As
filed with the Securities and Exchange Commission on July 20 , 2015
Registration
Statement No. 333-204599
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Amendment
No. 2 to
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VAPOR
CORP.
(Exact
name of registrant as specified in its charter)
| Delaware |
|
2100 |
|
84-1070932 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(Primary
Standard Industrial
Classification
Code Number) |
|
(I.R.S.
Employer
Identification
Number) |
3001
Griffin Road
Dania
Beach, Florida 33312
(888)
766-5351
(Address
and telephone number of registrant’s principal executive offices)
Jeffrey
Holman
Chief
Executive Officer
Vapor
Corp.
3001
Griffin Road
Dania
Beach, Florida 33312
(888)
766-5351
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
| Brian
S. Bernstein |
|
Ralph
V. De Martino |
| Michael
D. Harris |
|
Cavas
S. Pavri |
| Nason,
Yeager, Gerson, White & Lioce, P.A. |
|
Schiff
Hardin LLP |
| 1645
Palm Beach Lakes Blvd., Suite 1200 |
|
901
K Street, NW Suite 700 |
| West
Palm Beach, Florida 33401 |
|
Washington,
DC 20001 |
| (561)
686-3307 |
|
(202)
778–6400 |
Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box: [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
| Large
accelerated filer [ ] |
|
Accelerated
filer [ ] |
| Non-accelerated
filer [ ] (Do not check if a smaller reporting company) |
|
Smaller reporting
company [X] |
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY
NOTE
This
Amendment No. 2 (“Amendment No. 2”) to the Registration Statement on Form S-1 (File No. 333-204599) of Vapor Corp.
(“Registration Statement”) is being filed solely for the purpose of filing certain exhibits as indicated in Part II
of this Amendment No. 2. This Amendment No. 2 does not modify any provision of the prospectus that forms a part of the Registration
Statement. Accordingly, a preliminary prospectus has been omitted.
PART
II—INFORMATION NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution
The
following table sets forth all expenses, other than the underwriting commissions, payable by the registrant in connection with
the sale of the common stock being registered. All the amounts shown are estimates except the SEC registration fee and the FINRA
filing fee.
| | |
Amount
to be paid |
| SEC registration
fee | |
$ |
8,819.50
|
| FINRA filing fee | |
$ |
11,885 |
| NASDAQ listing fees | |
$ |
5,000
|
| Blue sky qualification fees
and expenses | |
$ |
10,000 |
| Transfer agent and registrar
fees | |
$ |
5,000 |
| Accounting fees and expenses | |
$ |
30,000 |
| Legal fees and expenses | |
$ |
120,000
|
| Printing and engraving expenses | |
$ |
5,000 |
| Miscellaneous | |
$ |
9,295.50
|
| Total | |
$ |
205,000
|
Item
14. Indemnification of Directors and Officers
Section
145(a) of the Delaware General Corporation Law (the “DGCL”), which Vapor is subject to, provides that a corporation
may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation)
by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. Section
145(b) of the DGCL provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 145(a) and (b) of the DGCL, or in defense of any claim, issue
or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably
incurred by such person in connection therewith.
Any
indemnification under Section 145(a) and (b) of the DGCL (unless ordered by a court) shall be made by Vapor only as authorized
in the specific case upon a determination that indemnification of the present or director, officer, employee or agent is proper
in the circumstances because the person has met the applicable standard of conduct set forth in Section 145(a) and (b). Such determination
shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee
of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors,
or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the shareholders. Expenses (including
attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including
attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms
and conditions, if any, as the corporation deems appropriate. The indemnification and advancement of expenses provided by, or
granted pursuant to, Section 145 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement
of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in such person’s official capacity and as to action in another capacity while holding such office.
Section
145 of the DGCL also empowers a corporation to purchase and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether
or not the corporation would have the power to indemnify such person against such liability under Section 145.
Article
10 of the Vapor’s Certificate of Incorporation and Article 7 of Vapor’s Bylaws provide that directors, officers, employees
and agents shall be indemnified to the fullest extent permitted by the DGCL.
Vapor
carries directors and officers liability coverages designed to insure its officers and directors and those of its subsidiaries
against certain liabilities incurred by them in the performance of their duties, and also providing for reimbursement in certain
cases to Vapor and its subsidiaries for sums paid to directors and officers as indemnification for similar liability. Vapor has
entered into Indemnification Agreements with its executive officers and directors providing for advancement of expenses and indemnification
to the fullest extent permissible under DGCL.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, Vapor has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Item
15. Recent Sales of Unregistered
Securities
On
June 25, 2015, the Company closed on a Securities Purchase Agreement, dated as of June 22, 2015, with certain purchasers pursuant
to which the Company sold, at a 5% original issue discount, a total of $1,750,000 convertible debentures (the “Debentures”).
Net proceeds to the Company from sale of the Debentures, after payment of commissions and legal fees of the lead investor, were
$1,466,250. The Debentures mature December 22, 2015, and accrue interest at 10% per year. Amounts of principal and accrued interest
under the Debentures are convertible into common stock of the Company at a price per share of $2.50. Principal and accrued interest
on the Debentures are payable in three approximately equal installments on September 22, 2015, October 22, 2015 and December 22,
2015, at the election of the holders of the Debentures, (i) in cash for an additional 25% premium, or (ii) in common stock of
the Company at a price per share of $2.50. As lead investor under the Securities Purchase Agreement, Redwood Management, LLC received
a right of first refusal to purchase up to 100% of the securities offered by the Company in future private placement offerings
through December 22, 2015.
