any time the Borrower
does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.


 


1.4          Method
of Conversion.


 


(a)           Mechanics
of Conversion.  Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
from time to time after the Issue Date, by : (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or
other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject
to Section 1.4(b), surrendering this Note at the principal office of the Borrower.


 


(b)           Surrender
of Note Upon Conversion.  Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid principal amount of this Note is so converted.  The Holder and the Borrower shall maintain records
showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory
to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.  In the
event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative
in the absence of manifest error.  Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid,
the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower
will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment
by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount
of this Note.  The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this
Note represented by this Note may be less than the amount stated on the face hereof.


 






    	3



    	 



    

 


(c)           Payment
of Taxes.  The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount
of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.


 


(d)          Delivery
of Common Stock Upon Conversion.  Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this
Section 1.4, the Borrower 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 ( but in any event the fifth
(5th) business day being hereinafter referred to as the “Deadline”) (and, solely in the case of conversion
of the entire unpaid principal amount hereof, surrender of the this Note) in accordance with the terms hereof and the Purchase
Agreement.


 


(e)           Obligation
of Borrower to Deliver Common Stock.  Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be
deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount
of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its
obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate
except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion.  If
the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the
certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce
the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action
to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation
to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the
Holder in connection with such conversion.  The Conversion Date specified in the Notice of Conversion shall be the Conversion
Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.


 


(f)           Delivery
of Common Stock by Electronic Transfer.  In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower’s transfer agent is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC
through its Deposit Withdrawal Agent Commission (“DWAC”) system.


 


(g)          Failure
to Deliver Common Stock Prior to Deadline.  Without in any way limiting the Holder’s right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon
conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3
above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day
beyond the Deadline that the Borrower fails to deliver such Common Stock.  Such cash amount shall be paid to Holder by
the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the
Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of
this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal
amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to
convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion
right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained
in this Section 1.4(g) are justified.


 






    	4



    	 



    

 


1.5          Concerning
the Shares.  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 Act or (ii) the Borrower 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”) or (iv) such shares are transferred to an “affiliate”
(as defined in Rule 144) of the Borrower who agrees to sell or
otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase
Agreement). Except
as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), 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.  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.”


 


The legend set forth above
shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the
Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration
under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the
Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration
statement filed 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. In the event that the Company does not accept the opinion of counsel
provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or
Regulations S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.


 


1.6          Effect
of Certain Events.


 


(a)           Effect
of Merger, Consolidation, Etc.  At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either:  (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof.  “Person”
shall mean any individual, corporation, limited liability company,
partnership, association, trust or other entity or organization.


 






    	5



    	 



    

 


(b)           Adjustment
Due to Merger, Consolidation, Etc.  If, at any time when this Note is issued and outstanding and prior to conversion
of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar
event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares
of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all
or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion,
such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted
in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such
case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the
provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities
or assets thereafter deliverable upon the conversion hereof.  The Borrower shall not affect any transaction described
in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any
event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or
if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization
or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting
successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b).  The
above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.


 


(c)           Adjustment
Due to Distribution.  If the Borrower shall declare or make any distribution of its assets (or rights to acquire
its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any
dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock
of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.


 


(d)          Adjustment
Due to Dilutive Issuance.  If, at any time when any Notes are issued and outstanding, the Borrower issues or sells,
or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock in connection with
a Subsequent Placement for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions
or underwriting discounts or allowances in connection therewith) based on a variable price formula (the “Alternative Variable
Price Formula”) that is more favorable to the investor in such Subsequent Placement than the Variable Conversion Price in
effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then
immediately upon the Dilutive Issuance, the Variable Conversion Price will be adjusted to match the Alternative Variable Price
Formula. If it is unclear whether the Alternative Variable Price Formula is better or worse, then Holder, in its sole discretion,
may elect at the time of such issuance whether to switch to the Alternative Variable Price Formula or not. In no event shall the
Conversion Price be above the original Conversion Price.


 


(e)           Purchase
Rights.  If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities
or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record
holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares
of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record
is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.


 


(f)           Notice
of Adjustments.  Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.  The Borrower shall, upon the written request at any time of the
Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price
at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which
at the time would be received upon conversion of the Note.


