UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 24,
2014
Attitude
Drinks Incorporated
(Exact name of registrant as specified in
its charter)
Delaware |
(000-52904) |
65-0109088 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Number) |
712 U.S.
Highway 1, Suite #200, North Palm Beach, Florida 33408
(Address of principal executive offices)
(Zip Code)
Telephone number: (561) 227-2727
N/A
(Former name or former address, if changed
since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
| Item 1.01 | Entry into a Material Definitive Agreement |
During December 2014, Attitude Drinks Incorporated
formed a new subsidiary which is called Attitude Beer Holding Co. (a Delaware company). Attitude Drinks Incorporated owns the majority
interest of 87.5% with Alpha Capital Anstalt owning 9.9% and Tarpon Bay Partners LLC owning 2.6%.
On December 24, 2014, Attitude Beer Holding
Co., New England WOB, LLC, Attitude Drinks Incorporated, Glenn E. Straub and James D. Cecil entered into a joint venture agreement.
New England WOB, LLC is an Area Developer developing and operating franchises for World of Beer Franchising and continues to hold
franchise development rights for all of Connecticut and certain portions of Massachusetts, including the greater Boston area. The
first location was successfully launched earlier this year in Stamford, Connecticut. The second location will be opened in West
Hartford, Connecticut within 30 days. Attitude Beer Holding Co. is a partner in the West Hartford location with the option to purchase
an interest in the existing Stamford location over the next 24 months for a capital investment of $1,400,000 and a $600,000 note
from Attitude Drinks Incorporated as well as all future locations within the territory, including the next two locations currently
planned for the Boston, Massachusetts market. Attitude Beer Holding Co. will own a majority ownership of 51% in the West Hartford,
Connecticut location as well as having an option to become a 51% owner of any new World of Beer Franchises developed by New England
WOB, LLC for the budgeted development costs of developing such new World of Beer franchises.
Attitude Beer Holding Co. agreed to purchase
51% membership interest in West Hartford World of Beer for a $1,200,000 capital contribution to West Hartford WOB with $300,000
paid on December 24, 2014 with the remaining amount of $900,000 to be paid monthly for the next three (3) months at $300,000 each
month due on or before January 24, 2015, February 24, 2015 and March 24, 2015. All parties agreed to execute an amended and restated
operating agreement to govern West Hartford WOB. In consideration of this transfer of membership interest, Attitude Drinks Incorporated
issued to New England World of Beer LLC a Class A Common Stock Purchase Warrant to purchase 4,545,000 fully paid and non-assessable
shares of Common Stock of Attitude Drinks Incorporated at a per share purchase price of $0.0005 over five years from the issue
date of December 24, 2014.
On December 24, 2014, Attitude Beer Holding
Co. (Company) entered into a Securities Purchase Agreement with certain purchasers identified below in which the Company agreed
to sell and the Purchasers agreed to purchase an aggregate of up to $398,500 but not less than $337,250 of principal amount of
Notes representing $1.00 of Note Principal for each $1.00 of such Purchaser’s Subscription amount. Attitude Drinks Incorporated
entered into a Guaranty for the benefit of the Collateral Agent identified as Tarpon Bay Partners LLC. Alpha Capital Anstalt made
a loan of $246,187 and Tarpon Bay Partners LLC made a loan of $91,063 for a total of $337,250 to Attitude Beer Holding Co. These
loans will be evidenced by certain Secured Convertible Promissory Notes issued by Attitude Beer Holding Co. (Company) with a maturity
date of December 24, 2015 with an interest rate of 10%. The conversion price for the principal and interest shall be either: (i)
if the Company’s common stock is traded on a Trading Market, the conversion price shall be 50% of the lowest bid price for
the previous 50 trading days; (ii) if the Company’s common stock is traded on a Trading Market and there is a DTC chill on
the Company’s common stock, the conversion price shall be 60% of the lowest bid price for the previous 50 trading days; or
(iii) if the Company’s common stock is not traded on a Trading Market it shall be $0.40
| Item 3.02 | Unregistered Sales of Equity Securities |
As set forth in Item 1.01 of this Form
8-K, on December 24, 2014, two of the subscribers identified above increased their investment for $337,250, and Attitude Beer Holding
Co. issued the principal amount of the convertible notes by the same $337,250. Further, Attitude Drinks Incorporated, the parent
company of Attitude Beer Holding Co., issued an additional Class A warrant to purchase 4,545,000 shares of common stock at an exercise
price of $0.0005 per share, exercisable over five years.
These securities were issued in reliance
upon an exemption from registration afforded by the provisions of Section 4(2) and/or Regulation D of the Securities Act of 1933,
as amended. Each investor was an accredited investor, there was no general solicitation or advertising in connection with the offer
and sale of securities, and the securities were issued with a restrictive legend.
Attitude Drinks Incorporated will issue
a press release on January 5, 2015 on these transactions.
| Item 9.01 | Financial Statements and Exhibits |
| (10)(153) | Class A Common Stock Purchase Warrant-Attitude Drinks
Incorporated |
| (10)(154) | Form of Convertible Note |
| (10)(155) | Non-Circumvention-No Shop Agreement |
| (10)(156) | Confidentiality, Non-solicitation and Noncompetition
Agreement |
| (10)(157) | West Hartford WOB, LLC Amended & Restated Operating
Agreement |
| (10)(158) | Joint Venture Agreement |
| (10)(159) | Form of Secured Convertible Note- Attitude Beer Holding
Co. |
| (10)(160) | Escrow Agreement |
| (10)(161) | Form of Class A Common Stock Purchase Warrant-Attitude
Beer Holding |
| (10)(163) | Form of Security Agreement |
| (10)(164) | Securities Purchase Agreement |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 31, 2014
ATTITUDE DRINKS INCORPORATED
By: /s/ Roy G. Warren
Name: Roy G. Warren
Title: Chief Executive Officer
Exhibit Index
| (10)(153) | Class A Common Stock Purchase Warrant |
| (10)(154) | Form of Convertible Note |
| (10)(155) | Non-Circumvention-No Shop Agreement |
| (10)(156) | Confidentiality, Non-solicitation and Noncompetition
Agreement |
| (10)(157) | West Hartford WOB, LLC Amended & Restated Operating
Agreement |
| (10)(158) | Joint Venture Agreement |
| (10)(159) | Form of Secured Convertible Note- Attitude Beer Holding
Co. |
| (10)(160) | Escrow Agreement |
| (10)(161) | Form of Class A Common Stock Purchase Warrant-Attitude
Beer Holding |
| (10)(163) | Security Agreement |
| (10)(164) | Securities Purchase Agreement |
Exhibit 10.153
EXHIBIT (10)(153) CLASS A COMMON STOCK
PURCHASE WARRANT-ATTITUDE DRINKS INCORPORATED
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, AT THE COMPANY’S EXPENSE),
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.
|
Right to Purchase 4,545,000 shares of Common Stock of Attitude Drinks, Inc. (subject to adjustment as provided herein) |
CLASS A COMMON STOCK PURCHASE WARRANT
No. 2014-A-001 |
Issue Date: December 24, 2014 |
ATTITUDE DRINKS, INC.,
a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for
value received NEW ENGALND WORLD OF BEER LLC (the “Holder”), address at 505 S. Flagler Drive, Suite #1010,
West Palm Beach, FL, 33401, or its assigns, is entitled, subject to the terms set forth below, to purchase from the Company at
any time after the Issue Date until 5:00 p.m., E.S.T. on five years after the Issue Date (the “Expiration Date”),
4,545,000 fully paid and non-assessable shares of Common Stock at a per share purchase price of $0.0005. The aforedescribed
purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the “Purchase Price.”
The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. The
Company may reduce the Purchase Price for some or all of the Warrants, temporarily or permanently, provided such reduction is made
as to all outstanding Warrants for all Holders of such Warrants.
As used herein the
following terms, unless the context otherwise requires, have the following respective meanings:
(A) The
term “Company” shall mean Attitude Drinks, Inc., a Delaware corporation, and any corporation which shall succeed
or assume the obligations of Attitude Drinks, Inc. hereunder.
(B) The
term “Common Stock” includes (i) the Company's Common Stock, $0.001 par value per share, and (ii) any other
securities into which or for which any of the securities described in (i) may be converted or exchanged pursuant to a plan
of recapitalization, reorganization, merger, sale of assets or otherwise.
(C) For
purposes of this Warrant, the “Fair Market Value” of a share of Common Stock as of a particular date (the “Determination
Date”) shall mean:
(a) If
the Company's Common Stock is traded on an exchange or is quoted on the NASDAQ Global Market, NASDAQ Global Select Market, the
NASDAQ Capital Market, the New York Stock Exchange or the NYSE Amex LLC, then the average of the closing sale prices of the Common
Stock for the five (5) Trading Days immediately prior to (but not including) the Determination Date;
(b) If
the Company's Common Stock is not traded on an exchange or on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange or the NYSE Amex LLC, but is traded on the OTC Bulletin Board or in the over-the-counter
market or Pink Sheets, then the average of the three (3) highest closing bid prices reported for the ten (10) Trading Days immediately
prior to (but not including) the Determination Date;
(c) Except
as provided in clause (d) below and Section 3.1, if the Company's Common Stock is not publicly traded, then as the
Holder and the Company agree, or in the absence of such an agreement, by arbitration in accordance with the rules then standing
of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education
and training to pass on the matter to be decided; or
(d) If
the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant
to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect
of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares
of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date.
(D) The
term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or
any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4
or otherwise.
(E) The
term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this Warrant.
1. Exercise
of Warrant.
1.1. Number
of Shares Issuable upon Exercise. From and after the Issue Date through and including the Expiration Date, the Holder hereof
shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of Section 1.2 or
upon exercise of this Warrant in part in accordance with Section 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 4 below.
1.2. Full
Exercise. This Warrant may be exercised in full by the Holder hereof by delivery to the Company of an original or facsimile
copy of the form of subscription attached as Exhibit A hereto (the “Subscription Form”) duly executed
by such Holder and delivery within two days thereafter of payment, in cash, wire transfer or by certified or official bank check
payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this
Warrant is then exercisable by the Purchase Price then in effect. The original Warrant is not required to be surrendered to the
Company until it has been fully exercised.
1.3. Partial
Exercise. This Warrant may be exercised in part (but not for a fractional share) by delivery of a Subscription Form in the
manner and at the place provided in Section 1.2, except that the amount payable by the Holder on such partial exercise
shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price then in effect. On any such partial exercise, provided the Holder has surrendered
the original Warrant, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder hereof a
new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer
taxes) may request, the whole number of shares of Common Stock for which such Warrant may still be exercised.
1.4. Automatic
Exercise. In the event this Warrant is exercisable pursuant to the provisions of Section 2 hereof on a cashless basis as of
the close of the last trading day on or before the Expiration Date, then this Warrant, to the extent not previously unexercised
and subject to the limitation in Section 10 of this Warrant shall be deemed to have been automatically exercised without the requirement
of any notice or delivery of the Subscription Form, pursuant to the terms of Section 2. Such Expiration Date will be deemed the
exercise date for purposes of determining the Warrant Share Delivery Date and similar terms hereof.
1.5. Company
Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the Holder hereof, acknowledge
in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to afford to such Holder any such rights.
1.6. Delivery
of Stock Certificates, etc. on Exercise. The Company agrees that, provided the full purchase price listed in the Subscription
Form is received as specified in Section 1.2, the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which delivery
of a Subscription Form shall have occurred and payment made for such shares as aforesaid. As soon as practicable after the exercise
of this Warrant in full or in part, and in any event within three (3) business days thereafter (“Warrant Share Delivery
Date”), the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued
in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any applicable transfer taxes)
may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued,
fully paid and non-assessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise,
plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash equal to such fraction multiplied
by the then Fair Market Value of one full share of Common Stock, together with any other stock or other securities and property
(including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.
The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in
economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and
not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $100
per business day after the Warrant Share Delivery Date for each $10,000 of Purchase Price of Warrant Shares for which this Warrant
is exercised which are not timely delivered, not to exceed a maximum amount of liquidated damages of 10% of the Purchase Price
of the Warrant Shares. The Company shall pay any payments incurred under this Section in immediately available funds upon demand.
Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any
reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant
Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored
to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated
damages described above shall be payable through the date notice of revocation or rescission is given to the Company.
1.7. Buy-In.
In addition to any other rights available to the Holder, if the Company fails to deliver to a Holder the Warrant Shares as required
pursuant to this Warrant after the Warrant Share Delivery Date and the Holder or a broker on the Holder’s behalf, purchases
(in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by such Holder of the
Warrant Shares which the Holder was entitled to receive from the Company (a “Buy-In”), then the Company shall
pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (A) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of common stock so purchased exceeds (B) the aggregate
Purchase Price of the Warrant Shares required to have been delivered together with interest thereon at a rate of 15% per annum,
accruing until such amount and any accrued interest thereon is paid in full (which amount shall be paid as liquidated damages and
not as a penalty). For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover
a Buy-In with respect to $10,000 of Purchase Price of Warrant Shares to have been received upon exercise of this Warrant, the Company
shall be required to pay the Holder $1,000, plus interest. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In.
2. Exercise.
(a) Payment
upon exercise may be made at the option of the Holder either in (i) cash, wire transfer or by certified or official bank check
payable to the order of the Company equal to the applicable aggregate Purchase Price, (ii) by delivery of Common Stock issuable
upon exercise of the Warrants in accordance with Section (b) below or (iii) by a combination of any of the foregoing
methods, for the number of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment
in the total number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the holder shall thereupon
be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or
Other Securities) determined as provided herein. Notwithstanding the immediately preceding sentence, payment upon exercise may
be made in the manner described in Section 2(b) below, only with respect to Warrant Shares not included for unrestricted
public resale in an effective registration statement.
(b) Subject
to the provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Purchase Price
(at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the holder may elect to receive shares
equal to the value (as determined below) of this Warrant (or the portion thereof being cancelled) by delivery of a properly endorsed
Subscription Form delivered to the Company by any means described in Section 12, in which event the Company shall issue
to the holder a number of shares of Common Stock computed using the following formula:
|
Where |
X= |
the number of shares of Common Stock to be issued to the Holder |
|
Y= |
the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation) |
|
|
|
|
A= |
Fair Market Value |
|
|
|
|
B= |
Purchase Price (as adjusted to the date of such calculation) |
For purposes of Rule
144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise
transaction in the manner described above shall be deemed to have been acquired by the Holder, and the holding period for the Warrant
Shares shall be deemed to have commenced, on the date this Warrant was originally issued.
3. Adjustment
for Reorganization, Consolidation, Merger, etc.
3.1. Fundamental Transaction.
If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of
the Company with or into another entity, (B) the Company effects any sale of all or substantially all of its assets in
one or a series of related transactions, (C) any tender offer or exchange offer (whether
by the Company or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, (D) the Company consummates a stock purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, or spin-off) with one or more persons
or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other
persons or entities making or party to, such stock purchase agreement or other business combination), (E) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate Common
Stock of the Company, or (F) the Company effects any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash
or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise
of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, (a) upon exercise of
this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable upon
or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event.
For purposes of any such exercise, the determination of the Purchase Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one
share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Purchase Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of
this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with
the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions of this Section 3.1 and
insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. “Black-Scholes Value” shall be determined in accordance with the Black-Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP
of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable Fundamental Transaction,
(ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant
as of the date of such request and (iii) an expected volatility equal to the 100 day volatility obtained from the HVT function
on Bloomberg L.P. determined as of the Trading Day immediately following the public announcement of the applicable Fundamental
Transaction.
3.2. Continuation
of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred
to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable
to the Other Securities and property receivable on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding
upon the issuer of any Other Securities, including, in the case of any such transfer, the person acquiring all or substantially
all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant
as provided in Section 4.
4. Extraordinary
Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of Common Stock as a dividend
or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine
its outstanding shares of the Common Stock into a smaller number of shares of Common Stock, then, in each such event, the Purchase
Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this Section 4. The number of shares of Common
Stock that the Holder of this Warrant shall thereafter, on the exercise hereof, be entitled to receive shall be adjusted to a number
determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section
4) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for
the provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such
exercise.
5. Certificate
as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable
on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including
a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any
Warrant Agent of the Company (appointed pursuant to Section 12 hereof).
6. Reservation
of Stock, etc. Issuable on Exercise of Warrant; Financial Statements. The Company will at all times reserve and keep available,
solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to
time issuable on the exercise of the Warrant. This Warrant entitles the Holder hereof, upon written request, to receive copies
of all financial and other information distributed or required to be distributed to the holders of the Company's Common Stock.
7. Assignment;
Exchange of Warrant. Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby,
may be transferred by any registered holder hereof (a "Transferor"). On the surrender for exchange of this Warrant,
with the Transferor's endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form")
and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance
with applicable securities laws, the Company will issue and deliver to or on the order of the Transferor thereof a new Warrant
or Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form
(each a "Transferee"), calling in the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant so surrendered by the Transferor.
8. Replacement
of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation
of this Warrant, the Company at its expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. Maximum
Exercise. The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise
of this Warrant with respect to which the determination of this limitation is being made on an exercise date, which would result
in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock on such date.
For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of
the 1934 Act and Rule 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99%. The restriction described in this paragraph may be waived, in whole or in
part, upon sixty-one (61) days prior notice from the Holder to the Company to increase such percentage up to 9.99% but not in excess
of 9.99%. The Holder may decide whether to convert a Convertible Note or exercise this Warrant to achieve an actual 4.99% or up
to 9.99% ownership position as described above, but not in excess of 9.99%.
10. Warrant
Agent. The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”)
for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any
of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by
such Warrant Agent.
11. Transfer
on the Company's Books. Until this Warrant is transferred on the books of the Company, the Company may treat the registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.
12. 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 Company, to: Attitude Drinks Inc., 712 US Highway 1, Suite 200, North Palm Beach, FL 33408,
Attn: Roy Warren, CEO and President, telecopier: (800) 799–5053, and (ii) if to the Holder, to the address and facsimile
number listed on the first paragraph of this Warrant.
13. Law
Governing This Warrant. This Warrant 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 Warrant 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 Warrant 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 Company 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 Warrant 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.
[-Signature Page Follows-]
IN WITNESS WHEREOF,
the Company has executed this Warrant as of the date first written above.
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ATTITUDE DRINKS, INC. |
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By: |
/s/ Roy Warren |
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Name: Roy Warren |
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Title: President & Chief Executive Officer |
Exhibit A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: ATTITUDE DRINKS, INC.
The undersigned, pursuant to the provisions
set forth in the attached Warrant (No. ___________), hereby irrevocably elects to purchase (check applicable box):
¨ ________
shares of the Common Stock covered by such Warrant; or
| ¨ | the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise
procedure set forth in Section 2 of the Warrant. |
The undersigned herewith makes payment
of the full purchase price for such shares at the price per share provided for in such Warrant, which is $___________. Such payment
takes the form of (check applicable box or boxes):
¨ $__________
in lawful money of the United States; and/or
| ¨ | the cancellation of such portion of the attached Warrant as is exercisable for a total of _______
shares of Common Stock (using a Fair Market Value of $_______ per share for purposes of this calculation); and/or |
| ¨ | the cancellation of such number of shares of Common Stock as is necessary, in accordance with the
formula set forth in Section 2 of the Warrant, to exercise this Warrant with respect to the maximum number of shares of Common
Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2. |
The
undersigned requests that the certificates for such shares be issued in the name of, and delivered pursuant to the
DTC instructions below or to __________________________________________ whose address is
_____________________________________________________________________________________________________
____________________________________________________________________________________________________.
The undersigned represents and warrants
that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant
to registration of the Common Stock under the Securities Act of 1933, as amended (the "Securities Act"), or pursuant
to an exemption from registration under the Securities Act.
DTC Instructions: _________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
Dated: |
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(Signature must conform to name of holder as specified on the face of the Warrant) |
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(Address) |
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the
undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the
right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of ATTITUDE DRINKS, INC.
to which the within Warrant relates specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on
the books of ATTITUDE DRINKS, INC. with full power of substitution in the premises.
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Percentage
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Dated: __________________, _______ |
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(Signature must conform to name of holder as specified on the face of the warrant) |
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Signed in the presence of: |
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(Name) |
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(address) |
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ACCEPTED AND AGREED: |
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[TRANSFEREE] |
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(address) |
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Exhibit 10.154
EXHIBIT (10)(154) FORM OF CONVERTIBLE
NOTE
“NEITHER THE ISSUANCE AND 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 $600,000.00 |
Issue Date: ________________, 201_ |
CONVERTIBLE NOTE
FOR VALUE RECEIVED,
ATTITUDE DRINKS, INC., a Delaware corporation (hereinafter called “Borrower”), hereby promises to pay to STAMFORD WOB,
LLC, 505 S. Flagler Drive, Suite #1010, West Palm Beach, FL, 33401, (the “Holder”) or order, without demand, the sum
of Six Huundred Thousand Dollars ($600,000.00), with interest accruing thereon, on the third anniversary of the Issue Date (the
“Maturity Date”), if not retired sooner.
ARTICLE I
GENERAL PROVISIONS
1.1 Interest
Rate. Interest payable on this Note shall accrue at the annual rate of two percent (2%) and be payable on the Maturity Date
in cash or common stock at the then in effect conversion price, accelerated or otherwise, when the principal and remaining accrued
but unpaid interest shall be due and payable, or sooner as described below.
1.2 Payment
Grace Period. The Borrower shall have a five (5) day grace period to pay any monetary amounts due under this Note.
1.3 Conversion
Privileges. The Conversion Privileges set forth in Article II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full regardless of the occurrence of an Event of Default. The Note shall be payable in full
on the Maturity Date, unless previously converted into Common Stock in accordance with Article II hereof.
ARTICLE II
CONVERSION RIGHTS
The Holder shall have
the right but not the obligation to convert the principal and any interest due under this Note into Shares of the Borrower's Common
Stock, $.00001 par value per share (“Common Stock”) as set forth below.
2.1. Conversion
into the Borrower’s Common Stock.
(a) The
Holder shall have the right from and after the date of the issuance of this Note and then at any time until this Note is fully
paid, to convert any outstanding and unpaid principal portion of this Note, and accrued interest, at the election of the Holder
(the date of giving of such notice of conversion being a “Conversion Date”) into fully paid and nonassessable shares
of Common Stock as such stock exists on the date of issuance of this Note, or any shares of capital stock of Borrower into which
such Common Stock shall hereafter be changed or reclassified, at the conversion price as defined in Section 2.1(b) hereof, determined
as provided herein. Upon delivery to the Borrower of a completed Notice of Conversion, a form of which is annexed hereto as Exhibit
A, Borrower shall issue and deliver to the Holder within three (3) business days after the Conversion Date (such third day being
the “Delivery Date”) that number of shares of Common Stock for the portion of the Note converted in accordance with
the foregoing. At the election of the Holder, the Borrower will deliver accrued but unpaid interest on the Note, if any, through
the Conversion Date directly to the Holder on or before the Delivery Date. The number of shares of Common Stock to be issued upon
each conversion of this Note shall be determined by dividing that portion of the principal of the Note and interest, if any, to
be converted, by the Conversion Price.
(b) Subject
to adjustment as provided in Section 2.1(c) hereof, the conversion price per share shall be the average closing price for the five
trading days prior to the Conversion date (“Conversion Price”).
(c)
The Conversion Price and number and kind of shares or other securities to be issued upon conversion determined pursuant to Section
2.1(a), shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains
outstanding, as follows:
A. Merger,
Sale of Assets, etc. If the Borrower at any time shall consolidate with or merge into or sell or convey all or substantially all
its assets to any other corporation, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase such number and kind of shares or other securities and property as would
have been issuable or distributable on account of such consolidation, merger, sale or conveyance, upon or with respect to the securities
subject to the conversion or purchase right immediately prior to such consolidation, merger, sale or conveyance. The foregoing
provision shall similarly apply to successive transactions of a similar nature by any such successor or purchaser. Without limiting
the generality of the foregoing, the anti-dilution provisions of this Section shall apply to such securities of such successor
or purchaser after any such consolidation, merger, sale or conveyance.
B. Reclassification,
etc. If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different
number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof
and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior
to such reclassification or other change.
C. Stock
Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price shall be proportionately
reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to
the total number of shares of Common Stock outstanding immediately prior to such event..
2.2 Method
of Conversion. This Note may be converted by the Holder in whole or in part as described in Section 2.1(a) hereof. Upon partial
conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be
issued by the Borrower to the Holder for the principal balance of this Note and interest which shall not have been converted or
paid, provided however that the Holder shall no obligation to return the Note until this note is satisfied in whole.
2.3. Maximum
Conversion. The Holder shall not be entitled to convert on a Conversion Date that amount of the Note in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock issuable in connection with the unconverted portion
of the Note, and (iii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the
determination of this provision is being made on a Conversion Date, which would result in beneficial ownership by the Holder and
its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Borrower on such Conversion Date. For the purposes
of the provision 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, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall
not be limited to aggregate conversions of 4.99%. The Holder shall have the authority and obligation to determine whether the restriction
contained in this Section 2.3 will limit any conversion hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the Notes are convertible shall be the responsibility
and obligation of the Holder. The Holder may waive the conversion limitation described in this Section 2.3, in whole or in part,
upon and effective after 61 days prior written notice to the Borrower to increase such percentage to up to 9.99%.
2.4. Mandatory
Conversion. Provided an Event of Default or an event which with the passage of time or giving of notice could become an Event
of Default has not occurred, then, until the Maturity Date, the Borrower will have the option by written notice to the Holder (“Notice
of Mandatory Conversion”) of compelling the Holder to convert all or a portion of the outstanding and unpaid principal of
the Note and accrued interest, thereon, into Common Stock at fifty percent (50%) of the Conversion Price, as adjusted, then in
affect (“Mandatory Conversion”). The Notice of Mandatory Conversion, which notice must be given on the first day following
twenty (20) consecutive trading days (“Lookback Period”) during which the closing price for the Common Stock as reported
by Bloomberg, LP for the Principal Market shall be greater than one cent ($0.01) each such trading day and during which twenty
(20) trading days, the daily trading volume as reported by Bloomberg L.P. for the Principal Market is greater than 100,000 shares.
The date the Notice of Mandatory Conversion is given is the “Mandatory Conversion Date.” The Notice of Mandatory Conversion
shall specify the aggregate principal amount of the Note which is subject to Mandatory Conversion. Mandatory Conversion Notices
must be given proportionately to all Holders of Notes. The Borrower shall reduce the amount of Note principal subject to a Notice
of Mandatory Conversion by the amount of Note Principal and interest for which the Holder had delivered a Notice of Conversion
to the Borrower during the twenty (20) trading days preceding the Mandatory Conversion Date. Each Mandatory Conversion Date shall
be a deemed Conversion Date and the Borrower will be required to deliver the Common Stock issuable pursuant to a Mandatory Conversion
Notice in the same manner and time period as described herein. A Notice of Mandatory Conversion may be given only in connection
with an amount of Common Stock which would not cause a Holder to exceed the 4.99% (or if increased, 9.99%) beneficial ownership
limitation set forth in Section 2.3 of this Note.
2.5. Optional
Redemption of Principal Amount. The Borrower will have the option of prepaying the outstanding amounts owed on this Note, in
whole or in part.
ARTICLE III
EVENT OF DEFAULT
The occurrence of any
of the following events of default (“Event of Default”) shall, at the option of the Holder hereof, make all sums of
principal and interest then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand,
without presentment, or grace period, all of which hereby are expressly waived, except as set forth below:
3.1 Failure
to Pay Principal or Interest. The Borrower fails to pay any installment of principal, interest or other sum due under this
Note when due.
3.2 Breach
of Covenant. The Borrower breaches any material covenant or other term or condition of this Note in any material respect and
such breach, if subject to cure, continues for a period of ten (10) business days after written notice to the Borrower from the
Holder.
3.3 Breach
of Representations and Warranties. Any material representation or warranty of the Borrower made herein.
3.4 Receiver
or Trustee. The Borrower or any Subsidiary of Borrower shall make an assignment for the benefit of creditors, or apply for
or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a
receiver or trustee shall otherwise be appointed.
3.5 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any
law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower
or any subsidiary of Borrower and if instituted against them are not dismissed within 45 days of initiation.
ARTICLE IV
MISCELLANEOUS
4.1 Failure
or Indulgence Not Waiver. No failure or delay on the part of Holder hereof 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 privilege. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
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: (i) if to the Borrower to: Attitude Drinks Inc., 712 US Highway 1, Suite 200, North Palm Beach, FL
33408, Attn: Roy Warren, CEO and President, telecopier: (800) 799–5053, and (ii) if to the Holder, to the name, address and
telecopy number set forth on the front page of this Note.
4.3 Amendment
Provision. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument
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 the benefit of the Holder and its
successors and assigns.
4.5 Cost
of Collection. If default is made in the payment of this Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys’ fees.
4.6 Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of New York, including, but not
limited to, New York statutes of limitations. Any action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the civil or state courts of New York or in the federal courts located
in the State and county of New York. Both parties and the individual signing this Agreement on behalf of the Borrower agree to
submit to the jurisdiction of such courts. 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 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 unenforceability of any other provision of this Note. Nothing contained herein shall be deemed
or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction
to collect on the Borrower's obligations to Holder, to realize on any collateral or any other security for such obligations, or
to enforce a judgment or other decision in favor of the Holder.
4.7 Maximum
Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed
by the Borrower to the Holder and thus refunded to the Borrower.
4.8. Construction.
Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation
of this Note to favor any party against the other.
4.9 Redemption.
This Note may be redeemed or called without the consent of the Holder.
4.10 Shareholder
Status. The Holder shall not have rights as a shareholder of the Borrower with respect to unconverted portions of this Note.
However, the Holder will have the rights of a shareholder of the Borrower with respect to the Shares of Common Stock to be received
after delivery by the Holder of a Conversion Notice to the Borrower.
4.11 Non-Business
Days. Whenever any payment or any action to be made shall be due on a Saturday, Sunday or a public holiday under the laws of
the State of New York, such payment may be due or action shall be required on the next succeeding business day and, for such payment,
such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.
[REST OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by an authorized officer as of the ___ day of __________, 201_.