The
Company’s obligations under the Debentures can be accelerated in the event the Company undergoes a change in control and
other customary events of default. In the event of default and acceleration of the Company’s obligations, the Company would
be required to pay 130% of amounts of principal and interest then outstanding under the Debentures. The Company’s obligations
under the Debentures are secured under a Security Agreement, under which Redwood Management, LLC acts as Collateral Agent, by
a second lien on substantially all of the Company’s assets, including all of the Company’s interests in its consolidated
subsidiaries.
For
acting as placement agent in the offering of the Debentures, the Company paid Chardan Capital Management, LLC (the “Placement
Agent”) a fee equal to 10% of the gross proceeds from the sale of the Debentures, and issued the Placement Agent 70,000
five-year warrants exercisable at $2.50 per share. In addition, the Company agreed to reduce the exercise price of 28,614 warrants
held by the Placement Agent to $2.50 from their original exercise prices ranging from $10.05 to $12.05.
On
June 19, 2015, the Company entered into agreements (the “Waivers”), with certain investors in each of its private
placement offerings under the Securities Purchase Agreement dated March 3, 2015 (the “2015 Agreement”) and the Securities
Purchase Agreement dated November 14, 2014 (the “2014 Agreement,” and with the 2015 Agreement, the “Agreements”).
Under the terms of the Waivers, the signatories thereto (the “Prior Investors”) agreed to amend the Agreements and
waive or modify certain terms thereunder, including certain price protection provisions and participation rights in subsequent
securities offerings. In exchange, the Company agreed to issue the Prior Investors a total of 647,901 shares of common stock (including
142,000 shares issued to the lead investor under each of the Agreements in its capacity as lead investor) and 595,685 five-year
warrants exercisable at $2.525 per share. In the event that, prior to November 14, 2015, the Company issues shares of common stock,
or securities convertible into common stock, at an effective price per share of less than $2.70, the Prior Investors will be entitled
to the issuance of additional shares (the “Additional Shares”), the exact amount of which will depend on the effective
price per share of such subsequent issuance, but which will not exceed a total of 2,328,598 shares. The Company will not issue
any shares of common stock requiring shareholder approval under the Rules of the Nasdaq Stock Market without receipt of such approval.
The Company will not issue any of the Additional Shares unless the 647,901 shares of common stock, the shares issuable upon conversion
of the Debentures and the Additional Shares are either within the 19.9% Nasdaq limitation or the issuance is approved by shareholders.
The Company agreed to file a registration statement with the Securities and Exchange Commission registering the shares and warrant
shares issued to the Prior Investors under the Waivers.
On
June 16, 2015, the Company issued a total of 292,191 shares of common stock upon the vesting of restricted stock units assumed
by the Company in connection with its merger with Vaporin, Inc. effective March 4, 2015. Recipients of the shares issued upon
vesting of the restricted stock units included Gregory Brauser, the Company’s President and a member of the Board. On May
27, 2015, the Company issued a total of 27,500 shares of common stock to consultants of the Company for consulting services.
The
shares and warrants issued under the Waivers, the shares issued upon vesting of the restricted stock units, and the shares issued
to consultants, were issued without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section
4(a)(2).
Item
16. Exhibits and Financial Statement
Schedules
(a)
Exhibits
See
the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this registration statement
on Form S-1, which Exhibit Index is incorporated herein by reference.
(b)
Financial Statement Schedules
Schedules
have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements
or notes thereto.
Item
17. Undertakings
The
undersigned registrant hereby undertakes:
| |
(1) |
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
| |
(i) |
to
include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| |
|
|
| |
(ii) |
to
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
and |
| |
|
|
| |
(iii) |
to
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement. |
| |
(2) |
That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. |
| |
|
|
| |
(3) |
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering. |
| |
(4) |
That,
for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the undersigned undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| |
(i) |
Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424; |
| |
|
|
| |
(ii) |
Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant; |
| |
|
|
| |
(iii) |
The
portion of any other free writing prospectus relating to the offering containing material
information about the undersigned registrant or its securities provided by or on behalf
of the undersigned registrant; and |
| |
|
|
| |
(iv) |
Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 14 above, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The
undersigned registrant hereby undertakes that:
| |
(1) |
For
purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective. |
| |
|
|
| |
(2) |
For
the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, has duly caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Dania Beach, State of Florida, on July 20 , 2015.