 






    	6



    	 



    

 


1.7           Trading
Market Limitations.  Unless permitted by the applicable rules and regulations of the principal securities market
on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant
to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock
that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is
then traded (the “Maximum Share Amount”), which shall be 9.99% of the total shares outstanding on the Closing Date
(as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the Common Stock occurring after the date hereof.  Once the Maximum
Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations
of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or
any of its securities on the Borrower’s ability to issue shares of Common Stock in excess of the Maximum Share Amount, in
lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.


 


1.8           Status
as Shareholder.  Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms  of this Note.  Notwithstanding the foregoing, if a Holder has not
received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline
with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its
status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with
respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note
to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been
converted.  In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i)
the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default
and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined
in accordance with Section 1.3) for the Borrower’s failure to convert this Note.


 


1.9           Prepayment.  Notwithstanding
anything to the contrary contained in this Note, so long as the Borrower has not received a Notice of Conversion from the Holder,
then at any time during the period beginning on the Issue Date and ending on the date which is ninety (90) days following the issue
date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder
of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any
notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its
registered address and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment
which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment
(the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to
the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the “Optional Prepayment Amount”) equal to 150%, multiplied by the sum of: (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional
Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any
amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers and Optional Prepayment Notice
and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional
Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.


  






    	7



    	 



    

 


ARTICLE II.  CERTAIN COVENANTS


 


2.1          Negative Covenants
As long as any portion of this Note remains outstanding, unless the holders of all of the outstanding Notes shall have otherwise
given prior written consent, the Borrower shall not, and shall not permit any of its subsidiaries (whether or not a subsidiary
on the Issue Date) to, directly or indirectly:


 


(a)           Omitted intentionally.


 


(b)          other
than Permitted Liens (as defined below), enter into, create, incur, assume or suffer to exist any liens, charges or encumbrances
of any kind or nature (“Liens”), on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom. “Permitted Lien”
means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other
governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the
good faith judgment of the management of the Borrower) have been established in accordance with GAAP; (b) Liens imposed by law
which were incurred in the ordinary course of the Borrower’s business, such as carriers’, warehousemen’s and
mechanics’ Liens,
statutory landlords’ Liens,
and other similar Liens arising in the ordinary course of the Borrower’s business, and which (x) do not individually or in
the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation
of the business of the Borrower and its consolidated subsidiaries or (y) are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject
to such Lien; (c) Liens incurred in connection with Permitted Indebtedness under clauses (a), and (b) thereunder; and (d) Liens
incurred in connection with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets
of the Borrower or its subsidiaries other than the assets so acquired or leased.


 


(c)          amend its charter
documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely
affects any rights of the Holder;


 


(d)          repay, repurchase
or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock
equivalents;


 


(e)         repay, repurchase
or offer to repay, repurchase or otherwise acquire any indebtedness, other than the Notes if on a pro-rata basis, other than regularly
scheduled principal and interest payments as such terms are in effect as of the Issue Date, provided that such payments shall not
be permitted if, at such time, or after giving effect to such payment, any Event of Default exist or occur;


 


(f)          pay cash dividends
or distributions on any equity securities of the Borrower;


 


(g)         sell, lease or otherwise
dispose of any portion of its assets outside the ordinary course of business, other than de minimis sales. Any consent to the disposition
of any assets may be conditioned on a specified use of the proceeds of disposition;


 


(h)         so long as the Borrower
shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give
credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors,
employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the
date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of
business or (c) not in excess of $5,000;


 


(i)          enter into any transaction
with any affiliate of the Borrower which would be required to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm’s length basis and expressly approved by a majority of the disinterested directors of the Borrower
(even if less than a quorum otherwise required for board approval); or


 


(j)          enter into any agreement
with respect to any of the foregoing.


 


ARTICLE III.  EVENTS OF DEFAULT


 


If any of the following events
of default (each, an “Event of Default”) shall occur:


 


3.1           Failure
to Pay Principal or Interest.  The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise.


 






    	8



    	 



    

 


3.2           Conversion
and the Shares.  The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing
that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance
with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated
form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as
and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its
transfer agent in transferring (or issuing( electronically or in certificated form) any certificate for shares of Common Stock
to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to
remove ( or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement,
statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three
(3) business days after the Holder shall have delivered a Notice of Conversion.


