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): April 21,
2015
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. |
On April 21,
2015, Attitude Drinks Incorporated, a Delaware corporation ( the “Company”), Alpha Capital Anstalt, a company
organized under the laws of Liechtenstein (“Alpha”) and Tarpon Bay
Partners LLC, a Florida limited liability company (“Tarpon Bay”), the three original shareholders of the
Company’s majority owned subsidiary, Attitude Beer Holding Co, a Delaware corporation (“ABH”) entered into
a Purchase Agreement (the “Purchase Agreement”) with Harrison Vickers and Waterman Inc., a Nevada corporation
(“HVW”). Pursuant to the terms of the Purchase Agreement, the Company, Alpha and Tarpon sold to HVW all of the
outstanding shares of stock of ABH and ABH became a wholly owned subsidiary of HVW. In consideration for the sale of the
shares of common stock of ABH, HVW issued: (i) to the Company, 51 shares of newly created Series B Convertible Preferred
Stock of HVW(the “Series B Preferred Stock”) of HVW and a seven year warrant (the “B Warrant”) to
purchase 5,000,000 shares of HVW’s common stock, par value $.0001 per share (the “Common Stock”), at an
exercise price of $0.075 per share (subject to customary anti-dilution adjustment); (ii) to Alpha, a secured convertible note
due April 20, 2017 (the “Secured Convertible Note”) in the principal amount of $1,619,375, a seven year warrant
(the “Alpha Warrants”) to purchase 1,295,500,000 shares of Common Stock at an exercise price of $0.0025 per share
(subject to customary anti-dilution adjustment), and an additional investment right (“AIR”) to purchase up to
$3,750,000 in additional notes and corresponding A Warrants; and (iii) to Tarpon, a Secured Convertible Note in the principal
amount of $554,791.67, a seven year warrant (the “Tarpon Warrant”) to purchase 443,833,333 shares of Common Stock
at an exercise price of $0.0025 per share (subject to customary anti-dilution adjustment), and an Additional Investment
Right to purchase up to $1,250,000 in additional notes and corresponding A Warrants. In addition, Alpha acquired 32,300
shares of the Company’s Series A Preferred Stock (convertible into 32,300,000 shares of the Company’s Common
Stock) from HVW Holdings LLC, an entity of which Mr. James Giordano, the HVW’s prior Chief Executive Officer and
Chairman of the Board, is the managing member, subject to the terms of a Purchase Agreement (the “Series A Purchase
Agreement”). The Company purchased 87,990,000 shares of Common Stock from HVW Holdings LLC at a price of $65,000,
subject to the terms of a Purchase Agreement (the “Common Stock Purchase Agreement”). With the acquisition of
these shares of Common Stock and the issuance of the Series B Preferred Stock, the Company became the beneficial owner of 70%
of the Company’s outstanding common stock and the Series B Preferred Stock has voting rights equal to 51% of the
outstanding votes of all voting securities of the Company. The Alpha Warrant and the Tarpon Warrant are collectively referred
to herein as the “A Warrants” and the B Warrant and the A Warrants are collectively referred to herein as the
“Warrants.”
Pursuant to the terms
of an Exchange agreement, dated April 21, 2015, by and among ABH, the Company, Alpha and Tarpon, ABH and the Company, Alpha and
Tarpon agreed to cancel ABH’s obligations under notes previously issued by ABH to Alpha and Tarpon and ABH and the Company
agreed to guaranty the Secured Convertible Notes, and enter into the Pledge Agreement and Security Agreement described in this
paragraph. As such, the two Secured Convertible Notes are collectively secured by a pledge of the 51 shares of Series
B Preferred Stock that were issued to the Company, subject to the terms of a pledge agreement between the Company and the collateral
agent on behalf of Alpha and Tarpon. In addition, ABH and the Company guaranteed payment of all amounts owed under the two Secured
Convertible Notes, subject to the terms of a Guaranty executed by each of them with the collateral agent on behalf of Alpha and
Tarpon. HVW and each of its subsidiaries also granted Alpha and Tarpon a security interest in substantially all of the assets of
the Company, subject to the terms of a Security Agreements entered into by and among the Collateral Agent for Alpha and Tarpon
and HVW and each subsidiary.
A summary of material
provisions of the shares of HVW Series B Preferred Stock issued to the Company as set forth in the Certificate of Designations
of HVW is set forth below.
Designation, Amount and Par Value
The number of shares designated and authorized
as Series B Preferred Stock is 51. Each share of Series B Preferred Stock has a par value of $0.0001 per share and
a stated value of $1,000 per share (“Stated Value”)
Dividends
Except for distributions
in the event of liquidation, the Series B Preferred Stock does not accrue dividends.
Conversion
At any time after the
second anniversary of the issuance date of the Series B Preferred Stock, each share of Series B Preferred Stock is, at the option
of the holder, convertible into 1,000 shares of Common Stock (the “Conversion Ratio”).
Liquidation
The Series B Preferred
Stock ranks junior to all other series of the Company’s Preferred Stock and on parity with other capital stock of the Company
that does not expressly provide it shall be senior or junior to the Series B Preferred Stock. In the event of a liquidation, dissolution
or winding up of the Company, holders of Series B Preferred Stock are entitled to receive, after distribution to the holders of
senior securities and prior to the distribution to holders of Common Stock or any other class of preferred stock ranking junior
to the Series B Preferred Stock, the Stated Value (as adjusted for any stock splits, stock dividends, reorganizations, recapitalizations
and the like).
Anti-Dilution
The Conversion Ratio
is subject to adjustment if the Company effectuates a stock split or issues a dividend in Common Stock.
Voting
Each share of the Series
B Preferred Stock has voting rights equal to (x) (i) 0.019607 multiplied by the aggregate total of: (A) the issued and outstanding
shares of Common Stock eligible to vote at the time of the respective vote, plus (B) the number of votes which all other series
or classes of securities other that the Series B Preferred Stock are entitled to cast together with the other holders of Common
Stock at the time of the relevant vote divided by (ii) 0.49, minus (y) the numerator. The voting rights are subject to adjustment
for any stock splits, stock dividends, reorganizations, recapitalizations and the like.
Negative Covenants
So long as any shares
of Series B Preferred Stock are outstanding, without the affirmative vote of the holders of the Series B Preferred Stock, the Company
cannot:
(i) alter or change
any provisions of the Certificate of Designations;
(ii) amend its certificate
of incorporation, bylaws or other charter documents to affect adversely any rights of the holders of the Series B Preferred Stock;
(iii)
issue any additional shares of Series B Preferred Stock;
(iv)
alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock;
(v) increase the authorized or designated
number of shares of Series B Preferred Stock; and
(vi) enter into agreements with respect
to the foregoing.
As described above,
the Warrants are exercisable for shares of Common Stock upon the payment in cash of the exercise price, and they are also exercisable
on a cashless basis at any time there is no effective registration statement registering the shares of Common Stock underlying
the Warrants. The exercise price of the Warrants is subject to adjustment in the event of certain stock dividends and distributions,
stock splits, stock combinations, reclassifications or similar events affecting our Common Stock and also upon any distributions
of assets, including cash, stock or other property to our stockholder. The exercise price of the Warrants are also subject to full
ratchet price adjustment if the Company sells or grants any option to purchase, sell or re-price any Common Stock or Common Stock
Equivalents (as defined therein) at an exercise price lower that the current exercise price of the Warrant with the exception for
certain exempted issuance. In the event of a fundamental transaction, as described in the Warrants and generally including any
reorganization, recapitalization or reclassification of the Common Stock, the sale, transfer or other disposition of all or substantially
all of the Company’s properties or assets, the Company’s consolidation or merger with or into another person, the acquisition
of more than 50% of the outstanding Common Stock, or any person or group becoming the beneficial owner of 50% of the voting power
represented by the outstanding Common Stock, the holders of the Warrants will be entitled to receive upon exercise of the Warrants
the kind and amount of securities, cash or other property that the holders would have received had they exercised the Warrants
immediately prior to such fundamental transaction; provided that upon the occurrence of certain fundamental transactions, the holder
can require the Company to purchase the Warrant for cash at a price equal to the higher of the Black Scholes Value of the unexercised
portion of the Warrant or difference between the cash per share paid in the fundamental transaction and the exercise price per
share. The holder of Warrants will not have the right to exercise any portion of the Warrant if the holder (together with its affiliates)
would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to
the exercise, as such percentage ownership is determined in accordance with the terms of the Warrants.
Alpha and Tarpon
were each also issued an AIR to acquire for a period of 24 months after the date of issuance of the AIR up to $3,750,000 and $1,250,000,
respectively, of principal amount of notes (the “AIR Notes”) and a corresponding amount of warrants (“AIR Warrants”).
Two AIR Warrants to purchase Common Stock will be issued for each share of Common Stock that would be issued on the exercise date
of the AIR assuming full conversion of the AIR Note on such date at the conversion price of the AIR Note then in effect. The AIR
Warrant and AIR Note are identical to the Warrants and the Secured Convertible Notes that were issued to Alpha and Tarpon under
the Purchase Agreement.
With
the acquisition of these shares of Common Stock and the issuance of the Series B Preferred Stock, the Company became
the beneficial owner of 70% of the Company’s outstanding common stock and the Series B Preferred Stock has voting
rights equal to 51% of the outstanding votes of all voting securities of the Company.
The descriptions
in this Current Report on Form 8-K the HVW Series B Preferred Stock, the B Warrants, the Secured Convertible Note issued to
Alpha, the Secured Convertible Note issued to Tarpon, the Additional Investment Right, the Purchase Agreement, Pledge Agreement,
Security Agreement, Guaranty of ABH, Guaranty of Attitude Drinks, Inc., the Exchange Agreement, the Common Stock Purchase
Agreement, the Series A Warrant and the Series A Purchase Agreement and are qualified in their entirety by reference to the
full text of such documents, copies of which are filed as Exhibits 4.1, 4.2. 4.3, 4.4, 4.5, 4.6, 10.1, 10.2, 10.3, 10.4,
10.5, 10.6, 10.7, 99.1, 99.2 and 99.3 to this Current Report on Form 8-K, respectively, and are incorporated by reference
herein.
| Item 2.02. | Completion of Acquisition or Disposition of Assets. |
The information contained in Item
1.01 is incorporated herein by reference.
| Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. |
The information contained in Item 1.01
is incorporated herein by reference.
The Secured
Convertible Note, dated April 21, 2015 issued to Alpha and Tarpon in the principal amount of $1,619,375 and $554,791.67,
respectively mature on April 20, 2017, provide for interest on the outstanding principal amount compounded annually at the
annual rate of 10% (subject to increase as set forth therein) payable on the first anniversary of the Original Issue
Date and on the date of maturity. At any time after the Original Issue Date, the holders at their option, may convert the
outstanding principal balance and accrued interest into shares of Common Stock of the Company. The conversion price for the
principal and interest in connection with voluntary conversions by a holder of a note is equal to the lesser of (i) $0.0025,
or (ii) 50% of the lowest Closing Price (as defined in the Secured Convertible Note) of the Common Stock for
the 30 trading days preceding the conversion date, subject to adjustment as provided therein. Each Secured
Convertible Note, for example, is subject to adjustment upon certain events such as stock splits and have full ratchet
anti-dilution protections for issuance of securities by the Company at a price that is lower than the conversion price. Each
Secured Convertible Note contains certain negative covenants, including prohibitions on incurrence of indebtedness, liens,
charter amendments, dividends, redemption. The holder of the Secures Convertible Notes will not have the right to convert any
portion of their Secured Convertible Note Warrant if the holder (together with its affiliates) would beneficially own in
excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise. The two
Secured Convertible Note are collectively collateralized by substantially all of the assets of the Company. ABH and
Attitude Drinks agreed to guaranty the Secured Convertible Notes and enter into the Pledge Agreement and Security
Agreement as described above.
| Item 9.01 |
Financial Statements and Exhibits |
(b) Pro Forma
Financial Information (Unaudited). Pro Forma Financial Information required by this item will be filed by amendment to this
report no later than 71 calendar days after the date this Current Report must be filed.
| Exhibit No. |
|
Description |
| |
|
|
| 4.1 |
|
Certificate of Designations of Series
B Convertible Preferred Stock of Harrison Vickers and Waterman Inc. |
| 4.2 |
|
Warrant issued to Attitude Drinks, Inc. |
| 4.3 |
|
Secured Convertible Note due 2017 issued to Alpha Capital Anstalt |
| 4.4 |
|
Secured Convertible Note due 2017 issued to Tarpon Bay Partners LLC |
| 4.5 |
|
Additional Investment Right issued
to Alpha Capital Anstalt |
| 4.6 |
|
Additional Investment Right issued
to Tarpon Bay Partners LLC |
| 10.1 |
|
Asset Purchase Agreement dated as of
April 21, 2015 between Harrison Vickers and Waterman Inc., and Attitude Drinks, Inc., Alpha Capital Anstalt and Tarpon Bay
Partners LLC |
| 10.2 |
|
Pledge Agreement dated as of April
21, 2015 by and between Attitude Drinks, Inc. and Tarpon Bay Partners LLC as collateral agent on behalf Alpha Capital Anstalt
and Tarpon Bay Partners LLC |
| 10.3 |
|
Security Agreement dated as of April
21, 2015 among Harrison Vickers and Waterman Inc., each subsidiary of Harrison Vickers and Waterman Inc. and Tarpon Bay Partners
LLC as collateral agent |
| 10.4 |
|
Guaranty dated as of April 21, 2015
entered into by Attitude Beer Holding Co., for the benefit of Alpha Capital Anstalt and Tarpon Bay Partners LLC |
10.5 |
|
Guaranty dated as of April 21, 2015
entered into by Attitude Drinks, Inc., for the benefit of Alpha Capital Anstalt and Tarpon Bay Partners LLC |
10.6 |
|
Exchange Agreement
dated as of April 21, 2015 by and among Attitude Beer Holding Co,
Attitude Drinks, Inc. and Alpha Capital Anstalt and Tarpon Bay Partners LLC |
10.7 |
|
Purchase Agreement dated as of April
21, 2015 between HVW Holdings LLC and Attitude Drinks, Inc. |
| 99.1 |
|
A Warrant issued to Alpha Capital Anstalt |
| 99.2 |
|
Series A Warrant issued to Tarpon Bay Partners LLC |
| 99.3 |
|
Purchase Agreement dated as of April 21, 2015 between HVW Holdings
LLC and Alpha Capital Anstalt
|
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: April 27, 2015
ATTITUDE DRINKS INCORPORATED
By: /s/ Roy G. Warren
Name: Roy G. Warren
Title: Chief Executive Officer
Exhibit 4.1
SERIES B CONVERTIBLE PREFERRED STOCK TERMS
Section 1. Designation,
Amount and Par Value. The series of preferred stock shall be designated as the Series B Convertible Preferred Stock (the "Series
B Preferred Stock"), and the number of shares so designated and authorized shall be Fifty One (51). Each share of Series
B Preferred Stock shall have a par value of $0.0001 per share and a stated value of $1,000 per share (the "Stated Value”).
Section 2. Ranking.
The Series B Preferred Stock will, with respect to rights on liquidation, dissolution and winding-up of the Company, rank junior
to all of the other series of Preferred Stock of the Company, and on a parity with each other class or series of capital stock
of the Company the terms of which do not expressly provide that such class or series shall rank senior or junior to the Series
B Preferred Stock (collectively, "Parity Securities").
Section 3. Dividends.
Except for distributions in the event of Liquidation in accordance with Section 5, Holders of Series B Preferred Stock (herein
“Holders”) shall not be entitled to receive dividends on the Series B Preferred Stock.