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ATTITUDE DRINKS INC. |
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By: |
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Name: |
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Title: |
NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert
the Note)
The undersigned hereby
elects to convert $_________ of the principal and $_________ of the interest due on the Note issued by Attitude Drinks Inc. on
__________, 201_ into Shares of Common Stock of Attitude Drinks Inc. (the “Borrower”) according to the conditions set
forth in such Note, as of the date written below.
Date of Conversion:________________________________________________________________________________
Conversion Price:__________________________________________________________________________________
Number of Shares of Common Stock Beneficially Owned on the Conversion
Date: Less than 5% of the outstanding Common Stock of Attitude Drinks Inc. _________________________________________________________________________
Shares To Be Delivered:_____________________________________________________________________________
Signature:________________________________________________________________________________________
Print Name:______________________________________________________________________________________
Address:_________________________________________________________________________________________
________________________________________________________________________________________
Exhibit 10.155
EXHIBIT (10)(155)
NON-CIRCUMVENTION – NO SHOP
AGREEMENT
This Non-Circumvention
– Commission Agreement (this “Agreement”) is entered into as of this December 24, 2013, among New England WOB,
LLC (“NEWOB”), Attitude Beer Holding Co. (“ABH”) and the person identified on the signature page hereto
as the principal (“Principal”).
RECITALS
WHEREAS, NEWOB and
ABH have entered into a Joint Venture Agreement;
WHEREAS, the Principal
is a principal of NEWOB;
NOW, THEREFORE, for
good and adequate consideration, the receipt of which is hereby acknowledged, the parties hereto, agree as follows:
1. NEWOB
and the Principals agree for themselves and all of their shareholders, members, directors, managers, officers, affiliates and beneficial
owners and any entity owned directly or indirectly, managed or related to them, along with any of their affiliates (collectively
the “Affiliates”), not to enter into any agreement that would impair ABH’s rights under the Joint Venture Agreement.
2. It
is further understood and agreed that money damages would not be a sufficient remedy for any breach or threatened breach of this
agreement and that ABH would suffer immediate and irreparable injury, loss and damage and shall be entitled to specific performance
and injunctive or other equitable relief as a remedy for any such breach without posting a bond or other security and NEWOB and
Principal expressly waive any requirement for posting a bond. Such remedy shall not be deemed to be the exclusive remedy for a
breach of this agreement, but shall be in addition to all other remedies available at law or equity to ABH.
3. This
Agreement will be governed by the substantive laws of the State of New York, without regards to the conflicts of laws provisions
thereof that would result in the application of the substantive law of any forum other than the State of York. The parties each
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State and County of New
York for the adjudication of any dispute hereunder or in connection herewith and waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
4. Any
notice, demand or request required or permitted to be given by the respective parties hereto pursuant to the terms of this Agreement
shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless
such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business Day actually
received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed to
the address set forth on the signature page hereto. Any party may change the address(es) to which all notices, requests and other
communications are to be sent by giving written notice of such address change to the other Parties in conformity with this Section,
but such change shall not be effective until notice of such change has been received by the other Party.
5. This
Agreement may be executed in two or more counter parts. A facsimile signature will be deemed an original for all purposes. This
Agreement may be delivered by electronic means.
[REST OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF,
the Parties have caused this Agreement to be executed as of the date first written above.
NEWOB
NEW ENGLAND WOB, LLC |
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/s/ Glenn E. Straub |
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By: Glenn E. Straub |
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Its: Manager |
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505 S. Flagler Drive, Suite #1010 |
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West Palm Beach, FL, 33401 |
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ABH
ATTITUDE BEER HOLDING CO. |
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/s/ Roy Warren |
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By: Roy Warren |
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Its: President |
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712 US Highway 1, Suite 200 |
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North Palm Beach, FL 33408 |
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PRINCIPAL
/s/ Glenn E. Straub |
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Glenn E. Straub |
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505 S. Flagler Drive, Suite #1010 |
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West Palm Beach, FL, 33401 |
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/s/ James D. Cecil |
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James D. Cecil |
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505 S. Flagler Drive, Suite #1010 |
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West Palm Beach, FL, 33401 |
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Exhibit 10.156
EXHIBIT (10)(156)
CONFIDENTIALITY, NONSOLICITATION AND
NONCOMPETITION AGREEMENT
THIS CONFIDENTIALITY, NONSOLICITATION
AND NONCOMPETITION AGREEMENT (this “Agreement”) is effective as of December 24, 2014, between NEW ENGLAND
WOB, LLC (the “Franchisee,” “we,” “us” or our”) and ATTITUDE
BEER HOLDING CO. (“you” or “your”).
BACKGROUND INFORMATION:
We have entered into
a Franchise Agreement (the “Franchise Agreement”) with WORLD OF BEER FRANCHISING, INC. (the "Franchisor")
to operate a WORLD OF BEER® Store franchise (the “Store” or “Stores”). The Store is operated
pursuant to formats, specifications, standards, methods and procedures prescribed or approved by the Franchisor (the “System”).
We and the Franchisor possess certain confidential information, consisting of specifications, plans and other characteristics of
products and services provided, the Computer System, Intranet database and information, Store and business operating techniques,
criteria methods in obtaining licensing and meeting regulatory requirements, designing and constructing Stores featuring retail
alcohol sales for on-premises and off-premises consumption, the selection, testing and training of personnel and other employees,
and the formats, specifications, standards, methods, procedures, information, and knowledge of and experience in the operating
and franchising of WORLD OF BEER® Stores, which we either own or license (the “Confidential Information”).
You understand that
the System and Confidential Information are the Franchisor's proprietary trade secrets and confidential. You acknowledge that we
and the Franchisor have and will provide you with specialized and extensive training regarding operation of the Business and have
invested considerable time, funds and resources to do so. We have an obligation under the Franchise Agreement to maintain such
Confidential Information as secret and confidential. You represent to us and the Franchisor that you have other skills that you
can utilize if, for any reason, your relationship with us ends.
OPERATIVE TERMS:
Accordingly, you and
we agree as follows:
1. Confidentiality.
Except as required by law, including any public disclosures filed by any of your affiliates, including Attitude Drinks, Inc. of
you will: (1) not use the Confidential Information in any other business or capacity; (2) maintain the absolute confidentiality
of the Confidential Information during and after the term of your ownership in, or employment by us; (3) not make unauthorized
copies of any portion of the Confidential Information disclosed in written or electronic form; and (4) comply with all procedures
we prescribe from time to time to prevent unauthorized use or disclosure of the Confidential Information.
2. In-Term
Competitive Restrictions. During the time that you are one of our owners or employees, unless we otherwise permit in writing,
you agree that you will not, directly or indirectly (e.g., through a spouse or child):
(a) have
any direct or indirect interest as a disclosed or beneficial owner, or in any other capacity in any business or facility owning,
operating or managing, or granting franchises or licenses to others to do so, any bar, pub, tavern or other beverage service facility
or any retail establishment (like a liquor store or convenience store) featuring beer, wine and related products as a primary menu
item (a “Competitive Business”), wherever located;
(b) perform
services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business,
wherever located;
(c) recruit
or hire any employee of ours, of the Franchisor, of our or its affiliates, or of any of the Franchisor’s franchisees, without
obtaining the prior written permission of that person’s employer; or
(d) divert
or attempt to divert any business or customer of the Store to any Competitive Business.
Nothing in this Section
prohibits you from having a direct or indirect interest as a disclosed or beneficial owner in a publicly held Competitive Business,
as long as such securities represent less than 5% of the number of shares of that class of securities which are issued and outstanding.
3. Post-Term
Competitive Restrictions. For a period of 2 years following the date that you cease to be one of our owners or an employee,
you agree that you will not, directly or indirectly (e.g., through a spouse or child):
(a) have
any direct or indirect interest as a disclosed or beneficial owner, or in any other capacity in a Competitive located or operating:
(i) within 10 miles of the Store; and (iii) within 10 miles of any Store, whether owned by us, our affiliates, the Franchisor or
any of the Franchisor’s franchisees in operation or under construction on the date you cease to be one of our owners or employees;
(b) perform
services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business located
or operating: (i) within 10 miles of the Store; and (iii) within 10 miles of any Store, whether owned by us, our affiliates, the
Franchisor or any of the Franchisor’s franchisees in operation or under construction on the date you cease to be one of our
owners or employees;
(c) recruit
or hire any employee of ours, of the Franchisor, of our or its affiliates, or of any of the Franchisor’s franchisees, without
obtaining the prior written permission of that person’s employer; or
(d) divert
or attempt to divert any business or customer of the Store to any Competitive Business.
If you refuse to voluntarily
comply with the foregoing obligations, the 2 year period will be extended by the period of noncompliance. Nothing in this Section
prohibits you from having a direct or indirect interest as a disclosed or beneficial owner in a publicly held Competitive Business,
as long as such securities represent less than 5% of the number of shares of that class of securities which are issued and outstanding.
4. Employment
Restriction. While you are employed by us and for 2 years afterwards, you will not accept employment by any of our franchisees
or their affiliates. If you do so anyway, you agree that:
(a) you
must immediately pay us an amount equal to ½ of the annualized cash compensation we were paying you when you left our employment
based on our employment and payroll records as liquidated damages;
(b) the
liquidated damages amount is reasonable and has been established because of the difficulty in determining and proving our actual
damages; and
(c) such
amount is intended to compensate us for our recruiting, training and replacement costs, and to encourage us to enable you to be
in maximum contact with our franchise owners without undue fear that you will leave our employ.
5. Severability
and Substitution. To the extent that any portion of this Agreement is deemed unenforceable by virtue of its scope in terms
of area, business activity prohibited, length of time or remedy, but may be made enforceable by reduction, adjustment or modification
of any or all thereof, you and we agree that this Agreement will be enforced to the fullest extent permissible under the laws or
public policies of the jurisdiction in which enforcement is sought, and such reduced or modified provision will be enforced to
the fullest extent.
6. Acquisition.
You agree that the confidentiality, competitive, and employment undertakings and restrictions survive any change in our ownership,
any merger or consolidation, any sale of our assets, and any assignment or transfer of this Agreement.
7. Extension
of Time Period. The time period during which you are to refrain from any of the activities listed in this Agreement will
be automatically extended by any length of time during which you or any of your affiliates, successors or assigns are in breach
of any provision of this Agreement. This Agreement will continue through the duration of the extended time periods.
8. Suspension
of Compensation. We will not be required to pay any other compensation to you during any period of time in which you are
in breach of this Agreement. Upon such breach, you forfeit payment of such amounts without limitation on any other remedies available
to us for redress.
9. No
Defense or Setoff. You must not assert, by way of defense or setoff, any alleged breach or damage caused by you if we must
enforce this Agreement against you.
10. Injunctive
Relief. You and we agree that the breach of this Agreement will result in irreparable harm to us, and that no monetary
award can fully compensate us if you violate it. Thus, if you breach this Agreement, you agree that we will be entitled to an injunction
restraining you from any further breach. Such injunctive relief may be obtained without bond, but upon due notice, in addition
to such other and further remedies or relief as may be available to us at equity or law.
11. Miscellaneous.
(a) Complete
Agreement: This Agreement contains the complete agreement between the parties concerning this subject matter. This Agreement
supersedes any prior or contemporaneous agreement, representation or understanding, oral or written, between them. The continued
relationship between the parties described in this Agreement constitutes full and sufficient consideration for the binding commitment
of the parties to this Agreement.
(b) Waiver
and Amendment: A waiver or amendment of this Agreement, or any provision of it, will be valid and effective only if it is in
writing and signed by all parties or the party waiving such provision. No waiver of any term of this Agreement will operate as
a waiver of any other term of this Agreement or of that same term at any other time.
(c) Rights
Cumulative: No right or remedy available to any party is exclusive of any other remedy. Each and every remedy will be cumulative
to any other remedy given under this Agreement, or otherwise legally existing upon the occurrence of a breach of this Agreement.
(d) Certain
Definitions: As used throughout this Agreement, the following terms have the following meanings:
| (i) | The term “person” means any corporation,
professional corporation or association, partnership (limited or general), joint venture, trust, association or other business
entity or enterprise or any natural person; |
| (ii) | The term “affiliate” means, with respect
to any person, any other person that directly, indirectly, or through one or more intermediaries, controls, is controlled by or
is under common control with, such person, and includes any subsidiaries or other business entities that are beneficially owned
by such person or its affiliates; |
| (iii) | The term “attorney's fees” means any
and all charges levied by an attorney for his services, including time charges, expenses and other reasonable fees including paralegal
fees and legal assistant fees, and includes fees earned in settlement, at trial, on appeal or in bankruptcy proceedings. |
(e) Governing
Law: This Agreement is governed by the laws of the State of Florida. The prevailing party in any litigation involving this
Agreement must be reimbursed its attorney's fees from the non-prevailing party.
(f) Third-Party
Beneficiary: The parties understand and acknowledge that the Franchisor is a third-party beneficiary of the terms of this Agreement
and, at its option, may enforce the provisions of this Agreement with you. Your obligations under this Agreement will continue
for the benefit of our and the Franchisor's successors and assigns.
(g) Background
Information: The background information is true and correct and is incorporated into this Agreement. This Agreement will be
interpreted with reference to the background information.
[REST OF THIS PAGE LEFT INTENTIONALLY BLANK]
Intending to be bound, the parties sign
below:
“US”: |
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“YOU”: |
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NEW ENGLAND WOB, LLC |
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ATTITUDE BEER HOLDING CO. |
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Signature: |
/s/ Glenn E. Straub |
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Signature: |
/s/ Roy Warren |
Print Name: |
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Print Name: |
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Title |
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Title: |
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Date: |
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Date: |
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Exhibit 10.157
EXHIBIT (10)(157)
WEST HARTFORD WOB, LLC
AMENDED AND RESTATED
OPERATING AGREEMENT
As of December 24, 2014
OPERATING AGREEMENT
THIS AMENDED AND RESTATED
OPERATING AGREEMENT (the “Agreement”) of WEST HARTFORD WOB, LLC, a Florida limited liability company (the “Company”),
dated as of December 24, 2014, by and among New England WOB, LLC and Attitude Beer Holding Co. (each a “Member and collectively
the “Members”).
WHEREAS, the Company,
was formed as a limited liability company pursuant to the laws of the State of Florida by filing the Articles of Organization with
the Florida Secretary of State on April 28, 2014, as the same may be amended, supplemented or modified from time to time (the “Articles
of Organization”); and
WHEREAS, the undersigned
desire to provide for the regulation and establishment of the affairs of the Company, the conduct of its business and the relations
among them as Members of the Company.
NOW THEREFORE, for
and in consideration of the premises stated, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Members hereby agree as follows:
Article
1
DEFINITIONS
SECTION 1.1 Definitions.
As used herein, the following terms have the following respective meanings:
(a) “Act”
shall mean the Limited Liability Company Law of the State of Florida and any successor statute, as amended from time to time.
(b) “Adjusted
Capital Account” means the cash contributed by a Member, (i) reduced from time to time by cash distributions from
the Company to him in accordance with Section 5.2(b)(ii) herein, and (ii) increased from time to time by any additional cash contributions
made by him in accordance with Section 3.2(a) herein, and (iii) otherwise adjusted as required under Treasury Regulations § 1.704-1(b)(2)(iv).
(c) “Affiliate”
means any Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, another Person.
(d) “Agreement”
means this Operating Agreement, as amended from time to time.
(e) “Available
Cash” means all cash of the Company after paying its current obligations and making the appropriate reservations
for foreseeable future expenses.
(f) “Bankruptcy”,
with respect to any Person, means (i) making an assignment for the benefit of creditors, (ii) filing a voluntary petition in bankruptcy,
(iii) becoming the subject of an order for relief or being-declared insolvent in any federal or state bankruptcy or insolvency
proceeding (unless such order is dismissed within ninety (90) days following entry), (iv) filing a petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute,
law, or regulation, (v) filing an answer or other pleading admitting or failing to contest the material allegation of a petition
filed against it in any proceeding similar in nature to those described in the preceding clause, or otherwise failing to obtain
dismissal of such petition within one hundred- twenty (120) days following its filing, or (vi) seeking, consenting to, or acquiescing
in, the appointment of a trustee, receiver, or liquidator of all or any substantial part of its properties.
(g) “Capital
Contribution” means the aggregate capital contribution made from time to time in cash by a Member to the Company.
(h) “Capital
Proceeds” means the proceeds of the sale of all or substantially all the assets of the Company.
(i) “Code”
means the Internal Revenue Code of 1986, as amended, and any successor statute.
(j) “Company”
means WEST HARTFORD WOB, LLC, a New York limited liability company.
(k) “Incompetency,”
with respect to any member who is a natural person, shall mean the entry by a court of competent jurisdiction of an order or decree
adjudicating such Member incompetent to manage his person or his estate.
(l) “Interest(s)”
means an interest as a Member of the Company.
(m) “Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, conditional sale agreement or encumbrance
of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest in respect
of such asset.
(n) “Liquidator”
means the Manager, or if there are no Manager at the time in question, such other Person who is appointed in accordance with applicable
law to take all actions related to the winding up of the Company’s business and the distribution of the Company’s assets.
(o) “Manager”
means New England WOB, LLC.
(p) “Management
Fee” shall mean 4% of Net Sales. Net Sales shall mean the total revenue from sales generated by a company, less deduction
of returns, allowances for damaged or missing goods and any discounts allowed.
(q) “Member”
means any of those Persons identified above as Members and any substitute or additional Member in such Person’s capacity
as a member of the Company.
(r) “Member
Majority” or “Majority of Members” means, at any time, any combination of Members holding, in
the aggregate, a majority of all of the Interests.
(s) “Membership
Interest” shall mean the same thing as Interest as defined in Section 1.1(o) herein.
(t) “Membership
Percentage” means, with respect to each Member, the percentage set forth in “Schedule A” attached
hereto.
(u) “Net
Profits and Net Losses” means, for any period, the net profits and net losses, respectively, derived from the operation
of the Company for Federal income tax purposes, including gains and losses on the sale of all or any portion of the Company’s
assets.
(v) “Notice”
means a written notice containing all information which is either desirable, relevant or necessary to satisfy the purposes for
which such notice is being delivered.
(w) “Operating
Reserves” means cash reserves of the Company held by the Company to ensure it can make future payments despite any
drop in revenue. Operating Reserves shall not exceed two (“2”) months expenses determined by taking the average monthly
expense for the previous 12 months.
(x) “P&L
Participant” means a person entitled to participate in the profits and losses of the Company but shall not be a Member
of the Company and shall not have any voting rights, equity interest or stake in the Company. A P&L Participant shall solely
have a contractual agreement with the Company.
(y) “Person”
means any natural person, corporation (stock or nonstock), limited liability company, limited partnership, general partnership,
joint stock company, joint venture, association (profit or nonprofit), company, estate, trust, bank, trust company, land trust,
business trust or other organization, whether or not a legal entity, and any government agency or political subdivision thereof.
(z) “Securities
Act” means the Securities Act of 1933, as amended, and any successor statute, and the rules and regulations promulgated
thereunder.
(aa) “Transfer”
means the sale, transfer, assignment, pledge, mortgage, hypothecation, encumbrance, distribution or other disposition of any
Interests.
(bb) “Treasury
Regulations” means regulations adopted by the Treasury Department of the United States governing application and
enforcement of the Code. Any reference to a section or provision of the Treasury Regulations shall be deemed to refer also to such
section or provision as amended or superseded.
(cc) “Unreturned
Capital Contribution” of any Member means, at any date, the Capital Contributions of such Member reduced from time
to time (but not below zero) by any distribution to such Member pursuant to Section 5.2(b)(ii) hereof.
Article
2
THE COMPANY; THE MEMBERS; VOTING RIGHTS
SECTION 2.1 Registered
Office and Registered Agent. The address of the registered office of the Company is 505 S. Flagler Drive, Suite #1010,
West Palm Beach, FL, 33401 and the registered agent is New England WOB, LLC.
SECTION 2.2 Principal
Office. The address of the principal office of the Company shall be 505 S. Flagler Drive, Suite #1010, West Palm Beach,
FL, 33401 or such other place as the Manager may from time to time determine.
SECTION 2.3 Duration.
The Company’s existence shall continue until dissolved in accordance with the Act and this Agreement.
SECTION 2.4 Maintenance.
The Members shall promptly sign and file all certificates, amendments or other instruments as required by law to maintain the Company
in good standing as a limited liability company in all jurisdictions in which it conducts business, including without limitation,
as required to comply with any fictitious name statutes.
SECTION 2.5 Changes
in Registered Office, etc. The Manager may make such changes in the registered office, registered agent and principal office
as they may deem necessary or advisable, and shall give Notice to all Members promptly following any such change. The Company may
maintain such other or additional business offices at such other place or places as the Manager may from time to time deem advisable.
SECTION 2.6 Business
Purpose. The Company is formed and organized to engage in the following business:
(a) To
own, improve, develop, operate and manage a World of Beer Franchise in West Hartford, Connecticut; and
(b) To
engage in any business related or incidental to one or more of the foregoing activities.
The Members have entered into a Joint Venture
Agreement dated December _, 2014, regarding the establishment of World of Beer franchises (the “JV Agreement”).
SECTION 2.7 Authority
and Powers. The Company is authorized and empowered to do any and all acts and things necessary, appropriate, proper, advisable,
incidental to, or convenient for the furtherance and accomplishment of its purposes, and for the protection and benefit of the
Company, including without limitation, all acts and things permitted under the Act and this Agreement.
SECTION 2.8 Juridical
Existence, Properties, Etc. The Company shall maintain, preserve, and keep in full force and effect its limited liability
company existence and all rights, franchises, licenses and permits necessary to the proper conduct of its business, and the ownership,
lease, or operation of its properties which, if not so maintained, could reasonably be expected to have a material adverse effect
on the Company, and to take all action which may be reasonably required to obtain, preserve, renew and extend all material licenses,
permits, authorizations, trade names, trademarks, service names, service marks, copyrights and patents which are necessary for
the continuance of the operation of any such property by the Company.
SECTION 2.9 Members
and Membership Percentages. The Members and their respective Membership Percentages shall are set forth in “Schedule
A” attached hereto.
SECTION 2.10 Voting
Rights. All Members shall have the right to vote their membership interest in proportion to their respective Membership
Percentages shall are set forth in “Schedule A” attached hereto.
SECTION 2.11 P&L
Participants. The Manger may grant solely to significant employees of the Company the rights to be a P&L Participant
of the Company, up to five percent (5%) of the Company’s profits and losses. Such P&L Participant shall participate in
the profits and losses as if such person was a Member. All P&L Participant shall be identified on Schedule C and their participation
with the Members in the profits and losses of the Company shall be set forth on Schedule B. No Member or employee of a Member may
be a P&L Participant.
Article
3
CAPITAL CONTRIBUTIONS
SECTION 3.1 Initial
Capital Contributions. The members have made an initial capital contribution as set forth on Schedule A.
SECTION 3.2 Additional
Capital Contributions.
(a) Upon
the consent of a Majority of Members, the Manager shall have the right to require additional capital contributions (“Capital
Calls”) from the Members to be paid on a pro rata basis as to all Members in accordance with the percentages set forth on
Schedule A.
(b) The
Manager may obtain Company loans to cover any Company required Additional Capital Contributions, with the consent of the Members
holding a majority of the Membership Interest in the Company.
(c) In
the event that a Member fails to, or refuses to contribute towards a Capital Call (the “Defaulting Member”), then either:
(i) The
remaining Members may elect to purchase the Membership Interest from the Defaulting Member, at a 15% discount to the Defaulting
Member’s Initial Capital Contribution; or
(ii) The
remaining Members may elect to contribute the necessary funds (the “Lending Members”) on behalf of the Defaulting Member
which shall be considered a loan to the Defaulting Member, to be secured by its Membership Interest in the Company.
(A) Any
loan given to the Company by the Lending Member on behalf of the Defaulting Member, shall accrue interest at a rate of 300 basis
points above LIBOR per annum. In the event of a Distribution by the Manager under Article 5 herein or under a dissolution of the
Company under Article 10 herein, the Manager shall use the funds attributable to the Defaulting Member, to first pay off any loans
to the Defaulting Member by the Lending Member.
(B) In
furtherance of any loan to any Defaulting Member by the Lending Members in accordance with this Section, the Members hereby expressly
agree to execute any and all loan documents which the Company’s attorneys deem necessary, including but not limited to; a
Note, Guaranty, Loan Agreement, and Pledge Agreement. Furthermore, the Defaulting Member shall be responsible to pay for all legal
fees that the Company shall incur in furtherance of such loan.
SECTION 3.3 Return
of Capital Contributions. The contributions of the Members to the capital of the Company shall be returned to them in cash,
in whole or in part, at any time in the discretion of the Manager in accordance with Section 5.2(b) herein.
SECTION 3.4 Time
when Capital is Returned. Upon the satisfaction of all the Company’s financing obligations, or a liquidation of the
assets of the LLC, or the dissolution of the LLC, the Capital Contributions shall be returned to the Members pro rata in accordance
with each Member’s Capital Contributions.
SECTION 3.5
No Right to Priority. Except as otherwise expressly provided in this Agreement, or as required to comply with the Code
and Treasury Regulations, no Member shall have priority over any other Member as to any allocations, distributions, or return of
all or any part of its Capital Contributions.
SECTION 3.6 Dilution.
No dilution of the membership interest of any member shall occur without the consent of World of Beer Franchising, Inc.
Article
4
ALLOCATION OF PROFITS AND LOSSES TO MEMBERS
SECTION 4.1 Allocation
of Net Profits and Net Losses. Net profits and net losses shall be allocated in the proportions set forth on Schedule B.
SECTION 4.2 Required
Special Allocations. Notwithstanding Section 4.1 hereof,
(a) Appropriate
adjustments shall be made to the allocations of Net Profits and Net Losses to the extent required under Section 704(c) of the Code
and the Treasury Regulations thereunder and under Sections 1.704-1(b)(2)(iv)(d), (e), (f) and (g) of the Treasury Regulations;
(b) Appropriate
adjustments shall be made to the allocations of Net Profits and Net Losses to the extent required to comply with the “qualified
income offset” provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations; the partnership “minimum gain
chargeback” provisions of Section 1.704-2(f) of the Treasury Regulations; and the “partner nonrecourse deduction”
and “partner nonrecourse debt minimum gain chargeback” provisions of Section 1.704-2(i) of the Treasury Regulations,
all issued pursuant to Section 704(b) of the Code. To the extent permitted by such Treasury Regulations, the allocations in such
year and subsequent years shall be further adjusted so that the cumulative effect of all the allocations shall be the same as if
all such allocations were made pursuant to Section 4.1 hereof (as adjusted by Section 4.3(a) hereof) without regard to this Section
4.3(b).
SECTION 4.3 Other
Allocation Rules. For purposes of determining the Net Profits, Net Losses, or any other items allocable to any period,
Net Profits, Net Losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the
Manager using any permissible method under Code § 706 and the Treasury Regulations applicable thereto.
SECTION 4.4 Recapture
Income. “Recapture Income,” if any, realized by the Company pursuant to Sections 1245 or 1250 of the Code shall
be allocated to the Members to whom the prior corresponding depreciation deductions were allocated, in proportion to the amounts
of such depreciation deductions previously allocated to them.
Article
5
DISTRIBUTIONS
SECTION 5.1 Distributions
in Kind. No Member shall be entitled to demand and receive distributions other than in cash form. Any non-cash Company
assets distributed in kind shall be distributed to the Members entitled thereto as tenants-in-common owning undivided interests
in the same proportion as would be applicable to cash distributions, however, such distribution in kind may only be made with consent
of the Members holding a Member Majority.
SECTION 5.2 Distribution
of Available Cash and Capital Proceeds.
(a) Available
Cash. The Manager shall distribute Available Cash in the percentages set forth on Schedule B. It is anticipated the Manager
shall make distributions on a monthly basis.
(b) Capital
Proceeds. Capital Proceeds remaining after the payment of any debts and liabilities of the Company due and payable at such
time and the establishment of any Operating Reserves which the Manager determines, in his sole discretion necessary for reasonable
ongoing business requirements, and necessary to provide for any contingent or unforeseen liabilities or obligations of the Company,
shall be distributed in accordance with the following order of priority:
(i) First,
to repay the Capital Contributions of the Members as set forth on Schedule A; and
(ii) Second,
in the percentages set forth on Schedule B.
Article
6
RESIGNATION OR BANKRUPTCY OF A MEMBER
RESTRICTIONS ON THE TRANSFER OF INTERESTS;
ADMISSION OF SUBSTITUTE AND ADDITIONAL MEMBERS;
SECTION 6.1 Resignation
or Bankruptcy of a Member; Continuation of the Company.
(a) A
Member shall have the right to withdraw his Capital Contribution upon the termination of the Company as provided in Section 10.2
hereof, provided, however, that no part of the Capital Contribution of any Member shall be withdrawn unless all liabilities of
the Company, except obligations to Members on account of their Capital Contributions, have been paid, or unless the Company has
assets sufficient to pay them.
(b) Within
ninety (90) days following the Resignation or the Bankruptcy (other than by reason of death or incompetency) of a Member, the Company
shall dissolve unless, within such applicable period, a majority in interest of the Members (excluding for such purpose the successor
in interest to the terminated Member’s Interest) elect in writing to continue the Company on such terms as they may agree
upon in writing. If an election to continue the Company is so made then the Company shall continue in existence until the end of
the term for which it has been formed, or until a subsequent Resignation (other than by reason of death or incompetency), Bankruptcy
or other event of dissolution occurs.
(c) The
death or Incompetency of a Member shall neither dissolve nor terminate the Company.
SECTION 6.2 Restrictions
on the Transfer of Interests.
(a) Except
as expressly provided herein, no Member shall have the right to Transfer all or any part of its Interest without the prior written
consent of the Manager, which may be withheld in his sole discretion, according to reasonable terms.
Upon the consent of
the Manager, a Member may transfer his Membership Interest in the Company to a permitted transferee (“Transferee”).
Such Transferee shall be required to pay the Company’s legal fees in connection with effectuating such Transfer as a condition
precedent to the consent. Such Transferee shall be bound to the same extent as a Member hereunder in making a Transfer of his Interest.
Any purported Transfer in violation of the provisions of this Agreement shall be null and void ab initio.
(b) Notwithstanding
subparagraph (a) above, any Member may Transfer all of his Interest during his lifetime to;
(i) an
entity that is wholly controlled, and continues to be controlled by that Member.
(ii) another
Member of the Company, pursuant to Section 6.2 herein.