| |
Vapor
Corp. |
| |
|
|
| |
By:
|
/s/
Jeffrey Holman |
| |
|
Jeffrey
Holman |
| |
|
Chief
Executive Officer |
In
accordance with the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons
in the capacities and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Jeffrey Holman |
|
Principal
Executive Officer and Director |
|
July
20 , 2015 |
| Jeffrey
Holman |
|
|
|
|
| |
|
|
|
|
| /s/
James Martin |
|
Chief
Financial Officer (Principal Financial Officer) and |
|
July
20 , 2015 |
| James
Martin |
|
Chief
Accounting Officer (Principal Accounting Officer) |
|
|
| |
|
|
|
|
| /s/ Gregory Brauser |
|
Director |
|
July
20, 2015 |
| Gregory
Brauser |
|
|
|
|
| |
|
|
|
|
/s/
William Conway III
|
|
Director
|
|
July
20 , 2015 |
William
Conway III
|
|
|
|
|
| |
|
|
|
|
/s/
Daniel MacLachlan
|
|
Director
|
|
July
20 , 2015 |
| Daniel
MacLachlan |
|
|
|
|
| |
|
|
|
|
| /s/
Nikhil Raman |
|
Director
|
|
July
20 , 2015 |
| Nikhil
Raman |
|
|
|
|
EXHIBIT
INDEX
Exhibit
Number |
|
Description
of Exhibit |
| |
|
|
| 1.1 Ω |
|
Form
of Underwriting Agreement |
| |
|
|
| 2.1 |
|
Smoke
Anywhere USA, Inc. Acquisition Agreement and Plan of Merger dated as of September 1, 2009 (1) |
| |
|
|
| 2.2†† |
|
Vaporin,
Inc. Agreement and Plan of Merger, dated as of December 17, 2014 (19) |
| |
|
|
| 3.1 |
|
Certificate
of Incorporation (3) |
| |
|
|
| 3.2 Ω |
|
Certificate of Amendment
to the Certificate of Incorporation |
| |
|
|
| 3.3 |
|
Bylaws
(3) |
| |
|
|
| 3.4 Ω |
|
Certificate
of Designation for Series A Convertible Preferred Stock |
| |
|
|
| 4.1 |
|
Specimen
Common Stock Certificate (3) |
| |
|
|
| 4.2* |
|
Form
of Series A Warrant to be issued in connection with this Offering |
| |
|
|
| 4.3 Ω |
|
Form of Unit Purchase
Option to be issued in connection with this Offering |
| |
|
|
| 5.1 * |
|
Opinion
Regarding Legality |
| |
|
|
| 10.1† |
|
2009
Equity Incentive Plan (2) |
| |
|
|
| 10.2 |
|
Lease
Agreement dated March 21, 2011 - 3001 Griffin Partners, LLC (5) |
| |
|
|
| 10.3† |
|
Kevin
Frija Employment Agreement, dated February 27, 2012 (6) |
| |
|
|
| 10.4† |
|
Harlan
Press Employment Agreement, dated February 27, 2012 (6) |
| |
|
|
| 10.5† |
|
Christopher
Santi Employment Agreement, dated December 12, 2012 (7) |
| |
|
|
| 10.6† |
|
Jeffrey
Holman Employment Agreement, dated February 19, 2013 (8) |
| |
|
|
| 10.7 |
|
Spike
Marks Inc./Casa Cubana Private Label Production and Supply
Agreement (9) |
| |
|
|
| 10.8 |
|
Form
of Warrant, dated as of June 19, 2012 (10) |
| |
|
|
| 10.9 |
|
Entrepreneur
Growth Capital, LLC Invoice Purchase and Sale Agreement made as of August 8, 2013 (11) |
| |
|
|
| 10.10† |
|
Form
of Letter Amendment to Harlan Press Employment Agreement (11) |
| |
|
|
| 10.11 |
|
Entrepreneur
Growth Capital, LLC Credit Card Receivables Advance Agreement dated as of August 16, 2013 (12) |
| 10.12 |
|
Entrepreneur
Growth Capital LLC Secured Promissory Note dated September 23, 2014 (13) |
| |
|
|
| 10.13 |
|
Purchase
Agreement, dated as of October 22, 2013 (4) |
| |
|
|
| 10.14 |
|
Registration
Rights Agreement, dated as of October 29, 2013 (4) |
| |
|
|
| 10.15 |
|
Form
of Warrant issued to Roth Capital Partners, LLC (16) |
| |
|
|
| 10.16 |
|
Securities
Purchase Agreement, dated as of November 14, 2014 (18) |
| |
|
|
| 10.17 |
|
Form
of Convertible Note Due November 14, 2015 (18) |
| |
|
|
| 10.18 |
|
Form
of Warrant, dated as of November 14, 2014 (18) |
| |
|
|
| 10.19† |
|
Form
of 2009 Equity Incentive Plan Stock Option Agreement (14) |
| |
|
|
| 10.20† |
|
Form
of Non-Equity Incentive Plan Stock Option Agreement (14) |
| |
|
|
| 10.21† |
|
Amendment
to 2009 Equity Incentive Plan (15) |
| |
|
|
| 10.22 |
|
Knight
Global Services Consulting Agreement dated as of February 3, 2014 (17) |
| |
|
|
| 10.23 |
|
Operating
Agreement of Emagine the Vape Store, LLC (19) |
| |
|
|
| 10.24 |
|
Convertible Promissory
Note, dated January 29, 2015 (20) |
| |
|
|
| 10.25 |
|
Securities Purchase Agreement,
dated as of January 20, 2015 (21) |
| |
|
|
| 10.26 |
|
Form of Note, dated as
of January 20, 2015 (21) |
| |
|
|
10.27Ω†
|
|
2015
Equity Incentive Plan |
| |
|
|
| 10.28 |
|
Securities
Purchase Agreement, dated as of March 3, 2015 (22) |
| |
|
|
| 10.29 |
|
Form
of Warrant, dated as of March 3, 2015 (22) |
| |
|
|
| 10.30 |
|
Form
of Waiver Agreement relating to November 14, 2014 Securities Purchase Agreement (23)
|
| |
|
|
| 10.31 |
|
Form
of Waiver Agreement relating to March 3, 2015 Securities Purchase Agreement (23)
|
| |
|
|
| 10.32 |
|
Form
of Warrant, dated as of June 19, 2015 (23)
|
| |
|
|
| 10.33 |
|
Form
of Registration Rights Agreement, dated as of June 16, 2015 (23)
|
| |