Section 4. Voting
Rights; Negative Covenants. Each one (1) share of the Series B Preferred Stock shall have voting rights equal to (x) (i) 0.019607
multiplied by the aggregate total of (A) the issued and outstanding shares of Common Stock eligible to vote at the time
of the respective vote, plus (B) the number of votes which all other series or classes of securities other than this Series B Preferred
Stock are entitled to cast together with the holders of Common Stock at the time of the relevant vote (the amount determined by
this clause (i), the "Numerator"), divided by (ii) 0.49, minus (y) the Numerator. For purposes of illustration
only, if the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote is 5,000,000
the voting rights of one share of the Series B shall be equal to 102,036 ((0.019607 x 5,000,000) / 0.49) — (0.019607 x 5,000,000)
= 102,036). Solely with respect to matters of Company capitalization (i.e. increase in authorized common stock, stock splits, etc.),
and similar matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders
of the outstanding shares of Series B Preferred Stock shall vote together with the holders of Common Stock without regard to class,
except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or
bylaws. If the Company affects a stock split which either increases or decreases the number of shares of Common Stock outstanding
and entitled to vote, the voting rights of the Series B Preferred Stock shall not be subject to adjustment unless specifically
authorized. So long as any shares of Series B Preferred Stock are outstanding, the Company shall not and shall cause its subsidiaries
not to, without the affirmative vote of the Holders of the Series B Preferred Stock, (a) alter or change adversely the powers,
preferences or rights given to the Series B Preferred Stock, (b) alter or amend this Certificate of Designation, (c) amend its
certificate of incorporation, bylaws or other charter documents so as to affect adversely any rights of any Holders of the Series
B Preferred Stock, (d) increase the authorized or designated number of shares of Series B Preferred Stock, (e) issue any additional
shares of Series B Preferred Stock (including the reissuance of any shares of Series B Preferred Stock converted for Common Stock),
or (f) enter into any agreement with respect to the foregoing.
Section 5. Liquidation.
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary or a Sale (as defined below) (a
"Liquidation"), the holders of the Series B Preferred Stock shall be entitled to receive out of the assets of
the Company, whether such assets are capital or surplus, for each share of Series B Preferred Stock an amount equal to the Stated
Value, after any distribution or payment with respect to such Liquidation shall be made to the holders of any Senior Securities
and prior to any distribution or payment with respect to such Liquidation shall be made to the holders of any Junior Securities,
and if the assets of the Company shall be insufficient to pay in full such amounts and amounts payable on any Parity Securities,
then the entire assets to be distributed to the holders of Series B Preferred Stock and the holders of such Parity Securities shall
be distributed among the holders of Series B Preferred Stock and the holders of such Parity Securities ratably in accordance with
the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The Company shall
mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record Holder
of Series B Preferred Stock. A "Sale" shall mean a merger or consolidation by the Company with another corporation
or other entity (in each case, other than where the Company is the surviving entity).
Section 6. Conversion.
(a) At
any time and from time to time, from and after the second anniversary of the Issuance Date, each share of Series B Preferred Stock
shall, at the option of the Holder (a "Voluntary Conversion"), be convertible into one-thousand shares of Common
Stock (the "Conversion Ratio"). A Holder shall effect a conversion by surrendering to the Company the original
certificate or certificates representing the shares of Series B Preferred Stock to be converted to the Company, together with a
completed form of conversion notice attached hereto as Exhibit A (the "Conversion Notice"). Each Conversion
Notice shall specify the number of shares of Series B Preferred Stock to be converted, the date on which such conversion is to
be effected, which date may not be prior to the date the Holder delivers such Conversion Notice (the "Voluntary Conversion
Date"). If no Voluntary Conversion Date is specified in a Conversion Notice, the Voluntary Conversion Date shall be the
date that the Conversion Notice is delivered pursuant to this Section 6(a). Subject to Section 6(c) hereof, each Conversion Notice,
once given, shall be irrevocable.
(b) Not
later than five (5) Trading Days after a Conversion Date, the Company will deliver to the Holder (i) a certificate or certificates
representing the number of shares of Common Stock being issued upon the conversion of shares of Series B Preferred Stock, and (ii)
one or more certificates representing the number of shares of Series B Preferred Stock not converted, if any. The Company shall,
upon request of the Holder, use reasonable efforts to deliver any certificate or certificates required to be delivered by the Company
under this Section electronically through the Depository Trust Company or another established clearing corporation performing similar
functions (to the extent legended physical certificates are not required). If in the case of any Voluntary Conversion (i) such
certificate or certificates representing the number of shares of Common Stock being issued upon the conversion of shares of Series
B Preferred Stock are not delivered to or as directed by the applicable Holder, and (ii) the Holder or its designee has not received
other evidence of its ownership of the shares of Common Stock being issued upon the conversion of shares of Series B Preferred
Stock by the close of business on the fifth Trading Day after the Conversion Date, the Holder shall be entitled by written notice
to the Company at any time on or before its receipt of such certificate or certificates, to rescind such conversion, in which event
the Company shall immediately return the certificates representing the shares of Series B Preferred Stock tendered for conversion.
(c) If
at any time conditions shall arise by reason of action taken by the Company which in the sole opinion of the Board of Directors
are not adequately covered by the other provisions hereof and which would be reasonably expected to materially and adversely affect
the rights of the holders of Series B Preferred Stock (different than or distinguished from the effect generally on rights of holders
of any class of the Company's capital stock) or if at any time any such conditions would be reasonably expected to arise by reason
of any action contemplated by the Company, the Company shall mail a written notice briefly describing the action contemplated and
the material adverse effects of such action on the rights of the holders of Series B Preferred Stock at least 30 calendar days
prior to the effective date of such action, and an Appraiser selected by the holders of majority in interest of the Series B Preferred
Stock shall give its opinion as to the adjustment, if any (not inconsistent with the standards established in this Section 6),
of the Conversion Ratio (including, if necessary, any adjustment as to the securities into which shares of Series B Preferred Stock
may thereafter be convertible) and any distribution which is or would be required to preserve without diluting the rights of the
holders of shares of Series B Preferred Stock; provided, however, that the Company, after receipt of the determination
by such Appraiser, shall have the right to select an additional Appraiser, in good faith, in which case the adjustment shall be
equal to the average of the adjustments recommended by each such Appraiser. The Board of Directors shall make the adjustment recommended
forthwith upon the receipt of such opinion or opinions or the taking of any such action contemplated, as the case may be.
(d) The
Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for
the purpose of issuance upon conversion of Series B Preferred Stock, as herein provided, free from preemptive rights or any other
actual or contingent purchase rights of persons other than the holders of Series B Preferred Stock, not less than 100% of such
number of shares of Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 6(g)) upon
the conversion of all outstanding shares of Series B Preferred Stock hereunder. The Company covenants that all shares of Common
Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid and non-assessable.
(e) The
issuance of certificates for shares of Common Stock on conversion of Series B Preferred Stock shall be made without charge to the
Holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate,
provided that the Company 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 such shares of Series
B Preferred Stock so converted and the Company 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 the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
(f) Shares
of Series B Preferred Stock converted into Common Stock shall be canceled and shall have the status of authorized but unissued
shares of undesignated preferred stock.
(g) Any
and all notices or other communications or deliveries to be provided by the Holders of the Series B Preferred Stock hereunder,
including, without limitation, any Conversion Notice, shall be in writing and delivered by facsimile, sent by a nationally recognized
overnight courier service, or sent by certified or registered mail, postage prepaid, addressed to the attention of the President
of the Company at the facsimile telephone number or address of the principal place of business of the Company. Any and all notices
or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered by facsimile, sent
by a nationally recognized overnight courier service or sent by certified or registered mail, postage prepaid, addressed to each
Holder of Series B Preferred Stock at the facsimile telephone number or address of such Holder appearing on the books of the Company,
or if no such facsimile telephone number or address appears, at the principal place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:00 p.m.
(New York time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section later than 5:00 p.m. (New York time) on any date and earlier than 11:59 p.m.
(New York time) on such date, (iii) four business days after deposit in the United States mails, (iv) the second Business Day (as
defined in Section 9) following the date of mailing, if sent by nationally recognized overnight courier service, or (v) upon actual
receipt by the party to whom such notice is required to be given.
Section 7. Adjustments.
(a) Stock
Splits, etc. If, at any time while any shares of Series B Preferred Stock remain outstanding, the Company effectuates a stock
split or reverse stock split of its Common Stock or issues a dividend on its Common Stock consisting of shares of Common Stock,
the Conversion Ratio and any other amounts calculated as contemplated by this Certificate of Designations shall be equitably adjusted
to reflect such action (unless the Conversion Ratio already reflects such split). By way of illustration, and not in limitation,
of the foregoing (a) if the Company effectuates a 2:1 split of its Common Stock, thereafter, with respect to any conversion for
which the Company issues shares after the record date of such split, the Conversion Ratio shall be adjusted to equal one-half of
what it had been calculated to be immediately prior to such split (unless the Conversion Ratio already reflects such split); (b)
if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter, with respect to any conversion for which the Company
issues shares after the record date of such reverse split, the Conversion Ratio shall be adjusted to equal ten times what it had
been calculated to be immediately prior to such split (unless the Conversion Ratio already reflects such split); and (c) if the
Company declares a stock dividend of one share of Common Stock for every 10 shares outstanding, thereafter, with respect to any
conversion for which the Company issues shares after the record date of such dividend, the Conversion Ratio shall be adjusted (unless
the Conversion Ratio already reflects such dividend) to equal such amount multiplied by a fraction, of which the numerator is the
number of shares (10 in the example) for which a dividend share will be issued and the denominator is such number of shares plus
the dividend share(s) issuable or issued thereon (11 in the example).
(b) Sale.
If, for as long as any shares of Series B Preferred Stock remain outstanding, the Company enters into a merger (other than where
the Company is the surviving entity) or consolidation with another corporation or other entity (collectively, a "Sale"),
the Company will require, in the agreements reflecting such transaction, that the surviving entity and, if an entity different
from the successor or surviving entity, the entity whose capital stock or assets the holders of Common Stock of the Company are
entitled to receive as a result of such transaction, expressly assume the obligations of the Company hereunder. Notwithstanding
the foregoing, if the Company enters into a Sale and the holders of the Common Stock are entitled to receive stock, securities
or property in respect of or in exchange for Common Stock, then as a condition of such Sale, the Company and any such successor,
purchaser or transferee will agree that the Series B Preferred Stock may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger, consolidation
or transfer by a Holder of the number of shares of Common Stock into which then outstanding shares of Series B Preferred Stock
might have been converted immediately before such merger, consolidation or transfer, subject to adjustments which shall be as nearly
equivalent as may be practicable. In the event of any such proposed Sale, the Holder hereof shall have the right to convert all
of any of the outstanding Series B Preferred Stock by delivering a Notice of Conversion to the Company within 15 days of receipt
of notice of such Sale from the Company.
(c) Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 7, the Company, at its expense,
shall promptly compute such adjustment or readjustment and prepare and furnish to each Holder of Series B Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of any Holder of Series B Preferred Stock, furnish to such Holder a like
certificate setting forth (a) such adjustment or readjustment, and (b) the number of shares of Common Stock and the amount, if
any, of other securities or property which at the time would be received upon conversion of a share of Series B Preferred Stock.
Section 8. Definitions.
For the purposes hereof, the following terms shall have the following meanings:
"Business Day"
means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the
State of Delaware are authorized or required by law or other government action to close.
"Common Stock"
means the common stock, $.001 par value per share, of the Company, and stock of any other class into which such shares may hereafter
have been reclassified or changed.
"Conversion Date" means Voluntary Conversion
Date.
"Exchange Act" mean the Securities Exchange
Act of 1934, as amended.
"Issuance Date"
means the earliest date on which a Holder receives shares of the Series B Preferred Stock, regardless of the number of certificates
which may be issued to evidence such Series B Preferred Stock.
"Holder" means a registered holder of
a share or shares of Series B Preferred Stock
"Junior Securities"
means the Common Stock and all other equity securities of the Company ranking junior to the Series B Preferred Stock in terms of
payment of liquidation proceeds.
"Person" means an individual
or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or other entity of any kind.
“Senior Security” means any
equity security of the Company ranking senior to the Series B Preferred Stock in terms of payment of liquidation proceeds.
"Trading Day" means a day
on which the New York Stock Exchange is open for three or more hours.
EXHIBIT A
CONVERSION NOTICE
Date of Conversion Notice:
(To be executed by the registered holder
to convert shares of Series B Preferred Stock)
The undersigned hereby elects, in accordance
with the terms and conditions of the Certificate of Designation, to convert the number of shares of Series B Convertible Preferred
Stock indicated below, into shares of Common Stock, par value $0.0001 per share (the "Common Stock"), of PureSafe Water
Systems, Inc. (the "Company"), as of the date written below. If shares are to be issued in the name of a person
other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the undersigned
for any conversion, except for such transfer taxes, if any.
| Date to effect conversion: |
|
|
| Number of shares of Series B Convertible Preferred Stock to be converted: |
|
| Number of shares of Common Stock to be issued: |
|
Exhibit 4.2
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.
COMMON STOCK PURCHASE CLASS B WARRANT
HARRISON
VICKERS AND WATERMAN INC.
Warrant Shares:
5,000,000 Initial Exercise Date: April 21, 2015
Warrant No: B-1
THIS COMMON
STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ATTITUDE DRINKS, INC or its
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”)
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 HARRISON VICKERS AND WATERMAN
INC., a Nevada corporation (the “Company”), up to 5,000,000 shares (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 Asset Purchase Agreement
(the “Purchase Agreement”), dated April 21, 2015, 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 be $0.075, 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 9.99% 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, upon not less than 61 days’ prior notice to the Company,
may increase or decrease 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 or decrease 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(b)), 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. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction,
(2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving
a person or entity not traded on a national securities exchange or trading market (with such exchange or market including, without
limitation, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, The New York Stock Exchange,
Inc., the NYSE or Amex), the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable
concurrently with the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder
the higher of (i) an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the
date of the consummation of such Fundamental Transaction, or (ii) the positive difference between the cash per share paid in such
Fundamental Transaction minus the then in effect Exercise Price. “Black Scholes Value” means the value of the
unexercised portion of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function
on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction
for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an
expected volatility equal to the greater of 100% and the 100 day volatility obtained from the “HVT” function on Bloomberg
as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying
price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value
of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. 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(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, 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) Subsequent
Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell
or grant any option to purchase, or sell or grant any right to reprice, or otherwise issue (or announce any offer, sale, grant
or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective price per share less
than the Exercise Price then in effect, excluding Exempt Issuances as defined in the Purchase Agreement (such lower price, the
“Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed
that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options
or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective
price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise
Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive
Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in
the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever
such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or
issued under this Section 3(e) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than
the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section
3(e), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing
terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides
a Dilutive Issuance Notice pursuant to this Section 3(e), upon the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon
in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be converted or exercised. Notwithstanding the foregoing, the issuance
of any Common Stock or Common Stock Equivalents pursuant to the Purchase Agreement shall not be deemed a Dilutive Issuance.
f) 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.
g) 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
fifteen (15) 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(a).
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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HARRISON VICKERS AND WATERMAN INC. |
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By: |
/s/ Roy Warren |
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Name: Roy Warren |
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Title: Chief Executive Officer |
NOTICE OF EXERCISE
To: HARRISON
VICKERS AND WATERMAN INC.
(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: |
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| Signature of Authorized Signatory of Investing Entity: |
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| Name of Authorized Signatory: |
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| Title of Authorized Signatory: |
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
HARRISON
VICKERS AND WATERMAN INC.
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 4.3
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.
THIS NOTE HAS BEEN ISSUED PURSUANT TO
AN ASSET PURCHASE AGREEMENT AMONG HARRISON VICKERS AND WATERMAN INC., THE INITIAL HOLDER ON APRIL 21, 2015 (THE
“PURCHASE AGREEMENT”) IN CONNECTION WITH TRANSACTIONS DESCRIBED THEREIN.
Original Issue Date: April 21,
2015
Original Conversion Price (subject to adjustment
herein): $.0025
Principal Amount: $1,619,375
SECURED
CONVERTIBLE NOTE
DUE
April 20, 2017
THIS CONVERTIBLE
NOTE is one of a series of duly authorized and validly issued Notes of HARRISON VICKERS AND WATERMAN INC., a Nevada
corporation, (the “Borrower”), having its principal place of business at 4224 White Plains Road,
3rd Floor, Bronx, New York 10466, due APRIL 20, 2017 (this note, the “Note” and,
collectively with the other notes of such series, the “Notes”).
FOR VALUE RECEIVED,
Borrower promises to pay to ALPHA CAPITAL ANSTALT or its registered assigns (the “Holder”), or
shall have paid pursuant to the terms hereunder, the principal sum of One Million Six Hundred Nineteen Thousand Three
Hundred Seventy Five Dollars ($1,619,375) on April 20, 2017 (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 assets of the 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.
“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, or (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) 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.
“Common
Stock” means the common stock of the Company, $0.0001 par value, 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.
“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.
“Distribution”
shall have the meaning set forth in Section 5(d).
“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).
“Loan
Documents” shall have the meaning set forth in Section 9.
“Mandatory
Conversion” shall have the meaning set forth in Section 6.