(iii) an
immediate family member of the Member or a trust for the benefit of an immediate family member.
For purposes
of this subparagraph (b), the term “Entity” shall be limited to the transfer of Member’s interest to a Corporation,
LLC or Trust. If control of such Entity is transferred to another individual or another entity, such change and transfer shall
constitute an unauthorized transfer pursuant to the terms of this agreement.
(c) Notwithstanding
anything to the contrary contained herein, pursuant to Section 6.1(a) or the applicability of Section 6.1(b) or 6.2 hereof:
(i) No
Transfer of an Interest shall be made if the Interest which is the subject of a proposed Transfer when added to the total of all
other Interests Transferred within the period of twelve (12) consecutive months prior thereto would result in the termination of
the Company under Section 708 of the Code or if the Transfer would cause the Company to lose its status under the Code as a partnership
for Federal income tax purposes.
(ii) No
Interest shall be transferred unless the registration provisions of the Securities Act of 1933, as amended, and all applicable
state “blue sky laws” have been complied with or unless compliance with such provisions is not required, each Member
recognizing that no interest in the Company has been registered under Federal or state securities laws. The Manager may request
in their sole discretion an opinion from the Company’s counsel or any other counsel that such transfer will not violate applicable
securities laws. The costs of such opinion shall be paid for by the Transferee.
(iii) Although
a permitted Transferee pursuant to Sections 6.1(b) or 6.2 shall be treated as an assignee of, and be entitled to, all of the rights
of the Selling Member to receive profits, losses and distributions to the extent of the Interest assigned to him, no Transferee
whatsoever shall become substituted as a Member in the Company (x) without the prior written consent of a Majority of Members,
which may be withheld in their sole discretion, for any or no reason, and (y) unless and until such Transferee shall have evidenced
his consent and agreement to be bound by all of the terms and provisions of this Agreement, and to assume, as a substituted Member,
his pro rata share hereunder of the obligations of his transferor as a Member, by executing and acknowledging a counterpart of
an amendment of this Agreement and/or such other agreement to that effect as the Manager may request, each of which shall appropriately
reflect his admission as a member of the Company and his capital contribution thereto, and such other documents, all as may reasonably
be required by the Managing Member. Such substitution shall then take effect when the Manager have accepted such person as a Member
and the books and records of the Company reflect such Person as admitted to the Company as a Member. As a condition to such
Transferee becoming a substituted Member, such Transferee shall also be required to pay the Company’s costs and expenses,
including but not limited to legal fees and disbursements, in connection with his becoming a Member.
(d) If
a Transfer or attempted Transfer of an Interest is made other than in accordance with the terms of this Agreement, it shall be
null and void and no right, title or interest in the Company shall be transferred.
(e) No
assignment, transfer or other disposition of all or any part of the interest of any Member permitted under this Agreement shall
be binding upon the Limited Liability Company unless and until a duly executed and acknowledged counterpart of such assignment
or instrument of transfer, in form and substance satisfactory to the Company, has been delivered to the Company.
(f) As
between a Member and an assignee or transferee of such Member's interest in accordance with this Agreement, allocations and distributions
for any fiscal year shall be apportioned as of the date of the assignment or transfer, on the basis of the number of days before
and after said date, without regard to the results of the Company's operations before or after the assignment or transfer.
(g) No
assignment or other disposition of any interest of any Member may be made if such assignment or disposition, alone or when combined
with other transactions, would result in the termination of the Company within the meaning of Section 708 of the Internal Revenue
Code or under any other relevant section of the Code or any successor statute. No assignment or other disposition of any interest
of any Member may be made without an opinion of counsel satisfactory to the Company that such assignment or disposition is subject
to an effective registration under, or exempt from the registration requirements of, the applicable State and Federal securities
laws. No interest in the Company may be assigned or given to any person below the age of 21 years or to a person who has been adjudged
to be insane or incompetent.
SECTION 6.3 RIGHT
OF FIRST REFUSAL
(a) Anything
herein contained to the contrary, the Company shall be entitled to treat the record holder of the interest of a Member as the absolute
owner thereof, and shall incur no liability by reason of distributions made in good faith to such record holder, unless and until
there has been delivered to the Company the assignment or other instrument of transfer and such other evidence as may be reasonably
required by the Company to establish to the satisfaction of the Limited Liability Company that an interest has been assigned or
transferred in accordance with this Agreement.
(b) Notwithstanding
the forgoing terms, and subject to Section 6.1(b) herein, if a Member desires to sell, or otherwise dispose of all or any part
of its interest in the Company, such Member (the “Selling Member”) shall first offer to sell and convey such interest
to any other Members before selling, or otherwise disposing of such interest to any other person, corporation or other entity.
Such offer shall be in writing, shall be given to every other Member, and shall set forth the interest to be sold, purchase price
to be paid, the date on which the closing is to take place, (which date shall be not less than thirty nor more than sixty days
after the delivery of the offer), the location within the State of New York at which the closing is to take place, and all other
material terms and conditions of the sale, transfer or the disposition.
(c) Within
fifteen days after the delivery of said offer to the other Members shall deliver to the Selling Member a written notice either
accepting or rejecting the offer. Failure to deliver said notice within said fifteen days conclusively shall be deemed a rejection
of the offer. Any or all of the other Members may elect to accept the offer, and if more than one of the other Members elects to
accept the offer, the interest being sold and the purchase price therefor shall be allocated among the Members so accepting the
offer in proportion to their Members’ Percentage Interest, unless they otherwise agree in writing.
(d) If
any or all of the other Members elect to accept the offer, then (a) upon such acceptance in writing, the Member(s) shall pay a
non-refundable ten percent (10%) down payment of the purchase price and (b) then the transfer of the Membership Interest shall
be held in accordance with the offer and the Selling Member shall deliver to the other Members who have accepted the offer an assignment
of the interest being sold by the Selling Member, and said other Member shall pay the remaining balance of the purchase price prescribed
in the offer.
(f) If
no other Member accepts the offer, or if the Members who have accepted such offer default in the obligation to purchase the interest,
than the Selling Member within 120 days after the delivery of the offer may sell such interest to any other person or entity at
a purchase price which is not less than the purchase price prescribed in the offer and upon terms and conditions which are substantially
the same as the terms and conditions set forth in the offer, provided all other applicable requirements of the Agreement are complied
with. An assignment of such interest to a person or entity who is not a Member of the Limited Liability Company shall cause such
Person to become a member upon the execution of the such documents required by Section 6.2(c)(iii).
(g) If
the Selling Member does not sell such interest within said 120 days, then the Selling Member may not thereafter sell such interest
without again offering such interest to the other Members in accordance with this Article 6.
SECTION 6.4 Admission
of Persons as Additional Members. In regards to permitted Transferee’s pursuant to Section 6.1 and 6.2 herein, the
Manager shall have the right to admit, and each of the Members hereby consents to the admission of, such additional Members to
the Company as the Manager shall unanimously determine in his sole discretion; it being understood no Member shall have its Membership
Percentage reduced without his prior written consent. In the event that the Manager shall determine to admit one or more Members
to the Company, the Members hereby agree to execute and deliver such documents as the Manager shall request in order to effectuate
the admission of such additional Member(s). Any additional Member(s) admitted to the Company shall be required to execute a counterpart
signature page to this Agreement and, if required, an amendment to the Articles of Organization of the Company and such other documents
as the Manager may request in order to effectuate admission to the Company.
SECTION 6.5 Attitude
Beer Holding Co. The Company and Members acknowledge that Attitude Beer Holding Co. is majority owned by Attitude Drinks,
Inc., a publicly traded company. No change in the direct or indirect ownership of Attitude Beer Holding Co. shall be deemed a transfer
of Attitude Beer Holding Co.’s Membership Interest. The Company agrees to fully cooperate with Attitude Beer Holding Co.
and Attitude Drinks, Inc. in supplying all information to Attitude Drinks, Inc. and its auditor so Attitude Drinks, Inc. can timely
comply with its Securities and Exchange Commission reporting obligations.
SECTION 6.6 WOB.
The Members acknowledge that the business of the Company is subject to a franchising agreement with WOB and pursuant to the Franchise
Agreement, the Members may be required to or prohibited from transfering their membership interest or make other changes to this
agreement in accordance with the terms of the Franchise Agreement.
Article
7
MANAGEMENT
SECTION 7.1 Manager
New England WOB, LLC is hereby appointed the Manager of the Company (the “Manager”). The business and affairs of the
Company shall be managed under the sole direction and control of the Manager, using reasonable business practices, and all powers
of the Company shall be exercised by or under the authority of the Manager. No other Person shall have any right or authority to
act for or bind the Company except as permitted in this Agreement or as required by law. The Manager may be removed by a Majority
of Members only for gross negligence or fraud.
SECTION 7.2 General
Powers. The Manager shall have the full power to execute and deliver, for and on behalf of the Company, any and all documents
and instruments which may be necessary or desirable to carry on the business of the Company, including, without limitation, any
and all deeds, contracts, leases, mortgages, deeds of trust, promissory notes, security agreements, and financing statements pertaining
to the Company's assets or obligations, and to authorize the confession of judgment against the Company. No person dealing with
the Manager need inquire into the validity or propriety of any document or instrument executed in the name of the Company by the
Manager, or as to the authority of the Manager in executing the same.
SECTION 7.3. Limitation
on Authority of Members.
(a) No
Member is an agent of the Company solely by virtue of being a Member, and no Member has authority to act for the Company solely
by virtue of being a Member.
(b) This
Article 7 supersedes any authority granted to the Members pursuant to Section 412 of the Law. Any non-manager Member who takes
any action or binds the Company in violation of this Article 7 shall be solely responsible for any loss and expense incurred by
the Company as a result of the unauthorized action and shall indemnify and hold the Company harmless with respect to the loss or
expense.
SECTION 7.4 Appointment
of New Manager. A new Manager can be appointed only by Members holding a Member Majority. Such new Manager need not be
a Member of the company.
SECTION 7.5 Liability
and Indemnification.
(a) The
Manager shall not be liable, responsible, or accountable, in damages or otherwise, to any Member or to the Company for any act
performed by the Manager within the scope of the authority conferred on the Manager by this Agreement, except for fraud, bad faith,
gross negligence, or an intentional breach of this Agreement.
(b) The
Company shall indemnify the Manager for any act performed by the Manager within the scope of the authority conferred on the Manager
by this Agreement, except for fraud, bad faith, gross negligence, or an intentional breach of this Agreement.
SECTION 7.6 Major
Decisions
(a) Approval
of Major Decisions. Notwithstanding anything to the contrary in this Agreement, certain decisions or actions as set forth in
this Section 7.6 (“Major Decisions”) may not be taken solely in the Manager’s discretion and shall require the
affirmative vote of a Member Majority. Approval of Major Decisions may be given at a Meeting called for that purpose or by written
consent.
(b) Designation
of Major Decisions. The following shall constitute Major Decisions subject to this Section:
(i)
Other than in the regular course of business, the sale of all or a substantial portion of the assets owned by the Company. For
this purpose, Twenty Percent (20%) of the fair market value of the assets owned by the Company shall constitute a “substantial
portion.”
(ii) The
dissolution, liquidation or other termination or cessation of the business operations of the Company, including without limitation
the filing of a voluntary petition in Bankruptcy, the assignment of all or substantially all of the assets of the Company for the
benefit of the Company’s creditors or the appointment of trustee, liquidator, administrator or like person or entity for
the purpose of winding up the business and affairs of the Company.
(iii) Any
change in the principal purpose of the Company’s business, as set forth in Section 2.6 above.
(iv) Any
borrowing or pledge of assets owned by the Company in excess of $50,000 in the aggregate or any loan to a Member or Manager.
(v) The
admission of new Member.
Article
8
RELATED PARTY DEALINGS
SECTION 8.1 Outside
Business Interests; Business Opportunity. The Members may each engage in or possess interests in other business ventures
of every kind and description for its own account, including without limitation, serving as a member, partner or shareholder of
other entities which own, either directly or through interests in other entities, properties similar to the assets of the Company
and neither the Company nor any of the Members shall have any rights by virtue of this Agreement in or to such other business ventures
or to the income or profits derived therefrom, or to any business opportunities as may become available to the Manager or any Member,
whether or not similar in nature to the Company’s then existing business activities.
SECTION 8.2 Member
Dealing With the Company. The fact that a Member or an affiliate thereof is employed by or is directly or indirectly interested
in or connected with any person, firm or corporation employed by the Company for real estate management or otherwise to perform
a service, or from or with which the Company may purchase any property or have other business dealings, shall not prohibit the
Member from employing or otherwise dealing with such person, firm or corporation, so long as such business dealing, contract, or
agreement follows and contains reasonable business terms. Neither the Company nor any of the Members shall have any rights in or
to any income or profits derived therefrom. The said Member or his affiliated company shall not receive any benefit of any kind,
other that is specifically and contractually agreed upon, in writing, between the respective companies and or parties.
Article
9
MEMBER LIABILITY; INDEMNIFICATION AND LIABILITY LIMITATION
SECTION 9.1 Liability
of Members; Enforcement of Obligations. Except to the extent otherwise expressly stated in this Agreement or prescribed
under the Act, (a) the Members shall have no fiduciary or partnership relationship between or among themselves solely by reason
of their status as Members, and (b) the rights of each of the Members and the Company to sue for matters and claims arising out
of or pertaining to this Agreement shall not be dependent upon the dissolution, winding-up or termination of the Company.
SECTION 9.2 Indemnification
of Members . Except as provided in Section 9.4, every Person who was or is a party, or who is threatened to be made a party,
to any pending, completed or impending action, suit or proceeding of any kind, whether civil, criminal, administrative, arbitrative
or investigative (whether or not by or in the right of the Company) by reason of (a) being or having been a Member of the Company,
(b) being or having been a Member, manager, partner, officer or director of any other entity at the request of the Company, or
(c) serving or having served in a representative capacity for the Company in connection with any partnership, joint venture, committee,
trust, employee benefit plan or other enterprise, shall be indemnified by the Company against all expenses (including reasonable
attorneys’ fees and expenses), judgments, fines, penalties, awards, costs, amounts paid in settlement and liabilities of
all kinds, actually incurred by such Person incidental to or resulting from such action, suit or proceeding to the fullest extent
permitted under the Act, without limiting any other indemnification rights to which such Person otherwise may be entitled. The
Company may, but shall not be required to, purchase insurance on behalf of such Person against liability asserted against or incurred
by such Person in its capacity as a Manager or Member of the Company, or arising from such Person’s status as a Manager or
Member, whether or not the Company would have authority to indemnify such Person against the same liability under the provisions
of this Section 9.2 or the Act.
SECTION 9.3 Limitation
of Liability. Except as otherwise expressly provided in this Agreement, no Member or Manager shall have liability to the
Company or other Members for monetary damages resulting from errors made in the exercise of good-faith judgment.
SECTION 9.4 Qualification
of Indemnification and Liability Limitation.
(a) The
indemnification rights and limitations on liabilities set forth in Sections 9.2 and 9.3 shall not apply to claims based upon any
willful misconduct, intentional breach or disregard of the terms of this Agreement or knowing violation of criminal law or any
federal or state securities law, including without limitation, unlawful insider trading or market manipulation for any security,
nor shall such indemnification rights and limitations on liabilities preclude the Company or any Member from recovery for any loss
or damage otherwise covered under any insurance policy or fidelity bonding. Nothing herein shall be deemed to prohibit or limit
the Company’s right to pay, or obtain insurance covering, the costs (including reasonable attorneys’ fees and expenses)
to defend an indemnitee, Member or Manager against any such claims, subject to a full reservation of rights to reimbursement in
the event of a final adjudication adverse to such indemnitee, Member or Manager.
(b) An
indemnitee shall be entitled to recover from an indemnitor all legal costs or expenses, including reasonable attorney’s fees
and expenses, incurred by such indemnitee to enforce its rights hereunder, or to collect any sums due from the indemnitor hereunder.
Article
10
DISSOLUTION AND LIQUIDATION OF THE COMPANY
SECTION 10.1 Dissolution
of the Company. The Company shall be dissolved on the earlier of the expiration of the term of the Company or upon:
(a) The
Resignation (other than by reason of death or incompetency) or Bankruptcy of a Member unless a majority in interest of the Members
(as defined in Section 6.1(b)) elect to continue the Company pursuant to Section 6.1(b);
(b) The
Resignation or Bankruptcy of a Member which leaves only one (1) Member remaining, and no additional or substitute Member is admitted
to the Company in accordance with this Agreement within ninety (90) days thereafter;
(c) The
expiration of thirty (30) days following the sale or other disposition of all or substantially all of the Company’s assets;
(d) The
election by a majority of the Members to liquidate the Company; or
(e) The
occurrence of any other event of dissolution under the provisions of this Agreement or the Act.
SECTION 10.2 Winding-up
and Distribution of the Company.
(a) Upon
the dissolution of the Company pursuant to Section 10.1, the Company’s business shall be wound up and its assets liquidated
by the Liquidator as provided in this Section 10.2, and the net proceeds of such liquidation shall be distributed as follows:
(i) First,
to payment of all debts and liabilities of the Company, including, without limitation, any loans from Members and the expenses
of liquidation;
(ii) Second,
to establishment of any reserves reasonably deemed necessary by the Liquidator for contingent, unmatured or unforeseen liabilities
or obligations of the Company. Said reserves shall be paid over to an attorney-at-law of the State of New York, as escrowee, to
be held by him for the purpose of disbursing such reserves in payment of any of the aforementioned contingencies, and, at the expiration
of such period as shall be deemed advisable, to distribute the balance thereafter remaining in the manner hereinafter provided,
together with accrued interest thereon, if any;
(iii) Third,
to those Members having positive Capital Account balances pro rata in the proportion that each such Member’s positive Capital
Account balance bears to the aggregate of the positive Capital Account balances of all such Members, until all Member’s Capital
Account balances are equal to zero;
(iv) Fourth,
any funds remaining shall be distributed in the percentages set forth on Schedule B.
(b) The
Liquidator shall file all certificates and notices of the Company’s dissolution required by law. The Liquidator shall sell
and otherwise liquidate the Company’s assets without unnecessary delay. Upon the complete liquidation of the Company’s
assets and distribution to the Members, they shall cease to be Members of the Company, and the Liquidator shall execute, acknowledge
and cause to be filed all certificates and notices required by law to terminate the existence of the Company.
Article
11
AMENDMENTS
SECTION 11.1 Adoption
of Amendments Generally. Amendments to this Agreement to reflect the substitution or addition of a Member shall be made
by written instrument executed by the substituted Member, the added Member, or the resigned Member (or its authorized representative),
as applicable. Any other amendments to this Agreement may be made by a written instrument executed by Members holding, in the aggregate,
at least two-thirds of Membership Interests; provided, however, that no amendment to this Agreement may:
(a) substantially
alter the purposes of the Company without the written consent of all Members;
(b) expand
the obligations or liabilities of any Member under this Agreement, or modify any Member’s limited liability, without the
written consent of such Member;
(c) modify
the computational method of determining, or priority applicable to, allocations or distributions under Articles 4 and 5 and Section
10.2, without the written consent of all Members; or
(d) amend
this Article 11 without the written consent of all Members.
Article
12
MISCELANEOUS
SECTION 12.1 Non-Recourse
Company Loans. Any loans taken by the Company, shall be non-recourse loans as to any and all individual Members or the
Manger, and no Member or Manager shall be required to sign a personal guaranty to in order to secure such loan(s), unless unanimously
consented to by the Members.
Article
13
GENERAL PROVISIONS.
SECTION 13.1 Books
and Records. All records of the Company shall be kept at the principal office of the Company and shall be available for
examination by any Member, or such Member’s duly authorized representatives, at all reasonable times at the office of the
Company and by way of internet access to Company bank accounts. The method of accounting on which the books shall be maintained
shall be determined by the majority of the Members . The Manager may make on behalf of the Company the election permitted by Section
754 of the Code. New England WOB, LLC shall be designated as the “tax matters partner” (the “TMP”) for
purposes of the Code and the “Designated Person” for purposes of maintaining an Investor List to the extent required
by the Code. The TMP is hereby authorized to take such actions as may be required by the Code and the regulations thereunder to
continue such designations. The determination by the TMP with respect to the treatment of any item or its allocation for Federal,
state or local tax purposes shall be binding upon all of the Members, so long as such determination is reasonable and will not
be inconsistent with any express terms hereof. No cause of action shall accrue to any Member under this Section 13.1 if the TMP
acted in good faith to comply with his obligations hereunder. No charge shall be made to the Company for his acting as tax matters
partner. Upon the Resignation or Bankruptcy of the TMP, a majority of the Members may select a Member to become the new “tax
matter partner” and “Designated Person”.
SECTION 13.2 Fiscal
Year. The fiscal year of the Company shall be the calendar year.
SECTION 13.3 Custody
of Company Funds; Bank Accounts.
(a) The
Manager shall have a fiduciary responsibility for the safekeeping and use of all funds and assets of the Company, whether or not
in their immediate possession or control. The Company’s funds shall not be commingled with the funds of any other Person
and the Manager shall not use, or permit use of, the Company’s funds in any manner except for the benefit of the Company.
(b) All
funds of the Company not otherwise invested shall be deposited in one or more internet–accessible accounts maintained in
such federally insured financial institutions as the Manager may deem appropriate, and withdrawals shall be made only in the regular
course of Company business on such signature or signatures as the Manager may deem appropriate. Usernames and passwords for access
to all accounts shall be made available to all members.
SECTION 13.4 Notices.
Except as otherwise provided herein, all Notices, requests, consents and other communications hereunder to the Company or to any
Member shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by telecopier, nationally-recognized
overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) if
to the Company, to its principal office set forth in Section 2.4, as such office may be changed in accordance with Section 2.7.
(b) if
to any Member, to its respective address set forth on Schedule A hereto.
Any Member may, at
any time and from time to time, designate a substitute address or addresses for itself by delivering a Notice to the Company and
to each other Member in the manner set forth in this Section. All such Notices, requests, consents and other communications shall
be deemed to have been delivered (i) in the case of personal delivery or delivery by telecopier, on the date of such delivery,
(ii) in the case of delivery by nationally-recognized overnight courier, on the date of such delivery, and (iii) in the case of
mailing in the manner set forth in this Section, on the third business day after the posting thereof.
SECTION 13.5 Burden
and Benefit. This Agreement shall be binding upon, and shall inure to the benefit of, the Members, and their respective
heirs, executors, administrators, successors and assigns. There shall be no third party beneficiaries of this Agreement.
SECTION 13.6 Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one Agreement binding on all parties hereto, notwithstanding that not all parties shall have signed the
same counterpart.
SECTION 13.7 Severability
of Provisions. If any term or provision of this Agreement or the application thereof to any Person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this Agreement and the application of such term or provision to Persons
or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term
and provision of this Agreement shall be valid and be enforceable to the fullest extent permitted by law.
SECTION 13.8 Entire
Agreement. This Agreement sets forth all (and is intended by the Members to be an integration of all) of the promises,
agreements and understandings among the Members with respect to the Company, its business operations and management, the Property
and all other Company assets, and there are no promises, agreements, or understandings, oral or written, express or implied, among
them other than as set forth or incorporated herein.
SECTION 13.9 Headings.
The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
SECTION 13.10 Pronouns
and Plurals. Whenever the context may require, any pronouns used herein shall be deemed to refer to the masculine, feminine,
or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural, and vice versa.
SECTION 13.11 Governing
Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
SECTION 13.12 Dispute
Resolution. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in New York County, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery). Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce
any provisions of the documents contemplated herein, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
SECTION 13.13 Agreement
in Counterparts. This Agreement may be executed in several counterparts, and all such executed counterparts shall constitute
one agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original
or to the same counterpart.
[REST OF THIS PAGE LEFT
INTENTIONALLY BLANK]
IN WITNESS WHEREOF,
the parties hereto have executed this Operating Agreement as of the date first above written.
COMPANY:
WEST HARTFORD WOB, LLC
Name:
Title: Manager of its manager New England World of Beer
MEMBERS:
New England World of Beer |
|
Attitude Beer Holding Co. |
|
|
|
/s/ Glenn E. Straub |
|
/s/ Roy Warren |
By: |
|
By: Roy Warren |
Its: Manager |
|
Its: President |
SCHEDULE A
Member | |
Percentage Interest | | |
Initial Capital Contribution | |
New England World of Beer 505 S. Flagler Drive, Suite 1010 West Palm Beach, FL 33401 | |
| 49 | % | |
$ | 1.00 | |
Attitude Beer Holding Co. 712 US Highway 1, Suite 200 North Palm Beach, FL 33408 | |
| 51 | % | |
$ | 1,200,000 | * |
Total | |
| 100 | % | |
$ | 1,200,001 | |
* This amount shall
be paid on the following schedule:
1. $300,000 on or before
December 24, 2014;
2. $300,000 on or before
January 24, 2015;
3. $300,000 on or before
February 24, 2015; and
4. $300,000 on or before
March 24, 2015.
SCHEDULE B
Details for Schedule B are not known as of this filing as the percentages can change in accordance with management decision
Exhibit 10.158
EXHIBIT (10)(158)
JOINT VENTURE AGREEMENT
This Joint Venture
Agreement is being entered into as of December 24, 2014, between New England WOB, LLC (“NEWOB”) , Attitude Beer Holding
Co. (“ABH”), Attitude Drinks, Inc. (“Attitude”), Glenn E. Straub (“Straub”) and James D. Cecil
(“Cecil” and together with Straub the “Current Members”)(each a “Party,” collectively the “Parties”).
WHEREAS, NEWOB has
entered into an Area Development Agreement (the “ADA”) with World of Beer Franchising, Inc. (“Franchisor”);
WHEREAS, Franchisor
is in the business of entering into franchise agreement with third parties for such third parties to own and operate World of Beer
themed bar/ restaurants (“WOB Franchises”).
WHEREAS, pursuant to
the ADA, NEWOB developed a WOB Franchise in Stamford, Connecticut (the “Stamford Location”) and assigned its rights
to the Stamford Location to Stamford WOB, LLC (“Stamford WOB”).
WHEREAS, pursuant to
the ADA, NEWOB is developing a WOB Franchise in West Hartford, Connecticut (the “West Hartford Location”) and assigned
its rights to the West Hartford Location to West Hartford WOB, LLC (“WH WOB”). WH WOB’s members are Straub and
Cecil.
WHERES, ABH has access
to capital that would allow NEWOB to maximize the number of WOB Franchises it could develop pursuant to the ADA.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
JOINT VENTURE
1.1 ADA.
a. NEWOB
and the Current Members hereby grant ABH the right to participate in any WOB Franchise that NEWOB proposes to develop whether pursuant
to the current ADA or any other agreement with Franchisor. ABH shall have the option to become a 51% member of any new WOB Franchise
for the contribution of 100% of the budgeted development costs of developing such new WOB Franchise.
b. Upon
NEWOB’s finalization of a location for a new WOB Franchise it shall give ABH notice of such new location. Upon the execution
of a letter of intent with a budget and forecasts (LOI) for a new location, ABH will be given notice of the LOI (the “LOI
Notice”). Within 30 days after receipt of the LOI Notice, ABH shall give NEWOB notice if it desires to exercise its option
to participate in such new WOB Franchise. ABH will have 14 days thereafter to sign a new Operating Agreement for that location
and must fund 100% of the costs of the new location within 90 days after lease execution in equal installments of twenty five percent
(25%). These installments will commence upon execution of the Operating Agreement & continue every 30 days until the capital
is contributed in full. There shall be a 7 day cure period after written notice is received that a payment has not been made.
c. If
ABH elects to not proceed forward with more than 2 new locations with NEWOB then NEWOB shall be allowed to operate such location
with other investors on the same terms as those offered to ABH. In the event NEWOB desires to continue with such location on different
terms than those previously rejected by ABH, NEWOB must first offer such terms to ABH in accordance with the procedure in 1.1(b).
d. For
each new location that ABH participates in, NEWOB shall form a new limited liability company to be the Franchisee. NEWOB, ABH and
the new limited liability company shall enter in an operating agreement substantially the same as the WH Operating Agreement (as
defined below).
e. NEWOB
shall be entitled to a management fee for each location under the same terms as set forth in the WH Operating Agreement.
f. ABH
will not invest in any other WOB locations other than with NEWOB.
1.2 West
Hartford.
a. Concurrently
with the execution of this Agreement and funding of the capital contribution, ABH agrees to purchase from West Hartford WOB a 51%
membership interest in West Hartford WOB for $1,200,000.00 capital contribution to West Hartford WOB (the “WH Investment”).
b. Concurrently
with the WH Investment, Straub and Cecil have transferred their membership interests in WH WOB to NEWOB so that upon the WH Investment,
NEWOB and ABH will be the sole members of West Hartford WOB.
c. NEWOB
and ABH will execute and amended and restated operating agreement to govern West Hartford WOB, substantially in the form annexed
hereto as Exhibit A (the “WH Operating Agreement”).
1.3 Stamford.
ABH and NEWOB and the Current Members agree to enter in an agreement regarding the Stamford WOB in the form annexed hereto as Exhibit
B.
1.4 Warrants.
In consideration of their transfer of their membership interests in West Hartford WOB and Stamford WOB to NEWOB, the person identified
on Schedule 1.4 shall be issued warrants to purchase shares of Attitude’s common stock as set forth on Schedule 1.4
1.5 Non-Circumvention
– Non-Compete. NEWOB shall have its principal, including those persons identified on Schedule 1.4, execute a non-circumvention
agreement in the form annexed hereto as Exhibit C.
1.6 Public
Disclosure. Attitude shall have the right to make disclosures and public announcements regarding this Agreement, and any agreement
or business entered into pursuant hereto, as it deems necessary to comply with its Securities and Exchange Commission reporting
obligations. Subject to the reasonable prior approval of Franchisor, Attitude will be allowed to use the World of Beer in its investor
and public relations materials.
1.7 Audits.
NEWOB and each WOB Franchise shall fully cooperate with ABH and Attitude in supplying all information to Attitude and its auditor
so Attitude can timely comply with its Securities and Exchange Commission reporting obligations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each Party hereby makes
the following representations and warranties for the benefit of all the other Parties:
2.1 Such
Party has full power and authority to enter into this Agreement. This Agreement has been duly and validly executed and delivered
by Such Party and constitutes the legal, valid and binding obligation of such Party, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws from
time to time in effect that affect creditors’ rights generally, and by legal and equitable limitations on the availability
of specific remedies.