|
|
| 10.34 |
|
Form
of Securities Purchase Agreement, dated as of June 22, 2015 (23)
|
| |
|
|
| 10.35 |
|
Form
of Senior Secured Convertible Debenture, due December 22, 2015 (23)
|
| |
|
|
| 10.36 |
|
Form
of Security Agreement dated as of June 22, 2015 (23)
|
| |
|
|
21.1Ω
|
|
Subsidiaries
|
| |
|
|
| 23.1 Ω |
|
Consent
of Marcum LLP |
| |
|
|
23.2 Ω
|
|
Consent
of RBSM LLP
|
| |
|
|
| 23.3 |
|
Consent
of Nason, Yeager, Gerson, White & Lioce, P.A. (contained in Exhibit 5.1) |
| |
|
|
| 101.INS Ω |
|
XBRL
Instance Document^ |
| 101.SCH Ω |
|
XBRL
Taxonomy Extension Schema Document^ |
| 101.CAL Ω |
|
XBRL
Taxonomy Extension Calculation Linkbase Document^ |
| 101.LAB Ω |
|
XBRL
Taxonomy Extension Label Linkbase Document^ |
| 101.PRE Ω |
|
XBRL
Taxonomy Extension Presentation Linkbase Document^ |
| 101.DEF Ω |
|
XBRL
Taxonomy Definition Linkbase Document^ |
*
Filed herewith.
^ XBRL (Extensible
Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes
of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange
Act of 1934, and otherwise is not subject to liability under these sections.
Ω Previously filed.
† Represents management
contract or compensatory plan.
†† A schedule to
the agreement has been omitted pursuant to Item 601(b)(2) of Regulation S-K; a copy of the schedule will be furnished supplementary
to the SEC upon request.
| (1) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated November 11,
2009, as filed with the Securities and Exchange Commission (“SEC”) on November
13, 2009. |
| | | |
| (2) | Incorporated
by reference to the Registrant’s Definitive Information Statement on Schedule 14C
dated November 24, 2009, as filed with the SEC on December 10, 2009. |
| | | |
| (3) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated December 31,
2013, as filed with the SEC on December 31, 2013. |
| | | |
| (4) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated October 22, 2013,
as filed with the SEC on October 23, 2013. |
| | | |
| (5) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated March 21, 2011,
as filed with the SEC on April 7, 2011. |
| | | |
| (6) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated February 27,
2012, as filed with the SEC on February 28, 2012. |
| | | |
| (7) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated December 12,
2012, as filed with the SEC on December 13, 2012. |
| (8) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated February 19,
2013, as filed with the SEC on February 26, 2013. |
| | | |
| (9) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated December 6, 2011,
as filed with the SEC on April 25, 2012. |
| | | |
| (10) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated June 19, 2012,
as filed with the SEC on June 22, 2012. |
| | | |
| (11) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated August 8, 2013,
as filed with the SEC on August 13, 2013. |
| | | |
| (12) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated August 16, 2013,
as filed with the SEC on August 19, 2013. |
| | | |
| (13) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated August 16, 2013,
as filed with the SEC on September 23, 2014. |
| | | |
| (14) | Incorporated
by reference to the Registrant’s Form S-8 Registration Statement (No. 333-188888),
as filed with the SEC on May 28, 2013. |
| | | |
| (15) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated November 20,
2013, as filed with the SEC on November 20, 2013. |
| | | |
| (16) | Incorporated
by reference to the Registrant’s Form S-1 Registration Statement (No. 333-192391),
as filed with the SEC on November 18, 2013 and declared effective on January 27, 2014.
|
| (17) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated February 3, 2014,
as filed with the SEC on February 6, 2014. |
| | | |
| (18) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated November 14,
2014, as filed with the SEC on November 17, 2014 |
| | | |
| (19) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated December 17,
2014, as filed with the SEC on December 18, 2014. |
| | | |
| (20) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated January 29, 2015,
as filed with the SEC on February 3, 2015. |
| | | |
| (21) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated January 20, 2015,
as filed with the SEC on January 26, 2015. |
| | | |
| (22) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated March 3, 2015,
as filed with the SEC on March 5, 2015. |
| | | |
| | (23) | Incorporated
by reference to the Registrant’s Current Report on Form 8-K dated June 19, 2015,
as filed with the SEC on June 25, 2015.
|
Exhibit
4.2
FORM
OF SERIES A WARRANT
VAPOR
CORP.