“Mandatory
Conversion Date” shall have the 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 Mandatory Conversion” shall have the 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 the 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 $200,000 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 Borrower’s consolidated
balance sheet (or the notes thereto) not affecting more than $200,000 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 $200,000 due under leases required to be capitalized in accordance with GAAP. Neither the Borrower
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” has the meaning set forth on the first page of this Note.
“Purchase
Rights” shall have the meaning set forth in Section 5(b).
“Reservation
Date” shall have the meaning set forth in Section 4(e)(vi).
“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).
“Transaction
Documents” shall have the meaning set forth in the Purchase Agreement of even date herewith among the Borrower and other
parties thereto.
“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 or in Kind. 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% (subject to increase as set forth in this Note) payable
on each anniversary of the Original Issue Date and on the Maturity Date (each such date, an “Interest Payment Date”)
(if the Interest Payment Date is not a Trading Day, the applicable payment shall be due on the next succeeding Trading Day).
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, 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. 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, Note principal and/or at the
election of the Holder accrued interest 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 and/or interest 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 or accrued interest, at the option of the Holder, in an amount equal
to the applicable conversion. The Holder and Borrower shall maintain records showing the principal and interest amount(s) converted
and the date of such conversion(s). Borrower may deliver an objection to any Notice of Conversion only 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
equal to the lesser of (i) $0.0025, or (ii) fifty percent (50%) of the lowest Closing Price of the Common Stock for the thirty
(30) Trading Days preceding the Conversion Date, 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) after the
effective date or a current registration statement, 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 from and after the Original Issue Date, and at all times
thereafter 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 be issuable 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 non-assessable.
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 9.99% 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).
d) 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).
e) 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(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 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.
f) Subsequent
Equity Sales. If, at any time while this Note is outstanding, Borrower or any Subsidiary, as applicable, sells or grants any
option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or
any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares
of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base
Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued
in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than
the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever
such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this
Section 6(b) in respect of an Exempt Issuance. If Borrower enters into a Variable Rate Transaction, despite the prohibition set
forth in the Purchase Agreement, Borrower shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest
possible conversion price at which such securities may be converted or exercised. Borrower shall notify the Holder in writing,
no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 6(b),
indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing
terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not Borrower provides
a Dilutive Issuance Notice pursuant to this Section 6(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless
of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.
g) 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.
h) 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. Redemption
and Mandatory Conversion. Borrower shall have no right to require the Holder to surrender the Note for redemption, nor convert
any part or all of this Note without the consent of the Holder.
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 which must include the Lead Investor 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 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) any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation,
or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of Borrower or any Subsidiary, if any such event or circumstance could have a Material Adverse
Effect; or
i)
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 7 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) 7 Trading Days after notice of such failure sent
by the Holder or by any Other Holder to Borrower and (B) 15 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, 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
$200,000, 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
does not meet the current public information requirements under Rule 144;
ix.
Borrower shall fail for any reason to deliver certificates to a Holder prior to the seventh 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;
x.
any Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase Agreement;
xi.
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;
xii.
any
dissolution, liquidation or winding up by Borrower or a material Subsidiary of a substantial portion of their business;
xiii.
cessation
of operations by Borrower or a material Subsidiary;
xiv.
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;
xv.
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;
xvi.
a
Commission or judicial stop trade order or suspension from its Principal Trading Market;
xvii.
except
as disclosed in the SEC Reports, the restatement after the date hereof of any financial statements filed by the Borrower 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;
xviii.
the
Borrower effectuates a reverse split of its Common Stock without ten (10) days prior written notice to the Holder;
xix.
the
Borrower fails to have authorized and reserved 150% of the Conversion Shares issuable upon conversion of the Notes including Conversion
Shares issuable upon conversion of interest through the Maturity Date;
xx.
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;
xxi.
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;
xxii.
the
occurrence of an Event of Default under any Other Note; or
xxiii.
any
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 parties thereto, or the validity or enforceability thereof shall be contested
by any party thereto, or a proceeding shall be commenced by Borrower or any Subsidiary or any governmental authority having jurisdiction
seeking to establish the invalidity or unenforceability thereof, or Borrower or any Subsidiary shall deny in writing that it has
any liability or obligation purported to be created under any Transaction Document.
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 this 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 he 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: Harrison Vickers and Waterman Inc., 4224 White Plains
Road, 3rd Floor, Bronx, New York 10466, Attn: Roy Warren, facsimile: (800) 799-5053, with a copy by fax only
to (which shall not constitute notice): __________, __________, 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 21 day of April, 2015.
| |
HARRISON VICKERS AND WATERMAN, INC. |
| |
|
| |
By: |
/s/ Roy Warren |
| |
|
Name: Roy Warren |
| |
|
Title: Chief Executive Officer |
| WITNESS: |
|
| |
|
| ______________________________________ |
|
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby
elects to convert principal under the Convertible Note due April 20, 2017 of Harrison Vickers and Waterman, Inc.,
a Nevada corporation (the “Borrower”), 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:
| |
Date to Effect Conversion: ____________________________ |
| |
|
| |
Principal Amount of Note to be Converted: $__________________ |
| |
|
| |
Number of shares of Common Stock to be issued: ______________ |
| |
|
| |
* Interest Amount to be Converted: $_______________ |
| |
|
| |
Signature: _________________________________________ |
| |
|
| |
Name: ____________________________________________ |
| |
|
| |
Address for Delivery of Common Stock Certificates: __________ |
| |
_____________________________________________________ |
| |
_____________________________________________________ |
| |
|
| |
Or |
| |
|
| |
DWAC Instructions: _________________________________ |
| |
|
| |
Broker No:_____________ |
| |
Account No: _______________ |
* Interest on Principal Amount of $____________ for period of ______________
through ________________.
Exhibit 4.4
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.
THIS NOTE HAS BEEN ISSUED PURSUANT TO AN
ASSET PURCHASE AGREEMENT AMONG HARRISON VICKERS AND WATERMAN INC., THE INITIAL HOLDER ON APRIL 21, 2015 (THE “PURCHASE
AGREEMENT”) IN CONNECTION WITH TRANSACTIONS DESCRIBED THEREIN.
Original Issue Date: April 21,
2015
Original Conversion Price (subject to adjustment
herein): $.0025
Principal Amount: $554,791.67
$554,791.67
SECURED
CONVERTIBLE NOTE
DUE
April 20, 2017
THIS CONVERTIBLE
NOTE is one of a series of duly authorized and validly issued Notes of HARRISON VICKERS AND WATERMAN INC., a Nevada
corporation, (the “Borrower”), having its principal place of business at 4224 White Plains Road,
3rd Floor, Bronx, New York 10466, due APRIL 20, 2017 (this note, the “Note” and,
collectively with the other notes of such series, the “Notes”).
FOR VALUE RECEIVED, Borrower
promises to pay to TARPON BAY PARTNERS LLC or its registered assigns (the “Holder”), or shall have paid
pursuant to the terms hereunder, the principal sum of Five Hundred Fifty Four Thousand Seven Hundred Ninety One Dollars and
Sixty Seven Cents ($554,791.67) on April 20, 2017 (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 assets of the 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.
“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, or (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) 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.
“Common
Stock” means the common stock of the Company, $0.0001 par value, 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.
“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.
“Distribution”
shall have the meaning set forth in Section 5(d).
“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).
“Loan
Documents” shall have the meaning set forth in Section 9.
“Mandatory
Conversion” shall have the meaning set forth in Section 6.
“Mandatory
Conversion Date” shall have the 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 Mandatory Conversion” shall have the 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 the 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 $200,000 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 Borrower’s consolidated
balance sheet (or the notes thereto) not affecting more than $200,000 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 $200,000 due under leases required to be capitalized in accordance with GAAP. Neither the Borrower
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” has the meaning set forth on the first page of this Note.
“Purchase
Rights” shall have the meaning set forth in Section 5(b).
“Reservation
Date” shall have the meaning set forth in Section 4(e)(vi).
“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).
“Transaction
Documents” shall have the meaning set forth in the Purchase Agreement of even date herewith among the Borrower and other
parties thereto.
“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 or in Kind. 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% (subject to increase as set forth in this Note) payable
on each anniversary of the Original Issue Date and on the Maturity Date (each such date, an “Interest Payment Date”)
(if the Interest Payment Date is not a Trading Day, the applicable payment shall be due on the next succeeding Trading Day).
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, 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. 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, Note principal and/or at the
election of the Holder accrued interest 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 and/or interest 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 or accrued interest, at the option of the Holder, in an amount equal
to the applicable conversion. The Holder and Borrower shall maintain records showing the principal and interest amount(s) converted
and the date of such conversion(s). Borrower may deliver an objection to any Notice of Conversion only 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
equal to the lesser of (i) $0.0025, or (ii) fifty percent (50%) of the lowest Closing Price of the Common Stock for the thirty
(30) Trading Days preceding the Conversion Date, 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) after the
effective date or a current registration statement, 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 from and after the Original Issue Date, and at all times
thereafter 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 be issuable 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 non-assessable.
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 9.99% 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).
d) 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).
e) 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(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 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.
f) Subsequent
Equity Sales. If, at any time while this Note is outstanding, Borrower or any Subsidiary, as applicable, sells or grants any
option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or
any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares
of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base
Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued
in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than
the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever
such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this
Section 6(b) in respect of an Exempt Issuance. If Borrower enters into a Variable Rate Transaction, despite the prohibition set
forth in the Purchase Agreement, Borrower shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest
possible conversion price at which such securities may be converted or exercised. Borrower shall notify the Holder in writing,
no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 6(b),
indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing
terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not Borrower provides
a Dilutive Issuance Notice pursuant to this Section 6(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless
of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.
g) 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.
h) 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. Redemption
and Mandatory Conversion. Borrower shall have no right to require the Holder to surrender the Note for redemption, nor convert
any part or all of this Note without the consent of the Holder.
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 which must include the Lead Investor 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 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) any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation,
or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of Borrower or any Subsidiary, if any such event or circumstance could have a Material Adverse
Effect; or
i)
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 7 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) 7 Trading Days after notice of such failure sent
by the Holder or by any Other Holder to Borrower and (B) 15 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, 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
$200,000, 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
does not meet the current public information requirements under Rule 144;
ix.
Borrower shall fail for any reason to deliver certificates to a Holder prior to the seventh 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;
x.
any Person shall breach any agreement delivered to the initial Holders pursuant to Section 2.2 of the Purchase Agreement;
xi.
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;
xii.
any
dissolution, liquidation or winding up by Borrower or a material Subsidiary of a substantial portion of their business;
xiii.
cessation
of operations by Borrower or a material Subsidiary;
xiv.
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;
xv.
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;
xvi.
a
Commission or judicial stop trade order or suspension from its Principal Trading Market;
xvii.
except
as disclosed in the SEC Reports, the restatement after the date hereof of any financial statements filed by the Borrower 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;
xviii.
the
Borrower effectuates a reverse split of its Common Stock without ten (10) days prior written notice to the Holder;
xix.
the
Borrower fails to have authorized and reserved 150% of the Conversion Shares issuable upon conversion of the Notes including Conversion
Shares issuable upon conversion of interest through the Maturity Date;
xx.
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;
xxi.
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;
xxii.
the
occurrence of an Event of Default under any Other Note; or
xxiii.
any
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 parties thereto, or the validity or enforceability thereof shall be contested
by any party thereto, or a proceeding shall be commenced by Borrower or any Subsidiary or any governmental authority having jurisdiction
seeking to establish the invalidity or unenforceability thereof, or Borrower or any Subsidiary shall deny in writing that it has
any liability or obligation purported to be created under any Transaction Document.
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 this 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 he 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: Harrison Vickers and Waterman Inc., 4224 White Plains
Road, 3rd Floor, Bronx, New York 10466, Attn: Roy Warren, facsimile: (800) 799-5053, with a copy by fax only
to (which shall not constitute notice): __________, __________, 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 21 day of April, 2015.
| |
HARRISON VICKERS AND WATERMAN, INC. |
| |
|
| |
By: |
/s/ Roy Warren |
| |
|
Name: Roy Warren |
| |
|
Title: Chief Executive Officer |
| WITNESS: |
|
| |
|
| ______________________________________ |
|
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby
elects to convert principal under the Convertible Note due April 20, 2017 of Harrison Vickers and Waterman, Inc.,
a Nevada corporation (the “Borrower”), 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:
| |
Date to Effect Conversion: ____________________________ |
| |
|
| |
Principal Amount of Note to be Converted: $__________________ |
| |
|
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Number of shares of Common Stock to be issued: ______________ |
| |
|
| |
* Interest Amount to be Converted: $_______________ |
| |
|
| |
Signature: _________________________________________ |
| |
|
| |
Name: ____________________________________________ |
| |
|
| |
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: _______________ |
* Interest on Principal Amount of $____________ for period of ______________
through ________________.
Exhibit 4.5
"NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE -OR- EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A FORM REASONABLY ACCEPTABLE TO THE COMPANY, 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."
ADDITIONAL INVESTMENT RIGHT
To Purchase for up
to $3,750,000.00 of Principal Amount of convertible Notes and Common Stock Purchase Warrants of:
HARRISON VICKERS AND WATERMAN
A Nevada corporation
(the “Company”)
THIS ADDITIONAL INVESTMENT
RIGHT (the "AIR") certifies that, for value received, ALPHA CAPITAL ANSTALT, address at Lettstrasse 32,
9490 Vaduz, Principality of Liechtenstein Fax: + 423 232 31 96 (the "HOLDER"), may voluntarily purchase, upon
the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date
hereof (the "INITIAL EXERCISE DATE") and on or prior to the close of business twenty four (24) months after the
date hereof (“EXPIRATION DATE”) with respect to up to $3,750,000.00 of Principal Amount of Notes (“AIR
NOTES”) and corresponding amount of Warrants (“AIR WARRANTS”). Two AIR Warrants to purchase Common
Stock will be issued for each share of Common Stock that would be issued on the exercise date of the AIR assuming the complete
conversion of the AIR Note on such date at the Conversion Price of the AIR Note then in effect. The AIR Notes and AIR Warrants
will be identical to the Notes and Warrants issued pursuant to the Asset Purchase Agreement except that all time effective or time
triggered clauses and provisions of the Transaction Documents in so far as they relate to the AIR Note and AIR Warrant shall be
determined from the issue date of the AIR Note and AIR Warrant and extend for the corresponding periods and until the corresponding
extended termination dates or deadlines as applicable to the Notes and Warrants issuable on the Closing Date, mutatis mutandis.
Collectively, the Air Notes and AIR Warrants issuable upon exercise of the AIR are referred to herein as the “AIR SECURITIES”.
SECTION
1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Asset Purchase Agreement (the "ASSET PURCHASE
AGREEMENT"), dated April 21, 2015, among the Company and the Subscribers signatory thereto, the Notes issued pursuant
thereto and pursuant to which this AIR was issued.