2.2 The
execution, delivery and performance by such Party of this Agreement will not: (i) violate the organizational documents of such
Party, (ii) violate any decree or judgment of any court or other governmental authority applicable to or binding on such Party;
(iii) violate any provision of any federal or state statute, rule or regulation which is, to such Party’s knowledge, applicable
to such Party; or (iv) violate any contract to which such Party or any of its assets or properties are bound, or conflict with,
or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of , any agreement, indenture or instrument to which such Party
is a party. No consent or approval of, or filing with, any governmental authority or other person not a party hereto is required
for the execution, delivery and performance by such Party of this Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Entire
Agreement; Amendments. The Agreement contains the entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.
3.2 Amendments;
Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment,
by the Parties or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.
3.3 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. Investor may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Holder.
3.4 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
3.5 Notices.
Any notice, demand or request required or permitted to be given by the respective parties hereto pursuant to the terms of this
Agreement shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission,
unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the
next succeeding Business Day, (ii) on the next Business Day after timely delivery to an overnight courier and (iii) on the Business
Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid),
addressed as follows:
If to NEWOB:
505 S. Flagler Drive, Suite 1010
West Palm Beach, FL 33401
If to ABH:
712 US Highway 1, Suite 200
North Palm Beach, FL 33408
If to Attitude:
712 US Highway 1, Suite 200
North Palm Beach, FL 33408
If to Straub:
505 S. Flagler Drive, Suite 1010
West Palm Beach, FL 33401
If to Cecil:
505 S. Flagler Drive, Suite 1010
West Palm Beach, FL 33401
Any Party may change
the address(es) to which all notices, requests and other communications are to be sent by giving written notice of such address
change to the other Parties in conformity with this Section 3.5, but such change shall not be effective until notice of such change
has been received by the other Party.
3.6
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in New York County, New York for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery).
Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party
irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action
or proceeding to enforce any provisions of the documents contemplated herein, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
3.7 Survival.
The representations, warranties, agreements and covenants contained herein shall survive the termination of this Agreement.
3.8 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed)
the same with the same force and effect as if such facsimile signature page were an original thereof.
3.9 Severability.
In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not in any way be affecting or impaired thereby and
the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefore, and
upon so agreeing, shall incorporate such substitute provision in this Agreement.
[REST OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF,
the parties hereto have caused this Joint Venture Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
NEW ENGLAND WOB, LLC |
|
ATTITUDE BEER HOLDING CO. |
|
|
|
/s/ Glenn E. Straub |
|
/s/ Roy Warren |
By: Glenn E. Straub |
|
By: Roy Warren |
Its: Manager |
|
Its: President |
|
|
|
ATTITUDE DRINKS, INC. |
|
GLENN E. STRAUB |
|
|
|
/s/ Roy Warren |
|
/s/Glenn E. Straub |
By: Roy Warren |
|
|
Its: President |
|
|
|
|
|
JAMES D. CECIL |
|
|
|
|
|
/s/James D. Cecil |
|
|
CONSENT
World of Beer Franchising,
Inc., hereby consents to the above Joint Venture Agreement between New England WOB, LLC and Attitude Beer Holding Co.
WORLD OF BEER FRANCHISING, INC. |
|
|
|
/s/ Benjamin P. Novello |
|
By: Benjamin P. Novello |
|
Its: Chief Development Officer |
|
EXHIBIT A
OPTION AGREEMENT
This OPTION AGREEMENT
is being entered into as of December 24, 2014, between New England WOB, LLC (“NEWOB”) , Attitude Beer Holding Co. (“ABH”),
Attitude Drinks, Inc. (“Attitude”), Glenn E. Straub (“Straub”), and James D. Cecil (“Cecil”),
and Scott McCurdy (“McCurdy” and together with Straub and Cecil the “Current Members”)(each a “Party,”
collectively the “Parties”).
WHEREAS, NEWOB has
entered into an Area Development Agreement (the “ADA”) with World of Beer Franchising, Inc. (“Franchisor”);
WHEREAS, pursuant to
the ADA, NEWOB developed a WOB Franchise in Stamford, Connecticut (the “Stamford Location”) and assigned its rights
to the Stamford Location to Stamford WOB, LLC (“Stamford WOB”). Stamford WOB’s members are the Current Members.
WHEREAS, the Current
Members and NEWOB, desire to grant ABH an option to participate in Stamford WOB on the terms set forth herein.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Parties agree as follows:
1. The
Current Members and NEWOB hereby grants ABH the option to obtain 51% membership interest in Stamford WOB for a contribution to
Stamford WOB of $1,400,000.00 in cash and a $600,000 note from Attitude (the “Stamford Option”). The note shall be
substantially in the form annexed hereto as Exhibit 1 (the “Note”). The Stamford Option shall be exercisable until
4:59 PM ET on the Second Anniversary of this Agreement.
2. ABH
shall exercise the Stamford Option by sending written notice of exercise to NEWOB and the Current Members. Upon ABH notifying NEWOB
and the Current Members of its election to exercise the Stamford Option, Current Members will transfer their membership interests
in Stamford WOB to NEWOB and NEWOB will enter into an amended and restated operating agreement in the form annexed hereto as Exhibit
2 (the “Stamford Operating Agreement”). At the closing, NEWOB shall have Stamford admitted as a 51% member of Stamford
WOB and ABH shall pay $1,400,000.00 in cash and tender the Note.
3. The
Current Members and NEWOB agree not to amend the Stamford Operating Agreement without the consent of ABH prior to the expiration
of the Stamford Option.
4. The
Current Members and NEWOB agree not to admit new members to Stamford WOB without the consent of ABH prior to the expiration of
the Stamford Option.
5. Except
as described in Section 6 below, the Current Members and NEWOB agree not to sell their interest in Stamford WOB without the consent
of ABH prior to the expiration of the Stamford Option.
6. This
option shall become null and void if NEWOB sells Stamford WOB to World Of Beer Franchising, Inc. before the option is exercised,
provided that ABH will receive fifty one percent (51%) of the economic benefits from such sale in excess of $2,000,000. For example,
if Stamford WOB is sold for $2,500,000, ABH will receive $250,000 from such sale.
[REST OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF,
the parties hereto have caused this Option Agreement to be duly executed by their respective authorized signatories as of the date
first indicated above.
NEW ENGLAND WOB, LLC |
|
ATTITUDE BEER HOLDING CO. |
|
|
|
/s/ Glenn E. Straub |
|
/s/ Roy Warren |
By: Glenn E. Straub |
|
By: Roy Warren |
Its: Manager |
|
Its: President |
|
|
|
ATTITUDE DRINKS, INC. |
|
GLENN E. STRAUB |
|
|
|
/s/ Roy Warren |
|
/s/ Glenn E. Straub |
By: Roy Warren |
|
|
Its: President |
|
|
|
|
|
JAMES D. CECIL |
|
SCOTT MCCURDY |
|
|
|
/s/ James D. Cecil |
|
/s/ Scott McCurdy |
CONSENT
World of Beer Franchising,
Inc., hereby consents to the above Option Agreement.
WORLD OF BEER FRANCHISING, INC. |
|
|
|
/s/ Benjamin P. Novello |
|
By: Benjamin P. Novello |
|
Its: Chief Development Officer |
|
EXHIBIT A - Exhibit
1
Intentionally not included as see Exhibit (10)(154)
EXHIBIT A - Exhibit
2
Intentionally not included
as no decision has been made as of this filing date about this option
EXHIBIT B
Intentionally not included as no decision has
been made as of this filing date about this option
EXHIBIT C
Intentionally not included as see Exhibit
(10)(155)
Schedule 1.4
Intentionally not included as no decision has been made as of this filing date about this option
Exhibit 10.159
EXHIBIT (10)(159) FORM OF SECURED CONVERTIBLE
NOTE-ATTITUDE BEER HOLDING CO.
NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS CONVERTIBLE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO BORROWER. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH
A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: December 24, 2014
Principal Amount: $[Requires Completion]
SECURED
CONVERTIBLE NOTE
DUE
December 24, 2015
THIS CONVERTIBLE NOTE
is one of a series of duly authorized and validly issued Notes of Attitude Beer Holding Co. a Delaware corporation, (the “Borrower”),
having its principal place of business at 712 US Highway 1, Suite 200, North Palm Beach, FL 33408, due December 24, 2015 (this
note, the “Note” and, collectively with the other notes of such series, the “Notes”).
FOR VALUE RECEIVED,
Borrower promises to pay to [Requires Completion], [Requires Completion] Fax: + [Requires Completion] or its registered assigns
(the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of [Requires Completion]
dollars and [Requires Completion] cents ($[Requires Completion]) on December 24, 2015 (the “Maturity Date”)
or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest, if any, to
the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof.
The Holder of this
Note has been granted a security interest in asset of Borrower.
This Note is subject
to the following additional provisions:
Section 1. Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
“Alternate
Consideration” shall have the meaning set forth in Section 5(e).
“Bankruptcy
Event” means any of the following events: (a) Borrower or any Subsidiary thereof commences a case or other
proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar law of any jurisdiction relating to Borrower or any Subsidiary thereof, (b) there is commenced
against Borrower or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after
commencement, (c) Borrower or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other
order approving any such case or proceeding is entered, (d) Borrower or any Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days
after such appointment, (e) Borrower or any Subsidiary thereof makes a general assignment for the benefit of creditors, (f)
Borrower or any Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts or (g) Borrower or any Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of
effecting any of the foregoing.
“Base
Conversion Price” shall have the meaning set forth in Section 5(b).
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.
“Buy-In”
shall have the meaning set forth in Section 4(c)(v).
“Change
of Control Transaction” means, other than by means of conversion or exercise of the Notes and the Securities issued
together with the Notes, the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of Borrower, by contract or otherwise) of in excess of 50% of
the voting securities of Borrower, (b) Borrower merges into or consolidates with any other Person, or any Person merges into or
consolidates with Borrower and, after giving effect to such transaction, the stockholders of Borrower immediately prior to such
transaction own less than 50% of the aggregate voting power of Borrower or the successor entity of such transaction, (c) Borrower
sells or transfers all or substantially all of its assets to another Person and the stockholders of Borrower immediately prior
to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction,
(d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which
is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by
those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors
was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution
by Borrower of an agreement to which Borrower is a party or by which it is bound, providing for any of the events set forth in
clauses (a) through (d) above.
“Closing
Price” means on any particular date (a) the last reported closing bid price per share of Common Stock on such date
on the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there is no such price on such
date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P.
at 4:15 p.m. (New York City time)), or (c) if the Common Stock is not then listed or quoted on a Trading Market and if prices
for the Common Stock are then reported in the “pink sheets” published by Pink OTC Markets, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Holder and reasonably acceptable to Borrower, the fees and expenses
of which shall be paid by Borrower.
“Conversion”
shall have the meaning ascribed to such term in Section 4.
“Conversion
Date” shall have the meaning set forth in Section 4(a).
“Conversion
Price” shall have the meaning set forth in Section 4(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the
terms hereof.
“Equity
Conditions” means, during the period in question, (a) Borrower shall have
duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable
Holder on or prior to the dates so requested or required, if any, (b) Borrower shall have paid all liquidated damages and other
amounts owing to the applicable Holder in respect of this Note and the other Transaction Documents, (c)(i) there is an
effective registration statement pursuant to which the Holders are permitted to utilize the prospectus thereunder to resell all
of the Underlying Shares (and Borrower believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable
future), or (ii) all of the Underlying Shares (and shares issuable in lieu of cash payments of interest) may be resold pursuant
to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel
to Borrower as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected
Holders, (d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents
are listed or quoted for trading on such Trading Market (and Borrower believes, in good faith, that trading of the Common Stock
on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized, but
unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable pursuant to the
Transaction Documents, (f) an Event of Default has not occurred, whether or not such Event of Default has been cured, (g) there
is no existing Event of Default and no existing event which, with the passage of time or the giving of notice, would constitute
an Event of Default, (h) the issuance of the shares in question to the applicable Holder would not exceed the Beneficial Ownership
Limitation, (i) there has been no public announcement of a pending or proposed Fundamental
Transaction or Change of Control Transaction that has not been consummated, and (j) the applicable Holder is not in possession
of any information provided by Borrower that constitutes, or may constitute, material non-public information.
“Event
of Default” shall have the meaning set forth in Section 8(a).
“Fundamental
Transaction” shall have the meaning set forth in Section 5(e).
“Interest
Payment Date” shall have the meaning set forth in Section 2(a).
“Lookback
Period” shall have meaning set forth in Section 6.
“Mandatory
Default Amount” means the sum of (a) the greater of (i) the outstanding principal amount of this Note divided by the
Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create an
Event of Default) or otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the
date the Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP, or
(ii) 115% of the outstanding principal amount of this Note and (b) all other amounts, costs, expenses and liquidated damages due
in respect of this Note.
“New
York Courts” shall have the meaning set forth in Section 9(d).
“Note
Register” shall have the meaning set forth in Section 2(c).
“Notice
of Conversion” shall have the meaning set forth in Section 4(a).
“Notice
of Redemption” shall have meaning set forth in Section 6.
“Optional
Redemption” shall have meaning set forth in Section 6.
“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless
of the number of instruments which may be issued to evidence such Notes.
“Other
Holders” means holders of Other Notes.
“Other
Notes” means Notes nearly identical to this Note issued to other Holders pursuant to the Purchase Agreement.
“Permitted
Indebtedness” means (x) any liabilities for borrowed money or amounts owed not in excess of $1,000 in the aggregate
(other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto) not affecting more than $1,000 in the aggregate, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of
any lease payments not in excess of $1,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company
nor any Subsidiary is in default with respect to any Indebtedness.
“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 Borrower) have
been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of Borrower’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of 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 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,
and (c) Liens incurred prior to the Closing Date in connection with Permitted Indebtedness under clauses (a), (b) thereunder,
and Liens incurred in connection with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured
by assets of Borrower or its Subsidiaries other than the assets so acquired or leased.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of December 24, 2014 among Borrower and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.
“Redemption
Amount” shall have meaning set forth in Section 6.
“Redemption
Period” shall have meaning set forth in Section 6.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).
“Successor
Entity” shall have the meaning set forth in Section 5(e).
“Threshold
Period” shall have the meaning set forth in Section 6(b).
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, the OTC Bulletin Board, the OTCQB, or the OTCQX (or any successors to any of the foregoing).
“Underlying
Shares” means all of the Conversion Shares and all of the Warrant Shares issuable upon exercise of the Warrants issued
pursuant to the Purchase Agreement.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is
not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the
OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for
the Common Stock are then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common
Stock on the first such facility (or a similar organization or agency succeeding to its functions of reporting prices), or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to Borrower, the fees
and expenses of which shall be paid by Borrower.
Section 2. Interest.
a) Interest
in Cash. Holders shall be entitled to receive, and Borrower shall pay, cumulative interest on the outstanding principal amount
of this Note compounded annually at the annual rate of 10% (all subject to increase as set forth in this Note) from the Original
Issue Date through the Maturity Date. Interest shall be payable on the Maturity Date (the “Interest Payment Date”)
(if any Interest Payment Date is not a Trading Day, the applicable payment shall be due on the next succeeding Trading Day) in
cash.
b) Payment
Grace Period. The Borrower shall not have any grace period to pay any monetary amounts due under this Note.
c) Conversion
Privileges. The Conversion Rights set forth in Section 4 shall remain in full force and effect immediately from the date hereof
and until the Note is paid in full regardless of the occurrence of an Event of Default. This Note shall be payable in full on
the Maturity Date, unless previously converted into Common Stock in accordance with Section 4 hereof.
d) Application
of Payments. Interest on this Note shall be calculated on the basis of a 360-day year and the actual number of days elapsed.
Payments made in connection with this Note shall be applied first to amounts due hereunder other than principal and interest,
thereafter to interest and finally to principal.
e) Pari
Passu. Except as otherwise set forth herein, all payments made on this Note and the Other Notes and all actions taken by the
Borrower with respect to this Note and the Other Notes, including but not limited to Mandatory Conversion, shall be made and taken
pari passu with respect to this Note and the Other Notes. Notwithstanding anything to the contrary contained herein or
in the Transaction Documents, it shall not be considered non-pari passu for a Holder or Other Holder to elect to receive interest
paid in shares of Common Stock or for the Borrower to actually pay interest in shares of Common Stock to such electing Holder
or Other Holder.
f) Manner
and Place of Payment. Principal and interest on this Note and other payments in connection with this Note shall be payable
at the Holder’s offices as designated above in lawful money of the United States of America in immediately available funds
without set-off, deduction or counterclaim. Upon assignment of the interest of Holder in this Note, Borrower shall instead make
its payment pursuant to the assignee’s instructions upon receipt of written notice thereof. Except as set forth herein,
this Note may not be prepaid or mandatorily converted without the consent of the Holder.
Section 3. Registration of Transfers and Exchanges.
a) Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth
in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
c) Reliance
on Note Register. Prior to due presentment for transfer to Borrower of this Note, Borrower and any agent of Borrower may treat
the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Note is overdue, and neither Borrower nor any such agent shall
be affected by notice to the contrary.
Section 4. Conversion.
a) Voluntary
Conversion. At any time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible,
in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the
conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to Borrower a
Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such
date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion
Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder
shall not be required to physically surrender this Note to Borrower unless the entire principal amount of this Note has been so
converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount
equal to the applicable conversion. The Holder and Borrower shall maintain records showing the principal amount(s) converted and
the date of such conversion(s). Borrower may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery
of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative
in the absence of manifest error. 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 may be less than the amount stated on the face hereof.
b) Conversion
Price. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be
either: (i) if the Company’s common stock is traded on a Trading Market, the conversion price shall be 50% of the lowest
bid price for the previous 50 trading days; (ii) if the Company’s common stock is traded on a Trading Market and there is
a DTC chill on the Company’s common stock, the conversion price shall be 60% of the lowest bid price for the previous 50
trading days; or (iii) if the Company’s common stock is not traded on a Trading Market it shall be $0.40, subject
to adjustment herein (the “Conversion Price”).
c) Mechanics
of Conversion.
i.
Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon
a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note
to be converted plus interest elected by the Holder to be converted by (y) the Conversion Price.
ii. Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), Borrower shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the
Conversion Shares which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective
Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase
Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note. On or after the earlier
of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, Borrower shall use its best efforts to
deliver any certificate or certificates required to be delivered by Borrower under this Section 4(c) electronically through the
Depository Trust Company or another established clearing corporation performing similar functions.
iii. Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to
Borrower at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event
Borrower shall promptly return to the Holder any original Note delivered to Borrower and the Holder shall promptly return to Borrower
the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.
iv. Obligation
Absolute; Partial Liquidated Damages. Borrower’s obligations to issue and deliver the Conversion Shares upon conversion
of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to Borrower or any violation or alleged violation of law by
the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of Borrower
to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall
not operate as a waiver by Borrower of any such action Borrower may have against the Holder. In the event the Holder of this Note
shall elect to convert any or all of the outstanding principal amount hereof, Borrower may not refuse conversion based on any
claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or
for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or
part of this Note shall have been sought and obtained, and Borrower posts a surety bond for the benefit of the Holder in the amount
of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect
until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder
to the extent it obtains judgment. In the absence of such injunction, Borrower shall issue Conversion Shares or, if applicable,
cash, upon a properly noticed conversion. If Borrower fails for any reason to deliver to the Holder such certificate or certificates
pursuant to Section 4(c)(ii) by the Share Delivery Date, Borrower shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day
on the fifth (5th) Trading Day after such liquidated damages being to accrue) for each Trading Day after such Share
Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s
right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for Borrower’s failure to deliver
Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it
hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise
of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.
v. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if Borrower fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder or Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then Borrower shall (A) pay in cash to the Holder (in addition
to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number
of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B)
at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of
the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares
of Common Stock that would have been issued if Borrower had timely complied with its delivery requirements under Section 4(c)(ii).
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence,
Borrower shall be required to pay the Holder $1,000. The Holder shall provide Borrower written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of Borrower, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver certificates
representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.
vi. Reservation
of Shares Issuable Upon Conversion. Borrower covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note as herein provided, free from
preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the
Notes), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth
in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion
of the then outstanding principal amount of this Note and interest which has accrued and would accrue on such principal amount,
assuming such principal amount was not converted through the Maturity Date. Borrower covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
vii. Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As
to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, Borrower shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.
viii. Transfer
Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without
charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificates, provided that, Borrower shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this
Note so converted and Borrower shall not be required to issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to Borrower the amount of such tax or shall have established to the satisfaction
of Borrower that such tax has been paid. Borrower shall pay all Transfer Agent fees required for same-day processing of any Notice
of Conversion.
d) Holder’s
Conversion Limitations. Borrower shall not effect any conversion of this Note, and a Holder shall not have the right to convert
any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion,
the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of
the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion
of the unexercised or unconverted portion of any other securities of Borrower subject to a limitation on conversion or exercise
analogous to the limitation contained herein (including, without limitation, any other Notes or the Warrants) beneficially owned
by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d),
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is
convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of
this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be
deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by
the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to Borrower each time
it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph
and Borrower shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as
to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following:
(i) Borrower’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public
announcement by Borrower, or (iii) a more recent written notice by Borrower or Borrower’s transfer agent setting forth the
number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, Borrower shall within two Trading
Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of Borrower, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion
of this Note held by the Holder. The Holder may decrease the Beneficial Ownership Limitation at any time and the Holder, upon
not less than 61 days’ prior notice to Borrower, may increase the Beneficial Ownership Limitation provisions of this Section
4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the
Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any such increase will
not be effective until the 61st day after such notice is delivered to Borrower. The Beneficial Ownership Limitation
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.
Section 5. Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents
(which, for avoidance of doubt, shall not include any shares of Common Stock issued by Borrower upon conversion of the Notes),
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification
of shares of the Common Stock, any shares of capital stock of Borrower, then the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of Borrower) outstanding immediately
before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination or re-classification.
b) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time Borrower grants, issues or
sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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 shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right
to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would
not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro
Rata Distributions. During such time as this Note is outstanding, if Borrower shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Note (without regard to any limitations on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation
in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time,
if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Fundamental
Transaction. If, at any time while this Note is outstanding, (i) Borrower, directly or indirectly, in one or more related
transactions effects any merger or consolidation of Borrower with or into another Person, (ii) Borrower, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by Borrower or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) Borrower, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, (v) Borrower, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or
other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this
Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) and Section
4(e) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of Borrower,
if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) and Section 4(e) on the conversion
of this Note). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of
Common Stock in such Fundamental Transaction, and Borrower shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following
such Fundamental Transaction. Borrower shall cause any successor entity in a Fundamental Transaction in which Borrower is not
the survivor (the “Successor Entity”) to assume in writing all of the obligations of Borrower under this Note
and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 5(d)
pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the
Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in
form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity
(or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without
regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares
of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior
to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of Borrower
and shall assume all of the obligations of Borrower under this Note and the other Transaction Documents with the same effect as
if such Successor Entity had been named as Borrower herein.
e) Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of Borrower) issued and outstanding.
f) Notice
to the Holder.
i. Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, Borrower shall
promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.
ii. Notice to Allow Conversion by Holder. If (A) Borrower shall declare a dividend (or any other distribution in
whatever form) on the Common Stock, (B) Borrower shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock, (C) Borrower shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of Borrower shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which Borrower is a party,
any sale or transfer of all or substantially all of the assets of Borrower, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) Borrower shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of Borrower, then, in each case, Borrower shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it
shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it
is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided
that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding Borrower or any of the Subsidiaries, Borrower shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the
20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may
otherwise be expressly set forth herein.
Section 6. Optional
Redemption. The Borrower will have the option of prepaying the outstanding Principal amount of this Note (“Optional
Redemption”), in whole or in part, by paying to the Holder a sum of money in cash equal to one hundred and fifty percent
(150%) of the Principal amount to be redeemed, together with accrued but unpaid interest thereon and any and all other sums due,
accrued or payable to the Holder arising under this Note through the Redemption Payment Date, as defined below (the “Redemption
Amount”). Borrower’s election to exercise its right to prepay must be by notice in writing and include proof of
funds to pay for the Optional Redemption (“Notice of Redemption”). The Notice of Redemption shall specify the
date for such Optional Redemption (the “Redemption Payment Date”), which date shall be a date certain not sooner
than twenty (20) Trading Days after the date of the Notice of Redemption (the “Redemption Period”). A Notice
of Redemption, if given, may be given on the first Trading Day following ten (10) consecutive Trading Days (the “Lookback
Period”) during which all of the Equity Conditions [until six months after the Original Issue Date, except for part
(c) and (i) of the definition of Equity Conditions] have been in effect. A Notice of Redemption shall not be effective with respect
to any portion of the Principal Amount for which the Holder has previously delivered an election to convert, or for conversions
initiated or made by the Holder during the Redemption Period. A Notice of Redemption may be given only in connection with an amount
of Common Stock that would not exceed the Beneficial Ownership Limitation. On the Redemption Payment Date, the Redemption Amount,
less any portion of the Redemption Amount against which the Holder has permissibly exercised its conversion rights, shall be paid
in good funds to the Holder. In the event the Borrower fails to pay the Redemption Amount on the Redemption Payment Date as set
forth herein, then (i) such Notice of Redemption will be null and void, (ii) Borrower will have no right to deliver another Notice
of Redemption, and (iii) Borrower’s failure may be deemed by Holder to be a non-curable Event of Default. In the event the
Equity Conditions cease to be in effect prior to the payment of the Redemption Amount, the Holder may cancel the Notice of Redemption.
Section 7. Negative
Covenants. As long as any portion of this Note remains outstanding, unless the holders of at least 51% in principal amount
of the then outstanding Notes shall have otherwise given prior written consent, Borrower shall not, and shall not permit any of
the Subsidiaries to, directly or indirectly:
a) other
than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
of any kind, including, but not limited to, a guarantee, 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;
b) other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, 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;
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 other than as to the Conversion Shares or Warrant Shares as permitted or required under the
Transaction Documents;
e) redeem,
defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness
(other than the Notes if on a pro-rata basis), whether by way of payment in respect of principal of (or premium, if any) or interest
on, such Indebtedness;
f) pay
cash dividends or distributions on any equity securities of Borrower;
g) enter
into any transaction with any Affiliate of 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 Borrower (even if less than a quorum otherwise required for board approval);
h) enter
into any agreement with respect to any of the foregoing.
Section 8.
Events of Default.
a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event
and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or
order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any
default in the payment of (A) the principal amount of any Note or (B) liquidated damages and other amounts owing to a Holder on
any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration
or otherwise) which default, solely in the case of a default under clause (B) above, is not cured within 3 Trading Days after
Borrower has become or should have become aware of such default;
ii. Borrower
shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by Borrower of its
obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (x) below) which
failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such failure sent
by the Holder or by any Other Holder to Borrower and (B) 10 Trading Days after Borrower has become or should have become aware
of such failure;
iii. a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents, including but not limited to failure to strictly comply with the provisions
of the Warrants, or (B) any other material agreement, lease, document or instrument to which Borrower or any Subsidiary is obligated
(and not covered by clause (vi) below);
iv. any
representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to the Holder or any Other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;
v. Borrower
or any Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
vi. Borrower
or any Subsidiary shall default on any of its obligations under 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 that (a) involves an obligation greater than
$50,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. Borrower
shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or in
excess of 30% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute
a Change of Control Transaction);
viii. Borrower
shall fail for any reason to deliver certificates to a Holder prior to the fifth Trading Day after a Conversion Date pursuant
to Section 4(c) or Borrower shall provide at any time notice to the Holder, including by way of public announcement, of Borrower’s
intention to not honor requests for conversions of any Notes in accordance with the terms hereof;
ix. any Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 or 2.5 of the Purchase Agreement;
x. any monetary judgment, writ or similar final process shall be entered or filed against Borrower, any subsidiary or any of
their respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain
unvacated, unbonded or unstayed for a period of 90 calendar days;
xi. any
dissolution, liquidation or winding up by Borrower or a material Subsidiary of a substantial portion of their business;
xii. cessation
of operations by Borrower or a material Subsidiary;
xiii. The
failure by Borrower or any material Subsidiary to maintain any material intellectual property rights, personal, real property,
equipment, leases or other assets which are necessary to conduct its business (whether now or in the future) and such breach is
not cured with twenty (20) days after written notice to the Borrower from the Holder;
xiv. If
the Common Stock ever is listed on a Trading Market, an event resulting in the Common Stock no longer being listed or quoted on
a Trading Market, or notification from a Trading Market that the Borrower is not in compliance with the conditions for such continued
quotation and such non-compliance continues for twenty (20) days following such notification;
xv. If
the Common Stock ever is listed on a Trading Market, a Commission or judicial stop trade order or suspension from its Principal
Trading Market;
xvi. the
restatement after the date hereof of any financial statements filed by the Borrower or Attitude Drinks, Inc. with the Commission
for any date or period from two years prior to the Original Issue Date and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statements, have constituted a Material Adverse Effect. For
the avoidance of doubt, any restatement related to new accounting pronouncements shall not constitute a default under this Section;
xvii. the
Borrower effectuates a reverse split of its Common Stock without ten (10) days prior written notice to the Holder;
xviii. a
failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms
of this Note or any other Transaction Document;
xix. a
default by the Borrower of a material term, covenant, warranty or undertaking of any other agreement to which the Borrower and
Holder are parties, or the occurrence of an event of default under any such other agreement to which Borrower and Holder are parties
which is not cured after any required notice and/or cure period;
xx. the
occurrence of an Event of Default under any Other Note;
xxi. any
material provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof)
cease to be valid and binding on or enforceable against the Borrower, or the validity or enforceability thereof shall be contested
by Borrower, or a proceeding shall be commenced by Borrower or any governmental authority having jurisdiction over Borrower or
Holder, seeking to establish the invalidity or unenforceability thereof, or Borrower shall deny in writing that it has any liability
or obligation purported to be created under any Transaction Document; or
xxii any
judgment or judgments against Attitude Drinks Inc. in the aggregate amount of $150,000.
b) Remedies
Upon Event of Default, Fundamental Transaction and Change of Control Transaction. If any Event of Default or a Fundamental
Transaction or a Change of Control Transaction occurs, the outstanding principal amount of this Note, liquidated damages and other
amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due
and payable in cash at the Mandatory Default Amount. Commencing on the Maturity Date and also five (5) days after the occurrence
of any Event of Default interest on this Note shall accrue at an interest rate equal to the lesser of 15% per annum or the maximum
rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender
this Note to or as directed by Borrower. In connection with such acceleration described herein, the Holder need not provide, and
Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it
under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the
Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to
this Section 8(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent
thereon.