WARRANT
TO PURCHASE COMMON STOCK
Warrant
No.:
Date of
Issuance: [ ], 2015 (“Issuance Date”)
Vapor
Corp., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, [ ], the registered holder hereof or its permitted assigns
(the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise
Price (as defined below) then in effect, upon exercise of this Series A Warrant, to purchase Common Stock (including any Warrants
to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or
times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), [5 YEARS
FROM DATE OF THE PROSPECTUS] (subject to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as
defined below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant
shall have the meanings set forth in Section 16. This Warrant is one of the Warrants to Purchase Common Stock (the “Purchased
Warrants”) underlying certain Units issued pursuant to the Offering (as defined in that certain Underwriting Agreement,
dated as of [ ], 2015, by and between the Company and Dawson James Securities, Inc., as representative of the several underwriters
(the “Underwriting Agreement”)).
This
Warrant shall be issuable in book entry form (the “Book-Entry Warrant Certificate”) and shall initially be
represented by one or more Book-Entry Warrant Certificates deposited with Equity Stock Transfer (the “Warrant Agent”)
and registered in the name of the Holder, or as otherwise directed by the Warrant Agent. Ownership of beneficial interests in
this Warrant shall be shown on, and the transfer of such ownership shall be effected through, records maintained by the Warrant
Agent (the “Warrant Register”). 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 written notice to the contrary.
1.
EXERCISE OF WARRANT.
(a)
Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth
in Section 1(f)), this Warrant may be exercised by the Holder, in whole or in part, upon the earlier of (but in no event earlier
than 30 days from the Date of Issuance) on (i) any day on or after the date that is six months after the Date of Issuance, (ii)
any day on or after the Early Exercise Trigger Date, or (iii) immediately if exercised for cash, in each case by delivery (whether
via e-mail, facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”) to the Warrant Agent 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 or the Warrant Agent (or to the Company
if the exercise is made pursuant to a Cashless Exercise (as defined in Section 1(d)), of the Holder’s election to exercise
this Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment
to the Warrant Agent of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number
of Warrant Shares as to which this Warrant was so exercised (in respect of such specific exercise, the “Aggregate Exercise
Price”) in cash or via wire transfer of immediately available funds (to the account set forth on Schedule A
hereto) if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise
(as defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise
hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same
effect as cancellation of the original of this Warrant certificate and issuance of a new Warrant certificate evidencing the right
to purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining
Warrant Shares shall have the same effect as cancellation of the original of this Warrant certificate after delivery of the Warrant
Shares in accordance with the terms hereof. The Holder and the Company or the Warrant Agent shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The
Company or the Warrant Agent shall deliver any objection to any Notice of Exercise form within two Business Days of receipt of
the applicable Notice of Exercise. On or before the first (1st) Trading Day following the date on which the Company has received
an Exercise Notice for a Cashless Exercise, the Company shall transmit by e-mail or facsimile an acknowledgment of confirmation
of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Warrant Agent. On or before
the third (3rd) Trading Day following (A) in the event of a Cashless Exercise, the date on which the Company has received such
Exercise Notice or (B) in the event of an exercise for cash, the later of (i) the date on which the Warrant Agent has received
such Exercise Notice or (ii) the date on which the Warrant Agent receives the Aggregate Exercise Price (such date is referred
to herein as the “Delivery Date”), the Company shall, (X) provided that (I) the Transfer Agent is participating
in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program and (II) either a registration
statement for the issuance to the Holder of the applicable Warrant Shares to be issued pursuant to such Exercise Notice is effective
and the prospectus contained therein is usable or such Warrant Shares to be so issued are otherwise freely tradable, cause the
Warrant Agent to credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise
to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or
(Y) if either of the immediately preceding clauses (I) or (II) are not satisfied, issue and deliver to the Holder or, at the Holder’s
instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in each case, sent by reputable overnight courier
to the address as specified in the applicable Exercise Notice, a certificate, registered in the Company’s share register
in the name of the Holder or its designee (as indicated in the applicable Exercise Notice), for the number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise. Upon (A) in the event of a Cashless Exercise, the date on which
the Company has received such Exercise Notice or (B) in the event of an exercise for cash, the later of (i) the date on which
the Warrant Agent has received such Exercise Notice or (ii) the date on which the Warrant Agent receives the Aggregate Exercise
Price, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be); provided, however, that
if the date of such receipt is a date upon which the Common Stock transfer books of the Company are closed, such Holder shall
be deemed to have become the record holder of such shares on, the next succeeding day on which the Common Stock transfer books
of the Company are open. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number
of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired
upon an exercise, then, at the request of the Holder and upon surrender hereof by the Holder at the principal office of the Company,
the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own
expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right
to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole
number. The Company shall pay any and all taxes and fees which may be payable with respect to the issuance and delivery of Warrant
Shares upon exercise of this Warrant.
(b)
Exercise Price. For purposes of this Warrant, “Exercise Price” means $[ ], subject to adjustment
as provided herein.
