Document:

Exhibit 10.65

Exhibit 10.65

SECURED PROMISSORY NOTE

		
	 
	Delray Beach, Florida

	$200,000.00

	January 11, 2012

FOR VALUE RECEIVED, the undersigned VeriTeQ Acquisition Corporation, a Florida corporation ("Maker"), promises to pay to the order of PositiveID Corporation, a Delaware corporation ("Payee") or its successors, assigns or designees, at Payee's corporate offices located at 1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445, or such other place as the holder hereof may from time to time designate in writing, the principal sum of Two Hundred Thousand Dollars and 00/100 ($200,000.00) in lawful money of the United States of America.

Interest on this Promissory Note (“Note”) shall accrue on the principal at a rate of 5% per annum until paid in full. Interest shall be calculated and charged daily on the basis of actual days elapsed over a three hundred sixty (360) day banking year, on the unpaid principal balance outstanding from time to time.  Principal and interest on the Note shall be due and payable over a period of twenty-four (24) months based on a monthly amortization schedule commencing January 11, 2013.

The Note is issued under, and is subject to, the Security Agreement, dated January 11, 2012, between the Maker and the Payee, as it may be amended from time to time (the “Security Agreement”) and the payment of all obligations under this Note is secured according to the provisions contained in the Security Agreement. The Payee is entitled to all of the benefits and rights of the Payee under the Security Agreement. However, neither this reference to the Security Agreement nor any provision thereof shall impair the absolute and unconditional obligation of the undersigned to pay the principal on the Note as herein provided.  

The word “holder,” as used in the Note, shall mean the Payee or endorsee of the Note who is in possession of it. 

The indebtedness evidenced by the Note is secured by the Security Agreement. Any default by the Maker under this Note or the Stock Purchase Agreement, dated January 11, 2012 (the “Stock Purchase Agreement”), between Maker and Payee shall constitute a default under the Note entitling the holder to declare the entire principal amount of the indebtedness evidenced hereby immediately due and payable.

It is further agreed hereby that if any payment of principal shall not be made as and when due as above provided; or in the event default be made in the performance or compliance with any of the covenants and conditions of the Stock Purchase Agreement; or upon the insolvency, bankruptcy or dissolution of the Maker; then, in any or all such events, the entire amount of principal of the Note with all interest then accrued, shall, at the option of the holder of the Note and without notice (Maker hereby expressly waives notice of such default), become and be due and collectible, time being of the essence for all sums due under the Note.  If the Note shall not be paid at maturity or according to the tenor thereof and strictly as above provided, it may be placed in the hands of an attorney at law for collection, and in that event, each party liable for the payment thereof, as Maker, endorser, guarantor, or otherwise, hereby agrees jointly and severally, to pay the holder hereof in addition to the sums above stated, a reasonable sum as an attorney's fee, which shall include attorney's fees at the trial level and on appeal, together with all reasonable costs incurred.  

After maturity or default, the Note shall bear interest at the highest rate permitted under then applicable law; provided, however, in the event said highest rate is otherwise indeterminable, the parties agree that the applicable rate shall be eighteen percent (18%) per annum; provided further, however, that in no event shall such rate exceed the highest rate permissible under the applicable law.  

Provided Payee has not exercised its right to accelerate the Note as hereinabove provided, in the event any required payment on the Note is not received by Payee within five (5) days after said payment is due, Maker shall pay Payee a late charge of eight percent (8%) of the payment not so received, the parties agreeing that said charge is a fair and reasonable charge for the late payment and shall not be deemed a penalty.

No delay or omission on the part of the Payee in exercising any right, privilege or remedy shall impair such right, privilege or remedy or be construed as a waiver thereof or of any other right, privilege or remedy.  No waiver of any right, privilege or remedy or any amendment to the Note shall be effective unless made in writing and signed by the Payee. Under no circumstances shall an effective waiver of any right, privilege or remedy on any one occasion constitute or be construed as a bar to the exercise of or a waiver of such right, privilege or remedy on any future occasion. The acceptance by the Payee hereof of any payment after any default hereunder shall not operate to extend the time of payment of any amount then remaining unpaid hereunder or constitute a waiver of any rights of the Payee hereof under the Note.  The unenforceability or invalidity of any provision of this Note as to any person or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable.