Section 9. Security
Interest/Waiver of Automatic Stay. This Note is secured by a security interest granted to the Holder
pursuant to a Security Agreement, as delivered by Borrower to Holder. The Borrower acknowledges and agrees that should a proceeding
under any bankruptcy or insolvency law be commenced by or against the Borrower or a Subsidiary, or if any of the Collateral (as
defined in the Security Agreement) should become the subject of any bankruptcy or insolvency proceeding, then the Holder should
be entitled to, among other relief to which the Holder may be entitled under the Transaction Documents and any other agreement
to which the Borrower or a Subsidiary and Holder are parties (collectively, “Loan Documents”) and/or applicable
law, an order from the court granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the
Holder to exercise all of its rights and remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER EXPRESSLY
WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND
AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT
LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO
ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The Borrower hereby consents to any motion
for relief from stay that may be filed by the Holder in any bankruptcy or insolvency proceeding initiated by or against the Borrower
and, further, agrees not to file any opposition to any motion for relief from stay filed by the Holder, The Borrower represents,
acknowledges and agrees that this provision is a specific and material aspect of the Loan Documents, and that the Holder would
not agree to the terms of the loan Documents if this waiver were not a part of this Note. The Borrower further represents, acknowledges
and agrees that is waiver is knowingly, intelligently and voluntarily made, that neither the Holder nor any person acting on behalf
of the Holder has made any representations to induce this waiver, that the Borrower has been represented (or has had the opportunity
to by represented) in the signing of this Note and the Loan Documents and in the making of this waiver by independent legal counsel
selected by the Borrower and that the Borrower has discussed this waiver with counsel.
Section 10. Miscellaneous.
a) 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: (i) if to Borrower, to: c/o Attitude Drinks Inc., 712 US Highway 1, Suite 200,
North Palm Beach, FL 33408, Attn: Roy Warren, CEO and President, telecopier: (800) 799–5053, and (ii) if to the Holder,
to: the address and fax number indicated on the front page of this Note, with an additional copy by fax only to (which shall not
constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.
b) Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of Borrower,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of Borrower.
This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.
c) Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to Borrower.
d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding 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 Note 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this
Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding. This
Note shall be deemed an unconditional obligation of Borrower for the payment of money and, without limitation to any other remedies
of Holder, may be enforced against Borrower by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213
or any similar rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any other
document or agreement to which Holder and Borrower are parties or which Borrower delivered to Holder, which may be convenient
or necessary to determine Holder’s rights hereunder or Borrower’s obligations to Holder are deemed a part of this
Note, whether or not such other document or agreement was delivered together herewith or was executed apart from this Note.
e) Waiver.
Any waiver by Borrower or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of this Note. The failure of Borrower or the Holder
to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion.
Any waiver by Borrower or the Holder must be in writing.
f) 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.
g) Usury.
If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. 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 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 Note, and
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 impede 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.
h) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
i) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit
or affect any of the provisions hereof.
j) Amendment.
Unless otherwise provided for hereunder, this Note may not be modified or amended or the provisions hereof waived without the
written consent of Borrower and the Holder.
k) Facsimile
Signature. In the event that the Borrower’s signature is delivered by facsimile transmission, PDF, electronic signature
or other similar electronic means, such signature shall create a valid and binding obligation of the Borrower with the same force
and effect as if such signature page were an original thereof.
*********************
(Signature Pages Follow)
IN WITNESS WHEREOF, Borrower has
caused this Note to be signed in its name by an authorized officer as of the 24 day of December, 2014.
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Attitude Beer Holding Co. |
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By: |
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Name: |
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Title: |
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WITNESS: |
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ANNEX A
NOTICE OF CONVERSION
The undersigned hereby
elects to convert principal under the Convertible Note due December 24, 2014 of Attitude Beer Holding Co., a Delaware corporation
(the “Company”), into shares of common stock (the “Common Stock”), of Borrower according
to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by Borrower in accordance therewith. No fee will be charged to the holder for
any conversion, except for such transfer taxes, if any.
By the delivery of
this Notice of Conversion the undersigned represents and warrants to Borrower that its ownership of the Common Stock does not
exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.
Conversion calculations:
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Date to Effect Conversion:
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Principal Amount of Note to be Converted:
$__________________ |
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Number of shares of Common Stock to be
issued: ______________ |
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Signature: _________________________________________ |
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Name: ____________________________________________ |
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Address for Delivery of Common Stock
Certificates: __________ |
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Or |
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DWAC Instructions: _________________________________ |
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Broker No:_____________ |
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Account No: _______________ |
Exhibit 10.160
EXHIBIT (10)(160)
ESCROW AGREEMENT
This Agreement is dated as of the
24th day of December, 2014 among Attitude Beer Holding Co., a Delaware corporation (the “Company”), the
parties identified on Schedule A hereto (each a “Subscriber”, and collectively “Subscribers”), and Grushko
& Mittman, P.C. (the “Escrow Agent”):
WITNESSETH:
WHEREAS, the Company
and Subscribers have entered into Securities Purchase Agreement calling for the sale by the Company to the Subscribers of Convertible
Notes and Warrants for an aggregate Subscription Amount of $337,250; and
WHEREAS, the parties
hereto require the Company to deliver the Notes and Warrants against payment therefor, with such Notes, Warrants and the Escrowed
Funds to be delivered to the Escrow Agent to be held in escrow and released by the Escrow Agent in accordance with the terms and
conditions of this Agreement; and
WHEREAS, the Escrow
Agent is willing to serve as escrow agent pursuant to the terms and conditions of this Agreement;
NOW THEREFORE, the
parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the Securities Purchase Agreement shall have the meanings
given to such terms in the Securities Purchase Agreement. Whenever used in this Agreement, the following terms shall have the following
respective meanings:
§ “Agreement”
means this Agreement and all amendments made hereto and thereto by written agreement between the parties;
§ “Closing
Date” shall have the meaning set forth in Section 1.1 of the Securities Purchase Agreement;
§ “Escrowed
Payment” means an aggregate cash payment of $337,250;
§ “Legal
Opinion” means the original signed legal opinion referred to in the Securities Purchase Agreement;
§ “Legal
Fees” shall have the meaning set forth in the Securities Purchase Agreement;
§ “Notes”
means the convertible notes due December 24, 2015, in the form of Exhibit A to the Securities Purchase Agreement;
§ “Securities
Purchase Agreement” means the Securities Purchase Agreement (and the exhibits thereto) entered into or to be entered
into by the parties in reference to the sale and purchase of Notes and Warrants;
§ “Security
Agreement” shall have the meaning set forth in the Securities Purchase Agreement;
§ “Subscription
Amount” shall have the meaning set forth in Section 1.1 of the Securities Purchase Agreement;
· “Warrants”
shall have the meaning set forth in Section 1.1 of the Securities Purchase Agreement;
§ Collectively,
the Company executed Securities Purchase Agreement, Notes, Warrants, Security Agreement and Legal Opinion are referred to as “Company
Documents”; and
· Collectively,
the Escrowed Payment, and the Subscriber executed Securities Purchase Agreement and Security Agreement are referred to as “Subscriber
Documents”.
1.2. Entire
Agreement. This Agreement along with the Company Documents and the Subscriber Documents constitute the entire agreement between
the parties hereto pertaining to the Company Documents and Subscriber Documents and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. There are no warranties, representations and other agreements
made by the parties in connection with the subject matter hereof except as specifically set forth in this Agreement, the Company
Documents and the Subscriber Documents.
1.3. Extended
Meanings. In this Agreement words importing the singular number include the plural and vice versa; words importing the masculine
gender include the feminine and neuter genders. The word “person” includes an individual, body corporate, partnership,
trustee or trust or unincorporated association, executor, administrator or legal representative.
1.4. Waivers
and Amendments. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions
hereof may be waived, only by a written instrument signed by all parties, or, in the case of a waiver, by the party waiving compliance.
Except as expressly stated herein, no delay on the part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude
any other or future exercise of any other right, power or privilege hereunder.
1.5. Headings.
The division of this Agreement into articles, sections, subsections and paragraphs and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of this Agreement.
1.6. Law
Governing this Agreement. This Agreement 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 Agreement shall be brought only in the state courts of New York or in the federal courts located in the state
of New York. Both parties and the individuals executing this Agreement and other agreements on behalf of the Company agree to submit
to the jurisdiction of such courts and waive trial by jury. The prevailing party (which shall be the party which receives an award
most closely resembling the remedy or action sought) shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Agreement 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.
1.7. Specific
Enforcement, Consent to Jurisdiction. The Company and Subscriber acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an injuction or injunctions to prevent or cure breaches
of the provisions of this Agreement and to enforce specifically the terms and provisions hereof or thereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity. Subject to Section 1.6 hereof, each of the Company and
Subscriber hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Nothing in this Section shall affect or limit any right to serve process in
any other manner permitted by law.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Company
Deliveries. On or about the date hereof, the Company shall deliver to the Escrow Agent the Company Documents.
2.2. Subscriber
Deliveries. On or before the Closing Date, each Subscriber shall deliver to the Escrow Agent such Subscriber’s portion
of the Purchase Price and the executed Securities Purchase Agreement. The Escrowed Payment will be delivered pursuant to the following
wire transfer instructions, unless Escrow Agent approves a different method of delivery:
Citibank, N.A.
1155 6th Avenue
New York, NY 10036
ABA Number: 0210-00089
For Credit to: Grushko & Mittman,
IOLA Trust Account
Account Number: 9997242837
2.3. Intention
to Create Escrow Over Company Documents and Subscriber Documents. The Subscriber and Company intend that the Company Documents
and Subscriber Documents shall be held in escrow by the Escrow Agent pursuant to this Agreement for their benefit as set forth
herein.
2.4. Escrow
Agent to Deliver Company Documents and Subscriber Documents. The Escrow Agent shall hold and release the Company Documents
and Subscriber Documents only in accordance with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND SUBSCRIBER
DOCUMENTS
3.1. Release
of Escrow. Subject to the provisions of Section 4.2, the Escrow Agent shall release the Company Documents and Subscriber Documents
as follows:
(a) On
the Closing Date, the Escrow Agent will simultaneously release the Company Documents to the Subscribers and release the Subscriber
Documents to the Company, except that the Legal Fees will be released directly to the Subscribers’ attorneys. The Escrow
Agent may request any written representations, certifications and documents in Escrow Agent’s absolute discretion before
releasing any funds from escrow.
(b) All
funds to be delivered to the Company shall be delivered pursuant to the wire instructions to be provided in writing by the Company
to the Escrow Agent.
(c) Notwithstanding
the above, upon receipt by the Escrow Agent of joint written instructions (“Joint Instructions”) signed by the Company
and the Subscriber, it shall deliver the Company Documents and Subscriber Documents in accordance with the terms of the Joint Instructions.
(d) Notwithstanding
the above, upon receipt by the Escrow Agent of a final and non-appealable judgment, order, decree or award of a court of competent
jurisdiction directing deliver og the Subscriber Documents, Company Documents or any portion thereof (a “Court Order”),
the Escrow Agent shall deliver the Company Documents and Subscriber Documents or portion thereof in accordance with the Court Order.
Any Court Order shall be accompanied by an opinion of counsel for the party presenting the Court Order to the Escrow Agent (which
opinion shall be satisfactory to the Escrow Agent) to the effect that the court issuing the Court Order has competent jurisdiction
and that the Court Order is final and non-appealable.
3.2. The
Closing may take place on or before December 24, 2014. After December 24, 2014, the Escrow Agent will promptly return Company Documents
to the Company and return the corresponding Subscribers Documents to the Subscribers in connection with which a Closing has not
occurred.
3.3. Acknowledgement
of Company and Subscriber; Disputes. The Company and the Subscriber acknowledge that the only terms and conditions upon which
the Company Documents and Subscriber Documents are to be released are set forth in Sections 3 and 4 of this Agreement. The Company
and the Subscriber reaffirm their agreement to abide by the terms and conditions of this Agreement with respect to the release
of the Company Documents and Subscriber Documents. Any dispute with respect to the release of the Company Documents and Subscriber
Documents shall be resolved pursuant to Section 4.2 or by agreement between the Company and Subscriber.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties
and Responsibilities of the Escrow Agent. The Escrow Agent's duties and responsibilities shall be subject to the following
terms and conditions:
(a) The
Subscriber and Company acknowledge and agree that the Escrow Agent (i) shall not be responsible for or bound by, and shall not
be required to inquire into whether either the Subscriber or Company is entitled to receipt of the Company Documents and Subscriber
Documents pursuant to, any other agreement or otherwise; (ii) shall be obligated only for the performance of such duties as are
specifically assumed by the Escrow Agent pursuant to this Agreement; (iii) may rely on and shall be protected in acting or refraining
from acting upon any written notice, instruction, instrument, statement, request or document furnished to it hereunder and believed
by the Escrow Agent in good faith to be genuine and to have been signed or presented by the proper person or party, without being
required to determine the authenticity or correctness of any fact stated therein or the propriety or validity or the service thereof;
(iv) may assume that any person believed by the Escrow Agent in good faith to be authorized to give notice or make any statement
or execute any document in connection with the provisions hereof is so authorized; (v) shall not be under any duty to give the
property held by Escrow Agent hereunder any greater degree of care than Escrow Agent gives its own similar property; and (vi) may
consult counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and complete authorization and protection
in respect of any action taken, suffered or omitted by Escrow Agent hereunder in good faith and in accordance with the opinion
of such counsel.
(b) The
Subscriber and Company acknowledge that the Escrow Agent is acting solely as a stakeholder at their request and that the Escrow
Agent shall not be liable for any action taken by Escrow Agent in good faith and believed by Escrow Agent to be authorized or within
the rights or powers conferred upon Escrow Agent by this Agreement. The Subscriber and Company, jointly and severally, agree to
indemnify and hold harmless the Escrow Agent and any of Escrow Agent's partners, employees, agents and representatives for any
action taken or omitted to be taken by Escrow Agent or any of them hereunder, including the fees of outside counsel and other costs
and expenses of defending itself against any claim or liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as Escrow Agent under this Agreement. The Escrow Agent shall
owe a duty only to the Subscriber and Company under this Agreement and to no other person.
(c) The
Subscriber and Company jointly and severally agree to reimburse the Escrow Agent for outside counsel fees, to the extent authorized
hereunder and incurred in connection with the performance of its duties and responsibilities hereunder.
(d) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five (5) days prior written notice of resignation to the
Subscriber and the Company. Prior to the effective date of the resignation as specified in such notice, the Subscriber and Company
will issue to the Escrow Agent a Joint Instruction authorizing delivery of the Company Documents and Subscriber Documents to a
substitute Escrow Agent selected by the Subscriber and Company. If no successor Escrow Agent is named by the Subscriber and Company,
the Escrow Agent may apply to a court of competent jurisdiction in the State of New York for appointment of a successor Escrow
Agent, and to deposit the Company Documents and Subscriber Documents with the clerk of any such court.
(e) The
Escrow Agent does not have and will not have any interest in the Company Documents and Subscriber Documents, but is serving only
as escrow agent, having only possession thereof. The Escrow Agent shall not be liable for any loss resulting from the making or
retention of any investment in accordance with this Escrow Agreement.
(f) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(g) The
Escrow Agent shall be permitted to act as counsel for the Subscriber in any dispute as to the disposition of the Company Documents
and Subscriber Documents, or in any other dispute between the Subscriber and Company, whether or not the Escrow Agent is then holding
the Company Documents and Subscriber Documents and continues to act as the Escrow Agent hereunder.
(h) The
provisions of this Section 4.1 shall survive the resignation of the Escrow Agent or the termination of this Agreement.
4.2. Dispute
Resolution: Judgments. Resolution of disputes arising under this Agreement shall be subject to the following terms and conditions:
(a) If
any dispute shall arise with respect to the delivery, ownership, right of possession or disposition of the Company Documents and
Subscriber Documents, or if the Escrow Agent shall in good faith be uncertain as to its duties or rights hereunder, the Escrow
Agent shall be authorized, without liability to anyone, to (i) refrain from taking any action other than to continue to hold the
Company Documents and Subscriber Documents pending receipt of a Joint Instruction from the Subscriber and Company, or (ii) deposit
the Company Documents and Subscriber Documents with any court of competent jurisdiction in the State of New York, in which event
the Escrow Agent shall give written notice thereof to the Subscriber and the Company and shall thereupon be relieved and discharged
from all further obligations pursuant to this Agreement. The Escrow Agent may, but shall be under no duty to, institute or defend
any legal proceedings which relate to the Company Documents and Subscriber Documents. The Escrow Agent shall have the right to
retain counsel if it becomes involved in any disagreement, dispute or litigation on account of this Agreement or otherwise determines
that it is necessary to consult counsel.
(b) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court Order. In case the Escrow Agent obeys or complies
with a Court Order, the Escrow Agent shall not be liable to the Subscriber and Company or to any other person, firm, corporation
or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination.
This escrow shall terminate upon the release of all of the Company Documents and Subscriber Documents or at any time upon the agreement
in writing of the Subscriber and Company.
5.2. 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:
(a) If
to the Company, to:
Attitude Beer
Holding Co.
c/o Attitude
Drinks Inc.
712 US Highway
1, Suite 200
North Palm
Beach, FL 33408
Attn: Roy Warren,
CEO and President
Fax: (800)
799–5053
(b) If
to the Subscriber, to: the addresses and fax numbers listed on Schedule A hereto.
With a copy by fax
only to (which shall not constitute notice):
Grushko & Mittman, P.C.
515 Rockaway Avenue
Valley Stream, New York 11581
Attn: Barbara R. Mittman, Esq.
Fax: (212) 697-3575
(c) If
to the Escrow Agent, to:
Grushko & Mittman, P.C.
515 Rockaway Avenue
Valley Stream, New York 11581
Fax: (212) 697-3575
or to such other address as any of them
shall give to the others by notice made pursuant to this Section 5.2.
5.3. Interest.
The Escrowed Payment shall not be held in an interest bearing account nor will interest be payable in connection therewith. In
the event the Escrowed Payment is deposited in an interest bearing account, the Subscriber shall be entitled to receive any accrued
interest thereon, but only if the Escrow Agent receives from the Subscriber the Subscriber’s United States taxpayer identification
number and other requested information and forms.
5.4. Assignment;
Binding Agreement. Neither this Agreement nor any right or obligation hereunder shall be assignable by any party without the
prior written consent of the other parties hereto. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective legal representatives, successors and assigns.
5.5. Invalidity.
In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid,
illegal, or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that
all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by different signatories hereto on separate counterparts, each
of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.
This Agreement may be executed by facsimile transmission and delivered by facsimile transmission.
[REST OF THIS PAGE LEFT INTENTIONALLY BLANK]
5.7. Agreement.
Each of the undersigned states that he has read the foregoing Escrow Agreement and understands and agrees to it.
|
Attitude Beer Holding Co. |
|
the “Company” |
|
|
|
By: |
/s/ Roy Warren |
|
|
|
ESCROW AGENT: |
|
|
|
/s/ Grushko & Mittman, P.C. |
|
GRUSHKO & MITTMAN, P.C. |
|
|
|
SUBSCRIBERS: |
|
|
|
Name of Subscriber: |
|
|
|
/s/ Alpha Capital Anstalt |
|
|
|
/s/ Tarpon Bay Partners LLC |
SCHEDULE A TO ESCROW AGREEMENT
SUBSCRIBER AND ADDRESS | |
ESCROWED
PAYMENT | | |
NOTE
PRINCIPAL | |
Alpha Capital Anstalt | |
$ | 246,187.50 | | |
$ | 246,187.50 | |
Tarpon Bay Partners LLC | |
$ | 91,062.50 | | |
$ | 91,062.50 | |
Total | |
$ | 337,250.00 | | |
$ | 337,250.00 | |
Exhibit 10.161
EXHIBIT (10)(161) FORM OF COMMON STOCK
PURCHASE WARRANT-ATTITUDE BEER HOLDING CO.
NEITHER THIS SECURITY NOR THE SECURITIES
FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
FORM OF CLASS A COMMON STOCK PURCHASE
WARRANT
ATTITUDE
BEER HOLDING CO.
Warrant No: [REQUIRES COMPLETION] |
Issue Date: December 24, 2014 |
THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, [REQUIRES
COMPLETION] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations
on exercise and the conditions hereinafter set forth, and on or prior to the close of business on the seven (7) year anniversary
of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from
ATTITUDE BEER HOLDING CO., a Delaware corporation (the “Company”), a number shares equal to the number
of share the Holder could acquire upon the complete conversion of the Note issued to it by the Company on or about the Issue Date
(as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share
of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the “Purchase Agreement”), dated December 24, 2014, among the Company and the purchasers signatory
thereto.
Section 2. Exercise.
a) Exercise
of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as
it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company)
of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within two (2) Trading Days following the date
of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice
of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified
in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary (although
the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company), the Holder shall not be required
to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder
and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation
within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise Form within one (1) Trading Day of delivery of such notice. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.
b) Exercise
Price. The initial exercise price per share of the Common Stock under this Warrant shall equal the conversion price of the
Note, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless
Exercise. If at any time after the Initial Exercise Date, there is no effective Registration Statement registering, or no
current prospectus available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at the
Holder’s election, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the
VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;
(B) = the
Exercise Price of this Warrant, as adjusted hereunder; and
(X) =
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant
if such exercise were by means of a cash exercise rather than a cashless exercise.
Notwithstanding
anything herein to the contrary, on the Termination Date, unless the Holder notifies the Company otherwise, if there is no effective
Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then
this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d) Mechanics
of Exercise.
| i. | Delivery of Certificates Upon Exercise. Certificates
for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s
prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”)
if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the
issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless
exercise and Rule 144 is available, and otherwise by physical delivery to the address specified by the Holder in the Notice of
Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise,
(B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (including by cashless
exercise, if permitted) (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed
to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi)
prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares
after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss,
the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon
exercise of this Warrant the proportionate amount of $10 per Trading Day (increasing to $20 per Trading Day after the fifth (5th)
Trading Day) after the Warrant Share Delivery Date for each $1,000 of Exercise Price of Warrant Shares for which this Warrant
is exercised which are not timely delivered. The Company shall pay any payments incurred under this Section in immediately available
funds upon demand. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the
Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke
all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and
the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this
Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission
is given to the Company. |
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called
for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing
the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right, at any
time prior to issuance of such Warrant Shares, to rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant
Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation
was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant
Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In
with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation
of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon
request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
vi. Charges,
Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto
duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any
Notice of Exercise.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company
is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock issuable upon exercise of this Warrant. The Holder may decrease the Beneficial Ownership Limitation at any time
and the Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this
Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase will not be effective
until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or
any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or
to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in
this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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 shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right
to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would
not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro
Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(c)), then in each such
case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed
for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments
shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed
or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the record date mentioned above.
d) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more
related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by
the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or
property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50%
of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 2(e) on the exercise of this Warrant) the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a
holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such
exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following
such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company
under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to
written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with
an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the
relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value
of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory
in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under
this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the
Company herein
e) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of
Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, to the extent that such information constitutes material non-public information
(as determined in good faith by the Company) the Company shall follow the procedure described in Section 13 of the Subscription
Agreement and shall deliver to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least
20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or
any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in
such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer
of Warrant.
a) Transferability.
Subject to compliance with any applicable securities laws and the provisions of the Purchase Agreement, this Warrant and all rights
hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially
in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified
in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised
by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial
issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case
of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding
Trading Day.
d) Authorized
Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued
upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by
this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue).
Except and
to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, or unless exercised
in a cashless exercise when Rule 144 is available, and the Holder does not utilize cashless exercise, will have restrictions upon
resale imposed by state and federal securities laws.
g) Non-waiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision
of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
h) Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Purchase Agreement.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holders
of not less than a majority of the outstanding Warrants issued pursuant to the Purchase Agreement.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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ATTITUDE BEER HOLDING CO. |
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By: |
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Name: Roy Warren |
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Title: President |
NOTICE OF EXERCISE
To: ATTITUDE
BEER HOLDING CO.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.
(2) Payment
shall take the form of (check applicable box):
¨
in lawful money of the United States; or
¨
[if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is
specified below:
(4) After
giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.
The Warrant Shares shall be delivered to
the following DWAC Account Number or by physical delivery of a certificate to:
[SIGNATURE
OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
ATTITUDE
BEER HOLDING CO.
FOR VALUE RECEIVED, [____]
all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
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Dated: ______________, _______ |
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Holder’s Signature: |
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Holder’s Address: |
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Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment
Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever,
and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing Warrant.
Exhibit 10.162
EXHIBIT (10)(162)
GUARANTY
1. Identification.
This Guaranty (the
“Guaranty”), dated as of December 24, 2014, is entered into by Attitude Drinks, Inc., a Delaware corporation
(“Guarantor”), for the benefit of the Collateral Agent identified below and the parties identified on Schedule
A hereto (each a “Lender” and collectively, the “Lenders”).
2. Recitals.
2.1 Guarantor
is the parent of Attitude Beer Holding Co., a Delaware corporation (“Subsidiary”). The Lenders have made and/or
are making loans to Subsidiary (the “Loans”). Guarantor will obtain substantial benefit from the proceeds of
the Loans.
2.2 The
Loans are and will be evidenced by certain Secured Convertible Promissory Notes (collectively, “Note” or the
“Notes”) issued by Subsidiary on, about or after the date of this Guaranty pursuant to those certain Securities
Purchase Agreements dated at or about the date hereof (“Securities Purchase Agreements”). The Notes issued on
the Closing Date are further described on Schedule A hereto and were and or will be executed by Subsidiary as “Borrower”
for the benefit of each Lender as the “Holder” thereof.
2.3 In
consideration of the Loans made and to be made by Lenders to Subsidiary and for other good and valuable consideration, and as security
for the performance by Subsidiary of its obligations under the Notes and as security for the repayment of the Loans and all other
sums due from Debtor to Lenders arising under the Notes (collectively, the “Obligations”), Guarantor, for good
and valuable consideration, receipt of which is acknowledged, has agreed to enter into this Guaranty.
2.4 The
Lenders have appointed Tarpon Bay Partners LLC as Collateral Agent pursuant to that certain Security Agreement dated at or about
the date of this Agreement (“Security Agreement”), among the Lenders and Collateral Agent.
2.5 Upper
case terms employed but not defined herein shall have the meanings ascribed to them in the Transaction Documents (as defined in
the Securities Purchase Agreement).
3. Guaranty.
3.1 Guaranty.
Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally with any other guarantor of the Obligations,
the punctual payment, performance and observance when due, whether at stated maturity, by acceleration or otherwise, of all of
the Obligations now or hereafter existing, whether for principal, interest (including, without limitation, all interest that accrues
after the commencement of any insolvency, bankruptcy or reorganization of Subsidiary, whether or not constituting an allowed claim
in such proceeding), fees, commissions, expense reimbursements, liquidated damages, indemnifications or otherwise arising under
the Notes, Security Agreement, or any other Transaction Document (as defined in the Securities Purchase Agreement) (such obligations,
to the extent not paid by Subsidiary being the “Guaranteed Obligations” and included in the definition of Obligations),
and agrees to pay any and all reasonable costs, fees and expenses (including reasonable counsel fees and expenses) incurred by
Collateral Agent and the Lenders in enforcing any rights under the Guaranty set forth herein. Without limiting the generality of
the foregoing, Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would
be owed by Subsidiary to Collateral Agent and the Lenders, but for the fact that they are unenforceable or not allowable due to
the existence of an insolvency, bankruptcy or reorganization involving Subsidiary.
3.2 Guaranty
Absolute. Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Notes,
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights
of Collateral Agent or the Lenders with respect thereto. The obligations of Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against Guarantor to enforce such obligations,
irrespective of whether any action is brought against Subsidiary or any other guarantor or whether Subsidiary or any other guarantor
is joined in any such action or actions. The liability of Guarantor under this Guaranty constitutes a primary obligation, and not
a contract of surety, and to the extent permitted by law, shall be irrevocable, absolute and unconditional irrespective of, and
Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:
(a) any
lack of validity of the Notes or any agreement or instrument relating thereto;
(b) any
change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from the Notes, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to Subsidiary or otherwise;
(c) any
taking, exchange, release, subordination or non-perfection of any Collateral, or any taking, release or amendment or waiver of
or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any
change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of Subsidiary;
or
(e) any
other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation
by Collateral Agent or the Lenders that might otherwise constitute a defense available to, or a discharge of, Subsidiary or any
other guarantor or surety.
This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by Collateral Agent, the Lenders or any other entity upon the insolvency, bankruptcy
or reorganization of the Subsidiary or otherwise (and whether as a result of any demand, settlement, litigation or otherwise),
all as though such payment had not been made.
3.3 Waiver.
Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that Collateral Agent or the Lenders exhaust any right or take any action against
any Borrower or any other person or entity or any Collateral. Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated herein and that the waiver set forth in this Section 3.3 is knowingly made in
contemplation of such benefits. Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty
is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.
3.4 Continuing
Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later
of the indefeasible cash or other payment in full of the Guaranteed Obligations , (b) be binding upon Guarantor, its successors
and assigns, and (c) inure to the benefit of and be enforceable by the Lenders and their successors, pledgees, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer
all or any portion of its rights and obligations under this Guaranty (including, without limitation, all or any portion of its
Notes owing to it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof
granted such Collateral Agent or Lender herein or otherwise.
3.5 Subrogation.
Guarantor will not exercise any rights that it may now or hereafter acquire against the Collateral Agent or any Lender or other
guarantor (if any) that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under
this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification,
whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation,
the right to take or receive from the Collateral Agent or any Lender or other guarantor (if any), directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless
and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been indefeasibly paid
in full.
3.6 Maximum
Obligations. Notwithstanding any provision herein contained to the contrary, Guarantor’s liability with respect to the
Obligations shall be limited to an amount not to exceed, as of any date of determination, the amount that could be claimed by Lenders
from Guarantor without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.