(c)
Company’s Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, to issue
to the Holder on or before the applicable Delivery Date, a certificate for the number of shares of Common Stock to which the Holder
is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance
account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of
this Warrant (as the case may be), then, in addition to all other remedies available to the Holder, the Company shall pay in cash
to the Holder on each day after such third (3rd) Trading Day that the issuance of such shares of Common Stock is not timely effected
an amount equal to 2% of the product of (A) the aggregate number of shares of Common Stock not issued to the Holder on a timely
basis and to which the Holder is entitled and (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding
the last possible date on which the Company could have issued such shares of Common Stock to the Holder without violating Section
1(a).
In
addition to the foregoing, if the Company shall fail to issue and deliver a certificate to the Holder and register such shares
of Common Stock on the Company’s share register or credit the Holder’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s exercise or exchange hereunder (as the case may
be) on or prior to the applicable Delivery Date, and if on or after such Delivery Date the Holder (or any other Person in respect,
or on behalf, of the Holder) purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common
Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such exercise or exchange that the Holder
so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall,
within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect,
or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue
and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s exercise or exchange hereunder (as the case may be) (and to issue such shares
of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or
certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s exercise or exchange hereunder (as the case may
be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number
of shares of Common Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date of the applicable Exercise Notice or Exchange Notice, as the case may be, and ending on the date of such
issuance and payment under this clause (ii),
(d)
Cashless Exercise. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), on the
earlier of the Early Exercise Trigger Date or six months after the Date of Issuance, the Holder may, in its sole discretion
(and without limiting the Holder’s rights and remedies contained herein), exercise this Warrant in whole or in part and,
subject to the provisions of Section 1(a), in lieu of making the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise a cash payment from
the Company equal to the product of (i) the total number of shares with respect to which this Warrant is then being exercised
multiplied by (ii) the Black Scholes Value (as defined below) (the “Exchange Amount”). In the Company’s
sole discretion, so long as the Equity Conditions have occurred the Company may elect to treat such notice as a cashless exercise
of the Warrant with respect to the number of shares specified in “A” below for the “Net Number” of shares
of Common Stock determined according to the following formula with respect thereto (a “Cashless Exercise”),
as follows:
Net Number
= (A x B) / C
For purposes
of the foregoing formula:
A= the total
number of shares with respect to which this Warrant is then being exercised.
B= Black
Scholes Value (as defined below).
C=
the Closing Bid Price of the Common Stock as of two (2) Trading Days prior to the time of such exercise (as defined below).
(e)
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number
of Warrant Shares to be issued pursuant to the terms hereof (including, without limitation, the Net Number), the Company shall
promptly issue to the Holder the number of Warrant Shares that are not disputed, provided that following such issuance to Holder
such dispute shall be resolved in accordance with Section 13.
(f)
Limitations on Exercises and Exchanges. Notwithstanding anything to the contrary contained in this Warrant, this Warrant
shall not be exercisable or exchangeable by the Holder hereof to the extent (but only to the extent) that the Holder or any of
its Affiliates would beneficially own in excess of 4.9% (the “Maximum Percentage”) of the Common Stock. To
the extent the above limitation applies, the determination of whether this Warrant shall be exercisable or exchangeable (vis-à-vis
other convertible, exercisable or exchangeable securities owned by the Holder or any of its Affiliates) and of which such securities
shall be exercisable or exchangeable (as among all such securities owned by the Holder) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case
may be). No prior inability to exercise or exchange this Warrant pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent determination of exercisability or exchangeability.
For
the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with
respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”), and the rules and regulations promulgated thereunder. The provisions
of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial
ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such
Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Warrant.
The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not amend or waive this paragraph
without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request
of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding, including by virtue of any prior conversion or exercise or exchange of convertible or exercisable
or exchangeable securities into Common Stock, including, without limitation, pursuant to this Warrant or securities issued pursuant
to the Certificate of Designation for the Series A Convertible Preferred Stock.
(g)
Insufficient Authorized Shares.
The
Company shall at all times keep reserved for issuance under this Warrant a number of shares of Common Stock as shall be necessary
to satisfy the Company’s obligation to issue shares of Common Stock hereunder (without regard to any limitation otherwise
contained herein with respect to the number of shares of Common Stock that may be acquirable upon exercise or exchange of this
Warrant). If, notwithstanding the foregoing, and not in limitation thereof, at any time while any of the Purchased Warrants remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve for issuance upon exercise or exchange of the Purchased Warrants at least a number of shares of Common Stock equal
to the number of shares of Common Stock as shall from time to time be necessary to effect the exercise or exchange of all of the
Purchased Warrants then outstanding (the “Required Reserve Amount”) (an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Purchased Warrants then outstanding.
Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company
shall hold a meeting of its shareholders for the approval of an increase in the number of authorized shares of Common Stock. In
connection with such meeting, the Company shall provide each shareholder with a proxy statement and shall use its commercially
reasonable efforts to solicit its shareholders’ approval of such increase in authorized shares of Common Stock and to cause
its board of directors to recommend to the shareholders that they approve such proposal.
2.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a)
Stock Dividends and Splits. Without limiting any provision of Section 4, if the Company, at any time on or after the Issuance
Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution
on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares
or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock 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 clause
(i) of this paragraph shall become effective immediately after the record date for the determination of shareholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph
occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be
adjusted appropriately to reflect such event.