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All rights and remedies of the Payee, whether granted herein or otherwise, shall be cumulative and may be exercised singularly or concurrently, and the Payee shall have, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of Florida. The Payee shall have no duty as to the collection or protection of the Collateral (as defined in the Security Agreement) or of any income thereon, or as to the preservation of any rights pertaining thereto beyond the safe custody thereof.  Surrender of the Note, upon payment or otherwise, shall not affect the right of the Payee to retain the Collateral (as defined in the Security Agreement) as security for the payment and performance of any liability of the undersigned to the Payee. 

All persons now or at any time liable for payment of the Note hereby waive presentment, protest, notice of protest, and notice of dishonor.  The Maker expressly consents to any extensions and renewals of the Note, in whole or in part, and all delays in time of payment or other performance under the Note which Payee may grant at any time and from time to time, without limitation and without any notice or further consent of the Maker. 

The Maker and such other parties authorize and employ the Payee, in its sole discretion, at any time after the occurrence of a default hereunder to appropriate and, in such order as the Payee may elect, apply any such money, deposits or property to the payment hereof or to the payment of any and all indebtedness, liabilities and obligations of such parties to the Payee or any of the Payee's affiliates, whether now existing or hereafter created or arising or now owned or howsoever after acquired by the Payee or any of the Payee's affiliates (whether such indebtedness, liabilities and obligations are or will be joint or several, direct or indirect, absolute or contingent, liquidated or unliquidated, matured or unmatured).

The Note and the provisions hereof shall be binding upon the Maker and the Maker’s administrators, successors, and assigns and shall inure to the benefit of the Payee, the Payee’s administrators, successors, and assigns.  The Maker may not assign its rights or obligations under the Note.

The Note may not be amended, changed or modified in any respect except by a written document that has been executed by each party.  The Note is to be construed according to the applicable laws of the State of Florida, without regard to its conflicts of law principles.  Any action brought upon the enforcement of this Note is hereby authorized to be instituted and prosecuted in the state and federal courts located in Palm Beach County, Florida, at Payee’s election.  

In any action or proceeding in connection with or to enforce this Note, the Maker irrevocably consents to and confers personal jurisdiction on the courts of the State of Florida, or the United States courts located within the State of Florida, in the county of Palm Beach, expressly waives any objections as to venue in any of such courts, and agrees that service of process may be made on him by mailing a copy of the summons and complaint by registered or certified mail, return receipt requested, to his address set forth herein (or otherwise expressly provided in writing).  Alternatively, in any such action or proceeding in any such court, service of any legal process may be made upon the Payee or any other obligor (regardless of any other appointment by such person of any other process agent) by mailing or delivery of such process to such person, or such other agent which such person may have appointed and the Payee has approved as the person’s agent for these purposes.  The Payee hereby irrevocably waives, to the fullest extent he may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.  Nothing contained herein shall, however, prevent the Payee from bringing any action or exercising any rights within any other state or jurisdiction or from obtaining personal jurisdiction by any other means available by applicable law.  

MAKER AND PAYEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT MAKER OR PAYEE, OR ANY OTHER PERSON MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THE NOTE AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE ACCEPTING THIS NOTE IN CONNECTION WITH THE STOCK PURCHASE AGREEMENT.

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IN WITNESS WHEREOF, the undersigned has executed this Note on the date set forth above.  

			
	 
	VERITEQ ACQUISITION CORPORATION

	 
	 
	 

	 
	By:

	/s/ Scott Silverman

	 
	 
	 

	 
	Name:

	Scott Silverman

	 
	 
	 

	 
	Title:

	Chairman & CEO

3Exhibit 10.66

Exhibit 10.66

SECURITY AGREEMENT

This is a Security Agreement (the “Security Agreement”), dated January 11, 2012 between VeriTeQ Acquisition Corporation, a Florida corporation (“Debtor”), and PositiveID Corporation, a Delaware corporation (the “Secured Party”).

BACKGROUND

Debtor has issued to the Secured Party a promissory note, pursuant to the terms of that certain Stock Purchase Agreement, dated January 11, 2012, between the Secured Party and Debtor (the “Stock Purchase Agreement”), in the principal amount of Two Hundred Thousand Dollars ($200,000.00) (the “Note”).  Pursuant to the terms herein, this Security Agreement secures the obligation of Debtor to satisfy Debtor’s obligations under the Note. Accordingly, in consideration of the mutual covenants and agreements set forth below, the parties agree as follows:

TERMS

1.

Grant of Security Interest.  

a.