4. Miscellaneous.
4.1 Expenses.
Guarantor shall pay to the Lenders, on demand, the amount of any and all reasonable expenses, including, without limitation, reasonable
attorneys’ fees, reasonable legal expenses and reasonable brokers’ fees, which the Lenders may incur in connection
with exercise or enforcement of any the rights, remedies or powers of the Lenders hereunder or with respect to any or all of the
Obligations.
4.2 Waivers,
Amendment and Remedies. No course of dealing by the Lenders and no failure by the Lenders to exercise, or delay by the Lender
in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, and no single or partial exercise thereof
shall preclude any other or further exercise thereof or the exercise of any other right, remedy or power of the Lenders. No amendment,
modification or waiver of any provision of this Guaranty and no consent to any departure by Guarantor therefrom, shall, in any
event, be effective unless contained in a writing signed by the Guarantor and the Majority in Interest (as such term is defined
in the Security Agreement) or Lenders against whom such amendment, modification or waiver is sought, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given. The rights, remedies and powers
of the Lenders, not only hereunder, but also under any other Transaction Documents and under applicable law are cumulative, and
may be exercised by the Lenders from time to time in such order as the Lenders may elect.
4.3 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 (a) personally served, (b) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (c) delivered by a reputable overnight courier service with charges prepaid, or (d) 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 (i) 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, or the first Business Day
following such delivery (if delivered other than on a Business Day during normal business hours), (ii) on the first Business Day
following the date deposited with an overnight courier service with charges prepaid, or (iii) on the fifth Business Day following
the date of mailing pursuant to subpart (b) above, or upon actual receipt of such mailing, whichever shall first occur. The addresses
for such communications shall be:
To Guarantor, to: |
Attitude Drinks Inc., |
|
712 US Highway 1, Suite 200 |
|
North Palm Beach, FL 33408 |
|
Attn: Roy Warren, CEO and President |
|
Fax: (800) 799–5053 |
|
|
To the Collateral Agent: |
Tarpon Bay Partners LLC |
|
c/o Grushko & Mittman, P.C. |
|
515 Rockaway Avenue |
|
Valley Stream, New York 11581 |
|
Fax: (212) 697–3575 |
|
|
To Lenders: |
To the addresses and telecopier numbers set |
|
forth on Schedule A |
Any party may change its address by written
notice in accordance with this paragraph.
4.4 Term;
Binding Effect. This Guaranty shall (a) remain in full force and effect until payment and satisfaction in full of all of the
Guaranteed Obligations; (b) be binding upon Guarantor and its successors and permitted assigns; and (c) inure to the benefit of
the Lenders and their respective successors and assigns. All the rights and benefits granted by Guarantor to the Collateral Agent
and Lenders hereunder and other agreements and documents delivered in connection therewith are deemed granted to both the Collateral
Agent and Lenders. Upon the payment in full of the Guaranteed Obligations, (i) this Guaranty shall terminate and (ii) the Lenders
will, upon Guarantor’s request and at Guarantor’s expense, execute and deliver to Guarantor such documents as Guarantor
shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.
4.5 Captions.
The captions of Paragraphs, Articles and Sections in this Guaranty have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other significance whatsoever.
4.6 Governing
Law; Venue; Severability. This Guaranty shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts or choice of law. Any legal action or proceeding against Guarantor with respect
to this Guaranty may be brought in the courts of the State of New York or of the United States for the Southern District of New
York, and, by execution and delivery of this Guaranty, Guarantor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Guarantor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection
with this Guaranty brought in the aforesaid courts and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. If any provision
of this Guaranty, or the application thereof to any person or circumstance, is held invalid, such invalidity shall not affect any
other provisions which can be given effect without the invalid provision or application, and to this end the provisions hereof
shall be severable and the remaining, valid provisions shall remain of full force and effect. This Guaranty shall be deemed
an unconditional obligation of Guarantor for the payment of money and, without limitation to any other remedies of Lenders, may
be enforced against Guarantor by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar
rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any other document or agreement
to which Lenders and Guarantor are parties or which Guarantor delivered to Lenders, which may be convenient or necessary to determine
Lenders’ rights hereunder or Guarantor’s obligations to Lenders are deemed a part of this Guaranty, whether or not
such other document or agreement was delivered together herewith or was executed apart from this Guaranty. 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. Guarantor irrevocably appoints Subsidiary its
true and lawful agent for service of process upon whom all processes of law and notices may be served and given in the manner described
above; and such service and notice shall be deemed valid personal service and notice upon Guarantor with the same force and validity
as if served upon Guarantor.
4.7 Satisfaction
of Obligations. For all purposes of this Guaranty, the payment in full of the Obligations shall be conclusively deemed to have
occurred when the Obligations have been paid pursuant to the terms of the Notes and the Securities Purchase Agreements.
4.8 Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.
This Agreement may be executed by facsimile signature and delivered by electronic transmission.
4.9 Exchange.
Each Lender shall have the right to tender its Note to the Guarantor and receive from the Guarantor a note issued by the Guarantor
on the same terms as the notes currently issued by the Guarantor to the Lenders.
[THE BALANCE OF THIS
PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned
have executed and delivered this Guaranty, as of the date first written above.
“GUARANTOR”
Attitude Drinks, Inc.
By: |
/s/ Roy Warren |
|
|
By: Roy Warren |
|
|
Its: President |
|
This Guaranty Agreement may be signed
by facsimile signature and
delivered by confirmed facsimile transmission.
SCHEDULE A
SUBSCRIBER AND ADDRESS | |
NOTE
PRINCIPAL | |
Alpha Capital Anstalt Lettstrasse 32 9490 Vaduz Principality of Liechtenstein Fax: + 423 232 31 96 | |
$ | 246,187.50 | |
Tarpon Bay Partners LLC Executive Pavilion 90 Grove Street Ridgefield CT 06877 Fax: (203) 431– 8301 | |
$ | 91,062,.50 | |
Total | |
$ | 337,250.00 | |
Exhibit 10.163
EXHBIT (10)(163)
FORM OF SECURITY
AGREEMENT
This SECURITY AGREEMENT,
dated as of December 24, 2014 (this “Agreement”), is among Attitude Beer Holding Co., a Delaware corporation
(the “Company”), each Subsidiary of the Company which shall become a party to this Agreement by execution and
delivery of the form annexed hereto as Annex A and the Subsidiary Guaranty annexed thereto (each such Subsidiary, a “Guarantor”
and together with the Company, the “Debtors”), Tarpon Bay Partners LLC, as collateral agent (the “Collateral
Agent”) for and the holders of the Company’s Secured Convertible Notes due December 24, 2015, in the original aggregate
principal amount of up to $398,500 (collectively, the “Notes”) (collectively, the “Secured Parties”).
WITNESSETH:
WHEREAS, pursuant
to the Securities Purchase Agreement (as defined in the Notes), the Secured Parties have severally agreed to extend the loans to
the Company evidenced by the Notes;
WHEREAS, pursuant
to a certain Subsidiary Guaranty (“Guaranty”) to be dated as of the date of the Additional Debtor Joinder, forms
of which are annexed hereto as Annex A, the Guarantor agrees to guarantee and act as surety for payment of such Notes, and other
obligations of the Company;
WHEREAS, in order
to induce the Secured Parties to extend the loans evidenced by the Notes, each Debtor has agreed to execute and deliver to the
Collateral Agent this Agreement and to grant Collateral Agent, for the ratable benefit of the Secured Parties, a security interest
in certain property of such Debtor to secure the prompt payment, performance and discharge in full of all of the Debtors’
obligations under the Notes and Transaction Documents.
NOW, THEREFORE, in
consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used
but not otherwise defined in this Agreement that are defined in Article 8 or 9 of the UCC (such as “account,” “chattel
paper,” “commercial tort claim,” “deposit account,” “document,” “equipment,”
“fixtures,” “general intangibles,” “goods,” “instruments,” “inventory,”
“investment property,” “letter-of-credit rights,” “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 8 or 9 of the UCC, as applicable. Upper case terms shall have the
meanings attributed to them in the Securities Purchase Agreement.
(a) “Collateral”
means the collateral in which the Collateral Agent is granted a security interest by this Agreement and which shall include the
following personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming into existence,
wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products
and accounts thereof, including, without limitation, all proceeds from the disposition, sale or transfer of the Collateral and
of insurance covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities,
equity interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of,
or in exchange for, any or all of the Pledged Securities (as defined below):
(i) All
goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and
wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in
connection with any Debtor’s businesses and all improvements thereto; and (B) all inventory;
(ii) All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents (as defined herein), agreements related to the Pledged
Securities (as defined herein), licenses, distribution and other agreements, computer software (whether “off-the-shelf,”
licensed from any third party or developed by any Debtor), computer software development rights, leases, franchises, customer lists,
quality control procedures, grants and rights, goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, and income tax refunds;
(iii)
All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, raw materials, timber cut or to be cut, oil, gas, hydrocarbons, and minerals extracted or to be extracted, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit accounts);
(vii) All
investment property;
(viii) All
supporting obligations;
(ix) All
files, records, books of account, business papers, and computer programs; and
(x) the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.
Without limiting
the generality of the foregoing, the “Collateral” shall include all investment property and general intangibles
respecting ownership and/or other equity interests in Guarantor, including, without limitation, the shares of capital stock and
the other equity interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the terms
hereof), and any other shares of capital stock and/or other equity interests of any other direct or indirect Subsidiary of any
Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each
case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable
or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged
Securities, including, but not limited to, all dividends, interest and cash.
Notwithstanding the foregoing, nothing
herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void by operation
of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such applicable
law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however,
that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.
(b) “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all patents of the
United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications
for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof,
(iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service
marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country
or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under
the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals
or extensions of the foregoing, (vi) all licenses for any of the foregoing, (vii) any items included in the definition of Intellectual
Property Rights as defined in the Securities Purchase Agreement and not set forth above, and (viii) all causes of action for infringement
of the foregoing.
(c) “Majority
in Interest” means, at any time of determination, the holders of more than fifty percent (50%) (based on then-outstanding
principal amounts and accrued interest of Notes at the time of such determination) of the Notes.
(d) “Necessary
Endorsement” means undated stock powers endorsed in blank and other proper instruments of assignment duly executed and
such other instruments or documents as the Collateral Agent (as that term is defined below) may reasonably request.
(e) “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured Parties, including,
without limitation, all obligations under this Agreement, the Notes, the Guaranty and obligations under any other Transaction Document,
instrument, agreement or other document executed and/or delivered in connection herewith or therewith in each case, whether now
or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise
as such obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality
of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest on the Notes
and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtors
from time to time under or in connection with this Agreement, the Notes and any other Transaction Documents, instruments, agreements
or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited
to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such
amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving
any Debtor.
(f) “Organizational
Documents” means with respect to any Debtor, the documents by which such Debtor was organized (such as a certificate
of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates
of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of such Debtor
(such as bylaws, a partnership agreement or an operating, limited liability or members agreement).
(g) “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).
(h) “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that
defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed
in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions,
they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones
shall be controlling.
2. Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes
and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations,
each Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a security interest
in and to, a lien upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and
nature in and to, the Collateral (a “Security Interest” and, collectively, the “Security Interests”).
3. Delivery
of Certain Collateral. At any time at the request of the Collateral Agent, each Debtor shall deliver or cause to be delivered
to the Collateral Agent, any and all certificates and other instruments or documents representing any of the Collateral, in each
case, together with all Necessary Endorsements.
4. Representations,
Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure
schedules delivered to the Secured Parties and Collateral Agent concurrently herewith (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed a part hereof. As of the date hereof, each Debtor represents and warrants to the Secured
Parties as follows and, until the repayment in full of the Obligations, covenants and agrees with, the Secured Parties as follows:
(a) Each
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement
and the filings contemplated herein have been duly authorized by all necessary action on the part of such Debtor and no further
action is required by such Debtor. This Agreement, when executed and delivered, will constitute the legal, valid and binding obligation
of each Debtor, enforceable against each Debtor in accordance with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies
of creditors and by general principles of equity.
(b) The
Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property or on the Collateral except
for Permitted Liens (as defined in the Securities Purchase Agreement), which are identified on Schedule B hereto. Except
as disclosed on Schedule A and except for Collateral to be held by the Collateral Agent, none of such Collateral is in the
possession of any consignee, bailee, warehouseman, agent or processor.
(c) Except
for Permitted Liens and except as set forth on Schedule B attached hereto, the Debtors are the sole owner of the Collateral
(except for non-exclusive licenses granted by any Debtor in the ordinary course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and are fully authorized to grant the Security Interests. Except as set forth on Schedule
B attached hereto, there is not on file in any governmental or regulatory authority, agency or recording office an effective
financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that will
be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral.
(d) No
written claim has been received that any Collateral or any Debtor’s use of any Collateral violates the rights of any third
party. There has been no adverse decision to any Debtor’s claim of ownership rights in or exclusive rights to use the Collateral
in any jurisdiction or to any Debtor’s right to keep and maintain such Collateral in full force and effect, and there is
no proceeding involving said rights pending or, to the best knowledge of any Debtor, threatened before any court, judicial body,
administrative or regulatory agency, arbitrator or other governmental authority.
(e) Each
Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and
records or tangible Collateral except in the ordinary course of sales unless it delivers to the Secured Parties at least 15 days
prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States)
and (ii) evidence that appropriate financing statements under the UCC and other necessary documents have been filed and recorded
and other steps have been taken to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected
and continuing perfected first priority lien in the Collateral, except as otherwise permitted hereby.
(f) This
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral, subject only to Permitted Liens
securing the payment and performance of the Obligations. Upon making the filings described in the immediately following paragraph,
all security interests created hereunder in any Collateral that may be perfected by filing Uniform Commercial Code financing statements
shall have been duly perfected. Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately
following paragraph, the recordation of the Intellectual Property Security Agreement (as defined below) with respect to copyrights
and copyright applications in the United States Copyright Office referred to in paragraph (m), the execution and delivery of deposit
account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of
the Debtors, and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create,
perfect or protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing
of said financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery
of said deposit account control agreements, no consent of any third parties and no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and
performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or
(iii) the enforcement of the rights of the Collateral Agent and the Secured Parties hereunder.
(g) Each
Debtor hereby authorizes the Collateral Agent to file one or more financing statements under the UCC, with respect to the Security
Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it and authorizes Collateral Agent
to take any other action in Collateral Agent’s absolute discretion to effectuate, memorialize and protect Secured Parties’
interest and rights under this Agreement.
(h) The
execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational
Documents of any Debtor or, to the knowledge of any Debtor, any judgment, decree, order or award of any court, governmental body
or arbitrator or any applicable law, rule or regulation applicable to any Debtor or (ii) to the knowledge of each Debtor, conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing any Debtor’s debt or otherwise) or other understanding to
which such Debtor is a party or by which any property or asset of any Debtor is bound or affected. If any, all required consents
(including, without limitation, from stockholders or creditors of any Debtor) necessary for any Debtor to enter into and perform
its obligations hereunder have been obtained.
(i) The
capital stock and other equity interests listed on Schedule H hereto (the “Pledged Securities”) represent
all of the capital stock and other equity interests of the Guarantor, and other Subsidiaries, if any, and represent all capital
stock and other equity interests owned, directly or indirectly, by the Company. All of the Pledged Securities, if applicable, are
validly issued, fully paid and nonassessable, and the Company is the legal and beneficial owner of the Pledged Securities, free
and clear of any lien, security interest or other encumbrance except for the security interests created by this Agreement and other
Permitted Liens.
(j) The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not
held in a securities account or by any financial intermediary.
(k) Except
for Permitted Liens, each Debtor shall at all times maintain the liens and Security Interests provided for hereunder as valid and
perfected first priority liens and security interests in the Collateral in favor of the Secured Parties until this Agreement and
the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby agrees to defend the same
against the claims of any and all persons and entities. Each Debtor shall safeguard and protect all Collateral for the account
of the Secured Parties. Upon request of the Collateral Agent, each Debtor will sign and deliver to the Collateral Agent on behalf
of the Secured Parties at any time or from time to time one or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Collateral Agent and will pay the cost of filing the same in all public offices wherever filing is, or is deemed
by the Collateral Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting
the generality of the foregoing, each Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and
the Security Interest hereunder, and each Debtor shall obtain and furnish to the Collateral Agent from time to time, upon demand,
such releases and/or subordinations of claims and liens (other than Permitted Liens) that may be required to maintain the priority
of the Security Interest hereunder.
(l) Other
than with respect to Permitted Liens, no Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose
of any of the Collateral (except for non-exclusive licenses granted by a Debtor in its ordinary course of business, sales of inventory
by a Debtor in its ordinary course of business and disposition of obsolete equipment) without the prior written consent of the
Collateral Agent. The foregoing notwithstanding, Debtor may replace noncash components of the Collateral with a cash or Cash Equivalent
deposit made at an institution subject to a cash account control agreement acceptable to the Secured Parties, provided the amount
of cash deposited subject to such agreement is not less than the highest amount of the Obligations that may be outstanding pursuant
to the Transaction Documents. Cash Equivalent shall mean U.S. government Treasury bills, bank certificates of deposit, bankers'
acceptances, corporate commercial paper and other money market instruments.
(m) Each
Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall
not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.
(n) Each
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral
hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established
reputation having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances
by other such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover
the full replacement cost thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and
the insurer issuing such policy to certify to the Collateral Agent, that (a) the Collateral Agent will be named as lender loss
payee and additional insured under each such insurance policy; and (b) if such insurance is proposed to be cancelled or materially
changed for any reason whatsoever, such insurer or the Company will promptly notify the Collateral Agent. In addition, the Collateral
Agent will have the right (but no obligation) at its election to remedy any default in the payment of premiums within thirty (30)
days of notice from the Company or the insurer of any such default. If no Event of Default (as defined in the Notes) exists and
if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each instance will
be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred to
the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be
payable to the applicable Debtor; provided , however , that payments received by any Debtor after an Event of Default
occurs and is continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Collateral
Agent on behalf of the Secured Parties and, if received by such Debtor, shall be held in trust for the Secured Parties and immediately
paid over to the Collateral Agent unless otherwise directed in writing by the Collateral Agent. Copies of such policies or the
related certificates, in each case, naming the Collateral Agent as lender loss payee and additional insured shall be delivered
to the Collateral Agent at least annually and at the time any new policy of insurance is issued.
(o) Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise Collateral Agent promptly, in sufficient detail, of any
material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the
value of the Collateral or on the Secured Parties’ security interest.
(p) Each
Debtor shall promptly execute and deliver to the Collateral Agent such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and assurances and take such further action as the Collateral
Agent may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’
security interest in the Collateral including, without limitation, one or more deposit account control agreements, and if applicable,
the execution and delivery of a separate security agreement with respect to each Debtor’s Intellectual Property (“Intellectual
Property Security Agreement”) in which the Secured Parties have been granted a security interest hereunder, all substantially
in forms reasonably acceptable to the Collateral Agent, which Intellectual Property Security Agreement, and other such documents
and agreements other than as stated therein, shall be subject to all of the terms and conditions hereof.
(q) Each
Debtor shall permit the Collateral Agent and its representatives and agents to inspect the Collateral during normal business hours
and upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by
the Collateral Agent from time to time.
(r) Each
Debtor shall take commercially reasonable steps necessary to diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the Collateral.
(s) Each
Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution
or other legal process levied against any Collateral and of any other information received by such Debtor that may materially affect
the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
(t) All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of any Debtor with respect to the Collateral
is accurate and complete in all material respects as of the date furnished and in light of the circumstances under which such statements
were made.
(u) Each
Debtor shall at all times preserve and keep in full force and effect its existence and good standing and any rights and franchises
material to its business.
(v) No
Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has
one), legal or corporate structure, or add any new fictitious name unless it provides at least 15 days prior written notice to
the Collateral Agent of such change and, at the time of such written notification, such Debtor provides any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(w) Except
in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale
or return, sale on approval, or other conditional terms of sale without the consent of the Collateral Agent which shall not be
unreasonably withheld.
(x) No
Debtor may relocate its chief executive office to a new location without providing 15 days prior written notification thereof to
the Secured Parties and provided that at the time of such written notification, such Debtor provides any financing statements necessary
to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(y) Each
Debtor was organized and remains organized solely under the laws of the state set forth next to such Debtor’s name in Schedule
D attached hereto, which Schedule D sets forth each Debtor’s organizational identification number or, if any Debtor
does not have one, states that one does not exist.
(z)
(i) The
actual name of each Debtor is the name set forth in Schedule D attached hereto;
(ii) no
Debtor has any trade names except as set forth on Schedule E attached hereto;
(iii) no
Debtor has used any name other than that stated in the preamble hereto or as set forth on Schedule E for the preceding
five years; and
(iv) no
entity has merged into any Debtor or been acquired by any Debtor within the past five years except as set forth on Schedule
E.
(aa) At
any time that any Collateral consists of instruments, certificated securities or other items that require or permit possession
by a secured party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral to the
Collateral Agent.
(bb) During
the continuance of an Event of Default, each Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders
and instructions of Collateral Agent regarding the Pledged Securities consistent with the terms of this Agreement without the further
consent of any Debtor as contemplated by Section 8-106 (or any successor section) of the UCC. Further, each Debtor agrees, solely
with respect to the Pledged Securities, that it shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity.
(cc) each
Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Collateral Agent or, if such delivery
is not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest
created by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall
cause the underlying chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section
thereto).
(dd) If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, the applicable Debtor shall at the request of the Collateral Agent cause such an account control
agreement, in form and substance in each case satisfactory to the Collateral Agent, to be entered into and delivered to the Collateral
Agent for the benefit of the Secured Parties.
(ee) To
the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
(ff) To
the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Collateral Agent
in notifying such third party of the Secured Parties’ security interest in such Collateral and shall use commercially reasonable
efforts to obtain an acknowledgement and agreement from such third party with respect to the Collateral, in form and substance
reasonably satisfactory to the Collateral Agent.
(gg) If
any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties in
a writing signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory
to the Collateral Agent.
(hh) Each
Debtor shall promptly provide written notice to the Collateral Agent of any and all accounts which arise out of contracts with
any governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in
such accounts and proceeds thereof, shall execute and deliver to the Collateral Agent an assignment of claims for such accounts
and cooperate with the Collateral Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims
Act or any similar federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests
in such accounts and proceeds thereof.
(ii) The
Company shall cause each subsidiary of the Company to promptly become a party hereto (an “Additional Debtor”),
by executing and delivering an Additional Debtor Joinder substantially in the form of Annex A attached hereto and comply
with the provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules
for, or supplements to all other Disclosure Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules
shall supersede, or supplements shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions
of counsel, authorizing resolutions, good standing certificates, incumbency certificates, organizational documents, financing statements
and other information and documentation as the Collateral Agent may reasonably request. Upon delivery of the foregoing to the Collateral
Agent, the Additional Debtor shall be and become a party to this Agreement with the same rights and obligations as the Debtors,
for all purposes hereof as fully and to the same extent as if it were an original signatory hereto and shall be deemed to have
made the representations, warranties and covenants set forth herein as of the date of execution and delivery of such Additional
Debtor Joinder (other than representations and warranties that specifically refer to an earlier date), and all references herein
to the “Debtors” shall be deemed to include each Additional Debtor.
(jj) Each
Debtor shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Notes.
(kk) Each
Debtor shall register the pledge of the applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each
issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Collateral Agent on
the books of such issuer. Further, except with respect to certificated securities delivered to the Collateral Agent, the applicable
Debtor shall deliver to Collateral Agent an acknowledgement of pledge (which, where appropriate, shall comply with the requirements
of the relevant UCC with respect to perfection by registration) signed by the issuer of the applicable Pledged Securities, which
acknowledgement shall confirm that: (a) it has registered the pledge on its books and records; and (b) at any time directed by
Collateral Agent during the continuation of an Event of Default, such issuer will transfer the record ownership of such Pledged
Securities into the name of any designee of the Collateral Agent, will take such steps as may be necessary to effect the transfer,
and will comply with all other instructions of the Collateral Agent regarding such Pledged Securities without the further consent
of the applicable Debtor.
(ll) In
the event that, upon an occurrence of an Event of Default, Collateral Agent shall sell all or any of the Pledged Securities to
another party or parties (herein called the “Transferee”) or shall purchase or retain all or any of the Pledged
Securities, each Debtor shall, to the extent applicable: (i) deliver to Collateral Agent or the Transferee, as the case may be,
the articles of incorporation, bylaws, minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements,
evidences of indebtedness, books of account, financial records and all other Organizational Documents and records of the Debtors
and their direct and indirect subsidiaries; (ii) use its commercially reasonable efforts to obtain resignations of the persons
then serving as officers and directors of the Debtors and their direct and indirect subsidiaries, if so requested; and (iii) use
its commercially reasonable efforts to obtain any approvals that are required by any governmental or regulatory body in order to
permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by Collateral
Agent and allow the Transferee or Collateral Agent to continue the business of the Debtors and their direct and indirect subsidiaries.
(mm) Without
limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect
to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be
duly recorded at the applicable office, and (iii) give the Collateral Agent notice whenever it acquires (whether absolutely or
by license) or creates any additional material Intellectual Property.
(nn) Each
Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments
and documents, and take all such further action as may be reasonably necessary or desirable, or as the Collateral Agent may reasonably
request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Collateral
Agent to exercise and enforce Collateral Agent’s rights and remedies hereunder and with respect to any Collateral or to otherwise
carry out the purposes of this Agreement.
(oo) Schedule
F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights,
and domain names owned by any of the Debtors as of the date hereof. Schedule F lists all material licenses in favor of any
Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks
of the Debtors have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.
(pp) Except
as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local
statute or rule in respect of such Collateral.
5. Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or
ownership interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership
interests upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock
or assets of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the
enforcement of any of Collateral Agent’s rights hereunder shall not be deemed to be the type of event which would trigger
such conversion rights notwithstanding any provisions in the Organizational Documents or agreements to which any Debtor is subject
or to which any Debtor is party.
6. Defaults.
The following events shall be “Events of Default”:
(a) The
occurrence of an Event of Default (as defined in the Notes) under the Notes;
(b) Any
representation or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made;
(c) The
failure by any Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to such Debtor of
notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such
time frame and such Debtor is using best efforts to cure same in a timely fashion; or
(d) If
any material provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having
jurisdiction over any Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any
Debtor has any liability or obligation purported to be created under this Agreement.
7. Duty
to Hold In Trust.
(a) During
the continuance of an Event of Default, each Debtor shall, upon receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interests, whether payable pursuant to the Notes or otherwise, or of any check, draft, note, trade acceptance
or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall forthwith
endorse and transfer any such sums or instruments, or both, to the Collateral Agent for distribution to the Secured Parties, pro-rata
in proportion to their respective then-currently outstanding principal amount of Notes for application to the satisfaction of the
Obligations (and if any Note is not outstanding, pro-rata in proportion to the initial purchases of the remaining Notes).
(b) If
any Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection with any reorganization of such Debtor or any of
its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in
exchange for, such Pledged Securities or otherwise), such Debtor agrees to (i) hold the same in trust on behalf of and for the
benefit of the Secured Parties; and (ii) to deliver any and all certificates or instruments evidencing the same to Collateral Agent
on or before the close of business on the fifth Business Day following the receipt thereof by such Debtor, in the exact form received
together with the Necessary Endorsements, to be held by Collateral Agent subject to the terms of this Agreement as Collateral.
8. Rights
and Remedies Upon Default.
(a) After
the occurrence and during the continuance of any Event of Default, the Collateral Agent shall have the right to exercise all of
the remedies conferred hereunder and under the Notes, and the Collateral Agent shall have all the rights and remedies of a secured
party under the UCC. Without limitation, the Collateral Agent, for the benefit of the Secured Parties, shall have the following
rights and powers:
(i) The
Collateral Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, so long as the
same can be accomplished without breach of the peace and otherwise in compliance with applicable law, and each Debtor shall assemble
the Collateral and make it available to the Collateral Agent at places which the Collateral Agent shall reasonably select, whether
at such Debtor’s premises or elsewhere, and make available to the Collateral Agent, without rent, all of such Debtor’s
respective premises and facilities for the purpose of the Collateral Agent taking possession of, removing or putting the Collateral
in saleable or disposable form.
(ii) Upon
notice to the Debtors by Collateral Agent, all rights of each Debtor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise
be authorized to receive and retain, shall cease. Upon such notice, Collateral Agent shall have the right to receive, for the benefit
of the Secured Parties, any interest, cash dividends or other payments on the Collateral and, at the option of Collateral Agent,
to exercise in such Collateral Agent’s discretion all voting rights pertaining thereto. Without limiting the generality of
the foregoing, Collateral Agent shall have the right (but not the obligation) to exercise all rights with respect to the Collateral
as if it were the sole and absolute owner thereof, including, without limitation, to vote and/or to exchange, at its sole discretion,
any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization or other readjustment
concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries.
(iii) The
Collateral Agent shall have the right to seek an Order from a court appointing a Trustee to operate the business of each Debtor
using the Collateral and shall have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the
Collateral, at public or private sale or otherwise, either with or without special conditions or stipulations, for cash or on credit
or for future delivery, in such parcel or parcels and at such time or times and at such place or places, and upon such terms and
conditions as are commercially reasonable. Upon each such sale, lease, assignment or other transfer or disposition of Collateral,
the Collateral Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived,
purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and
equities of any Debtor, which are hereby waived and released.
(iv) The
Collateral Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments
or accounts to make payments directly to the Collateral Agent, on behalf of the Secured Parties, and to enforce the Debtors’
rights against such account debtors and obligors.
(v) The
Collateral Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any
other person or entity holding any investment property to transfer the same to the Collateral Agent, on behalf of the Secured Parties,
or its designee.
(vi) The
Collateral Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at
the United States Patent and Trademark Office and/or Copyright Office into the name of the Collateral Agent or any purchaser of
any Collateral.
(b) The
Collateral Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not
be considered adversely to affect the commercial reasonableness of any sale of the Collateral. The Collateral Agent may sell the
Collateral without giving any warranties and may specifically disclaim such warranties. If the Collateral Agent sells any of the
Collateral on credit, the Debtors will only be credited with payments actually made by the purchaser. In addition, each Debtor
waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Collateral Agent’s
rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession
of the Collateral and to exercise its rights and remedies with respect thereto.