(b)
[RESERVED].
(c)
Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to paragraph (a) of this Section
2, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately,
so that after such adjustment the Aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be
the same as the Aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on
exercise contained herein). In addition, and notwithstanding anything to the contrary contained herein, (x) upon a Cashless Exercise
as set forth in Section 1(d) hereof, the number of Warrant Shares for which this Warrant is exercisable immediately following
such Cashless Exercise shall be equal to (i) the number of Warrant Shares for which this Warrant was exercisable immediately prior
to such Cashless Exercise less (ii) the number of Warrant Shares as to which such Cashless Exercise was exercised (such
number of Warrant Shares in this clause (ii) in respect of such Cashless Exercise being equal to “A” in such Cashless
Exercise formula in respect of such Cashless Exercise) and (y) the number of Warrant Shares issuable hereunder shall automatically
be increased, as necessary, to enable to the Company to comply with its obligations to issue the Net Number of shares of Common
Stock under Section 1(d) hereof upon any Cashless Exercise hereunder.
(d)
Calculations. All calculations under this Section 2 shall be made by rounding to the nearest 1/10000th of a cent and the
nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.
(e)
Other Events. In the event that the Company shall take any similar action to which the provisions hereof are not strictly
applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated
by the provisions of this Section 2 but not expressly provided for by such provisions, then the Company’s board of directors
shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if
applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase
the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further
that if the Required Holders (as defined below) do not accept such adjustments as appropriately protecting its interests hereunder
against such dilution, then the Company’s board of directors and the Required Holders shall agree, in good faith, upon an
independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall
be final and binding and whose fees and expenses shall be borne by the Company.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company, at any
time prior to the Expiration Date, shall declare or make any dividend or other distribution of its assets (or rights to acquire
its assets) to all or substantially all of the 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, indebtedness, 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 Warrant, 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 Warrant (without regard to any limitations on exercise hereof, including without limitation,
the Maximum Percentage) immediately before the date on 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 Distributions would result in the Holder
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (or
the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent) and such Distribution
to such extent 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 Maximum Percentage), provided further, such Distribution shall be held in abeyance for the
benefit of the Holder until such time as the Holder exercises this Warrant (whether in whole or in part), and subject to the foregoing
proviso, upon each exercise of this Warrant the Company shall make such Distribution to the Holder with respect to each Warrant
Share for which this Warrant is so exercised until such time as this Warrant has been exercised in full).
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a)
Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if the Company, at any time prior to the Expiration
Date, grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property
pro rata to all or substantially all of 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 Maximum Percentage) 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 Maximum Percentage, 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 Maximum Percentage), and provided further, that such Purchase Rights shall be held in abeyance
for the benefit of the Holder until such time as the Holder exercises this Warrant (whether in whole or in part), and subject
to the foregoing proviso, upon each exercise of this Warrant the Company shall deliver such Purchase Rights to the Holder with
respect to each Warrant Share for which this Warrant is so exercised until such time as this Warrant has been exercised in full).
(b)
Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor
Entity assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section
4(b) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the
Required Holders prior to such Fundamental Transaction, including agreements confirming the obligations of the Successor Entity
as set forth in this paragraph (b) and (c) and elsewhere in this Warrant and an obligation to 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, including, without limitation, which is exercisable for a corresponding number of shares of capital stock 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 for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction). Notwithstanding the foregoing, at the election of the Holder upon
exercise of this Warrant following a Fundamental Transaction, the Successor Entity shall deliver to the Holder, in lieu of the
shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3
and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of common stock (or its equivalent) of the Successor Entity (including its Parent Entity),
or other securities, cash, assets or other property, which the Holder would have been entitled to receive upon the happening of
the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant).
(c)
Black Scholes Value—FT. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of
the Holder delivered at any time commencing on the date of the consummation of any such Fundamental Transaction through the date
that is thirty (30) days after the consummation of any such Fundamental Transaction, the Company or the Successor Entity, at the
election of the Holder, shall purchase this Warrant from the Holder on the date of such request by paying to the Holder cash in
an amount equal to the Black Scholes Value—FT.
(d)
Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions
and shall be applied as if this Warrant (and any such subsequent warrants issued hereunder) were fully exercisable and without
regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter
receivable upon exercise of this Warrant (or any such other warrant)).
5.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Charter (as defined
in the Underwriting Agreement), Bylaws (as defined in the Underwriting Agreement) or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, 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, and will at all times in good faith carry out
all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting
the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon
the exercise of this Warrant, and (iii) shall, so long as any of the Purchased Warrants are outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the
exercise of the Purchased Warrants, the maximum number of shares of Common Stock as shall from time to time be necessary to effect
the exercise of the Purchased Warrants then outstanding (without regard to any limitations on exercise).
6.
WARRANT HOLDER NOT DEEMED A SHAREHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity
as the Holder of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or withhold consent
to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other
information given to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders;
provided however, that the Company shall not be obligated to provide such information if it is filed with the SEC through EDGAR
and available to the public through the EDGAR system.
7.
REISSUANCE OF WARRANTS.