For good and valuable consideration received, the sufficiency of which is hereby acknowledged and agreed, in order to secure Debtor’s (a) performance under the Note and (b) payment of all costs and expenses, including attorney’s fees, incurred in connection with realizing the value of the security provided by this Security Agreement following an Event of Default (as defined herein) (collectively, the “Liabilities”), Debtor grants to the Secured Party a first lien and first priority security interest (the “Security Interest”) in all of Debtor’s assets, including, but not limited to, collateral, accounts receivable, chattel paper, instruments, documents, inventory, equipment, general intangibles, intellectual property, and all other present and future tangible and intangible property of Debtor, whether now owned or existing or hereafter acquired or arising, including additions, accessions and substitutions thereof, all proceeds of any proceeds wherever located, and all cash and non-cash proceeds and products thereof (collectively, the “Collateral”).  This Security Interest given to Secured Party shall also attach to all replacements and proceeds and all proceeds of any sale or transfers of the Collateral.

b.

 Notwithstanding the grant by Debtor to Secured Party of a Security Interest in the Collateral as noted above, Secured Party agrees, after being requested therefore, to not unreasonably withhold consent to the subordination of its Security Interest in the Collateral to the rights of any bank, potential investor, or other financing source who makes available to Debtor a loan or lending facility which includes the Collateral as part of the security securing that loan.  Such subordination will include Secured Party taking no action to enforce its Security Interest with regard to such Collateral unless and until the lender has taken action to enforce its first lien with regard to such security or in the event Debtor declares bankruptcy.  Secured Party further agrees that its first perfected lien will be second in priority to the lien of the lender and agrees to promptly execute a document mutually acceptable to Secured Party and the lender reflecting such subordination.

2.

Assurances; Covenants.  Debtor hereby agrees that:

a.

 (i) The Collateral is and will be free of all liens and security interests of every kind and nature, except as may be in effect on the date hereof or have been the result of actions of the Secured Party; (ii) Debtor will not assign, transfer, sell, convey, hypothecate, pledge, or in any other way dispose of or encumber the Collateral while this Security Agreement is in effect; and (iii) Debtor will warrant and defend the Collateral and the Secured Party’s Security Interest against the claims and demands of all persons.

b.

Debtor will not, without the prior written consent of the Secured Party, borrow from anyone on the security of the Collateral, or otherwise permit any liens, encumbrances, security interests, or adverse claims against the Collateral, and will not permit the Collateral to be levied upon under any legal process.  

c.

Debtor authorizes the Secured Party to file financing statements, including amendments or continuations thereof, describing the Collateral, and from time to time at the request of the Secured Party, will execute such other documents, and will do such other acts and things, all as the Secured Party may reasonably request, to establish and maintain a valid first, perfected security interest in the Collateral and to enable the Secured Party to enforce its rights and remedies hereunder with respect to the Collateral.  Notwithstanding the foregoing, Debtor agrees to file the financing statement describing the Collateral and perfecting Secured Party’s Security Interest promptly following the execution of this Security Agreement with the appropriate state recording officer.  Debtor shall deliver to the Secured Party filed marked and date stamped copies of the financing statements within three (3) calendar days from the day Debtor receives them from the state recording office.

3.

Representations and Warranties.  Debtor represents and warrants to the Secured Party as follows:

a.

Debtor is a corporation duly organized, validly existing, and in good standing and active status under the laws of the state of Florida;

b.

Debtor has all requisite power to own and operate its properties and to carry on its business as now being conducted, and has all necessary rights to conduct its business;

c.

Debtor has the power, authority, and legal right to execute and deliver this Security Agreement, and to perform its obligations hereunder, and has taken all action necessary to authorize the execution, delivery, and performance of this Security Agreement and to authorize the transactions contemplated hereby;

d.

None of the equipment or inventory constituting part of the Collateral pursuant to this Security Agreement is or will be located in or on any premises other than at the principal place of business of Debtor as disclosed in subparagraph (e);

e.

The principal place of business and chief executive office of Debtor is located as follows:  1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445;

f.

The execution, delivery, and performance by Debtor of this Security Agreement will not (i) contravene, conflict with, result in the breach of, or constitute a violation of or default under the organizational documents of Debtor, any applicable law, rule, regulation, judgment, order, writ, injunction, or decree of any court or governmental authority, or any agreement or instrument to which Debtor is a party or by which Debtor or its property may be bound or affected, or (ii) result in the creation of any lien, charge, or encumbrance upon any property or assets of Debtor pursuant to any of the foregoing, except the liens created by this Security Agreement;

g.