SECTION 2. EXERCISE.
a) i. EXERCISE
BY HOLDER. Exercise of the purchase rights represented by this AIR 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 Expiration Date by the Holder by (i) delivery to the Company of a duly executed
facsimile copy of the Notice of Exercise Form annexed hereto (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 such Holder appearing on the books of the Company), and (ii) upon
receipt of the AIR Securities by the Holder, the payment to the Company of the aggregate Purchase Price of the AIR Notes and Warrants
thereby purchased (“AGGREGATE EXERCISE PRICE”). If exercised in part, the Holder may continue to exercise the
balance of this AIR at any time until the earlier of; (i) this AIR has been exercised in whole; or (ii) the Expiration Date.
ii. Upon
payment for the AIR Securities, Holder will receive a legal opinion in form reasonably acceptable to Holder and such other representations
and certificates reasonably requested by Holder.
b) MECHANICS
OF EXERCISE.
i. AUTHORIZATION
OF AIR SECURITIES. The Company covenants that its issuance of this AIR shall constitute full authority to its officers who are
charged with the duty of executing certificates to execute and issue the necessary certificates for the AIR Securities upon the
exercise of the purchase rights under this AIR. The Company will take all such reasonable action as may be necessary to assure
that the AIR Securities may be issued as provided herein without violation of any applicable law or regulation.
ii. DELIVERY
OF CERTIFICATES UPON EXERCISE. AIR Notes and AIR Warrants purchased hereunder shall be delivered to the Holder within five (5)
Trading Days after the delivery to the Company of the Notice of Exercise Form as set forth above ("AIR SECURITIES DELIVERY
DATE"). This AIR shall be deemed to have been exercised on the date the payment of the Purchase Price is received by the
Company. The AIR Securities 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 the AIR Securities for all purposes, as of the date the AIR has been exercised
by payment to the Company of the Aggregate Exercise Price to be paid by the Holder. This AIR certificate is not required to be
delivered to the Company until fourteen (14) days after this AIR has been fully exercised.
iii. DELIVERY
OF NEW AIRS UPON EXERCISE. If this AIR shall have been exercised in part prior to the Expiration Date and this AIR was delivered
to the Company in connection therewith, the Company shall, at the time of delivery of the certificate or certificates representing
the AIR Securities, deliver to Holder a new AIR evidencing the rights of Holder to purchase the unpurchased AIR Securities called
for by this AIR, which new AIR shall in all other respects be identical with this AIR.
iv. RESCISSION
RIGHTS. If the Company fails to deliver to the Holder a certificate or certificates representing the AIR Securities pursuant to
this Section 2(e)(iv) by the AIR Securities Delivery Date, then the Holder will have the right, at Holder’s election, to
enforce the exercise of this AIR or rescind such exercise and in any event be entitled to actual damages incurred, and the Company
will not have the right thereafter to compel exercise of this AIR.
v. CHARGES,
TAXES AND EXPENSES. Issuance of certificates for AIR Securities 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 AIR Securities 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 AIR Securities are to be issued in a name other than the name of
the Holder, this AIR 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.
vi. CLOSING
OF BOOKS. The Company will not close its records in any manner which prevents the timely exercise of this AIR, pursuant to the
terms hereof or the conversion of the Air Notes or exercise of the AIR Warrants.
SECTION 3. NOTICE.
If (A) 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, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property
or (B) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;
then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the AIR Register
of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating
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. The Holder is entitled to exercise this AIR during the 20-day period commencing the date of such
notice to the effective date of the event triggering such notice.
SECTION 4. TRANSFER
OF AIR.
a) TRANSFERABILITY.
Subject to compliance with any applicable securities laws, and provided such assignee agrees to be bound to the terms of this Agreement
and the Asset Purchase Agreement, this AIR and all rights hereunder are transferable, in whole or in part, upon surrender of this
AIR at the principal office of the Company, together with a written assignment of this AIR 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 AIR or AIRs in the
name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall
issue to the assignor a new AIR evidencing the portion of this AIR not so assigned, and this AIR shall promptly be cancelled. An
AIR, if properly assigned, may be exercised by a new holder for the purchase of AIR Securities without having a new AIR issued.
b) NEW
AIRS. This AIR may be divided or combined with other AIRs upon presentation hereof at the aforesaid office of the Company, together
with a written notice specifying the names and denominations in which new AIRs 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 AIR or AIRs in exchange for the AIR or AIRs to be divided or combined in accordance
with such notice.
c) AIR
REGISTER. The Company shall register this AIR, upon records to be maintained by the Company for that purpose (the "AIR
REGISTER"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder
of this AIR 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) TITLE
TO THE ADDITIONAL INVESTMENT RIGHT. Prior to the Expiration Date and subject to compliance with applicable laws and Section 4 of
this AIR, this AIR and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this AIR together with the Assignment Form annexed hereto properly
endorsed and an opinion of Holder’s counsel, if required by the Company. As a condition to such transfer, the transferee
shall sign an investment letter, and deliver such other documents, in form and substance reasonably satisfactory to the Company.
b) NO
RIGHTS AS SHAREHOLDER. This AIR does not entitle the Holder to any voting rights or other rights as a shareholder of the Company.
Upon the surrender of this AIR and the payment of the aggregate principal, the AIR Securities so purchased shall be and be deemed
to be issued to such Holder as the record owner of such AIR Securities as of the close of business on the later of the date of
such surrender or payment.
c) LOSS,
THEFT, DESTRUCTION OR MUTILATION OF AIR. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this AIR or any certificate relating to the AIR Securities, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the AIR, shall not
include the posting of any bond), and upon surrender and cancellation of such AIR or certificate, if mutilated, the Company will
make and deliver, at Holder’s expense, a new AIR or certificate of like tenor and dated as of such cancellation, in lieu
of such AIR or certificate.
d) ANTI-DILUTION.
The conversion price of the Air Notes, the exercise price of the AIR Warrants and the number of shares of Common Stock purchasable
upon conversion and exercise shall be adjusted from and after the date of issue of this AIR in the same manner and in the same
proportions as is applicable to the Note and Warrants.
SECTION 6. INCORPORATION.
This AIR is subject to the terms of the Asset Purchase Agreement which is incorporated herein by this reference. Without limitation,
the grant of the security interest, the Company’s representations and warranties, covenants and indemnifications set forth
therein. The provisions of Sections 5.9 and 5.22 of the Asset Purchase Agreement are incorporated herein by this reference as if
included herein, and shall relate to, control and govern this certificate.
[-Signature Page Follows-]
IN WITNESS WHEREOF,
the Company has caused this AIR to be executed by its officer thereunto duly authorized.
Dated: April 21, 2015
| |
HARRISON VICKERS AND WATERMAN INC. |
| |
|
| |
By: |
/s/ Roy Warren |
| |
|
Name: Roy Warren |
| |
|
Title: Chief Executive Officer |
NOTICE OF EXERCISE
TO: [_______________
(1) The undersigned hereby elects to purchase
$________ principal amount of secured convertible promissory notes of HARRISON VICKERS AND WATERMAN (the “Company”)
pursuant to the terms of the attached AIR and tenders herewith payment of the amount equal to such Stated Value.
(2) Payment shall take the form of (check
applicable box) in lawful money of the United States,
¨
Cash;
¨
Wire Transfer; or
¨
Check
(3) Please issue a certificate or certificates
representing said AIR Notes and AIR Warrants representing the right to purchase ___________ shares of the Company’s Common
Stock in the name of the undersigned or in such other name as is specified below:
________________________________________
The AIR Notes and AIR Warrants shall be delivered to the following:
________________________________________
________________________________________
________________________________________
(4) ACCREDITED INVESTOR. The undersigned
is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[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 AIR, execute this form and supply required
information. Do not use this form to exercise the AIR.)
FOR VALUE RECEIVED, the foregoing AIR and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address
is ____________________
________________________________________________________________.
________________________________________________________________
Dated: ______________, _______
Holder's Signature: ______________________________________________________
Holder's Address: ______________________________________________________
______________________________________________________________________
Exhibit 4.6
"NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE -OR- EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A FORM REASONABLY ACCEPTABLE TO THE COMPANY, 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."
ADDITIONAL INVESTMENT RIGHT
To Purchase for up
to $1,250,000.00 of Principal Amount of convertible Notes and Common Stock Purchase Warrants of:
HARRISON VICKERS AND WATERMAN
A Nevada corporation
(the “Company”)
THIS ADDITIONAL INVESTMENT
RIGHT (the "AIR") certifies that, for value received, Tarpon Bay Partners LLC, address at Executive Pavilion
90 Grove Street, Ridgefield CT 06877 Fax: (203) 431– 8301 (the "HOLDER"), may voluntarily purchase, upon
the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date
hereof (the "INITIAL EXERCISE DATE") and on or prior to the close of business twenty four (24) months after the
date hereof (“EXPIRATION DATE”) with respect to up to $1,250,000.00 of Principal Amount of Notes (“AIR
NOTES”) and corresponding amount of Warrants (“AIR WARRANTS”). Two AIR Warrants to purchase Common
Stock will be issued for each share of Common Stock that would be issued on the exercise date of the AIR assuming the complete
conversion of the AIR Note on such date at the Conversion Price of the AIR Note then in effect. The AIR Notes and AIR Warrants
will be identical to the Notes and Warrants issued pursuant to the Asset Purchase Agreement except that all time effective or time
triggered clauses and provisions of the Transaction Documents in so far as they relate to the AIR Note and AIR Warrant shall be
determined from the issue date of the AIR Note and AIR Warrant and extend for the corresponding periods and until the corresponding
extended termination dates or deadlines as applicable to the Notes and Warrants issuable on the Closing Date, mutatis mutandis.
Collectively, the Air Notes and AIR Warrants issuable upon exercise of the AIR are referred to herein as the “AIR SECURITIES”.
SECTION
1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Asset Purchase Agreement (the "ASSET PURCHASE
AGREEMENT"), dated April 21, 2015, among the Company and the Subscribers signatory thereto, the Notes issued pursuant
thereto and pursuant to which this AIR was issued.
SECTION 2. EXERCISE.
a) i. EXERCISE
BY HOLDER. Exercise of the purchase rights represented by this AIR 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 Expiration Date by the Holder by (i) delivery to the Company of a duly executed
facsimile copy of the Notice of Exercise Form annexed hereto (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 such Holder appearing on the books of the Company), and (ii) upon
receipt of the AIR Securities by the Holder, the payment to the Company of the aggregate Purchase Price of the AIR Notes and Warrants
thereby purchased (“AGGREGATE EXERCISE PRICE”). If exercised in part, the Holder may continue to exercise the
balance of this AIR at any time until the earlier of; (i) this AIR has been exercised in whole; or (ii) the Expiration Date.
ii. Upon
payment for the AIR Securities, Holder will receive a legal opinion in form reasonably acceptable to Holder and such other representations
and certificates reasonably requested by Holder.
b) MECHANICS
OF EXERCISE.
i. AUTHORIZATION
OF AIR SECURITIES. The Company covenants that its issuance of this AIR shall constitute full authority to its officers who are
charged with the duty of executing certificates to execute and issue the necessary certificates for the AIR Securities upon the
exercise of the purchase rights under this AIR. The Company will take all such reasonable action as may be necessary to assure
that the AIR Securities may be issued as provided herein without violation of any applicable law or regulation.
ii. DELIVERY
OF CERTIFICATES UPON EXERCISE. AIR Notes and AIR Warrants purchased hereunder shall be delivered to the Holder within five (5)
Trading Days after the delivery to the Company of the Notice of Exercise Form as set forth above ("AIR SECURITIES DELIVERY
DATE"). This AIR shall be deemed to have been exercised on the date the payment of the Purchase Price is received by the
Company. The AIR Securities 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 the AIR Securities for all purposes, as of the date the AIR has been exercised
by payment to the Company of the Aggregate Exercise Price to be paid by the Holder. This AIR certificate is not required to be
delivered to the Company until fourteen (14) days after this AIR has been fully exercised.
iii. DELIVERY
OF NEW AIRS UPON EXERCISE. If this AIR shall have been exercised in part prior to the Expiration Date and this AIR was delivered
to the Company in connection therewith, the Company shall, at the time of delivery of the certificate or certificates representing
the AIR Securities, deliver to Holder a new AIR evidencing the rights of Holder to purchase the unpurchased AIR Securities called
for by this AIR, which new AIR shall in all other respects be identical with this AIR.
iv. RESCISSION
RIGHTS. If the Company fails to deliver to the Holder a certificate or certificates representing the AIR Securities pursuant to
this Section 2(e)(iv) by the AIR Securities Delivery Date, then the Holder will have the right, at Holder’s election, to
enforce the exercise of this AIR or rescind such exercise and in any event be entitled to actual damages incurred, and the Company
will not have the right thereafter to compel exercise of this AIR.
v. CHARGES,
TAXES AND EXPENSES. Issuance of certificates for AIR Securities 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 AIR Securities 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 AIR Securities are to be issued in a name other than the name of
the Holder, this AIR 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.
vi. CLOSING
OF BOOKS. The Company will not close its records in any manner which prevents the timely exercise of this AIR, pursuant to the
terms hereof or the conversion of the Air Notes or exercise of the AIR Warrants.
SECTION 3. NOTICE.
If (A) 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, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property
or (B) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;
then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the AIR Register
of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating
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. The Holder is entitled to exercise this AIR during the 20-day period commencing the date of such
notice to the effective date of the event triggering such notice.
SECTION 4. TRANSFER
OF AIR.
a) TRANSFERABILITY.
Subject to compliance with any applicable securities laws, and provided such assignee agrees to be bound to the terms of this Agreement
and the Asset Purchase Agreement, this AIR and all rights hereunder are transferable, in whole or in part, upon surrender of this
AIR at the principal office of the Company, together with a written assignment of this AIR 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 AIR or AIRs in the
name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall
issue to the assignor a new AIR evidencing the portion of this AIR not so assigned, and this AIR shall promptly be cancelled. An
AIR, if properly assigned, may be exercised by a new holder for the purchase of AIR Securities without having a new AIR issued.
b) NEW
AIRS. This AIR may be divided or combined with other AIRs upon presentation hereof at the aforesaid office of the Company, together
with a written notice specifying the names and denominations in which new AIRs 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 AIR or AIRs in exchange for the AIR or AIRs to be divided or combined in accordance
with such notice.
c) AIR
REGISTER. The Company shall register this AIR, upon records to be maintained by the Company for that purpose (the "AIR
REGISTER"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder
of this AIR 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) TITLE
TO THE ADDITIONAL INVESTMENT RIGHT. Prior to the Expiration Date and subject to compliance with applicable laws and Section 4 of
this AIR, this AIR and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this AIR together with the Assignment Form annexed hereto properly
endorsed and an opinion of Holder’s counsel, if required by the Company. As a condition to such transfer, the transferee
shall sign an investment letter, and deliver such other documents, in form and substance reasonably satisfactory to the Company.
b) NO
RIGHTS AS SHAREHOLDER. This AIR does not entitle the Holder to any voting rights or other rights as a shareholder of the Company.
Upon the surrender of this AIR and the payment of the aggregate principal, the AIR Securities so purchased shall be and be deemed
to be issued to such Holder as the record owner of such AIR Securities as of the close of business on the later of the date of
such surrender or payment.
c) LOSS,
THEFT, DESTRUCTION OR MUTILATION OF AIR. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this AIR or any certificate relating to the AIR Securities, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the AIR, shall not
include the posting of any bond), and upon surrender and cancellation of such AIR or certificate, if mutilated, the Company will
make and deliver, at Holder’s expense, a new AIR or certificate of like tenor and dated as of such cancellation, in lieu
of such AIR or certificate.
d) ANTI-DILUTION.
The conversion price of the Air Notes, the exercise price of the AIR Warrants and the number of shares of Common Stock purchasable
upon conversion and exercise shall be adjusted from and after the date of issue of this AIR in the same manner and in the same
proportions as is applicable to the Note and Warrants.
SECTION 6. INCORPORATION.
This AIR is subject to the terms of the Asset Purchase Agreement which is incorporated herein by this reference. Without limitation,
the grant of the security interest, the Company’s representations and warranties, covenants and indemnifications set forth
therein. The provisions of Sections 5.9 and 5.22 of the Asset Purchase Agreement are incorporated herein by this reference as if
included herein, and shall relate to, control and govern this certificate.
[-Signature Page Follows-]
IN WITNESS WHEREOF,
the Company has caused this AIR to be executed by its officer thereunto duly authorized.
Dated: April 21, 2015
| |
HARRISON VICKERS AND WATERMAN INC. |
| |
|
| |
By: |
/s/ Roy Warren |
| |
|
Name: Roy Warren |
| |
|
Title: Chief Executive Officer |
NOTICE OF EXERCISE
TO: [_______________
(1) The undersigned hereby elects to purchase
$________ principal amount of secured convertible promissory notes of HARRISON VICKERS AND WATERMAN (the “Company”)
pursuant to the terms of the attached AIR and tenders herewith payment of the amount equal to such Stated Value.
(2) Payment shall take the form of (check
applicable box) in lawful money of the United States,
¨
Cash;
¨
Wire Transfer; or
¨
Check
(3) Please issue a certificate or certificates
representing said AIR Notes and AIR Warrants representing the right to purchase ___________ shares of the Company’s Common
Stock in the name of the undersigned or in such other name as is specified below:
________________________________________
The AIR Notes and AIR Warrants shall be delivered to the following:
________________________________________
________________________________________
________________________________________
(4) ACCREDITED INVESTOR. The undersigned
is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[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 AIR, execute this form and supply required
information. Do not use this form to exercise the AIR.)
FOR VALUE RECEIVED, the foregoing AIR and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address
is ____________________
________________________________________________________________.
________________________________________________________________
Dated: ______________, _______
Holder's Signature: ______________________________________________________
Holder's Address: ______________________________________________________
______________________________________________________________________
Exhibit 10.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE
AGREEMENT (this “Agreement”) is entered into as of April 21, 2015, by and among Harrison Vickers and
Waterman Inc., a Nevada corporation (the “Purchaser” or “Company”), and
the sellers listed on Schedule A hereto (each a “Seller” and collectively the
“Sellers”).