(c) If
any notice to Debtor of the sale or other disposition of Collateral is required by then applicable law, five (5) business days
prior written notice (which Debtor agree is reasonable notice within the meaning of Section 9.612(a) of the Uniform Commercial
Code) shall be given to Debtor of the time and place of any sale of Collateral. The rights granted in this Section are in addition
to any and all rights available to Collateral Agent under the Uniform Commercial Code.
(d) For
the purpose of enabling the Collateral Agent to further exercise rights and remedies under this Section 8 or elsewhere provided
by agreement or applicable law, each Debtor hereby grants to the Collateral Agent, for the benefit of the Collateral Agent and
the Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such
Debtor) to use, license or sublicense during the continuance of an Event of Default, any Intellectual Property now owned or hereafter
acquired by such Debtor, and wherever the same may be located, and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.
9. Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, if any, to the reasonable attorneys’ fees and expenses incurred by the
Collateral Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing
of the Collateral, and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal
amounts of Notes at the time of any such determination), and then to the payment of any other amounts required by applicable law,
after which the Secured Parties shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or other disposition
of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled,
the Debtors will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount
permitted by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured
Parties to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all claims, damages and demands
against the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to
the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal)
of a court of competent jurisdiction.
10. Securities
Law Provision. Each Debtor recognizes that Collateral Agent may be limited in its ability to effect a sale to the public of
all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal
or state securities laws (collectively, the “Securities Laws”), and may reasonably be obliged to resort to one
or more sales to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own
account, for investment and not with a view to the distribution or resale thereof. Each Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold to the public, and that Collateral Agent has no
obligation to delay the sale of any Pledged Securities for the period of time necessary to register the Pledged Securities for
sale to the public under the Securities Laws. Each Debtor shall cooperate with Collateral Agent in its attempt to satisfy any requirements
under the Securities Laws (including, without limitation, registration thereunder if requested by Collateral Agent) applicable
to the sale of the Pledged Securities by Collateral Agent.
11. Costs
and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any
filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements,
partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Collateral
Agent. The Debtors shall also pay all other claims and charges which in the reasonable opinion of the Collateral Agent is reasonably
likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon
demand, pay to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the Collateral Agent, for the benefit of the Secured Parties, may incur in connection
with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization
upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the Notes.
Until so paid, any fees payable hereunder shall be added to the principal amount of the Notes and shall bear interest at the Default
Rate.
12. Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations
shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability
for any reason. Without limiting the generality of the foregoing, (a) neither the Collateral Agent nor any Secured Party (i) has
any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights
relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor
shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed by such
Debtor thereunder. Neither the Collateral Agent nor any Secured Party shall have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any Secured Party of any payment
relating to any of the Collateral, nor shall the Collateral Agent or any Secured Party be obligated in any manner to perform any
of the obligations of any Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Collateral Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been assigned to the Collateral Agent or to which the Collateral
Agent or any Secured Party may be entitled at any time or times.
13. Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of,
or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from
the Notes or any other agreement entered into in connection with the foregoing; (c) any exchange, release or non-perfection of
any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee,
or any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel
in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense available to a Debtor, or a discharge of all or any part of the
Security Interests granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured
Parties shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute
of limitations or bankruptcy. Each Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment
and demand for performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured
Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other
than the Secured Parties, then, in any such event, each Debtor’s obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall
remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. Each Debtor waives all right
to require the Secured Parties to proceed against any other person or entity or to apply any Collateral which the Secured Parties
may hold at any time, or to marshal assets, or to pursue any other remedy. Each Debtor waives any defense arising by reason of
the application of the statute of limitations to any Obligations secured hereby.
14. Term
of Agreement. This Agreement and the Security Interest shall terminate on the date on which all payments under the Notes have
been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtors contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative and
in full force and effect regardless of the termination of this Agreement.
15. Power
of Attorney; Further Assurances.
(a) Each
Debtor authorizes the Collateral Agent, and does hereby make, constitute and appoint the Collateral Agent and its officers, agents,
successors or assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in
the name of the Collateral Agent or such Debtor, after the occurrence and during the continuance of an Event of Default, (i) to
endorse any note, checks, drafts, money orders or other instruments of payment (including, without limitation, payments payable
under or in respect of any policy of insurance) in respect of the Collateral that may come into possession of the Collateral Agent;
(ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight or express bill, bill of lading, storage
or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts, and other documents
relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied
or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies
due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual Property;
and (vi) generally, at the option of the Collateral Agent, and at the expense of the Debtors, at any time, or from time to time,
to execute and deliver any and all documents and instruments and to do all acts and things which the Collateral Agent deems necessary
to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect the intent of
this Agreement and the Notes all as fully and effectually as the Debtors might or could do; and each Debtor hereby ratifies all
that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding. The
designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents
or other documents or agreements to which any Debtor is subject or to which any Debtor is a party. Without limiting the generality
of the foregoing, after the occurrence and during the continuance of an Event of Default, each Secured Party is specifically authorized
to execute and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.
(b) On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C
attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably
requested by the Collateral Agent, to perfect the Security Interest granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Collateral Agent the grant or perfection of a perfected security
interest in all the Collateral under the UCC.
(c) Each
Debtor hereby irrevocably appoints the Collateral Agent as such Debtor’s attorney-in-fact, with full authority in the place
and instead of such Debtor and in the name of such Debtor, from time to time in the Collateral Agent’s discretion, to take
any action permitted under this Agreement and to execute any instrument which the Collateral Agent may reasonably deem necessary
or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing
or continuation statements and amendments thereto, relative to any of the Collateral without the signature of such Debtor where
permitted by law, which financing statements may (but need not) describe the Collateral as “all assets” or “all
personal property” or words of like import, and ratifies all such actions taken by the Collateral Agent. This power of attorney
is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.
16. 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 (a) personally served, (b) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (c) delivered by a reputable overnight courier service with charges prepaid, or (d) 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 (i) 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), or the first Business
Day following such delivery (if delivered other than on a Business Day during normal business hours), (ii) on the first Business
Day following the date deposited with an overnight courier service with charges prepaid, or (iii) on the fifth Business Day following
the date of mailing pursuant to subpart (b) above, or upon actual receipt of such mailing, whichever shall first occur. The addresses
for such communications shall be:
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To Debtor, to: |
Attitude Beer Holding Co. |
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c/o Attitude Drinks Inc., |
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712 US Highway 1, Suite 200 |
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North Palm Beach, FL 33408 |
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Attn: Roy Warren, CEO and President |
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Fax: (800) 799–5053 |
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To the Collateral Agent: |
Tarpon Bay Partners LLC |
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Executive Pavilion 90 Grove Street |
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Ridgefield CT 06877 |
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Fax: (203) 431– 8301 |
17. Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Collateral Agent shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any
way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.
18. Appointment
of Collateral Agent. The Secured Parties hereby appoint Tarpon Bay Partners LLC to act as their agent (“Collateral
Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. Such appointment
shall continue until revoked in writing by a Majority in Interest, at which time a Majority in Interest shall appoint a new Collateral
Agent. The Collateral Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.
19. Miscellaneous.
(a) No
course of dealing between the Debtors and the Collateral Agent, nor any failure to exercise, nor any delay in exercising, on the
part of the Collateral Agent, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(b) All
of the rights and remedies of the Collateral Agent with respect to the Collateral, whether established hereby or by the Notes or
by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c) This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement
may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors
and Collateral Agent or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.
(d) If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(e) No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
(f) This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtors
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of a Majority in Interest
(other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person to whom such Secured
Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound, with respect to the transferred
Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”
(g) Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
(h) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof. Each Debtor agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated
by this Agreement and the Notes (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan. Each Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding 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 manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
If any party shall commence a proceeding to enforce any provisions of this Agreement, then the prevailing party in such proceeding
shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such proceeding.
(i) This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile
or other electronic transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such signature were the original thereof.
(j) All
Debtors shall jointly and severally be liable for the obligations of each Debtor to the Secured Parties hereunder.
(k) Each
Debtor shall indemnify, reimburse and hold harmless the Collateral Agent and the Secured Parties and their respective partners,
members, shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions)
(collectively, “Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise
from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses
which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision
of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification
provision in the Notes, the Securities Purchase Agreement (as such term is defined in the Notes) or any other agreement, instrument
or other document executed or delivered in connection herewith or therewith.
(l) Nothing
in this Agreement shall be construed to subject Collateral Agent or any Secured Party to liability as a partner in any Debtor or
any if its direct or indirect subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect
subsidiaries that is a limited liability company, nor shall Collateral Agent or any Secured Party be deemed to have assumed any
obligations under any partnership agreement or limited liability company agreement, as applicable, of any such Debtor or any if
its direct or indirect subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted
for such Debtor as a partner or member, as applicable, pursuant hereto.
(m) To
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtors hereby grant such consent and approval and waive
any such noncompliance with the terms of said documents.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF,
the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
ATTITUDE BEER HOLDING CO.
COLLATERAL AGENT
Tarpon Bay Partners LLC
OMNIBUS SECURED PARTY SIGNATURE PAGE
TO
ATTITUDE BEER HOLDING CO.
SECURITY AGREEMENT
The undersigned, in
its capacity as a Secured Party, hereby executes and delivers the Security Agreement to which this signature page is attached and
agrees to be bound by the Security Agreement on the date set forth on the first page of the Security Agreement. This counterpart
signature page, together with all counterparts of the Security Agreement and signature pages of the other parties named therein,
shall constitute one and the same instrument in accordance with the terms of the Security Agreement.
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[Print Name of Investor] |
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[Signature] |
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Taxpayer ID# (if applicable): |
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Security Agreement
Schedules
Schedule A |
Locations |
Schedule B |
Permitted Liens |
Schedule C |
Jurisdictions |
Schedule D |
Name |
Schedule E |
Trade Names – Merger Entities |
Schedule F |
Intellectual Property |
Schedule G |
Account Debtors |
Schedule H |
Pledged Securities |
Above schedules not included in this document
ANNEX A
to
SECURITY
AGREEMENT
FORM
OF ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of December
24, 2014 made by
Attitude Beer Holding Co.
and its Subsidiaries party thereto from
time to time, as Debtors
to and in favor of
the Secured Parties identified therein (the
“Security Agreement”)
Reference is made to the Security Agreement
as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in,
or by reference in, the Security Agreement.
The undersigned hereby agrees that upon
delivery of this Additional Debtor Joiner to the Secured Parties referred to above, the undersigned shall (a) be an Additional
Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the Security Agreement as fully
and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made the representations
and warranties set forth therein as of the date of execution and delivery of this Additional Debtor Joinder (except to the extent
such representation or warranty specifically refers to an earlier date). WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY
AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached hereto are supplemental and/or
replacement Schedules to the Security Agreement, as applicable.
Attached hereto is an original Subsidiary Guaranty executed
by the undersigned and delivered herewith.
An executed copy of this Additional Debtor
Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein on or after
the date hereof. This Additional Debtor Joinder shall not be modified, amended or terminated without the prior written consent
of the Secured Parties.
IN WITNESS WHEREOF, the undersigned has
caused this Joiner to be executed in the name and on behalf of the undersigned.
[Name of Additional Debtor] |
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By: |
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Name: |
Title: |
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Address: |
Dated:
FORM OF SUBSIDIARY GUARANTY
1. Identification.
This Guaranty (the
“Guaranty”), dated as of [RC], is entered into by [RC],
a [RC] corporation (“Guarantor”), for the benefit of the Collateral
Agent identified below and the parties identified on Schedule A hereto (each a “Lender” and collectively,
the “Lenders”).
2. Recitals.
2.1 Guarantor
is a direct or indirect subsidiary of Attitude Beer Holding Co., a Delaware corporation (“Parent”). The Lenders
have made and/or are making loans to Parent (the “Loans”). Guarantor will obtain substantial benefit from the
proceeds of the Loans.
2.2 The
Loans are and will be evidenced by certain Secured Convertible Promissory Notes (collectively, “Note” or the
“Notes”) issued by Parent on, about or after the date of this Guaranty pursuant to those certain Securities
Purchase Agreements dated at or about the date hereof (“Securities Purchase Agreements”). The Notes issued on
the Closing Date are further described on Schedule A hereto and were and or will be executed by Parent as “Borrower”
for the benefit of each Lender as the “Holder” thereof.
2.3 In
consideration of the Loans made and to be made by Lenders to Parent and for other good and valuable consideration, and as security
for the performance by Parent of its obligations under the Notes and as security for the repayment of the Loans and all other sums
due from Debtor to Lenders arising under the Notes (collectively, the “Obligations”), Guarantor, for good and
valuable consideration, receipt of which is acknowledged, has agreed to enter into this Guaranty.
2.4 The
Lenders have appointed Tarpon Bay Partners LLC as Collateral Agent pursuant to that certain Security Agreement dated at or about
the date of this Agreement (“Security Agreement”), among the Lenders and Collateral Agent.
2.5 Upper
case terms employed but not defined herein shall have the meanings ascribed to them in the Transaction Documents (as defined in
the Securities Purchase Agreement).
3. Guaranty.
3.1 Guaranty.
Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally with any other guarantor of the Obligations,
the punctual payment, performance and observance when due, whether at stated maturity, by acceleration or otherwise, of all of
the Obligations now or hereafter existing, whether for principal, interest (including, without limitation, all interest that accrues
after the commencement of any insolvency, bankruptcy or reorganization of Parent, whether or not constituting an allowed claim
in such proceeding), fees, commissions, expense reimbursements, liquidated damages, indemnifications or otherwise arising under
the Notes, Security Agreement, or any other Transaction Document (as defined in the Securities Purchase Agreement) (such obligations,
to the extent not paid by Parent being the “Guaranteed Obligations” and included in the definition of Obligations),
and agrees to pay any and all reasonable costs, fees and expenses (including reasonable counsel fees and expenses) incurred by
Collateral Agent and the Lenders in enforcing any rights under the Guaranty set forth herein. Without limiting the generality of
the foregoing, Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would
be owed by Parent to Collateral Agent and the Lenders, but for the fact that they are unenforceable or not allowable due to the
existence of an insolvency, bankruptcy or reorganization involving Parent.
3.2 Guaranty
Absolute. Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Notes,
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights
of Collateral Agent or the Lenders with respect thereto. The obligations of Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against Guarantor to enforce such obligations,
irrespective of whether any action is brought against Parent or any other guarantor or whether Parent or any other guarantor is
joined in any such action or actions. The liability of Guarantor under this Guaranty constitutes a primary obligation, and not
a contract of surety, and to the extent permitted by law, shall be irrevocable, absolute and unconditional irrespective of, and
Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:
(a) any
lack of validity of the Notes or any agreement or instrument relating thereto;
(b) any
change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from the Notes, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to Parent or otherwise;
(c) any
taking, exchange, release, subordination or non-perfection of any Collateral, or any taking, release or amendment or waiver of
or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any
change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of Parent;
or
(e) any other circumstance
(including, without limitation, any statute of limitations) or any existence of or reliance on any representation by Collateral
Agent or the Lenders that might otherwise constitute a defense available to, or a discharge of, Parent or any other guarantor or
surety.
This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by Collateral Agent, the Lenders or any other entity upon the insolvency, bankruptcy
or reorganization of the Parent or otherwise (and whether as a result of any demand, settlement, litigation or otherwise), all
as though such payment had not been made.
3.3 Waiver.
Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that Collateral Agent or the Lenders exhaust any right or take any action against
any Borrower or any other person or entity or any Collateral. Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated herein and that the waiver set forth in this Section 3.3 is knowingly made in
contemplation of such benefits. Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty
is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.
3.4 Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until
the later of the indefeasible cash or other payment in full of the Guaranteed Obligations , (b) be binding upon Guarantor, its
successors and assigns, and (c) inure to the benefit of and be enforceable by the Lenders and their successors, pledgees, transferees
and assigns. Without limiting the generality of the foregoing clause (c), any Lender may pledge, assign or otherwise transfer
all or any portion of its rights and obligations under this Guaranty (including, without limitation, all or any portion of its
Notes owing to it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof
granted such Collateral Agent or Lender herein or otherwise.
3.5 Subrogation.
Guarantor will not exercise any rights that it may now or hereafter acquire against the Collateral Agent or any Lender or other
guarantor (if any) that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under
this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification,
whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation,
the right to take or receive from the Collateral Agent or any Lender or other guarantor (if any), directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right,
unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been indefeasibly
paid in full.
3.6 Maximum Obligations. Notwithstanding any provision herein contained to the contrary, Guarantor’s liability with respect
to the Obligations shall be limited to an amount not to exceed, as of any date of determination, the amount that could be claimed
by Lenders from Guarantor without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.
4. Miscellaneous.
4.1 Expenses.
Guarantor shall pay to the Lenders, on demand, the amount of any and all reasonable expenses, including, without limitation, reasonable
attorneys’ fees, reasonable legal expenses and reasonable brokers’ fees, which the Lenders may incur in connection
with exercise or enforcement of any the rights, remedies or powers of the Lenders hereunder or with respect to any or all of the
Obligations.
4.2 Waivers,
Amendment and Remedies. No course of dealing by the Lenders and no failure by the Lenders to exercise, or delay by the Lender
in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, and no single or partial exercise thereof
shall preclude any other or further exercise thereof or the exercise of any other right, remedy or power of the Lenders. No amendment,
modification or waiver of any provision of this Guaranty and no consent to any departure by Guarantor therefrom, shall, in any
event, be effective unless contained in a writing signed by the Guarantor and the Majority in Interest (as such term is defined
in the Security Agreement) or Lenders against whom such amendment, modification or waiver is sought, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given. The rights, remedies and powers
of the Lenders, not only hereunder, but also under any other Transaction Documents and under applicable law are cumulative, and
may be exercised by the Lenders from time to time in such order as the Lenders may elect.
4.3 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 (a) personally served, (b) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (c) delivered by a reputable overnight courier service with charges prepaid, or (d) 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 (i) 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, or the first Business Day
following such delivery (if delivered other than on a Business Day during normal business hours), (ii) on the first Business Day
following the date deposited with an overnight courier service with charges prepaid, or (iii) on the fifth Business Day following
the date of mailing pursuant to subpart (b) above, or upon actual receipt of such mailing, whichever shall first occur. The addresses
for such communications shall be:
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To Guarantor, to: |
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c/o Attitude Drinks Inc.,
712 US Highway 1, Suite 200 |
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North Palm Beach, FL 33408 |
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Attn: Roy Warren, CEO and President
Fax: (800) 799–5053 |
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To the Collateral Agent: |
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Tarpon Bay Partners LLC |
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c/o Grushko & Mittman, P.C. |
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515 Rockaway Avenue |
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Valley Stream, New York 11581 |
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Fax: (212) 697–3575 |
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To Lenders: |
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To the addresses and telecopier numbers set |
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forth on Schedule A |
Any party may change its address by written
notice in accordance with this paragraph.
4.4 Term;
Binding Effect. This Guaranty shall (a) remain in full force and effect until payment and satisfaction in full of all of the
Guaranteed Obligations; (b) be binding upon Guarantor and its successors and permitted assigns; and (c) inure to the benefit of
the Lenders and their respective successors and assigns. All the rights and benefits granted by Guarantor to the Collateral Agent
and Lenders hereunder and other agreements and documents delivered in connection therewith are deemed granted to both the Collateral
Agent and Lenders. Upon the payment in full of the Guaranteed Obligations, (i) this Guaranty shall terminate and (ii) the Lenders
will, upon Guarantor’s request and at Guarantor’s expense, execute and deliver to Guarantor such documents as Guarantor
shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.
4.5 Captions.
The captions of Paragraphs, Articles and Sections in this Guaranty have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other significance whatsoever.
4.6 Governing
Law; Venue; Severability. This Guaranty shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts or choice of law. Any legal action or proceeding against Guarantor with respect
to this Guaranty may be brought in the courts of the State of New York or of the United States for the Southern District of New
York, and, by execution and delivery of this Guaranty, Guarantor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Guarantor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection
with this Guaranty brought in the aforesaid courts and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. If any provision
of this Guaranty, or the application thereof to any person or circumstance, is held invalid, such invalidity shall not affect any
other provisions which can be given effect without the invalid provision or application, and to this end the provisions hereof
shall be severable and the remaining, valid provisions shall remain of full force and effect. This Guaranty shall be deemed
an unconditional obligation of Guarantor for the payment of money and, without limitation to any other remedies of Lenders, may
be enforced against Guarantor by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar
rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any other document or agreement
to which Lenders and Guarantor are parties or which Guarantor delivered to Lenders, which may be convenient or necessary to determine
Lenders’ rights hereunder or Guarantor’s obligations to Lenders are deemed a part of this Guaranty, whether or not
such other document or agreement was delivered together herewith or was executed apart from this Guaranty. 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. Guarantor irrevocably appoints Parent its true
and lawful agent for service of process upon whom all processes of law and notices may be served and given in the manner described
above; and such service and notice shall be deemed valid personal service and notice upon Guarantor with the same force and validity
as if served upon Guarantor.
4.7 Satisfaction
of Obligations. For all purposes of this Guaranty, the payment in full of the Obligations shall be conclusively deemed to have
occurred when the Obligations have been paid pursuant to the terms of the Notes and the Securities Purchase Agreements.
4.8 Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.
This Agreement may be executed by facsimile signature and delivered by electronic transmission.
[THE BALANCE OF THIS
PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned
have executed and delivered this Guaranty, as of the date first written above.
“GUARANTOR”
This Guaranty Agreement may be signed
by facsimile signature and
delivered by confirmed facsimile transmission.
SCHEDULE A TO GUARANTY
ANNEX B
to
SECURITY
AGREEMENT
THE COLLATERAL AGENT
1. Appointment. The
Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided in the
Security Agreement to which this Annex B is attached (the “Agreement”), by their acceptance of the benefits
of the Agreement, hereby designate Tarpon Bay Partners LLC (“Collateral Agent”) as the Collateral Agent to act
as specified herein and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Collateral Agent to take
such action on its behalf under the provisions of the Agreement and any other Transaction Document (as such term is defined in
the Notes) and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or
required of the Collateral Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The
Collateral Agent may perform any of its duties hereunder by or through its agents or employees.
2. Nature of Duties. The
Collateral Agent shall have no duties or responsibilities except those expressly set forth in the Agreement. Neither the Collateral
Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken
or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence
of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful
misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of
the Collateral Agent shall be mechanical and administrative in nature; the Collateral Agent shall not have by reason of the Agreement
or any other Transaction Document a fiduciary relationship in respect of any Debtor or any Secured Party; and nothing in the Agreement
or any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Collateral
Agent any obligations in respect of the Agreement or any other Transaction Document except as expressly set forth herein and therein.
3. Lack of Reliance on the Collateral
Agent. Independently and without reliance upon the Collateral Agent, each Secured Party, to the extent it deems appropriate,
has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Company
and its subsidiaries in connection with such Secured Party’s investment in the Debtors, the creation and continuance of the
Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection
therewith, and (ii) its own appraisal of the creditworthiness of the Company and its subsidiaries, and of the value of the Collateral
from time to time, and the Collateral Agent shall have no duty or responsibility, either initially or on a continuing basis, to
provide any Secured Party with any credit, market or other information with respect thereto, whether coming into its possession
before any Obligations are incurred or at any time or times thereafter. The Collateral Agent shall not be responsible to the Debtors
or any Secured Party for any recitals, statements, information, representations or warranties herein or in any document, certificate
or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition
of the Debtors or the value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of
the Debtors, or the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under
the Agreement, the Notes or any of the other Transaction Documents.
4. Certain Rights of the Collateral
Agent. The Collateral Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the
Secured Parties. To the extent practical, the Collateral Agent shall request instructions from the Secured Parties with respect
to any material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the instructions of Secured Parties holding a majority in principal
amount of Notes (based on then-outstanding principal amounts of Notes at the time of any such determination); if such instructions
are not provided despite the Collateral Agent’s request therefor, the Collateral Agent shall be entitled to refrain from
such act or taking such action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured
Parties in respect of actions to be taken by the Collateral Agent; and the Collateral Agent shall not incur liability to any person
or entity by reason of so refraining. Without limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever
against the Collateral Agent as a result of the Collateral Agent acting or refraining from acting hereunder in accordance with
the terms of the Agreement or any other Transaction Document, and the Debtors shall have no right to question or challenge the
authority of, or the instructions given to, the Collateral Agent pursuant to the foregoing and (b) the Collateral Agent shall not
be required to take any action which the Collateral Agent believes (i) could reasonably be expected to expose it to personal liability
or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.
5. Reliance. The Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made
by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other Transaction Documents
and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement and the
other Transaction Documents and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary notwithstanding,
the Collateral Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral exists or is owned
by the Debtors or is cared for, protected or insured or that the liens granted pursuant to the Agreement have been properly or
sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.
6. Indemnification. To the
extent that the Collateral Agent is not reimbursed and indemnified by the Debtors, the Secured Parties will jointly and severally
reimburse and indemnify the Collateral Agent, in proportion to their initially purchased respective principal amounts of Notes,
from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Collateral Agent in
performing its duties hereunder or under the Agreement or any other Transaction Document, or in any way relating to or arising
out of the Agreement or any other Transaction Document except for those determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction to have resulted solely from the Collateral Agent’s own gross negligence or
willful misconduct. Prior to taking any action hereunder as Collateral Agent, the Collateral Agent may require each Secured Party
to deposit with it sufficient sums as it determines in good faith is necessary to protect the Collateral Agent for costs and expenses
associated with taking such action.
7. Resignation by the Collateral Agent.
(a) The
Collateral Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction
Documents at any time by giving 5 days’ prior written notice (as provided in the Agreement) to the Debtors and the Secured
Parties. Such resignation shall take effect upon the appointment of a successor Collateral Agent pursuant to clauses (b) and (c)
below.
(b) Upon
any such notice of resignation, the Secured Parties, acting by a Majority in Interest, shall appoint a successor Collateral
Agent hereunder.
(c) If
a successor Collateral Agent shall not have been so appointed within said 5-day period, the Collateral Agent shall then appoint
a successor Collateral Agent who shall serve as Collateral Agent until such time, if any, as the Secured Parties appoint a successor
Collateral Agent as provided above. If a successor Collateral Agent has not been appointed within such 5-day period, the Collateral
Agent may petition any court of competent jurisdiction or may interplead the Debtors and the Secured Parties in a proceeding for
the appointment of a successor Collateral Agent, and all fees, including, but not limited to, extraordinary fees associated with
the filing of interpleader and expenses associated therewith, shall be payable by the Debtors on demand.
8. Rights with respect to Collateral.
Each Secured Party agrees with all other Secured Parties and the Collateral Agent (i) that it shall not, and shall not attempt
to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any other agreement or otherwise
(other than pursuant to this Agreement), or take or institute any action against the Collateral Agent or any of the other Secured
Parties in respect of the Collateral or its rights hereunder (other than any such action arising from the breach of this Agreement)
and (ii) that such Secured Party has no other rights with respect to the Collateral other than as set forth in this Agreement and
the other Transaction Documents. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral
Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent and the retiring Collateral Agent shall be discharged from its duties and obligations under
the Agreement. After any retiring Collateral Agent’s resignation or removal hereunder as Collateral Agent, the provisions
of the Agreement including this Annex B shall inure to its benefit as to any actions taken or omitted to be taken by it while it
was Collateral Agent.
Exhibit 10.164
EXHIBIT (10)(164)
SECURITIES PURCHASE AGREEMENT
This Securities Purchase
Agreement (this “Agreement”) is dated as of December 24, 2014, between Attitude Beer Holding Co., a Delaware
corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its
successors and permitted assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described
in this Agreement (the “Offering”).
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Notes (as defined herein), and (b) the following terms have the meanings set forth in this
Section 1.1:
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Additional
Closing” shall have the meaning ascribed to such term in Section 2.4(a).
“Additional
Closing Subscription Amount” shall have the meaning ascribed to such term in Section 2.4(a).
“Additional
Closing Date” shall have the meaning ascribed to such term in Section 2.4(a).
“Additional
Closing Exercise Notice” shall have the meaning ascribed to such term in Section 2.4(a)
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Closing”
shall have the meaning ascribed to such term in Section 2.1.
“Closing
Date” means the Business Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount at such Closing,
and (ii) the Company’s obligations to deliver the Securities to be issued and sold at such Closing, in each case, have been
satisfied or waived, but in no event later than the tenth Business Day following the date hereof.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company
Counsel” means counsel for the Company.
“Conversion
Price” shall have the meaning ascribed to such term in the Notes.
“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.
“Effective
Date” means the earliest of the date that (a) a registration statement has been declared effective by the Commission
including therein all of the Underlying Shares for public unrestricted resale, or (b) all of the Underlying Shares have been sold
pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current
public information requirement under Rule 144 and without volume or manner-of-sale restrictions; and Company counsel has delivered
to such holders a standing written unqualified opinion that resales may then be made by such holders of the Underlying Shares pursuant
to such registration statement or exemption which opinion shall be in form and substance reasonably acceptable to such holders.
“Equity
Line of Credit” shall have the meaning ascribed to such term in Section 4.13.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock and options to officers, directors, employees, or consultants
of the Company, prior to and after the Closing Date up to the amounts and on the terms set forth on Schedule 4.13, (b) securities
upon the exercise or exchange of or conversion of any Securities issued hereunder, including shares paid as interest on the Notes
pursuant to Section 2.a) of the Notes (subject to adjustment for forward and reverse stock splits and the like that occur after
the date hereof) and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities and any term thereof have not been amended since the date
of this Agreement to increase the number of such securities or to decrease the issue price, exercise price, exchange price or conversion
price of such securities and which securities and the principal terms thereof are set forth on Schedule 3.1(g), and described
in the SEC Reports filed not later than ten (10) days before the Closing Date, (c) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or
an owner of an asset in a business synergistic with the business of the Company and shall be intended to provide to the Company
substantial additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company
is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities,
(d) as set forth on Schedule 3.1(g), and (e) securities issued or issuable pursuant to this Agreement, the Notes or the
Warrants, including, without limitation, Section 4.18, or upon exercise or conversion of any such securities.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“Form
8-K” shall have the meaning ascribed to such term in Section 4.6.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“G&M”
shall mean Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax: 212-697-3575.
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(z).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).
“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Listing
Default” shall have the meaning ascribed to such term in Section 4.11.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).
“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.
“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(gg).