This Security Agreement constitutes a legal, valid, and binding agreement enforceable against Debtor and the Collateral in accordance with its terms and, without limiting the foregoing, this Security Agreement grants the Secured Party a valid, perfected, first Security Interest in the Collateral; and

h.

Debtor is the owner of and has good and marketable title to all of the Collateral, free and clear of all liens, encumbrances, security interests, and adverse claims whatsoever.  None of the Collateral is subject to any prohibition against encumbering, pledging, hypothecating or assigning same or requires notice or consent in connection therewith.

4.

Additional Covenants.  Debtor hereby further covenants and agrees that, until full and final payment of and performance under the Note, Debtor shall, unless Secured Party shall otherwise consent in writing:

a.

Liability and Property Insurance.   Maintain at Debtor’s expense public liability and third party property damage insurance with such insurers, in such amounts and with such deductibles as are satisfactory to Secured Party, and maintain at Debtor’s expense insurance on the Collateral with such insurers, against such risks, in such amounts and with such deductibles as are satisfactory to Secured Party (including without limitation, insurance against fire, explosion, theft, burglary, pilferage and all other hazards and risks ordinarily insured against by other owners or users of such properties in similar businesses), which insurance shall be evidenced by policies:

(i)

in form and substance reasonably satisfactory to Secured Party;

(ii)

for such insured values as Secured Party may reasonably require in order to replace the property in the event of actual or constructive total loss;

(iii)

designating Secured Party and its assignees as additional co-insureds or loss payees as their interests may appear from time to time;

(iv)

containing a “breach of warranty clause” whereby the insurer agrees that a breach of the insuring conditions or any negligence of Debtor or any other person shall not invalidate the insurance as to Secured Party and his assigns; and

(v)

requiring at least thirty (30) days prior written notice to Secured Party and his assigns before cancellation or any material change shall be effective.

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Upon execution hereof, Debtor shall deliver to Secured Party a certificate of insurance evidencing insurance required by this Section 4, together with evidence of payment of all premiums therefor and adding Secured Party as an additional insured thereon.  In the event of loss or damage, Debtor shall forthwith notify Secured Party and file proofs of loss satisfactory to Secured Party with the appropriate insurer, and forthwith upon receipt, endorse and deliver insurance proceeds to Secured Party.

b.

Change of Name or Business.   Immediately notify Secured Party if there is any change in the location of (i) books and records relative to the accounts and inventory stated in subsection 3(e) of this Security Agreement; (ii) any equipment constituting part of the Collateral if it becomes located in or on any premises other than those identified in subsection 3(e) of this Security Agreement; (iii) the principal place of business or chief executive office of Debtor stated in subsection 3(e) of this Security Agreement; or (iv) Debtor conducts any of their business or operations in or from any new office or location.

c.

Transfer of Accounts.  Not sell, assign, transfer, discount or otherwise dispose of any promissory note or other instrument payable to Debtor, except for collection without recourse in the ordinary course of business.

d.

Sale of Equipment or Collateral.  Not sell, assign, lease, transfer or otherwise dispose of any substantial part of the equipment or inventory, other than by sales of inventory in Debtor’s ordinary course of business.

e.

Settlements Relating to Collateral.   Not compromise, settle or adjust any claim in a material amount relating to the Collateral, other than in Debtor’s ordinary course of business.

f.

Removal of Collateral.  Not remove, or cause or permit to be removed, any of the Collateral from their present location except for sales in the ordinary course of business.

g.

Change of Location or Name.   Not change any of the following:  (i) the location of the principal place of business or chief executive office of Debtor; or (ii) the name under which Debtor conducts any of its business or operations.

5.

Default.  Each of the following shall, after receipt by Debtor of written notice from the Secured Party and after a cure period of ten (10) business days with respect to Section 5(a) - 5(d) below, constitute an event of default under this Security Agreement (each, an “Event of Default”):

a.

Any representation or warranty made by any Debtor under this Security Agreement or any report, certificate, financial statement, or other information provided by Debtor to the Secured Party in connection herewith is false or misleading in any material respect when made or deemed made;

b.

Debtor fails to fully and promptly perform when due any agreement or covenant under this Security Agreement or any related document (and such failure continues beyond the expiration of any applicable grace or cure period);

c.

If a default occurs (and continues beyond the expiration of an applicable grace or cure period) under any other agreement, undertaking or instrument relating to any obligation of Debtor to Secured Party; or

d.

If Debtor is declared to be in default of any loan or other obligation to any other secured party (and such default continues beyond the expiration of any applicable grace or cure period).