WHEREAS, the Sellers are
the original shareholders of Attitude Beer Holding Co, a Delaware corporation (the “ABH”);
WHEREAS, the Sellers are
the holder of all the outstanding shares of ABH, as set forth on Schedule A (the “ABH Shares”);
WHEREAS, the Seller desire
to purchase all the ABH Shares from the Sellers.
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 purchase from each Seller, and each Seller, severally
and not jointly, desires to Sell to the Company, their respective portion of the ABH Shares for the Purchase Price described below,
as more fully described in this Agreement.
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 Seller 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.
“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.
“AIRs”
means additional investment right, in the form of Exhibit H hereto.
“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”
means the closing of the purchase and sale of the ABH Shares pursuant to Section 2.1.
“Closing
Date” means the Trading 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 Sellers’ obligations to Sell the ABH Shares at such Closing and
(ii) the Company’s obligations to deliver the Securities to be issued at such Closing, in each case, have been satisfied
or waived.
“Closing
Form 8-K” shall have the meaning ascribed to such term in Section 4.6.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 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.
“Conversion
Price” shall have the meaning ascribed to such term in the Notes and Preferred Shares.
“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.
“Escrow
Agreement” means the escrow agreement to be employed in connection with the sale of the Securities, a copy of which is
annexed hereto as Exhibit C.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange
Agreement” means the exchange agreement substantially in the form annexed hereto as Exhibit E.
“G&M”
shall mean Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax: 212-697-3575.
“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.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(a).
“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.
“Notes”
means the convertible notes due twenty-four (24) months after their respective issue dates, in the form of Exhibit A hereto.
“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.
“Preferred
Stock” means the shares of the Company’s Series A Convertible Preferred Stock issued or issuable hereunder or in
connection herewith and the shares of the Company’s Series B Convertible Preferred Stock issued or issuable hereunder or
in connection herewith.
“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.
“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).
“Security
Agreement” means the agreement to memorialize and perfect the security interest to be granted to some of the Sellers,
form of which are annexed hereto as Exhibit G, together with such other documents, forms, certificates, and payments necessary
to effectuate the memorialization and perfection of such security interest.
“Seller
Party” shall have the meaning ascribed to such term in Section 4.9.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(d).
“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 mean all reports, schedules, forms, statements and other documents required to be filed by the Company
under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding
the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by reference therein.
“Securities”
means the Notes, AIRs Preferred Shares, the Warrants, Series B Shares and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series
B Shares” means shares of the company Series B Convertible Preferred Stock.
“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.
“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 Notes, the AIRS, the Warrants, Series B Shares, Security Agreement, the Escrow Agreement,
all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions
contemplated hereunder.
“Transfer
Agent” means Island Stock Transfer Inc, and any successor transfer agent of the Company.
“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Notes or Series B Shares 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 Seller in connection with or pursuant to the Securities
or Transaction Documents.
“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.
“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Sellers 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 6 years, in the form of Exhibit B1
(A Warrants) and Exhibit B2 (B Warrants) 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 purchase, and the Sellers, severally and not jointly,
agree to sell, the ABH Shares, for issuance of the securities described on Schedule A as the Purchase Price.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Seller the following:
(i) this
Agreement duly executed by the Company;
(ii) Notes
with a principal amount as set forth on Schedule A;
(iii) Warrants
registered in the name of such Sellers as set forth on Schedule A;
(iv) AIRs
registered in the name of such Sellers as set forth on Schedule A;
(v)
the Security Agreement, duly executed by the Company and its Subsidiaries;
(vi) the
fully executed Exchange Agreement and
(vii) the
Escrow Agreement duly executed by the Company.
(b) On
or prior to the Closing Date, each Seller shall deliver or cause to be delivered to the Company the following:
(i) this
Agreement duly executed by such Seller;
(ii) such
Seller’s portion of the ABH shares together with an executed stock power; and
(iii) the
Escrow Agreement duly executed by such Seller.
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 Sellers 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 Seller required to be performed at or prior to the Closing Date shall have been performed;
and
(iii) the
delivery by each Seller of the items set forth in Section 2.2(b) of this Agreement.
(b) The
respective obligations of a Seller hereunder to effect the Closing, unless waived by such Seller, 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;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
(v) from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of such Seller, makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the SEC Reports or 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 Seller:
(a) 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.
(b) 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.
(c) 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.
(d) 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 4.6 of this Agreement, (ii) the filing of the Security Agreement and the payment of all
sums in connection therewith, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale
of the Notes and Warrant Shares and the listing of the Underlying Shares for trading thereon in the time and manner required thereby,
and (iv) 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”).
(e) 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 non-assessable, 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.
(f) 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.
(g) Reporting
Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Sections 12(g) and
13 of the Exchange Act. Pursuant to the provisions of the Exchange Act, except as set forth on Schedule 3.1(g), the Company
has timely filed all reports and other materials required to be filed by the Company thereunder with the SEC during the preceding
twelve months. As of the Closing Date, the Company is not a “shell company” nor a former “shell company”
as those terms are employed in Rule 144 under the Securities Act. The Company is, and has no reason to believe that it will not
in the foreseeable future continue to be in compliance with all such listing and maintenance requirements.
(h) 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 Sellers as a result of the
Sellers 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 Sellers’ ownership of the Securities.
(i) 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 Sellers 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 Sellers 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 Sellers 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 Seller 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.
(j) No
Integrated Offering. Assuming the accuracy of the Sellers’ 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 this 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.
(k) Acknowledgment
Regarding Sellers’ Purchase of Securities. The Company acknowledges and agrees that each of the Sellers is acting solely
in the capacity of an arm’s length Seller with respect to the Transaction Documents and the transactions contemplated thereby.
The Company further acknowledges that no Seller 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 Seller
or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the Sellers’ purchase of the Securities. The Company further represents to each Seller 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.
(l) Private
Placement. Assuming the accuracy of the Sellers’ 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 Sellers as contemplated hereby.
The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(m) 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 Sellers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(n) Listing
and Maintenance Requirements. The Common Stock is quoted on the OTC Bulletin Board under the symbol HVCW. The Company
has not, in the twenty-four (24) months preceding the date hereof, received notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements
of such Trading Market.
(o) Survival.
The foregoing representations and warranties shall survive the Closing Date.
3.2 Representations
and Warranties of the Sellers. Each Seller, for itself and for no other Seller, 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 Seller 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 Seller 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 Seller. Each Transaction
Document to which it is a party has been duly executed by such Seller, and when delivered by such Seller in accordance with the
terms hereof, will constitute the valid and legally binding obligation of such Seller, 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 Seller 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 Seller’s right to sell the Securities pursuant to a registration
statement or otherwise in compliance with applicable federal and state securities laws). Such Seller is acquiring the Securities
hereunder in the ordinary course of its business.
(c) Seller
Status. At the time such Seller 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 Seller is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act. Such Seller has the authority and is duly and legally qualified to purchase and own the Securities. Such Seller is
able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. Such Seller has provided
the information in the Accredited Investor Questionnaire attached hereto as Exhibit D (the “Investor
Questionnaire”). The information set forth on the signature pages hereto and the Investor Questionnaire regarding
such Seller is true and complete in all respects. Except as disclosed in the Investor Questionnaire, such Seller 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
Seller 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 Seller. Such Seller, 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 Seller 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.
The Company acknowledges
and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Seller’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
4.1 The
Securities.
a. Transfer
Restrictions. 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 Seller 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 Seller under this Agreement.
b. The
Sellers 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 Seller 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 Seller 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
Seller’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 Seller 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 Seller 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 Seller by crediting the account of the Seller’s prime broker with the Depository
Trust Company System as directed by such Seller. In addition to such Seller’s other available remedies, the Company shall
pay to a Seller, 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 Seller’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 Seller 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.
d. DWAC.
In lieu of delivering physical certificates representing the Unlegended Shares, upon request of a Seller, so long as the certificates
therefor do not bear a legend and the Seller 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 Seller’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.
e. Injunction.
In the event a Seller 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 Seller
or anyone associated or affiliated with such Seller has not complied with Seller’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 Seller 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 Seller to the extent Seller obtains judgment in Seller’s favor.
f. Buy-In.
In addition to any other rights available to Seller, if the Company fails to deliver to a Seller Unlegended Shares as required
pursuant to this Agreement and after the Legend Removal Date the Seller, or a broker on the Seller’s behalf, purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Seller of the shares
of Common Stock which the Seller was entitled to receive in unlegended form from the Company (a “Buy-In”), then
the Company shall promptly pay in cash to the Seller (in addition to any remedies available to or elected by the Seller) the amount,
if any, by which (A) the Seller’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 Seller 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 Seller $1,000, plus
interest, if any. The Seller shall provide the Company written notice indicating the amounts payable to the Seller in respect of
the Buy-In.
g. Each
Seller, severally and not jointly with the other Sellers, agrees with the Company that such Seller 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 Seller 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 Seller 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 Seller’s other available remedies, the Company shall pay to a Seller,
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 Seller 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 Sellers to transfer the Underlying Shares pursuant to Rule 144. The payments
to which a Seller shall be entitled pursuant to this Section 4.3(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 Seller’s right to pursue actual damages for the Public
Information Failure, and such Seller 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 Sellers in order to exercise the Warrants or convert
the Notes. No additional legal opinion, other information or instructions shall be required of the Sellers 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 9:00 a.m. (New York City time) on the fourth (4th) Trading Day
immediately following each Closing Date, issue a press release disclosing the material terms of the transactions contemplated hereby,
and shall file a Current Report on Form 8-K including the Transaction Documents as exhibits thereto (the “Closing Form
8-K” mutatis mutandem) within one Business Day of the date hereof. A form of the Closing Form 8-K is annexed hereto
as Exhibit F. Such Exhibit F will be identical to the Closing 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 issuance
of such press release and filing of the Closing Form 8-K, the Company represents to the Sellers that it shall have publicly disclosed
all material, non-public information delivered to any of the Sellers 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 Seller shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Seller shall issue any such press release nor otherwise make any such public
statement without the prior consent of the Company, with respect to any press release of any Seller, or without the prior consent
of each Seller, 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 Seller, or include the name of any Seller in any filing with the Commission or any regulatory agency or Trading Market unless
the name of such Seller is already included in the body of the Transaction Documents, without the prior written consent of such
Seller, 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 Sellers 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
Seller 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 Seller 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 Sellers.
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 Seller or its agents
or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such
Seller 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 Seller shall be relying on the foregoing covenant in effecting transactions in securities
of the Company.
4.9 Indemnification
of Sellers. Subject to the provisions of this Section, the Company will indemnify and hold each Seller 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 Seller (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 “Seller 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 Seller 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 Seller 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
Seller Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon
a breach of such Seller Party’s representations, warranties or covenants under the Transaction Documents or any agreements
or understandings such Seller Party may have with any such stockholder or any violations by such Seller Party of state or federal
securities laws or any conduct by such Seller Party which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Seller Party in respect of which indemnity may be sought pursuant to this Agreement,
such Seller 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 Seller Party. Any Seller 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 Seller 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 Seller 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 Seller Party under this Agreement (y) for any settlement
by a Seller 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 Seller Party’s
breach of its representations, warranties or covenants under the Transaction Documents. The indemnification required by this Section
4.9 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 Seller Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.10 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.
(c) The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum
on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing
or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Sellers evidence of such listing or quotation
and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such date
on such Trading Market or another Trading Market.
4.11 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 Seller. 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 Sellers 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 Seller.
4.12 Reimbursement.
If any Seller 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 Seller to or with any current stockholder), solely
as a result of such Seller’s acquisition of the Securities under this Agreement, the Company will reimburse such Seller 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 Sellers 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 Sellers 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 Sellers and any such
Affiliate and any such Person. The Company also agrees that neither the Sellers 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.
4.13 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.
4.14 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.
4.15 Negative
Covenants. The Company agrees that for so long as any of the Securities are outstanding it shall not:
a. Pay
any cash dividend on its preferred or common stock;
b. Enter
into any material agreements with any of its affiliates;
c. Make
any loan or series of loans to any subsidiary or parent company in excess of an aggregate of $10,000.
ARTICLE V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Seller, as to such Seller’s obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Sellers, by written notice to the other parties, if the Closing has not been
consummated on or before May 17, 2015; 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 Sellers’ legal fees in the amount of $35,000.00. Except as expressly set forth in the Transaction Documents
and on Schedule 5.2, 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 Seller), stamp
taxes and other taxes and duties levied in connection with the delivery of any Securities to the Sellers.
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: Harrison Vickers and Waterman Inc., 4224 White Plains Road, 3rd
Floor, Bronx, NY 10467, Attn: Roy Warren, Chief Executive Officer, and (ii) if to the Sellers, 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 Sellers 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 Seller (other than by merger). Following the Closing, any Seller may assign any or all of its rights under this Agreement
to any Person to whom such Seller 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 “Sellers.”
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 4.9.
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 4.9, 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 Seller 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 Seller 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 Seller 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 Seller of the aggregate exercise price paid to the Company for such shares
and the restoration of such Seller’s right to acquire such shares pursuant to such Seller’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 Sellers 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 Seller pursuant to any Transaction Document or
a Seller 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 Seller 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 Seller with respect to indebtedness evidenced by the Transaction Documents, such excess
shall be applied by such Seller 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 Seller’s election.
5.18 Independent
Nature of Sellers’ Obligations and Rights. The obligations of each Seller under any Transaction Document are several
and not joint with the obligations of any other Seller, and no Seller shall be responsible in any way for the performance or non-performance
of the obligations of any other Seller under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Seller pursuant hereto or thereto, shall be deemed to constitute the Sellers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Sellers 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 Seller 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 Seller to be joined as an additional party in any
proceeding for such purpose. Each Seller 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 Seller and its respective counsel have chosen to
communicate with the Company through G&M. The Company has elected to provide all Sellers 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 Sellers. 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 Seller, solely, and not between the Company and the Sellers collectively and not between and among the Sellers.
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.
(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.
| Harrison Vickers and Waterman Inc. |
|
Address for Notice: |
| |
|
4224 White Plains Road, 3rd Floor |
| |
|
Bronx, NY 10467 |
| |
|
|
|
| By: |
/s/ Roy Warren |
|
|
| |
Name: Roy Warren |
|
|
| |
Title: Chief Executive Officer |
|
|
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR SELLER FOLLOWS]
[SELLER
SIGNATURE PAGE TO Harrison Vickers and Waterman Inc.
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 Seller: ________________________________________________________
Signature of Authorized Signatory of Seller:
__________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory: _____________________________________________
Facsimile Number of Authorized Signatory: __________________________________________
Address for Notice to Seller:
Address for Delivery of Securities to Seller (if not same as address
for notice):
Preferred Stock: ___________________
Note principal amount: ___________________
Warrants: ___________________
EIN Number, if applicable, will be provided under separate cover:
________________________
Date: ___________________________
[SIGNATURE PAGES CONTINUE]
EXHIBITS
AND
SCHEDULES
| Exhibit A |
Form of Note |
| Exhibit B1 |
Form of A Warrant |
| Exhibit B2 |
Form of B Warrant |
| Exhibit C |
Form of Escrow Agreement |
| Exhibit D |
Form of Investor Questionnaire |
| Exhibit E |
Form of Exchange Agreement |
| Exhibit F |
Form 8K |
| Exhibit G |
Form of Security Agreement |
| Exhibit H |
Form of AIR |
Schedule A
| Seller |
|
ABH Shares |
|
Purchase Price |
|
Attitude Drinks, Inc.