 


3.3           Breach
of Covenants.  The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of
ten (10) days after written notice thereof to the Borrower from the Holder;


 


3.4           Breach
of Representations and Warranties.  Any representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase
Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of
time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement;


 


3.5           Bankruptcy,
Receiver or Trustee.  The Borrower or any subsidiary of the Borrower shall commence, or there shall be commenced
against the Borrower or any subsidiary of the Borrower under any applicable bankruptcy or insolvency laws as now or hereafter in
effect or any successor thereto, or the Borrower or any subsidiary of the Borrower commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect relating to the Borrower or any subsidiary of the Borrower or there is commenced against the Borrower
or any subsidiary of the Borrower any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of
61 days; or the Borrower or any subsidiary of the Borrower is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Borrower or any subsidiary of the Borrower suffers any appointment
of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of sixty one (61) days; or the Borrower or any subsidiary of the Borrower makes a general
assignment for the benefit of creditors; or the Borrower or any subsidiary of the Borrower shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Borrower or any subsidiary of the
Borrower shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts;
or the Borrower or any subsidiary of the Borrower shall by any act or failure to act expressly indicate its consent to, approval
of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Borrower or any subsidiary of the
Borrower for the purpose of effecting any of the foregoing;


3.6           Judgments.  Any
money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any
of its property or other assets for more than $19,000, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld;


 


3.7           Indebtedness
Default. The Borrower or any subsidiary of the Borrower shall default in any of its obligations under any other Note or any
mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may
be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing
or factoring arrangement of the Borrower or any subsidiary of the Borrower in an amount exceeding $25,500, whether such indebtedness
now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable;


 






    	9



    	 



    

 


3.8           Delisting
of Common Stock; DTC Chill.  The Borrower shall fail to maintain the listing of the Common Stock on at least one
of the OTCQB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock
Exchange, or the American Stock Exchange or there shall be no bid price for the stock for a period of one business day OR the Depository
Trust Company places a chill on new deposits of Common Stock, which is not removed within ten (10) trading days;


 


3.9           Failure
to Comply with the Exchange Act.  The Borrower shall fail to comply with the reporting requirements of the Exchange
Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.


 


3.10         Liquidation. Any
dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.


 


3.11         Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its
debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall
not be an admission that the Borrower cannot pay its debts as they become due.


 


3.12         Maintenance
of Assets.  The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).


 


3.13         Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or
period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such
restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights
of the Holder with respect to this Note or the Purchase Agreement.


 


3.14         Reverse
Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to
the Holder.


 


3.15         Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide,
prior to the effective date of such replacement, fully executed Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocable reserve shares of Common
Stock in the Reserved Amount) signed by the successor transfer agent to Holder and the Borrower.


 


3.16         Failure to Pay
Post-Closing Expenses. The failure by Borrower to pay any and all Post-Closing Expenses as defined in section 4.6.


 


3.17        Delisting.
From and after the initial trading, listing or quotation of the Common Stock on a Principal Market, an event resulting in the Common
Stock no longer being traded, listed or quoted on a Principal Market; failure to comply with the requirements for continued quotation
on a Principal Market; or notification from a Principal Market that the Borrower is not in compliance with the conditions for such
continued quotation and such non-compliance continues for seven (7) trading days following such notification.


 


3.18         Cross-Default. Notwithstanding
anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower
of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice
and cure or grace periods, shall, at the option of the Borrower, be considered a default under this Note and the Other Agreements,
in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the
terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements”
means collectively, all agreements and instruments between, among
or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation,
promissory notes; provided, however, the term “Other Agreements”
shall not include the related or companion documents to this Note.
Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt
of Borrower to the Holder.


 






    	10



    	 



    

 


3.19         Consecutive
Late Filings. If the Company files a late notification (NT 10-Q or NT 10-K) for any quarterly or annual report for any two
(2) consecutive periods.





Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable
and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum
(as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE
SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGTAIONS HEREUNDER,
AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation
of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon
when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8,
3.9, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19, and/or 3.20 exercisable through the delivery of written notice to the
Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified in the remaining
sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in
Section 3.1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction
of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date
of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in
clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding
principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively
be known as the “Default Sum”) or (ii) the “parity value”
of the Default Sum to be prepaid, where parity value means (a)
the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance
with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date”
for purposes of determining the lowest applicable Conversion Price,
unless the Default Event arises as a result of such breach in respect of a specific Conversion Date in which case such Conversion
Date shall be the Conversion Date, multiplied by (b) the highest Closing Price for the Common Stock during the period beginning
on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the “Default
Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment
or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses,
of collection, and the Holder shall be entitled to exercise all other rights and remedies available at low or in equity. 