“Notes”
means senior secured the convertible notes due one (1) year after their issue date, in the form of Exhibit A hereto.
“OFAC”
shall have the meaning ascribed to such term in Section 3.1(ii).
“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.17(a).
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.17.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
“Pro-Rata
Portion” shall have the meaning ascribed to such term in Section 4.17.
“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).
“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.
“Registration
Expenses” shall have the meaning ascribed to such term in Section 4.22.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all Notes, ignoring any conversion or exercise limits set forth therein, and assuming that any previously
unconverted Notes will be held until the third anniversary of the Final Closing Date.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Notes, the Warrants, and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security
Agreement” means the security agreement to be employed in connection with the sale of the Securities, a copy of which
is annexed hereto as Exhibit C.
“Selling
Expenses” shall have the meaning ascribed to such term in Section 4.22.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the Notes and Warrants purchased hereunder as
specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.
“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.17.
“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.17.
“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 30% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other
managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital
or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination,
owned or controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control
of the Company.
“Termination
Date” shall have the meaning ascribed to such term in Section 2.1.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, the OTC Bulletin Board, the OTCQB, or the OTCQX (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Security Agreement, the Notes, the Warrants, all exhibits and schedules thereto
and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Notes and upon exercise of the Warrants
and issued and issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes and any
other shares of Common Stock issued or issuable to a Purchaser in connection with or pursuant to the Securities or Transaction
Documents.
“Variable
Priced Equity Linked Instruments” shall have the meaning ascribed to such term in Section 4.13.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common Stock on the first
such facility (or a similar organization or agency succeeding to its functions of reporting prices), or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers
of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to 5 years, in the form of Exhibit B
attached hereto.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, an aggregate of up to $ 398,500, but not less than $337,250 of principal amount of Notes representing $1.00
of Note Principal for each $1.00 of such Purchaser’s Subscription Amount as set forth on the signature page hereto executed
by such Purchaser, and Warrants as determined pursuant to Section 2.2(a) (such purchase and sale being the “Closing”.
Each Purchaser shall deliver to the Company such Purchaser’s Subscription Amount, and the Company shall deliver to each Purchaser
its respective Note and Warrants, as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the
other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of G&M or such other location as the parties shall mutually agree.
Notwithstanding anything herein to the contrary, the Closing Date shall occur on or before December 24, 2014 (“Termination
Date”). If the Closing is not held on or before the Termination Date, the Company shall cause all subscription documents
and funds to be returned, without interest or deduction to each prospective Purchaser.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) a
Note with a principal amount equal to each Purchaser’s Subscription Amount registered in the name of such Purchaser;
(iii) Class
A Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of the shares
issuable upon conversion of the Notes; and
(iv) the
Security Agreement duly executed by the Company.
(v) The
Guaranty executed by Attitude Drinks, Inc.
(b) On
or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this
Agreement duly executed by such Purchaser;
(ii) such
Purchaser’s Subscription Amount by wire transfer; and
(iii) the
Security Agreement duly executed by such Purchaser..
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder to effect the Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The
respective obligations of a Purchaser hereunder to effect the Closing, unless waived by such Purchaser, are subject to the following
conditions being met:
(i) the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
including but not limited to having obtained the Required Approvals.
(iii) the
Company shall have received executed signature pages to this Agreement with an aggregate Subscription Amount of not less than $337,250
prior to the Closing;
(iv) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(v) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
2.4 Additional
Closings.
(a) Subject
to the satisfaction of the conditions set forth below, until one (1) year after the Closing Date the Company may sell to the Purchasers
additional Notes and Warrants for the aggregate consideration of up to $1,000,000, (“Additional Closing Subscription Amount”),
in up to four (4) closings (each an “Additional Closing”). The date an Additional Closing occurs is an “Additional
Closing Date”.
2.5 Additional
Closing Deliveries.
(a) On
or prior to any Additional Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
i. a
Note with a principal amount equal to each Purchaser’s Subscription Amount registered in the name of such Purchaser;
ii. Class
A Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of the shares
issuable upon conversion of the Notes; and
iii. certificate
signed by the Company’s CEO or CFO stating that all of the conditions to completing an Additional Closing as set forth in
section 2.6 (b) have been satisfied.
(b) On
or prior to the Additional Closing Date, each Purchaser shall deliver to the Company such Purchaser’s Additional Closing
Subscription Amount by wire transfer to the account specified in the Additional Closing Exercise Notice.
2.6 Additional
Closing Conditions.
(a) The
obligations of the Company hereunder in connection with any Additional Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects on the Additional Closing Date of the representations and warranties of the Purchasers contained
herein (unless as of a specific date, in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of each Purchaser to be performed at or prior to the Additional Closing Date shall have been
performed;
(iii) the
delivery by each Purchaser of such Purchaser’s Additional Closing Subscription Amount.
(b) The
respective obligations of a Purchaser hereunder in connection with any Additional Closing are, unless waived by such Purchaser,
subject to the following conditions being met:
(i) the
accuracy in all material respects on the Additional Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date, in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of the Company under this Agreement required to be performed at or prior to the Additional
Closing Date shall have been performed;
(iii)
the delivery by the Company of the items set forth in Section 2.5(a) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof;
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation made herein only to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company and the Company’s ownership interests therein are set forth on
Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. Entities
in existence as of the Closing Date which would otherwise be deemed Subsidiaries as of the Closing Date but which are inactive
and have nominal assets and liabilities will not be deemed Subsidiaries until such entities have or acquire material assets or
liabilities. As of the Closing Date the Company has no active Subsidiaries.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and, no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents, the
issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it
is a party do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) subject to Required Approvals, conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.5 of this Agreement, (ii) the filing of Form D with the Commission and such filings
as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The
Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares
at least equal to the Required Minimum on the date hereof.
(g) Capitalization.
The capitalization of the Company is as set forth in Schedule 3.1(g). The Company has not issued any capital stock since its
most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as disclosed
on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents. Except as set forth on Schedule 3.1(g), the issuance and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.
All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable,
have been issued in material compliance with all federal and state securities laws, and none of such outstanding shares was issued
in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization
of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(h) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities
or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Except
as set forth in the SEC Reports, neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach
of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation
by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued
any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary
under the Exchange Act or the Securities Act.
(i) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(j) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.
(k) Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess
such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any
Material Permit.
(l) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property (if any) owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries
and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made in accordance with
GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and
the Subsidiaries are in compliance.
(m) Intellectual
Property.
(i) The
term “Intellectual Property Rights” includes:
| 1. | the name of the Company and each Subsidiary, all fictional business names, trading names, registered
and unregistered trademarks, service marks, and applications of the Company and each Subsidiary (collectively, “Marks''); |
| 2. | all patents, patent applications, and inventions and discoveries that may be patentable of the
Company and each Subsidiary (collectively, “Patents''); |
| 3. | all copyrights in both published works and published works of the Company and each Subsidiary (collectively,
“Copyrights”); |
| 4. | all rights in mask works of the Company and each Subsidiary (collectively, “Rights in
Mask Works''); and |
| 5. | all know-how, trade secrets, confidential information, customer lists, software, technical information,
data, process technology, plans, drawings, and blue prints (collectively, “Trade Secrets''); owned, used, or licensed
by the Company and each Subsidiary as licensee or licensor. |
(ii) Agreements.
There are no outstanding and, to Company’s knowledge, no threatened disputes or disagreements with respect to any agreements
relating to any Intellectual Property Rights to which the Company is a party or by which the Company is bound.
(iii) Know-How
Necessary for the Business. The Intellectual Property Rights are all those necessary for the operation of the Company’s
businesses as it is currently conducted or as represented, in writing, to the Purchaser to be conducted. The Company is the owner
of all right, title, and interest in and to each of the Intellectual Property Rights, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims, and has the right to use all of the Intellectual Property Rights. To
the Company’s knowledge, no employee of the Company has entered into any contract that restricts or limits in any way the
scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than of the Company.
(iv) Patents.
The Company is the owner of all right, title and interest in and to each of the Patents, free and clear of all Liens and other
adverse claims. All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the Closing Date. No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To the Company’s knowledge: (1) there is no potentially interfering patent
or patent application of any third party, and (2) no Patent is infringed or has been challenged or threatened in any way. To the
Company’s knowledge, none of the products manufactured and sold, nor any process or know-how used, by the Company infringes
or is alleged to infringe any patent or other proprietary right of any other Person.
(v) Trademarks.
The Company is the owner of all right, title, and interest in and to each of the Marks, free and clear of all Liens and other adverse
claims. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with
all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date. No Mark has been or is now involved in any opposition, invalidation, or cancellation and, to the Company’s
knowledge, no such action is threatened with respect to any of the Marks. To the Company’s knowledge: (1) there is no potentially
interfering trademark or trademark application of any third party, and (2) no Mark is infringed or has been challenged or threatened
in any way. To the Company’s knowledge, none of the Marks used by the Company infringes or is alleged to infringe any trade
name, trademark, or service mark of any third party.
(vi) Copyrights.
The Company is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all Liens and other
adverse claims. All the Copyrights have been registered and are currently in compliance with formal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the date of the
Closing. No Copyright is infringed or, to the Company’s knowledge, has been challenged or threatened in any way. To the Company’s
knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party
or is a derivative work based on the work of a third party. All works encompassed by the Copyrights have been marked with the proper
copyright notice.
(vii) Trade
Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient
in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory
of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade
Secrets. The Company has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets. The Trade Secrets
are not part of the public knowledge or literature, and, to the Company’s knowledge, have not been used, divulged, or appropriated
either for the benefit of any Person (other the Company) or to the detriment of the Company. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
(n) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without
a significant increase in cost.
(o) Certain
Fees. No brokerage, finder’s fees, commissions or due diligence fees are or will be payable by the Company or any Subsidiary
to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any such fees
or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(s) that
may be due in connection with the transactions contemplated by the Transaction Documents.
(p) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.
(q) Registration
Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary.
(r) Application
of Takeover Protections. The Company and the Board of Directors will have taken as of the Closing Date all necessary action,
if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of
the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including
without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(s) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, when taken
together as a whole, is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.
The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(t) No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Offering
of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.
(u) Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, and the Company’s good faith estimate
of the fair market value of its assets, after giving effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be
paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they
mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current
cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking
into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of
any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(z) sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $100,000 in the aggregate (other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same
are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.
(v) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.
(w) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision
of FCPA.
(x) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to
each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(y)
Acknowledgment Regarding Purchaser’s Trading Activity.
Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(e) and 4.16 hereof), it
is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has
any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open
market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative” transactions
to which any such Purchaser is a party, directly or indirectly, may presently have a “short” position in the Common
Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party
in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may
engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Underlying Shares deliverable with respect to Securities are being determined, and (z)
such hedging activities (if any) could reduce the value of the existing stockholders' equity interests in the Company at and after
the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.
(z) Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.
(aa) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.
(bb) Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“OFAC”).
(cc) Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(dd) No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(ee) Indebtedness
and Seniority. As of the date hereof, all Indebtedness and Liens are as set forth on Schedule 3.1(z). Except as set
forth on Schedule 3.1(z), as of the Closing Date, no Indebtedness or other equity of the Company is senior to the Notes
in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness
secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations
(which is senior only as to the property covered thereby).
(ff) Survival.
The foregoing representations and warranties shall survive the Closing Date.
3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):
(a) Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(b) Understandings
or Arrangements. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to a registration
statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or converts any Notes it will be either: (i) an “accredited investor” as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer”
as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section
15 of the Exchange Act. Such Purchaser has the authority and is duly and legally qualified to purchase and own the Securities.
Such Purchaser is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. Such
Purchaser has had no position, office or other material relationship within the past three years with the Company or Persons (as
defined below) known to such Purchaser to be affiliates of the Company, and is not a member of the Financial Industry Regulatory
Authority or an “associated person” (as such term is defined under the FINRA Membership and Registration Rules Section
1011).
(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) Information
on Company. Such Purchaser may have received in writing from the Company such other information concerning its operations,
financial condition and other matters as such Purchaser has requested, identified thereon as OTHER WRITTEN INFORMATION (such other
information is collectively, the “Other Written Information”), and considered all factors such Purchaser deems
material in deciding on the advisability of investing in the Securities. Such Purchaser was afforded (i) the opportunity
to ask such questions as such Purchaser deemed necessary of, and to receive answers from, representatives of the Company concerning
the merits and risks of acquiring the Securities; (ii) the right of access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable such Purchaser to evaluate the Securities;
and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to acquiring the Securities.
(f) Compliance
with Securities Act; Reliance on Exemptions. Such Purchaser understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require
registration under the 1933 Act, and that such Securities must be held indefinitely unless a subsequent disposition is registered
under the 1933 Act or any applicable state securities laws or is exempt from such registration. Such Purchaser understands and
agrees that the Securities are being offered and sold to such Purchaser in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility
of such Purchaser to acquire the Securities.
(g) Communication
of Offer. Such Purchaser is not purchasing the Securities as a result of any “general solicitation” or “general
advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the internet
or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or general advertisement.
(h) No
Governmental Review. Such Purchaser understands that no United States federal or state agency or any other governmental or
state agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the Offering.
(i) No
Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of such Purchaser’s charter documents, bylaws or other organizational documents, if
applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become a
default) under any agreement to which such Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or perform under the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided that
for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
(j) Survival.
The foregoing representations and warranties shall survive the Closing Date.
The Company acknowledges and agrees that
the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
Transfer Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company,
at the Company’s expense, an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the
form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this
Agreement.
(b) The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may transfer pledge or secure Securities to the pledgees or
secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if
the Securities are subject to registration pursuant to a registration statement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend
the list of selling stockholders thereunder.
(c) Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of
such Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying
Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall
cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer
Agent to effect the removal of the legend hereunder. If all or any Notes are converted or any portion of a Warrant is exercised
at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying
Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall
be issued free of all legends. The Company agrees that following such time as such legend is no longer required under this Section
4.1(c), it will, no later than five Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of
a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such fifth Trading Day, the “Legend
Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free
from all restrictive and other legends (however, the Corporation shall use reasonable best efforts to deliver such shares within
three (3) Trading Days). The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section 4. Certificates for Underlying Shares subject to legend removal hereunder
shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with
the Depository Trust Company System as directed by such Purchaser.
(d) In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares (based on the higher of the actual purchase price or VWAP of
the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend
and subject to Section 4.1(c), $10 per Trading Day for each Trading Day after the Legend Removal Date (increasing to $20 per Trading
Day after the fifth Trading Day) until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s
right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required
by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.
(e) DWAC.
In lieu of delivering physical certificates representing the Unlegended Shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Purchaser’s
prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s
Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system.
Such delivery must be made on or before the Legend Removal Date.
(f) Injunction.
In the event a Purchaser shall request delivery of Unlegended Shares as described in this Section 4.1 and the Company is required
to deliver such Unlegended Shares, the Company may not refuse to deliver Unlegended Shares based on any claim that such Purchaser
or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction
Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and
or enjoining delivery of such Unlegended Shares shall have been sought and obtained by the Company and the Company has posted a
surety bond for the benefit of such Purchaser in the amount of the greater of (i) 120% of the amount of the aggregate purchase
price of the Underlying Shares to be subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock
on the trading day before the issue date of the injunction multiplied by the number of Unlegended Shares to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall
be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.
(g) Buy-In.
In addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser Unlegended Shares as required
pursuant to this Agreement and after the Legend Removal Date the Purchaser, or a broker on the Purchaser’s behalf, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company for
reissuance as Unlegended Shares together with interest thereon at a rate of 15% per annum accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of Shares delivered to the Company for reissuance as Unlegended Shares, the Company shall be required to pay the Purchaser
$1,000, plus interest, if any. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser
in respect of the Buy-In.
(i) Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance
with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
4.2 Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless
of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the Company.
4.3 Furnishing
of Information; Public Information.
(a) Until
the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to file
all periodic reports with the Commission pursuant to Section 15(d) of the Exchange Act or alternatively, if registered under Section
12(b) or 12(g) of the 1934 Act, maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act
and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to
be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.
(b) At
any time commencing on the Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser,
in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell
the Securities, an amount in cash equal to two percent (2.0%) of the aggregate principal amount of Notes and accrued interest held
by such Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling
less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time
that such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The
payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar
month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event
or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information
Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages
for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief.
4.4 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.5 Conversion
and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion
included in the Notes set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or
convert the Notes. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise
their Warrants or convert their Notes. The Company shall honor exercises of the Warrants and conversions of the Notes and shall
deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.6 Securities
Laws Disclosure; Publicity. The Company shall, by 9:30 a.m. (New York City time) on the Trading Day immediately following the
Closing Date, cause Attitude Drinks, Inc., to file a Current Report on Form 8-K including the Transaction Documents as exhibits
thereto with the Commission within the time required by the Exchange Act (“Form 8-K”). A form of the Form 8-K
is annexed hereto as Exhibit D. Such Exhibit D will be identical to the Form 8-K which will be filed with the Commission
except for the omission of signatures thereto by the Company and auditors providing the financial statements. From and after the
filing of the Form 8-K, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public
information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company and each
Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any press release nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market unless the name
of such Purchaser is already included in the body of the Transaction Documents, without the prior written consent of such Purchaser,
except: (a) as required by federal securities law in connection with the filing of final Transaction Documents with the Commission
and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.7 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.8 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto
such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.
4.9 Use
of Proceeds. The Company shall use the net proceeds from the sale of the Offering hereunder solely for its business and the
acquisition of World of Beer franchises and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s
debt except as disclosed on Schedule 4.9 (other than payment of trade payables in the ordinary course of the Company’s
business and prior practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of
any outstanding litigation, (d) for the expenses of Attitude Drinks, Inc. or (e) in violation of FCPA or OFAC regulations.
4.10 Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against Purchaser
Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser
Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful
misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for
the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party
under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability
is attributable to any Purchaser Party’s breach of its representations, warranties or covenants under the Transaction Documents.
The indemnification required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be
in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the
Company may be subject to pursuant to law.
4.11 Reservation
and Listing of Securities.
(a) The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may then be required to fulfill its obligations in full under the Transaction Documents, but not less than the
Required Minimum.
(b) If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors shall amend the Company’s certificate or articles of incorporation to increase
the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible
and in any event not later than the 60th day after such date.
4.12 Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.
4.13 Subsequent
Equity Sales. From the date hereof until such time as the Notes and Warrants are no longer outstanding, the Company will not,
without the consent of the Purchasers, enter into any Equity Line of Credit or similar agreement, nor issue nor agree to issue
any common stock at a per share price less than the then in effect Conversion Price, Common Stock Equivalents at a price per share
of less than $0.12, floating or Variable Priced Equity Linked Instruments nor any of the foregoing or equity with price reset rights
(subject to adjustment for stock splits, distributions, dividends, recapitalizations and the like) (collectively, the “Variable
Rate Transaction”). For purposes hereof, “Equity Line of Credit” shall include any
transaction involving a written agreement between the Company and an investor or underwriter whereby the Company has the right
to “put” its securities to the investor or underwriter over an agreed period of time and at an agreed price or price
formula, and “Variable Priced Equity Linked Instruments” shall include: (A) any debt or equity securities which
are convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common Stock either (1)
at any conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations
for Common Stock at any time after the initial issuance of such debt or equity security, or (2) with a fixed conversion, exercise
or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt or equity
security due to a change in the market price of the Company’s Common Stock since date of initial issuance, and (B) any amortizing
convertible security which amortizes prior to its maturity date, where the Company is required or has the option to (or any investor
in such transaction has the option to require the Company to) make such amortization payments in shares of Common Stock which are
valued at a price that is based upon and/or varies with the trading prices of or quotations for Common Stock at any time after
the initial issuance of such debt or equity security (whether or not such payments in stock are subject to certain equity conditions).
For purposes of determining the total consideration for a convertible instrument (including a right to purchase equity of
the Company) issued, subject to an original issue or similar discount or which principal amount is directly or indirectly increased
after issuance, the consideration will be deemed to be the actual cash amount received by the Company in consideration of the original
issuance of such convertible instrument. Until twenty-four (24) months after the Closing Date, the Company will not issue any Common
Stock or Common Stock Equivalents to officers, directors, employees, consultants and service providers of the Company. For so long
as the Notes are outstanding, the Company will not amend the terms of any securities or Common Stock Equivalents or of any agreement
outstanding or in effect as of the date of this Agreement or at any time thereafter, pursuant to which same were or may be acquired
nor issue any Common Stock or Common Stock Equivalents, if such issuance or the result of such amendment would be at an effective
price per share of Common Stock less than the higher of the Conversion Price or Warrant Exercise Price in effect at the time of
such potential lower price issuance or amendment or would be issued or made on terms more favorable to such other holder or recipient
than the Purchaser, with respect to the terms of the Offering pursuant to the Transaction Documents.
4.14 Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration
is also offered on a ratable basis to all of the parties to this Agreement. For clarification purposes, this provision constitutes
a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group
with respect to the purchase, disposition or voting of Securities or otherwise.
4.15 Capital
Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split
or reclassification of the Common Stock without 10 days prior written notice to the Purchasers, unless such reverse split is made
in conjunction with the listing of the Common Stock on a national securities exchange.
4.16 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to a press release or Form
8-K as described in Section 4.6. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until
such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to a press release
or Form 8-K as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction
and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes
any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to a press release or
Form 8-K as described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited
from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the
time that the transactions contemplated by this Agreement are first publicly announced pursuant to a press release or Form 8-K,
and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the filing of the Form 8-K.
Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.
4.17 Participation
in Future Financing.
(a) From
the date hereof until the Notes and Warrants are no longer outstanding, upon any proposed issuance by the Company or any of its
Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, Indebtedness or a combination thereof, other than
(i) a rights offering to all holders of Common Stock (which may include extending such rights offering to holders of Notes) or
(ii) an Exempt Issuance, the Purchasers shall have the right to participate in up to an amount of the Subsequent Financing equal
to 100% of the Subsequent Financing (the “Participation Maximum”) pro rata to each other in proportion to their
Subscription Amounts on the same terms, conditions and price provided for in the Subsequent Financing, unless the Subsequent Financing
is an underwritten public offering, in which case the Company shall offer each Purchaser the right to participate in such public
offering when it is lawful for the Company to do so, but no Purchaser shall be entitled to purchase any particular amount of such
public offering.
(b) At
least five Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
requesting Purchaser shall be deemed to have acknowledged that the Subsequent Financing Notice may contain material non-public
information. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.
(c) Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice that
the Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing
and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to participate.
(d) If
by 5:30 p.m. (New York City time) on the fifth (5th ) Trading Day after all of the Purchasers have received the Pre-Notice,
notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may affect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
(e) If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” means the ratio of (x) the principal amount of Notes purchased
hereunder by a Purchaser participating under this Section 4.17 and (y) the sum of the aggregate principal amounts of Notes purchased
hereunder by all Purchasers participating under this Section 4.17.
(f) The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.18, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.
(g) The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to
any restrictions on trading as to any of the Securities purchased hereunder (for avoidance of doubt, the securities purchased in
the Subsequent Financing shall not be considered securities purchased hereunder) or be required to consent to any amendment to
or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written
consent of such Purchaser.
(h) Notwithstanding
anything to the contrary in this Section 4.17 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the
Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to
the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such
Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession
of any material, non-public information with respect to the Company or any of its Subsidiaries.
4.18 Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good
working order and condition, ordinary wear and tear excepted.
4.19 Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.
4.20 Most
Favored Nation Provision. From the date hereof until the later of (i) such time as no Purchaser holds any Notes or Warrants
and (ii) three (3) years after the Closing Date in the event that the Company issues or sells any Common Stock, or Common Stock
Equivalents, if a Purchaser then holding outstanding Securities reasonably believes that any of the terms and conditions appurtenant
to such issuance or sale are more favorable to such investors than are the terms and conditions granted to the Purchasers hereunder,
upon notice to the Company by such Purchaser within five Trading Days after disclosure of such issuance or sale, the Company shall
amend the terms of this transaction as to such Purchaser only so as to give such Purchaser the benefit of such more favorable terms
or conditions. This Section 4.20 shall not apply with respect to an Exempt Issuance. The Company shall provide each Purchaser with
notice of any such issuance or sale in the manner for disclosure of Subsequent Financings set forth in Section 4.17.
4.21 Left
intentionally blank.
4.22 Piggy-Back
Registrations. If at any time after the Closing Date there is not an effective registration statement covering all of the issued
Underlying Shares and Warrant Shares and the Company determines to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities,
but excluding Forms S-4 or S-8 and similar forms which do not permit such registration, then the Company shall send to each holder
of any of the issued Securities written notice of such determination and, if within fifteen calendar days after receipt of such
notice, any such holder shall so request in writing, the Company shall include in such registration statement all or any part of
the Underlying Shares, and Warrant Shares such holder requests to be registered and which inclusion of such Underlying Shares and
Warrant Shares will be subject to customary underwriter cutbacks applicable to all holders of registration rights and minimum cutbacks
in accordance with guidance provided by the Securities and Exchange Commission (including, but not limited to, Rule 415). The obligations
of the Company under this Section may be waived by any holder of any of the Securities entitled to registration rights under this
Section 4.22. The holders whose Underlying Shares and Warrant Shares are included or required to be included in such registration
statement are granted the same rights, benefits, liquidated or other damages and indemnification granted to other holders of securities
included in such registration statement. In no event shall the liability of any holder of Securities or permitted successor in
connection with any Underlying Shares and Warrant Shares included in any such registration statement be greater in amount than
the dollar amount of the net proceeds actually received by such Purchaser upon the sale of the Underlying Shares and Warrant Shares
sold pursuant to such registration or such lesser amount in proportion to all other holders of Securities included in such registration
statement. All expenses incurred by the Company in complying with Section 4.22, including, without limitation, all registration
and filing fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue
sky” laws, fees of the FINRA, transfer taxes, and fees of transfer agents and registrars, are called “Registration
Expenses.” All underwriting discounts and selling commissions applicable to the sale of Registrable Securities are called
“Selling Expenses.” The Company will pay all Registration Expenses in connection with the registration statement
under Section 4.22. Selling Expenses in connection with each registration statement under Section 4.22 shall be borne by the holder
and will be apportioned among such holders in proportion to the number of Shares included therein for a holder relative to all
the securities included therein for all selling holders, or as all holders may agree. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this Agreement with respect to the Underlying Shares and Warrant
Shares of a particular Purchaser that such Purchaser shall furnish to the Company in writing such information and representation
letters, including a completed form of a securityholder questionnaire, with respect to itself and the proposed distribution by
it as the Company may reasonably request to assure compliance with federal and applicable state securities laws.
4.23 Purchaser’s
Exercise Limitations. The Company shall not effect any exercise of the rights granted in Section 4.17 of this Agreement, and
a Purchaser shall not have the right to exercise any portion of such rights granted in Section 4.17 to the extent that after giving
effect to such exercise, the Purchaser (together with the Purchaser’s Affiliates, and any other Persons acting as a group
together with the Purchaser or any of the Purchaser’s Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined in the Note), applied in the manner set forth in the Note.
4.24 Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current stockholder),
solely as a result of such Purchaser’s acquisition of the Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the
Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting claims
on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before December 24, 2014; provided, however, that such termination will not affect
the right of any party to sue for any breach by any other party (or parties).
5.2 Fees
and Expenses. At the Closing, the Company has agreed to pay G&M for the legal fees in connection with the Closing of some,
but not all, of the Purchasers in the amount of $30,000. Except as expressly set forth in the Transaction Documents and on Schedule
3.1(s), each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
5.3 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 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: (i) if to the Company, to: Attitude Drinks Inc., 712 US Highway 1, Suite 200, North Palm Beach, FL
33408, Attn: Roy Warren, CEO and President, telecopier: (800) 799–5053, and (ii) if to the Purchasers, to: the addresses
and fax numbers indicated on the signature pages hereto, with an additional copy by fax only to (which shall not constitute notice):
Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers holding at least a majority in interest of the component of the
affected Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision
is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such
right.
5.6 Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Following the Closing, any Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.10.
5.9 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action,
suit or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or proceeding 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. If either
party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations
of the Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may, at any time prior to the Company’s performance of such obligations, rescind or withdraw, in its sole discretion from
time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice
to its future actions and rights; provided, however, that in the case of a rescission of a conversion of a Note or
exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded
conversion or exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company
for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant
(including, issuance of a replacement warrant certificate evidencing such restored right).
5.14 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
5.16 Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17 Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the Closing Date thereof
forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such
excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.
5.18 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through G&M. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required
or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement
and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers
collectively and not between and among the Purchasers.
5.19 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
5.20 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.
5.21 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
5.22 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
5.23 Equitable
Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall be equitably
adjusted (but without duplication) to offset the effect of stock splits, similar events and as otherwise described in this Agreement
and Warrants.
(Signature Pages Follow)
IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Attitude Beer Holding Co. |
Address for Notice: |
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712 US Highway 1, Suite 200, |
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North Palm Beach, FL 33408 |
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Attn: Roy Warren, CEO and President |
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Fax: (800) 799–5053 |
By: |
/s/ Roy Warren |
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Name: Roy Warren |
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Title: Chief Executive Officer |
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With a copy to (which shall not constitute notice): |
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[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGE TO Attitude Beer Holding Co.
SECURITIES
PURCHASE AGREEMENT]
IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.
Name of Purchaser: ________________________________________________________
Signature of Authorized Signatory of
Purchaser: __________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory:
_____________________________________________
Facsimile Number of Authorized Signatory: __________________________________________
Address for Notice to Purchaser:
Address for Delivery of Securities to Purchaser (if not same
as address for notice):
Aggregate Closing Subscription Amount: US$________________
Note Principal Amount: US$___________________
Class A Warrants: ___________________
EIN Number, if applicable, will be provided under separate cover:
________________________
Date: ___________________________
[SIGNATURE PAGES CONTINUE]
SPA Exhibits and Schedules
Exhibit A |
Form of Note |
Exhibit B |
Form of Warrant |
Exhibit C |
Security Agreement |
Exhibit D |
8K |
|
|
Schedule 3.1(a) |
Subsidiaries |
Schedule 3.1(g) |
Capitalization |
Schedule 3.1(s) |
Fees and Expenses |
Schedule 3.1(z) |
Indebtedness |
Schedule 4.9 |
Use of Proceeds |
Schedule 4.13 |
Option Plans |
Above exhibits are reported separately in other exhibits
Above schedules are not included in this document