712 US Highway 1, Suite 200
North Palm Beach, FL 33408,
Attn: Roy Warren, CEO
Fax: (800) 799–5053 |
|
875,000 |
|
51 Series B Shares
5,000,000 B W warrants. |
| |
|
|
|
|
|
Alpha Capital Anstalt
Lettstrasse 32
LI-9490 Vaduz
Liechtenstein
Fax: 011-42-32323196 |
|
99,000 |
|
1. A
note in the principal amount of $1,619,375.00
2. A
Warrants to purchase 1,295,500,000 shares
3. An
AIR to purchase up to $3,750,000 in additional notes and corresponding warrants
4. 5,000
Series A Preferred Shares |
| |
|
|
|
|
|
Tarpon Bay Partners LLC
90 Grove Street, Ste 206
Ridgefield CT 06877
Fax: (203) 431-8301 |
|
26,000 |
|
1. A
note in the principal amount of $554,791.67
2. A
Warrants to purchase 443,833,333 shares
3. An
AIR to purchase up to $1,250,000 in additional notes and corresponding warrants |
| |
|
|
|
|
| Total |
|
1,000,000 |
|
|
Schedule 3.1(g)
SEC Filings
None
Schedule 5.2
Fees
None
Exhibit 10.2
STOCK PLEDGE AGREEMENT
THIS
STOCK PLEDGE AGREEMENT (this “Agreement”), dated as of April 21, 2015, by and between Attitude Drinks,
Inc. (“Pledgor”), and Tarpon Bay Partners LLC (“Pledgee”) as collateral agent on
behalf of Alpha Capital Anstalt (“Alpha”) and Tarpon Bay Partners LLC
(“Tarpon” and together with Alpha the “Investors”);
WITNESSETH:
WHEREAS,
pursuant to that certain securities purchase agreement dated December 24, 2014 (the “SPA”) Attitude
Beer Holding Co, a Delaware corporation (“ABH”) issued to the Investors
notes (the “ABH Notes”);
WHEREAS,
pursuant to that certain guaranty dated December 24, 2014 (the “Guaranty”) Pledgor
guaranteed ABH’s obligations under the Notes;
WHEREAS,
pursuant to that certain asset purchase agreement of even date herewith (the “APA”) Pledgor
and the Investors sold to Harrison Vickers and Waterman Inc., a Nevada corporation (the “HVW”) all the
outstanding shares of ABH so that ABH shall become a fully owned subsidiary of HVW;
WHEREAS,
pursuant to the APA, Pledgor was issued 53,750 shares Series B Preferred Shares issued by
HVW (the “Series B Shares”);
WHEREAS,
pursuant to the APA, HVW issued to the Investors, notes set forth on Schedule A (the “HVW Notes”);
WHEREAS,
pursuant to that certain purchase agreement of even date herewith (the “PA”) HVW Holdings LLC
(the “Seller”) sold to Pledgor 87,990,000 shares of HVW’s common
stock (the “Common Shares”);
WHEREAS,
pursuant to that exchange agreement of even date herewith (the “EA”) pledger executed a guaranty
of even date herewith (the “Guaranty”) to guaranty HVW’s obligation under the HVW Notes and agreed
to secure its obligations under the Guaranty by granting a security interest in the Series B Shares and Common Shares (collectively
the “Pledged Stock”);
NOW, THEREFORE,
in consideration of the promises and the mutual covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions.
The following terms shall
have the following meanings wherever used in this Agreement:
(a) “Event
of Default” shall have the meaning given thereto in the HVW Notes.
(b) “Obligations”
shall mean all principal and interest and other payments which may be due and payable under the Guaranty, whether upon stated maturity,
by acceleration, or otherwise, outstanding at any time and under this Agreement.
(c) “Satisfaction
Date” shall mean that date on which all of the Obligations have been paid or otherwise satisfied in full.
2. Pledge
of the Pledged Stock/Additional Deposits.
(a) As
security for the due and timely payment and performance of all of the Obligations, the Pledgor hereby, pledges to the Pledgee,
and grants to the Pledgee a first priority lien and security interest in, all of the Pledged Stock (as same are constituted from
time to time), together with all cash dividends, stock dividends, interest, profits, premiums, redemptions, warrants, subscription
rights, options, substitutions, exchanges and other distributions now or hereafter made on the Pledged Stock and all cash and non-cash
proceeds thereof, until the Satisfaction Date. The Pledged Stock and all property at any time pledged to the Pledgee hereunder
or in which the Pledgee is granted a security interest (whether described herein or not) and all income therefrom and proceeds
thereof are herein collectively called the “Pledged Stock”.
(b) In
furtherance of the pledge hereunder, the Pledgor will deliver to the Pledgee the certificates representing all of the Pledged Stock,
each of which now remains in the name of the Pledgor and is accompanied by appropriate undated stock powers duly endorsed in blank
by the Pledgor bearing “medallion” signature guarantees.
(c) If,
while this Agreement is in effect, the Pledgor becomes entitled to receive or receives any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or
reduction of capital or issued in connection with any reorganization), option or rights, whether as an addition to, in substitution
of, or in exchange for, any Pledged Stock or otherwise, the Pledgor agrees to accept the same as agent for the Pledgee, to hold
the same in trust on behalf of and for the benefit of the Pledgee, and to deliver the same promptly upon receipt to the Pledgee
in the exact form received, with the endorsement of the Pledgor when necessary and/or appropriate undated “medallion”
stock or other powers duly executed in blank, to be held by the Pledgee, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid on or in respect of the Pledged Stock on the liquidation or dissolution of the Pledgor
shall be paid over to the Pledgee, to be held by the Pledgee, subject to the terms and conditions hereof, as additional collateral
security for the Obligations.
3. Retention
of the Pledged Stock.
(a) Except
as otherwise provided herein, the Pledgee shall have no obligation with respect to the Pledged Stock, except to use reasonable
care in the custody and preservation thereof, to the extent required by law.
(b) The
Pledgee shall hold the Pledged Stock in the form in which same are delivered herewith, unless and until there shall occur an Event
of Default.
4. Rights
of the Pledgor. Throughout the term of this Agreement, so long as no Event of Default has occurred and is continuing, the Pledgor
shall have the right to vote the Pledged Stock in all matters presented to the stockholders of the Pledgor for vote thereon, except
in a manner inconsistent with the terms of this Agreement or detrimental to the interests of the Pledgee.
5. Event
of Default; Power of Attorney.
(a) Upon
the occurrence and during the continuance of any Event of Default, the Pledgee shall have the right to: (i) exercise all voting
and corporate rights of, and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining
to, any Pledged Stock as if the Pledgee was the absolute owner thereof, including (without limitation) the right to exchange, at
its discretion, any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other readjustment
of the Pledgor or upon the exercise by the Pledgor or the Pledgee of any right, privilege or option pertaining to any of the Pledged
Stock and, in connection therewith, to deposit and deliver any and all of the Pledged Stock with any committee, depository, transfer
agent, registrar or other designated agency on such terms and conditions as the Pledgee may determine, all without liability except
to account for property actually received by it; (ii) apply any funds or other property received in respect of the Pledged Stock
to the Obligations, and receive in its own name any and all further distributions which may be paid in respect of the Pledged Stock,
all of which shall, upon receipt by the Pledgee, be applied to the Obligations; (iii) transfer all or any portion of the Pledged
Stock (as determined by the Pledgee in its discretion) on the books of HVW to and in the name of the Pledgee or such other person
or persons as the Pledgee may designate; (iv) effect any sale, transfer or disposition of all or any portion of the Pledged Stock
and in furtherance thereof, take possession of and endorse any and all checks, drafts, bills of exchange, money orders or other
documents and instruments received on account of the Pledged Stock; (v) collect, sue for and give acquittance for any money due
on account of any of the foregoing; and (vi) take any and all other action contemplated by this Agreement, or as otherwise permitted
by law, or as the Pledgee may reasonably deem necessary or appropriate, in order to accomplish the purposes of this Agreement.
(b) In
furtherance of the foregoing powers of the Pledgee, the Pledgor hereby authorizes and appoints the Pledgee, with full powers of
substitution, as the true and lawful attorney-in-fact of the Pledgor, in his name, place and stead, to take any and all such action
as the Pledgee, in its sole discretion, may deem necessary or appropriate in furtherance of the exercise of the aforesaid powers.
Such power of attorney shall be coupled with an interest, and shall be irrevocable until the Satisfaction Date. Without limitation
of the foregoing, such power of attorney shall not in any manner be affected or impaired by reason of any act of the Pledgor or
by operation of law. Nothing herein contained, however, shall be deemed to require or impose any duty upon the Pledgee to exercise
any of the rights or powers granted herein.
(c) The
foregoing rights and powers granted to the Pledgee, and the foregoing power of attorney, shall be fully binding upon any person
who may acquire any beneficial interest in any of the Pledged Stock or any other property held or received by the Pledgee hereunder.
6. Foreclosure;
Sale of Pledged Stock.
(a) Without
limitation of paragraph 5 above, in the event that the Pledgee shall make any sale or other disposition of any or all of the Pledged
Stock following an Event of Default, the Pledgee may also:
(i) offer
and sell all or any portion of the Pledged Stock publicly through a registered broker-dealer, or by means of a private placement
restricting the offer or sale to a limited number of prospective purchasers who meet such suitability standards as the Pledgee
and its counsel may deem appropriate, and who may be required to represent that they are purchasing Pledged Stock for investment
and not with a view to distribution;
(ii) sell
any or all of the Pledged Stock upon credit or for future delivery, without being in any way liable for failure of the purchaser
to pay for the subject Pledged Stock; and
(iii)
receive and collect the net proceeds of any sale or other disposition of any Pledged Stock, and apply same in such order and to
such of the Obligations (including the customary costs and expenses of the sale or disposition of the Pledged Stock) as the Pledgee
may, in its absolute discretion, deem appropriate.
(b) Upon
any sale of any of the Pledged Stock in accordance with this Agreement, the Pledgee shall have the right to assign, transfer and
deliver the subject Pledged Stock to the purchaser(s) thereof, and each such purchaser shall be entitled to hold such Pledged Stock
absolutely free from any right or claim of the Pledgor and/or any other person claiming any beneficial interest in the Pledged
Stock, including any equity of redemption (which right and all other such rights are hereby waived by the Pledgor to the fullest
extent permitted by law).
(c) Following
the occurrence and during the existence of an Event of Default, Pledgor and HVW will cooperate and provide such certificate, resolutions,
representations, legal opinions and all other matters necessary to facilitate a transfer or sale of any part of the Pledged Stock
pursuant to Rule 144. Pledgor and HVW are unaware of any impediment to the resale of the Pledged Stock in reliance on Rule 144
by the Pledgee upon an Event of Default. Pledgor and HVW will not take any action that would impede or limit the Pledgee’s
ability to sell all the Pledged Stock upon an Event of Default, pursuant to Rule 144. For so long as any Pledged Stock is subject
to this Agreement, the Pledgor will not sell any security of HVW which sale would or could be aggregated with sales by the Pledgee
pursuant to Rule 144. HVW shall issue instructions to its transfer agent to comply with the foregoing sentence. HVW will not permit
the transfer of any security of HVW if such transfer would or could aggregate for purposes of Rule 144 with sales of the Pledged
Stock by the Pledgor or any sales of the Pledged Stock. Pledgor represents and warrants that he has not sold any security of HVW
during the ninety (90) days prior to the date of this Agreement. HVW acknowledges that upon transfer of the Pledged Stock to the
Pledgee or other transferee, the Pledgee’s holding period under subsections (b) of Rule 144 may be “tacked” with
the Pledgor’s holding period. Pledgor and HVW further represent that the Note was issued in a bona fide loan
transaction.
(d) Nothing
herein contained shall be deemed to require the Pledgee to effect any sale or disposition of any Pledged Stock at any time, or
to consummate any proposed public or private sale at the time and place at which same was initially called. It is the intention
of the parties hereto that the Pledgee shall, subject to any further conditions imposed by this Agreement, at all times following
the occurrence of an Event of Default, have the right to use or deal with the Pledged Stock as if the Pledgee were the outright
owner thereof, and to exercise any and all rights and remedies, as a secured party in possession of collateral or otherwise, under
any and all provisions of law.
(e) The
Pledgor may take action and exercise rights in connection with any portion of the Pledged Stock regardless of the proportion in
which Pledgor has provided Pledged Stock.
(f) Pledgor,
Pledgee and HVW agree that upon release of the Pledged Stock after the occurrence of an Event of Default, such Pledged Stock will
not be subject to the terms of any Standstill Agreement.
7. Covenants,
Representations and Warranties.
In connection with the
transactions contemplated by this Agreement, and knowing that the Pledgee is and shall be relying hereon, the Pledgor hereby covenants,
represents and warrants that:
(a) the
Pledged Stock has been and will be duly and validly issued, is and will be fully paid and non-assessable, and is and will be owned
by the Pledgor free and clear of any and all restrictions, pledges, liens, encumbrances or other security interests of any kind,
save and except for the pledge to the Pledgee pursuant to this Agreement;
(b) there
are and will be no options, warrants or other rights in respect of the sale, transfer or other disposition of any of the Pledged
Stock by the Pledgor, and the Pledgor has the absolute right to pledge the Pledged Stock hereunder without the necessity of any
consent of any Person;
(c) neither
the execution or delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with
or performance of this Agreement by the Pledgor, conflicts with or will result in the breach or violation of or a default under
the terms, conditions or provisions of (i) any mortgage, security agreement, indenture, evidence of indebtedness, loan or financing
agreement, or other agreement or instrument to which the Pledgor is a party or by which the Pledgor is bound, or (ii) any provision
of law, any order of any court or administrative agency, or any rule or regulation applicable to the Pledgor;
(d) this
Agreement has been duly executed and delivered by the Pledgor, and constitutes the legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms;
(e) there
are no actions, suits or proceedings pending or threatened against or affecting the Pledgor that involve or relate to the Pledged
Stock; and
(f) upon
execution of this Agreement by Pledgor, the Pledgee shall have the senior security interest in the Pledged Stock.
8. UCC
Filings. Pledgor hereby grants to Pledgee the right and authority to file UCC Financing Statements at Pledgor’s expense
in Delaware and any other jurisdiction in the sole discretion of Pledgee to memorialize the security interest herein granted.
9. Return
of the Pledged Stock. To the extent that the Pledgee shall not previously have taken, acquired, sold, transferred, disposed
of or otherwise realized value on the Pledged Stock in accordance with this Agreement, at the Satisfaction Date, any security interest
in the Pledged Stock shall automatically terminate, cease to exist and be released, and the Pledgee shall forthwith return the
Pledged Stock to and in the name of the Pledgor, and file, at Pledgor’s expenses, releases of Pledgee’s security interest
in the Pledged Stock.
10. Expenses
of the Pledgee. All expenses incurred by the Pledgee (including but not limited to reasonable attorneys’ fees) in connection
with any actual or attempted sale or other disposition of Pledged Stock hereunder shall be reimbursed to the Pledgee by the Pledgor
and HVW on demand, or, at the Pledgee’s option, such expenses may be added to the Obligations and shall be payable on demand.
11. Further
Assurances. From time to time hereafter, each party shall take any and all such further action, and shall execute and deliver
any and all such further documents and/or instruments, as any other party may request in order to accomplish the purposes of and
fulfill the parties’ obligations under this Agreement, in order to enable the Pledgee to exercise any of its rights hereunder,
and/or in order to secure more fully the Pledgee’s interest in the Pledged Stock.
12. Miscellaneous.
(a) 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 Pledgor to Attitude Drinks, Inc., 712 US Highway 1, Suite 200, North Palm Beach, FL
33408, Attn: Roy Warren, CEO, Fax: (800) 799–5053: and (ii) if to the Pledgee, to Tarpon Bay Partners LLC, Executive Pavilion,
90 Grove Street, Ridgefield CT 06877, Fax: (203) 431– 8301.
(b) If
any notice to Pledgor of the sale or other disposition of Pledged Stock is required by then applicable law, five (5) business days
prior written notice (which Pledgor agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial
Code) to Pledgor of the time and place of any sale of Pledged Stock which Pledgor agrees may be by private sale. The rights granted
in this Section are in addition to any and all rights available to Pledgee under the Uniform Commercial Code.
(c) The
laws of the State of New York including but not limited to Article 9 of the Uniform Commercial Code as in effect from time to time,
shall govern the construction and enforcement of this Agreement and the rights and remedies of the parties hereto. The parties
hereby consent to the exclusive jurisdiction of all courts sitting in the State and County of New York, in connection with any
action or proceeding under or relating to this Agreement, and waive trial by jury in any such action or proceeding.
(d) This
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and permitted assigns. The Pledgor shall not, however, assign any of its or his rights or
obligations hereunder without the prior written consent of the Pledgee, and the Pledgee shall not assign its rights hereunder without
simultaneously assigning its obligations hereunder to the subject assignee. Except as otherwise referred to herein, this Agreement,
and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties relating to the specific
subject matter hereof.
(e) Neither
any course of dealing between the Pledgor and the Pledgee nor any failure to exercise, or any delay in exercising, on the part
of the Pledgee, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege operate as a waiver of any other exercise of such right, power or privilege or any other right,
power or privilege.