 


If the Borrower fails to pay the Default Amount
within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any
time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to
require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.


  


ARTICLE IV. MISCELLANEOUS


 


4.1           Failure
or Indulgence Not Waiver.  No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privileges.  All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 



    	11



    	 



    




 


4.2           Notices.  All
notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:


 


If to the Borrower, to:


VERITEQ CORP.

3333 South Congress Ave., Suite 401


DELRAY BEACH, FL 33445


Attn: Mr. Scott Silverman, CEO


 


With a copy to:


MDO Partners


175 SW 7th St #1900


Miami, FL 33131


Attn: Richard Montes, Esq.


 


If to the Holder:


Magna Equities II, LLC


 


4.3           Amendments.  This
Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder.  The
term “Note” and
all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the
Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.


 


4.4           Assignability.  This
Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its
successors and assigns.  Each transferee of this Note must be an “accredited investor”
(as defined in Rule 501(a) of the 1933 Act).  Notwithstanding
anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin
account or other lending arrangement.


 


4.5           Cost
of Collection.  If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of
collection, including reasonable attorneys’ fees.


 


4.6          Post-Closing Expenses.
The Issuer will bear any and all miscellaneous expenses that may arise as a result of this Agreement post-closing. These expenses
include, but are not limited to, the cost of legal opinion production from its counsel, transfer agent fees, equity issuance fees,
etc. The failure to pay any and all Post-Closing Expenses will be deemed a default as described in Section 2.6.10 herein.


 


4.6           Governing
Law.  This Note shall be governed by and construed in accordance with the laws of the State of New York without regard
to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions
contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and
county of New York.  The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non
conveniens.  The Borrower and Holder waive trial by jury.  The prevailing party shall be entitled to recover
from the other party its reasonable attorney’s fees and costs.  In the event that any provision of this Note or any other
agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute
or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other
Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any
right to serve process in any other manner permitted by law.


 






    	12



    	 



    

 


4.7           Certain
Amounts.  Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal
amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such
interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note
may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and
is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale
of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note.  The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate
to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares
of Common Stock.


 


4.8           Purchase
Agreement.  By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase
Agreement.


 


4.9           Notice
of Corporate Events.  Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder
of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder
with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders).  In the event of any taking by the Borrower of a record of its shareholders for the purpose of
determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any
class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are
entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower
or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least
twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or
event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution,
right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event
to the extent known at such time.  The Borrower shall make a public announcement of any event requiring notification
to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section
4.9.


 


4.10         Remedies.  The
Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby.  Accordingly, the Borrower acknowledges that the remedy
at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach
by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.


 


4.11        Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.
If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The
Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive
the Borrower from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Borrower
(to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will
suffer and permit the execution of every such as though no such law has been enacted.


 






    	13



    	 



    

 


IN WITNESS WHEREOF, Borrower has caused this
Note to be signed in its name by its duly authorized officer this November 25, 2015.


	 	 	 	 
	 	VERITEQ CORP.
	 	 	 	 
	 	By:	/s/
Scott Silverman	 
	 	 	 
	 	 	Scott Silverman, CEO
	 	 	 	 	 


 



    	14



    	 



    

 
Exhibit
A. 





NOTICE
OF CONVERSION


 





The
undersigned hereby elects to convert $________________ of the principal amount of the Note (defined below) into Shares of Common
Stock of VERITEQ CORP., a(n) DELAWARE Corporation (the “Borrower”) according to the conditions of the Convertible
Note of the Borrower dated as of November 25, 2015 (the “Note”). No fee will be charged to the Holder or Holder’s
Custodian for any conversion, except for transfer taxes, if any.


 


Box Checked
as to applicable instructions:


 


[ 
]         The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account
of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).


 


Name
of DTC Prime Broker: ___________________________________________


 


Account
Number: ____________________________________________________


 


[
 ]         The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common
Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately
below:


 


Magna
Equities II, LLC


EIN
#:


  


	Date
    of Conversion:	 	 
	 	 	 
	 	 	 
	Conversion
    Price:  	 	 
	 	 	 
	 	 	 
	Shares
    to Be Delivered:	 	 
	 	 	 
	 	 	 
	Remaining
        Principal Balance Due

        After
        This Conversion:
	 	 
	 	 	 
	Signature	 

         

         
	 
	 	 	 
	Print
    Name:	 	 
	 	 	 


 





    	15