In the event that Debtor substantially cures such default within the applicable cure period, such default shall not constitute an Event of Default.

6.

Remedies Upon the Occurrence of an Event of a Default.  

a.

Upon the occurrence and continuance of an Event of Default under this Security Agreement, the Secured Party will have the right at any time and from time to time, without further notice or demand to Debtor to exercise the rights and remedies upon default that are granted to a secured party under the Uniform Commercial Code and/or that are otherwise available to the Secured Party under this Security Agreement or otherwise available to secured creditors at law and/or in equity under applicable law, including without limitation:

(i)

Enforce Debtor’s rights against account debtors and notify any and all account debtors or other parties against which Debtor has a claim under the Collateral that such Collateral has been assigned by Debtor and that the Secured Party has a security interest therein and, if desired by the Secured Party, that all payments should be made to the Secured Party;

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(ii) Receive and endorse the name of Debtor upon any instruments of payment (including payments made under any policy of insurance) that may come into the possession of the Secured Party;

b.

Upon the occurrence or continuation of an Event of Default: 

(i)

the Secured Party may require Debtor, at Debtor’s expense, to marshal and assemble the Collateral and make it available to the Secured Party at a place to be designated by the Secured Party, which is reasonable and convenient to all parties.

(ii)

Secured Party may, with or without judicial process, sell, lease or otherwise dispose of, in a commercially reasonable manner, any or all of the collateral at public or private sale or proceedings, by one or more contracts, in one or more parcels, at the same or different times and places, with or without having the Collateral at the place of sale or other disposition, to such persons or entities, for cash or credit or for future delivery, and upon such other terms, as Secured Party may in its discretion deem best in each such matter.  The purchaser of any of the Collateral at any such sale shall hold the same free of any equity of redemption or other right or claim of Debtor all of which, together with all rights of stay, exemption or appraisal under any statute or other law now or hereafter in effect, Debtor hereby unconditionally waives to the fullest extent permitted by law.  If any of the collateral is sold on credit or for future delivery, Secured Party shall not be liable for the failure of the purchaser to pay for same and, in the event of such failure, Secured Party may resell such Collateral.

(iii)

Debtor hereby further agrees that notice of the time after which any private sale or other intended disposition or action relating to any of the Collateral is to be made or taken, shall be deemed commercially reasonable notice thereof, and shall satisfy the requirements of any applicable statute or other law, if such notice is delivered or mailed not less than five (5) business days prior to the date of the sale, disposition or other action to which the notice is related.  Secured Party shall not be obligated to make any sale or other disposition or take other action pursuant to such notice and may, without other notice or publication, adjourn or postpone any public or private sale or other disposition or action by announcement at the time and place fixed therefor, and such sale, disposition or action may be held or accomplished at any time or place to which the same may be so adjourned or postponed.

(iv)

Secured Party may at its discretion retain any or all of the Collateral and apply the retained Collateral in satisfaction of part or all of the Note.

(v)

Any cash proceeds of sale, lease or other disposition of Collateral shall be applied as follows:

First:   To the expenses of collecting, enforcing, safeguarding, holding and disposing of Collateral, and to other expenses of Secured Party in connection with the enforcement of this Security Agreement or any other documents including, without limitation, court costs and the fees of attorneys, accountants and appraisers;

Second:   Any surplus then remaining to the payment of interest and then principal of the Note, in such order as Secured Party elects; and

Third:   Any surplus then remaining to Debtor or whomever may be lawfully entitled thereto.

c.

The net proceeds realized by the Secured Party upon a sale or other disposition of the Collateral, or any part thereof, after deduction of the expenses of retaking, holding, preparing for sale, selling or the like, and reasonable attorneys’ fees and other expenses incurred by the Secured Party, shall be applied to payment of (or held as a reserve against) the Liabilities, whether or not then due, and in such order of application as the Secured Party may from time to time elect.

7.

Termination.  This Security Agreement and the Security Interest granted pursuant to this Security Agreement shall immediately terminate when the Note and any accrued but unpaid interest thereon has been paid in full.  Upon such termination, Debtor may take any action and file all documents necessary to terminate all effective financing statements in the Secured Party’s favor that are then on file or recorded with respect to the Collateral described in this Security Agreement.  Secured Party will agree to sign any reasonably required and reasonable documents within 3 business days of termination of this Security Agreement.

8.

Assignment.  Neither this Security Agreement nor any of the rights, interests, or obligations arising under this Security Agreement may be assigned by Debtor without the prior written consent of the Secured Party.