(f) The
Pledgee’s rights and remedies, whether hereunder or pursuant to any other agreements or by law or in equity, shall be cumulative
and may be exercised singly or concurrently.
(g) No
change, amendment, modification, waiver, assignment of rights or obligations, cancellation or discharge hereof, or of any part
hereof, shall be valid unless the Pledgee shall have consented thereto in writing.
(h) The
captions and paragraph headings in this Agreement are for convenience of reference only, and shall not in any way define, limit
or describe the construction, terms or provisions of this Agreement.
(i) 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 or PDF email 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.
(j) If
any provision of this Agreement is held invalid or unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall thereupon be deemed modified only to the extent necessary to render same valid, or
not applicable to given circumstances, or excised from this Agreement, as the situation may require, and this Agreement shall be
construed and enforced as if such provision had been included herein as so modified in scope or application, or had not been included
herein, as the case may be.
[REST OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto
have executed this Stock Pledge Agreement on and as of the date first set forth above.
| ATTITUDE DRINKS, INC. |
|
TARPON BAY PARTNERS LLC |
| |
|
|
| /s/ Roy Warren |
|
/s/ Steven Hicks |
| By: Roy Warren |
|
By: Steven Hicks |
| Its: Chief Executive Officer |
|
Its: Managing Member |
Exhibit 10.3
SECURITY AGREEMENT
This SECURITY
AGREEMENT, dated as of April 21, 2015 (this “Agreement”), is among Harrison Vickers and Waterman Inc., a
Nevada 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 April , 2017, in the original aggregate principal amount of up to $7,174,166.67 (collectively,
the “Notes”) (collectively, the “Secured Parties”).
WITNESSETH:
WHEREAS, pursuant to
the Asset Purchase Agreement (as defined in the Notes), the Secured Parties have severally agreed to sell certain assets to the
Company to be paid for by the issuance of certain securities including 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 Asset 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 Asset 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 Asset 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:
| To Debtor, to: |
Harrison Vickers and Waterman Inc. |
| |
224 White Plains Road, 3rd Floor |
| |
Bronx, New York 10466 |
| |
Attn: Roy Warren, CEO |
| |
Fax: (800) 799-5053 |
| |
|
| To the Collateral Agent: |
Tarpon Bay Partners LLC |
| |
Executive Pavilion, 90 Grove Street |
| |
Ridgefield CT 06877 |
| |
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 Asset 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.
| HARRISON VICKERS AND WATERMAN INC. |
|
| |
|
|
| By: |
/s/ Roy Warren |
|
| |
Name: Roy Warren |
|
| |
Title: Chief Executive Officer |
|
COLLATERAL AGENT
Tarpon Bay Partners LLC
| By: |
/s/ Stephen M Hicks |
|
| |
Name: Stephen M Hicks |
|
| |
Its: Chief Executive Officer |
|
OMNIBUS SECURED PARTY SIGNATURE PAGE
TO
HARRISON VICKERS AND WATERMAN INC.
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.
Taxpayer ID# (if applicable): ______________________
Security Agreement
Schedules
| Schedule A |
Locations |
| |
|
| Schedule B |
Permitted Liens |
| |
|
| None |
|
| |
|
| Schedule C |
Jurisdictions |
| |
|
| Schedule D |
Name |
| |
|
| Schedule E |
Trade Names – Merger Entities |
| |
|
| Schedule F |
Intellectual Property |
| |
|
| Schedule G |
Account Debtors |
| |
|
| Schedule H |
Pledged Securities |
1,000,000 shares of common stock issued by Attitude Beer Holding
Company
ANNEX A
to
SECURITY
AGREEMENT
FORM
OF ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of April 21,
2015 made by
Harrison Vickers and Waterman Inc.
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] |
| |
| By: |
| |
| Name: |
| Title: |
| |
| 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 HARRISON VICKERS AND WATERMAN INC., a Nevada 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 Asset 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____________________ 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 Asset 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 Asset 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:
| To Guarantor, to: |
Harrison Vickers and Waterman Inc. |
| |
224 White Plains Road, 3rd Floor |
| |
Bronx, New York 10466 |
| |
Attn: _____________ |
| |
Fax: ______________ |
| |
|
| To the Collateral Agent: |
____________________ |
| |
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 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 Asset 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 ____________________ (“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 10.4
GUARANTY
1. Identification.
This Guaranty (the “Guaranty”),
dated as of April 21, 2014, is entered into by Attitude Beer Holding Co., 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 subsidiary of Harrison Vickers and Waterman Inc., a Nevada corporation (“HVW”). The Lenders have sold
certain assets to HVW which were paid in part by the issuance of certain Secured Convertible Promissory Notes (collectively, “Note”
or the “Notes”) issued by HVW on, about or after the date of this Guaranty pursuant to that certain Asset Purchase
Agreement dated at or about the date hereof (“Asset Purchase Agreement”). The Notes issued on the Closing Date
are further described on Schedule A hereto and were and or will be executed by HVW as “Borrower” for the benefit
of each Lender as the “Holder” thereof. Guarantor will obtain substantial benefit from the Notes.
2.3 In
consideration of the assets sold by Lenders to HVW and for other good and valuable consideration, and as security for the performance
by HVW of its obligations under the Notes and as security for the repayment of the Notes 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 Asset 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 HVW, 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 HVW 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 HVW 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 HVW.
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 HVW or any other guarantor or whether HVW 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 HVW 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 HVW;
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, HVW 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 HVW 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./ Attitude Beer Holding Co. |
| |
|
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 HVW 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” |
|
| Attitude Beer Holding Co. |
|
| |
|
| 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 | |
$ | 1,619,375.00 | |
Tarpon Bay Partners LLC
Executive Pavilion
90 Grove Street
Ridgefield CT 06877
Fax: (203) 431– 8301 | |
$ | 554,791.67 | |
| Total | |
$ | 2,174,166.67 | |
Exhibit 10.5
GUARANTY
1. Identification.
This Guaranty (the
“Guaranty”), dated as of April 21, 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 Harrison Vickers and Waterman Inc., a Nevada corporation (“HVW”). The Lenders have sold certain
assets to HVW which were paid in part by the issuance of certain Secured Convertible Promissory Notes (collectively, “Note”
or the “Notes”) issued by HVW on, about or after the date of this Guaranty pursuant to that certain Asset Purchase
Agreement dated at or about the date hereof (“Asset Purchase Agreement”). The Notes issued on the Closing Date
are further described on Schedule A hereto and were and or will be executed by HVW as “Borrower” for the benefit
of each Lender as the “Holder” thereof. Guarantor will obtain substantial benefit from the Notes.
2.3 In
consideration of the assets sold by Lenders to HVW and for other good and valuable consideration, and as security for the performance
by HVW of its obligations under the Notes and as security for the repayment of the Notes 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 Asset 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 HVW, 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 HVW 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 HVW 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 HVW.
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 HVW or any other guarantor or whether HVW 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 HVW 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 HVW;
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, HVW 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 HVW 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 HVW 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”
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 | |
$ | 1,619,375.00 | |
Tarpon Bay Partners LLC
Executive Pavilion
90 Grove Street
Ridgefield CT 06877
Fax: (203) 431– 8301 | |
$ | 554,791.67 | |
| Total | |
$ | 2,174,166.67 | |
Exhibit 10.6
EXCHANGE AGREEMENT
This Exchange
Agreement (this “Agreement”) is entered into as of April 21, 2015, by and among Attitude Beer Holding
Co, a Delaware corporation (“ABH”), Attitude Drinks, Inc. (“ADI” and
together with ABH the “Debtors”), Alpha Capital Anstalt (“Alpha”) and
Tarpon Bay Partners LLC (“Tarpon” and together with Alpha the “Investors”
and together with the Debtors, the “Parties”).
WHEREAS, pursuant to
that certain securities purchase agreement dated December 24, 2014 (the “SPA”) ABH issued to the Investors,
notes set forth on Schedule A (the “ABH Notes”);
WHEREAS, pursuant to
that certain security agreement dated December 24, 2014 (the “Security Agreement”) ABH issued to Tarpon,
as collateral agent on behalf of the Investors a security interest in all the assets of ABH (the “Security Interest”);
WHEREAS, pursuant to
that certain guaranty dated December 24, 2014 (the “Guaranty”) ADI guaranteed ABH’s obligations
under the Notes;
WHEREAS, pursuant to
that certain asset purchase agreement of even date herewith (the “APA”) ADI and the Investors sold to
Harrison Vickers and Waterman Inc., a Nevada corporation (the “HVW”) all the outstanding shares of ABH
so that ABH shall become a fully owned subsidiary of HVW;
WHEREAS, pursuant to
the APA, ADI was issued 53,750 shares Series B Preferred Shares issued by HVW (the “Series B Shares”);
WHEREAS, pursuant to
the APA, HVW issued to the Investors, notes set forth on Schedule A (the “HVW Notes”);
WHEREAS, pursuant to
that certain purchase agreement of even date herewith (the “PA”) HVW Holdings LLC (the “Seller”)
sold to ADI 87,990,000 shares of HVW’s common stock (the “Common Shares”);
NOW, THEREFORE, in
consideration of the rights and benefits that they will each receive in connection with this Agreement and the APA, the Parties,
intending to be legally bound, agree as follows:
1. Guaranties.
The Debtors will guaranty the HVW Notes pursuant to a guaranty in the form annexed hereto as Exhibit A (the “HVW Guaranties”).
2. ABH
Security Interest. The obligations of ABH under its HVW Guaranty will be secured under Security Agreement.
3. ADI
Stock Pledge. The obligations of ADI under its HVW Guaranty will be secured by as pledge of its ownership of the Series
B Shares and Common Shares pursuant to the stock pledge agreement annexed hereto as Exhibit B (the “Pledge”).
4. ABH
Notes. Upon the delivery of the executed HVW Guaranties the Investors will cancel ABH’s obligations under the ABH
Notes and the ABH Notes will be deemed satisfied.
5. Representations
and Warranties of the Debtors. The Debtors hereby represent and warrants to the Investor as of the date hereof as follows:
(a) Organization
and Standing. Each Debtor is a corporation duly organized, validly existing under, and by virtue of, the laws of the State
of Delaware, and is in good standing under such laws. The Debtors have all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as presently conducted.
(b) Corporate
Power. The Debtors have all requisite legal and corporate power and authority to execute and deliver this Agreement and to
carry out and perform their obligations under the terms of this Agreement and the transactions contemplated hereby.
(c) Authorization.
All corporate action on the part of the Debtors, their officers, directors and stockholders necessary for the authorization, execution,
delivery and performance of this Agreement, and the performance of all of the Debtors’ obligations hereunder have been taken.
This Agreement has been duly executed by the Debtors and constitutes valid and legally binding obligations of the Debtors, enforceable
against the Debtors in accordance with their respective terms, subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
6. Representations
and Warranties of all the Investor. Each Investor, for itself only, hereby represents and warrants as of the date hereof
to the Debtors as follows:
(a) Organization
and Standing. The Investor is either an individual or an entity duly organized, validly existing under, and by virtue of, the
laws of the jurisdiction of its incorporation or formation, and is in good standing under such laws.
(b) Corporate
Power. The Investor has all right, corporate, partnership, limited liability company or similar power and authority to execute
and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement and the transactions
contemplated hereby.
(c) Investor
Status. The Investor is 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 under the Securities
Act. The Investor is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).
7. Miscellaneous.
(a) Entire
Agreement. This Agreement, together with the schedules attached 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.
(b) 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 occur first. The addresses for
such communications shall be: (i) if to the ADI or ABH to c/o Attitude Drinks, Inc., 712 US Highway 1, Suite 200, North Palm Beach,
FL 33408, Attn: Roy Warren, CEO, Fax: (800) 799–5053 and (ii) if to the Investors, to the address and fax number as indicated
on Schedule A, attached hereto.
(c) 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 Investor, in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought. No waiver 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 any party to exercise any right hereunder in any manner impair the exercise of any such right.
(d) 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.
(e) Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns.
(f) No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(g) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement and the transactions
contemplated hereby shall be governed by and construed and enforced in accordance with the internal laws of the State of New York,
without regard to the principals 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 (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 the 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 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.
(h) Survival.
The representations and warranties contained herein shall survive the Closing for the applicable statute of limitations.
(i) Execution.
This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same
agreement, 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 email 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 was an original thereof.
(j) 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.
(k) Independent
Nature of Investor’ Obligations and Rights. The obligations of the Investors hereunder are several and not joint with
the obligations, and no Investor shall be responsible in any way for the performance or non-performance of the obligations of any
other Investor. Nothing contained herein and no action taken by any Investor hereto shall be deemed to constitute the Investors
as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in
any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby.
(l) Construction.
The parties hereto agree that each of them and/or their respective counsel have reviewed and have had an opportunity to revise
this Agreement and the schedules attached hereto. This Agreement shall be construed according to its fair meaning and not strictly
for or against any party. The word “including” shall be construed to include the words “without limitation.”
In this Agreement, unless the context otherwise requires, references to the singular shall include the plural and vice versa.
(m) 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 ANDINTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRAIL BY JURY.
[Remainder of page
intentionally left blank]
IN
WITNESS WHEREOF, the parties have caused this Exchange Agreement to be duly executed and delivered as of the date and year first
written above.
DEBTORS
| Attitude Beer Holding Co |
|
Attitude Drinks, Inc. |
| |
|
|
| /s/ Roy Warren |
|
/s/ Roy Warren |
| By: Roy Warren |
|
By: Roy Warren |
| Its: President |
|
Its: President |
INVESTORS
| Alpha Capital Anstalt |
|
Tarpon Bay Partners LLC |
| |
|
|
| /s/ Konrad Ackermann |
|
/s/ Stephen M. Hicks |
| By: Konrad Ackermann |
|
By: Stephen M. Hicks |
| Its: Director |
|
Its: Managing Member |
SCHEDULE A
| Date | |
Alpha | | |
Tarpon | |
| 12/24/2014 | |
$ | 246,187.50 | | |
$ | 91,062.50 | |
| 1/24/2015 | |
$ | 225,000.00 | | |
$ | 75,000.00 | |
| 2/24/2015 | |
$ | 225,000.00 | | |
$ | 75,000.00 | |
| 2/24/2015 | |
$ | 200,437.50 | | |
$ | 66,812.50 | |
| 4/21/2015 | |
$ | 75,000.00 | | |
$ | 25,000.00 | |
| Total | |
$ | 971,625.00 | | |
$ | 332,875.00 | |
Exhibit 10.7
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT
(the “Agreement”) is dated as of April 21, 2015 between HVW Holdings LLC maintaining an address at 4224 White Plains
Road, 3rd Floor, Bronx, NY 10467 (the “Seller”) and Attitude Drinks, Inc. maintaining an address at 712
US Highway 1, Suite 200, North Palm Beach, FL 33408 (the “Purchaser”).
WHEREAS, the Seller presently
is the holder of 87,990,000 shares of common stock, (the “Shares”), issued by Harrison Vickers and Waterman Inc., a
Nevada corporation (the “Company”).
WHEREAS, concurrently herewith
the Purchaser, Tarpon Bay Partners LLC, and Alpha Capital Anstalt have entered into an agreement with the Company, as the sole
shareholders of Attitude Beer Holding Co. a Delaware corporation, to sell all their interest in Attitude Beer Holding Co. to the
Company (the “ABH Sale”).
WHEREAS, concurrently with
and in consideration of the ABH Sale, certain holders of the Company’s securities have agreed to transfer their interest
in the Company to Purchaser, Tarpon Bay Partners LLC, and Alpha Capital Anstalt.
WHEREAS, the Purchaser
desires to purchase the Shares from the Seller, and the Seller desires to sell the Shares to the Purchaser on the terms set forth
in this Agreement.
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 Seller and the Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE
1. The
Closing
(a) The
Closing. Subject to the terms and conditions set forth in this Agreement and in consideration of the ABH Sale, the
Seller shall sell to the Purchaser and the Purchaser shall purchase from the Seller the Shares for an aggregate purchase price
of $65,000 (“Purchase Price”). The Closing shall occur concurrently with the ABH Sale.
(b) Deliveries.
The parties shall deliver or shall cause to be delivered the following:
(i) Purchaser
will deliver to the Seller the Purchase Price pursuant to the following wire instructions:
(ii) The
Seller shall deliver the Shares to Purchaser in certificated form in the name of the Purchaser to the following address:
c/o LH Financial Services Corp.
510 Madison Avenue, 14th Floor
New York, NY 10022
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations
and Warranties of the Seller. The Seller hereby makes the following representations and warranties to the Purchaser:
(a) The
Seller has full power and authority to enter into this Agreement and to consummate the Transaction. This Agreement has been duly
and validly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller, 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.
(b) The
execution, delivery and performance by the Seller of this Agreement and consummation by the Seller of the Transaction do not and
will not: (i) violate the organizational documents of the Seller, (ii) violate any decree or judgment of any court or other governmental
authority applicable to or binding on the Seller; (iii) violate any provision of any federal or state statute, rule or regulation
which is, to the Seller’s knowledge, applicable to the Seller; or (iv) violate any contract to which the Seller 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 Seller 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 the Seller of this Agreement or the
consummation of the Transaction, except for such consents or approvals of the Issuer required pursuant to any Transfer Restriction
that have been obtained prior to the Trade Date for each Transaction.
(c) Seller
is an “affiliate” of the Company as defined in Rule 405 under the Securities Act of 1933 (the “Securities
Act”).
(d) With
respect to the sale of the Shares, (i) the Seller is the sole record and beneficial owner of the Shares, free and clear of any
taxes and encumbrances; (ii) the Shares, when delivered and paid for in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, free from all taxes and encumbrances; (iii) the Shares to be delivered are not and will
not be as of the Closing Date subject to any transfer restriction, other than the restriction that the Shares have not been registered
under the Securities Act and, therefore, cannot be resold unless it is registered under the Securities Act or in a transaction
exempt from or not subject to the registration requirements of the Securities Act (“Permitted Securities Law Restriction”);
and (iv) upon the transfer of the Shares to Purchaser, Purchaser will acquire good and marketable title thereto (assuming that
Purchaser is a bona fide purchaser within the meaning of Section 8-302 of the New York Uniform Commercial Code), and will be the
legal and beneficial owner of such the Shares, free and clear of any encumbrances or transfer restrictions, other than the Permitted
Securities Law Restriction.
(e) The
Seller (i) is a sophisticated person with respect to the sale of the Shares; (ii) has adequate information concerning the business
and financial condition of the issuer to make an informed decision regarding the sale of the Shares; and (c) has independently
and without reliance upon the Purchaser, and based on such information as the Seller has deemed appropriate, made its own analysis
and decision to enter into this Agreement, except that the Seller has relied upon the Purchaser’ express representations,
warranties and covenants in this Agreement. The Seller acknowledges that the Purchaser has not given the Seller any investment
advice, credit information or opinion on whether the sale of the Shares is prudent.
(f) There
are no outstanding rights, options, subscriptions or other agreements or commitments obligating the Seller with respect to the
Shares.
(g) The
Seller has taken no action that would give rise to any claim by any person for brokerage commissions, finder’s fees or similar
payments relating to this Agreement or the transactions contemplated hereby.
2.2 Representations
and Warranties of the Purchaser. Purchaser hereby represents, warrants and agrees as of the date hereof:
(a) Purchaser
has full power and authority to enter into this Agreement and to consummate the Transaction. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect that affect the enforcement of creditors’ rights generally and by equitable limitations on the availability
of specific remedies.
(b) The
execution, delivery and performance by Purchaser of this Agreement and consummation by Purchaser of the Transaction do not and
will not: (i) violate any decree or judgment of any court or other governmental authority applicable to or binding on Purchaser;
(ii) violate any provision of any federal or state statute, rule or regulation which is, to Purchaser’s knowledge, applicable
to the Purchaser; or (iii) violate any contract to which Purchaser is a party or by which Purchaser or any of its respective assets
or properties are bound. 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 Purchaser of this Agreement or the consummation of the Transaction.
(c) Purchaser
is an “accredited investor” and is aware that the Shares are subject to restrictions on transfer pursuant to the Securities
Act.
(d) The
Purchaser is acquiring the Shares for its own account and not with a view towards, or for resale in connection with, the public
sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, such Purchaser does not agree to hold the Shares for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act.
(e) Purchaser
is aware of the Company’s business affairs and financial condition, and has acquired sufficient information about the issuer
to reach an informed and knowledgeable decision to acquire the Shares.
(f) Purchaser
has taken no action that would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments
relating to this Agreement or the transactions contemplated hereby.
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 Seller and the Purchaser 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.
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 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.
3.6 Survival.
The representations, warranties, agreements and covenants contained herein shall survive the Closing.
3.7 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.
3.8 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 Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| SELLER: |
|
PURCHASER: |
| HVW Holdings LLC |
|
Attitude Drinks, Inc. |
| |
|
|
| /s/ James Giordano |
|
/s/ Roy Warren |
| By: James Giordano |
|
By: Roy Warren |
| Its: President |
|
Its: President |
Exhibit 99.1
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.
COMMON STOCK PURCHASE CLASS A WARRANT
HARRISON
VICKERS AND WATERMAN INC.
Warrant Shares: 1,295,500,000 Initial Exercise Date:
April 21, 2015
Warrant No: A-1
THIS COMMON
STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Alpha Capital Anstalt or its
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”)
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 HARRISON VICKERS AND WATERMAN
INC., a Nevada corporation (the “Company”), up to 1,295,500,000 shares (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 Asset Purchase Agreement (the “Purchase
Agreement”), dated April 21, 2015, 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 be $0.0025, 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 9.99% 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, upon not less than 61 days’
prior notice to the Company, may increase or decrease 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 or decrease 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(b)), 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. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction,
(2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving
a person or entity not traded on a national securities exchange or trading market (with such exchange or market including, without
limitation, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, The New York Stock Exchange,
Inc., the NYSE or Amex), the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable
concurrently with the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder
the higher of (i) an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the
date of the consummation of such Fundamental Transaction, or (ii) the positive difference between the cash per share paid in such
Fundamental Transaction minus the then in effect Exercise Price. “Black Scholes Value” means the value of the
unexercised portion of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function
on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction
for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an
expected volatility equal to the greater of 100% and the 100 day volatility obtained from the “HVT” function on Bloomberg
as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying
price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value
of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. 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(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, 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) Subsequent
Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell
or grant any option to purchase, or sell or grant any right to reprice, or otherwise issue (or announce any offer, sale, grant
or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective price per share less
than the Exercise Price then in effect, excluding Exempt Issuances as defined in the Purchase Agreement (such lower price, the
“Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed
that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options
or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective
price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise
Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive
Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in
the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever
such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or
issued under this Section 3(e) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than
the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section
3(e), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing
terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides
a Dilutive Issuance Notice pursuant to this Section 3(e), upon the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon
in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be converted or exercised. Notwithstanding the foregoing, the issuance
of any Common Stock or Common Stock Equivalents pursuant to the Purchase Agreement shall not be deemed a Dilutive Issuance.
f) 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.
g) 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
fifteen (15) 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(a).
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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HARRISON VICKERS AND WATERMAN INC. |
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By: |
/s/ Roy Warren |
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Name: Roy Warren |
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Title: Chief Executive Officer |
NOTICE OF EXERCISE
To: HARRISON
VICKERS AND WATERMAN INC.
(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.)
HARRISON
VICKERS AND WATERMAN INC.
FOR VALUE RECEIVED, [____]
all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
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 99.2
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.
COMMON STOCK PURCHASE CLASS A WARRANT
HARRISON
VICKERS AND WATERMAN INC.
Warrant Shares: 443,833,333 Initial Exercise Date:
April 21, 2015
Warrant No: A-2
THIS COMMON STOCK
PURCHASE WARRANT (the “Warrant”) certifies that, for value received, TARPON BAY PARTNERS LLC or its
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”)
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 HARRISON VICKERS AND WATERMAN
INC., a Nevada corporation (the “Company”), up to 443,833,333 shares (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 Asset Purchase Agreement (the “Purchase
Agreement”), dated April 21, 2015, 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 be $0.0025, 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 9.99% 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, upon not less than 61 days’
prior notice to the Company, may increase or decrease 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 or decrease 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(b)), 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. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction,
(2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving
a person or entity not traded on a national securities exchange or trading market (with such exchange or market including, without
limitation, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, The New York Stock Exchange,
Inc., the NYSE or Amex), the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable
concurrently with the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder
the higher of (i) an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the
date of the consummation of such Fundamental Transaction, or (ii) the positive difference between the cash per share paid in such
Fundamental Transaction minus the then in effect Exercise Price. “Black Scholes Value” means the value of the
unexercised portion of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function
on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction
for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an
expected volatility equal to the greater of 100% and the 100 day volatility obtained from the “HVT” function on Bloomberg
as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying
price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value
of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. 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(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, 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) Subsequent
Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell
or grant any option to purchase, or sell or grant any right to reprice, or otherwise issue (or announce any offer, sale, grant
or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective price per share less
than the Exercise Price then in effect, excluding Exempt Issuances as defined in the Purchase Agreement (such lower price, the
“Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed
that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options
or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective
price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise
Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive
Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in
the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever
such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or
issued under this Section 3(e) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than
the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section
3(e), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing
terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides
a Dilutive Issuance Notice pursuant to this Section 3(e), upon the occurrence of any Dilutive Issuance, the Holder is entitled
to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon
in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be converted or exercised. Notwithstanding the foregoing, the issuance
of any Common Stock or Common Stock Equivalents pursuant to the Purchase Agreement shall not be deemed a Dilutive Issuance.
f) 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.
g) 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
fifteen (15) 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(a).
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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HARRISON VICKERS AND WATERMAN INC. |
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By: |
/s/ Roy Warren |
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Name: Roy Warren |
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Title: Chief Executive Officer |
NOTICE OF EXERCISE
To: HARRISON
VICKERS AND WATERMAN INC.
(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.)
HARRISON
VICKERS AND WATERMAN INC.
FOR VALUE RECEIVED, [____]
all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
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 99.3
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT
(the “Agreement”) is dated as of April 21, 2015 between HVW Holdings LLC maintaining an address at 4224 White Plains
Road, 3rd Floor, Bronx, NY 10467 (the “Seller”) and Alpha Capital Anstalt maintaining an address at Lettstrasse
32, 9490 Vaduz, Principality of Liechtenstein (the “Purchaser”).
WHEREAS, the Seller presently
is the holder of 32,300 shares of Series A Preferred shares, (the “Shares”), issued by Harrison Vickers and Waterman
Inc., a Nevada corporation (the “Company”).
WHEREAS, concurrently herewith
the Purchaser, Tarpon Bay Partners LLC, and Attitude Drinks, Inc., a Delaware corporation have entered into an agreement with the
Company, as the sole shareholders of Attitude Beer Holding Co. a Delaware corporation, to sell all their interest in Attitude Beer
Holding Co. to the Company (the “ABH Sale”).
WHEREAS, concurrently
with and in consideration of the ABH Sale, certain holders of the Company’s securities have agreed to transfer their interest
in the Company to Purchaser, Tarpon Bay Partners LLC, and Attitude Drinks, Inc.
WHEREAS, the Purchaser
desires to purchase the Shares from the Seller, and the Seller desires to sell the Shares to the Purchaser on the terms set forth
in this Agreement.
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 Seller and the Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE
1. The
Closing
(a) The
Closing. Subject to the terms and conditions set forth in this
Agreement and in consideration of the ABH Sale, the Seller shall sell to the Purchaser and the Purchaser shall purchase from the
Seller the Shares for an aggregate purchase price of $323 (“Purchase Price”). The Closing shall occur concurrently
with the ABH Sale.
(b) Deliveries.
The parties shall deliver or shall cause to be delivered the following:
(i) Purchaser
will deliver to the Seller the Purchase Price pursuant to the following wire instructions:
[ ]
(ii) The
Seller shall deliver the Shares to Purchaser in certificated form in the name of the Purchaser to the following address:
c/o LH Financial Services Corp.
510 Madison Avenue, 14th Floor
New York, NY 10022
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations
and Warranties of the Seller. The Seller hereby makes the following representations and warranties to the Purchaser:
(a) The
Seller has full power and authority to enter into this Agreement and to consummate the Transaction. This Agreement has been duly
and validly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller, 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.
(b) The
execution, delivery and performance by the Seller of this Agreement and consummation by the Seller of the Transaction do not and
will not: (i) violate the organizational documents of the Seller, (ii) violate any decree or judgment of any court or other governmental
authority applicable to or binding on the Seller; (iii) violate any provision of any federal or state statute, rule or regulation
which is, to the Seller’s knowledge, applicable to the Seller; or (iv) violate any contract to which the Seller 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 Seller 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 the Seller of this Agreement or the
consummation of the Transaction, except for such consents or approvals of the Issuer required pursuant to any Transfer Restriction
that have been obtained prior to the Trade Date for each Transaction.
(c) Seller
is an “affiliate” of the Company as defined in Rule 405 under the Securities Act of 1933 (the “Securities
Act”).
(d) With
respect to the sale of the Shares, (i) the Seller is the sole record and beneficial owner of the Shares, free and clear of any
taxes and encumbrances; (ii) the Shares, when delivered and paid for in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, free from all taxes and encumbrances; (iii) the Shares to be delivered are not and will
not be as of the Closing Date subject to any transfer restriction, other than the restriction that the Shares have not been registered
under the Securities Act and, therefore, cannot be resold unless it is registered under the Securities Act or in a transaction
exempt from or not subject to the registration requirements of the Securities Act (“Permitted Securities Law Restriction”);
and (iv) upon the transfer of the Shares to Purchaser, Purchaser will acquire good and marketable title thereto (assuming that
Purchaser is a bona fide purchaser within the meaning of Section 8-302 of the New York Uniform Commercial Code), and will be the
legal and beneficial owner of such the Shares, free and clear of any encumbrances or transfer restrictions, other than the Permitted
Securities Law Restriction.
(e) The
Seller (i) is a sophisticated person with respect to the sale of the Shares; (ii) has adequate information concerning the business
and financial condition of the issuer to make an informed decision regarding the sale of the Shares; and (c) has independently
and without reliance upon the Purchaser, and based on such information as the Seller has deemed appropriate, made its own analysis
and decision to enter into this Agreement, except that the Seller has relied upon the Purchaser’ express representations,
warranties and covenants in this Agreement. The Seller acknowledges that the Purchaser has not given the Seller any investment
advice, credit information or opinion on whether the sale of the Shares is prudent.
(f) There
are no outstanding rights, options, subscriptions or other agreements or commitments obligating the Seller with respect to the
Shares.
(g) The
Seller has taken no action that would give rise to any claim by any person for brokerage commissions, finder’s fees or similar
payments relating to this Agreement or the transactions contemplated hereby.
2.2 Representations
and Warranties of the Purchaser. Purchaser hereby represents, warrants and agrees as of the date hereof:
(a) Purchaser
has full power and authority to enter into this Agreement and to consummate the Transaction. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect that affect the enforcement of creditors’ rights generally and by equitable limitations on the availability
of specific remedies.
(b) The
execution, delivery and performance by Purchaser of this Agreement and consummation by Purchaser of the Transaction do not and
will not: (i) violate any decree or judgment of any court or other governmental authority applicable to or binding on Purchaser;
(ii) violate any provision of any federal or state statute, rule or regulation which is, to Purchaser’s knowledge, applicable
to the Purchaser; or (iii) violate any contract to which Purchaser is a party or by which Purchaser or any of its respective assets
or properties are bound. 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 Purchaser of this Agreement or the consummation of the Transaction.
(c) Purchaser
is an “accredited investor” and is aware that the Shares are subject to restrictions on transfer pursuant to the Securities
Act.
(d) The
Purchaser is acquiring the Shares for its own account and not with a view towards, or for resale in connection with, the public
sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, such Purchaser does not agree to hold the Shares for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act.
(e) Purchaser
is aware of the Company’s business affairs and financial condition, and has acquired sufficient information about the issuer
to reach an informed and knowledgeable decision to acquire the Shares.
(f) Purchaser
has taken no action that would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments
relating to this Agreement or the transactions contemplated hereby.
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 Seller and the Purchaser 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.
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 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.
3.6 Survival.
The representations, warranties, agreements and covenants contained herein shall survive the Closing.
3.7 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.
3.8 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.
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IN WITNESS WHEREOF, the parties hereto have
caused this Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| SELLER: |
|
PURCHASER: |
| HVW Holdings LLC |
|
Alpha Capital Anstalt |
| |
|
|
| /s/ James Giordano |
|
/s/ Konrad Ackerman |
| By: James Giordano |
|
By: Konrad Ackerman |
| Its: President |
|
Its: Director |