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9.

Binding Effect.  Subject to Section 8 above, this Security Agreement shall be binding upon and inure to the benefit of the Secured Party, its respective successors and assigns, and shall be binding upon Debtor and its successors and assigns and shall bind all persons who become bound as a Debtor to this Security Agreement.

10.

Severability.  Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.  If any provision of this Security Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

11.

Titles.  The titles and headings preceding the text of the sections of this Security Agreement have been inserted solely for convenience of reference and do not constitute a part of this Security Agreement or affect its meaning, interpretation, or effect.

12.

Waiver.  The failure of any party to insist in any one or more instances upon performance of any terms or conditions of this Security Agreement shall not be construed as a waiver of future performance of any such term, covenant, or condition, and the obligations of either party with respect to such term, covenant, or condition shall continue in full force and effect.

13.

Entire Agreement.  This Security Agreement contains the final, complete, and exclusive expression of the understanding of Debtor and the Secured Party with respect to the transactions contemplated in this Security Agreement, and supersedes any prior or other contemporaneous agreement or representation by or among the parties related to the subject matter of this Security Agreement.

14.

Amendment.  This Security Agreement may not be amended, modified, or changed in any respect and no waiver of any requirement hereof will be effective except by an agreement in writing signed by Debtor and the Secured Party.

15.

Notices.  All notices, requests, demands, claims and other communications under this Security Agreement will be in writing. Any notice, request, demand, claim or other communication under this Security Agreement shall be deemed duly given if it is sent: (a) by personal delivery, or (b) by commercial delivery or overnight courier service that requires a signature as evidence of delivery, and, in each case, addressed to the intended recipient as set forth below, or to any other or additional persons and addresses as the parties may from time to time designate in a writing delivered in a writing in accordance with this Section 15:

If to Debtor:

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attn: Bryan Happ

If to the Secured Party:

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

Attn: Scott Silverman

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Governing Law/Venue.  The validity, construction, enforcement, and interpretation of this Security Agreement are governed by the laws of the State of Florida and the federal laws of the United States of America, excluding the laws of those jurisdictions pertaining to resolution of conflicts with laws of other jurisdictions.  The Debtor and the Secured Party (a) consent to the personal jurisdiction of the state and federal courts having jurisdiction in Palm Beach County, Florida, (b) stipulate that the proper, exclusive, and convenient venue for any legal proceeding arising out of this Security Agreement is Palm Beach County, Florida, for state court proceedings, and the Southern District of Florida, for federal district court proceedings, and (c) waive any defense, whether asserted by a motion or pleading, that Palm Beach County, Florida, or the Southern District of Florida, is an improper or inconvenient venue.

17.

Relationship.  This Security Agreement does not create or evidence a partnership or joint venture between Debtor and the Secured Party.

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18.

Interpretation.  Neither this Security Agreement nor any uncertainty or ambiguity in this Security Agreement shall be construed or resolved against any party, whether under any rule of construction or otherwise.  No party to this Security Agreement shall be considered the draftsman.  The parties acknowledge and agree that this Security Agreement has been reviewed, negotiated, and accepted by all the parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.

19.

Time.  Time shall be of the essence with respect to all of the provisions of this Security Agreement.

20.

Counterparts.  This Security Agreement may be executed (including by facsimile transmission or portable document format) in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

21.

Enforcement of Security Agreement.  The parties agree that irreparable damage will occur if any of the provisions of this Security Agreement are not performed in accordance with its specific terms or are otherwise breached.  It is therefore agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Security Agreement and to specifically enforce the terms and provisions of this Security Agreement in any court of the United States or any state having jurisdiction, in addition to any other remedy to which they are entitled.

22.

Remedies Cumulative.  The rights and remedies provided in this Security Agreement are cumulative and not exclusive of any rights or remedies provided by law, and the warranties, representations, covenants, and other provisions of this Security Agreement shall be cumulative.

23.

 Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT.

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IN WITNESS WHEREOF, the undersigned have executed this Security Agreement as of the date and year first above written.

			
	 
	POSITIVEID CORPORATION

	 
	 
	 

	 
	By:

	/s/ Bryan Happ

	 
	Name:

	Bryan Happ

	 
	Title:

	Chief Financial Officer

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	VERITEQ ACQUISITION CORPORATION

	 
	 
	 

	 
	By:

	/s/ Scott Silverman

	 
	Name:

	Scott Silverman

	 
	Title:

	Chief Executive Officer

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