(a)
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant (or the Book Entry Warrant
Certificate) to the Company or the Warrant Agent (or other designated agent), whereupon the Company or the Warrant Agent (or other
designated agent) will forthwith issue and deliver upon the order of the Holder a new Warrant (or Book Entry Warrant Certificate)
(in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (or Book Entry Warrant Certificate) (in accordance with Section 7(d)) to the Holder representing the
right to purchase the number of Warrant Shares not being transferred.
(b)
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant (or the Book Entry Warrant Certificate) (as to which a written certification
and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary and reasonable form (including posting a bond) and,
in the case of mutilation, upon surrender and cancellation of this Warrant (or the Book Entry Warrant Certificate), the Company
shall execute and deliver to the Holder a new Warrant (or Book Entry Warrant Certificate) (in accordance with Section 7(d)) representing
the right to purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof (or of the Book Entry Warrant
Certificate) by the Holder at the principal office of the Company, for a new Warrant or Warrants (or Book Entry Warrant Certificates)
(in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant (or Book Entry Warrant Certificate) will represent the right to purchase such portion
of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional
shares of Common Stock shall be given.
(d)
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant (or Book Entry Warrant Certificate) pursuant
to the terms of this Warrant, such new Warrant (or Book Entry Warrant Certificate) (i) shall be of like tenor with this Warrant
(or Book Entry Warrant Certificate), (ii) shall represent, as indicated on the face of such new Warrant (or Book Entry Warrant
Certificate), the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant (or Book
Entry Warrant Certificate) being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other new Warrants (or Book Entry Warrant Certificates)
issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall
have an issuance date, as indicated on the face of such new Warrant (or Book Entry Warrant Certificate) which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8.
NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall
be in writing and shall be deemed given (w) the date of transmission, if such notice or communication is delivered via facsimile
or email at the number or email address set forth below prior to 5:00 p.m. (New York time) on a Business Day, (x) on the date
delivered, if delivered personally, (y) on the first Business Day following the deposit thereof with Federal Express or another
recognized overnight courier, if sent by Federal Express or another recognized overnight courier, and (z) on the fourth Business
Day following the mailing thereof with postage prepaid, if mailed by registered or certified mail (return receipt requested),
in each case to the parties at the following addresses (or at such other address for a party as shall be specified by like notice).
| |
(a)
|
If
to the Company, to: |
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|
|
| |
|
Vapor Corp. |
| |
|
3001 Griffin Road |
| |
|
Dania Beach, Florida
33312 |
| |
|
Attention: Chief
Financial Officer |
| |
|
Facsimile: [ ]
|
| |
|
Email: jmartin@vpco.com |
| |
|
|
| |
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Equity Stock Transfer
Co. |
| |
|
237 West 37th
Street, Suite 601 |
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New York, NY 10018 |
| |
|
Attention: Nora
Marckwordt |
| |
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Email: nora@equitystock.com |
(c)
If to the Holder, to the address of such holder as shown on the Warrant Register. Any notice required to be delivered by
the Company to the Holder may be given by the Warrant Agent on behalf of the Company. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action
and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder
(i) as soon as practicable upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable
detail, and certifying, the calculation of such adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B)
with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities,
indebtedness, or other property pro rata to holders of shares of Common Stock or (C) for determining rights to vote with respect
to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information (to the extent it constitutes,
or contains, material, non-public information regarding the Company or any of its Subsidiaries shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder and (iii) at least ten (10) Trading Days prior to the
consummation of any Fundamental Transaction. To the extent that any notice provided hereunder (whether under this Section 8 or
otherwise) constitutes, or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company
shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K.
9.
AMENDMENT AND WAIVER. Except as otherwise expressly set forth herein, the provisions of this Warrant may be amended only
with the written consent of the Company and the Holders holding 100% of the then outstanding Warrants. Except as otherwise expressly
set forth herein, no waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving
party, and any waiver of any provision of this Warrant made in conformity with the provisions of this Section 9 shall be binding
on the Holder, provided that no such waiver shall be effective to the extent that it (1) applies to less than all Purchased Warrants
then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on the Holder without
the Holder’s prior written consent (which may be granted or withheld in the Holder’s sole discretion). Notwithstanding
the foregoing, nothing contained in this Section 9 shall permit any amendment or waiver of any provision of Section 1(f).
10.
SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).
11.
GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.
The Company 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 suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall (i) be deemed or
operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to
collect on the Company’s obligations to the Holder or to enforce a judgment or other court ruling in favor of the Holder
or (ii) limit, or be deemed to limit, any provision of Section 13. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12.
CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not
be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall
not form part of, or affect the interpretation of, this Warrant.
13. DISPUTE
RESOLUTION.
(a)
Disputes Over the Exercise Price, Exchange Amount, Closing Sale Price, Bid Price, the Black Scholes Value—FT or Fair
Market Value.
(i)
In the case of a dispute relating to the Exercise Price, the Exchange Amount, the Closing Sale Price, the Closing Bid Price, the
Bid Price, the Black Scholes Value—FT or fair market value (as the case may be) (including, without limitation, a dispute
relating to the determination of any of the foregoing), the Company or the Required Holders (as the case may be) shall submit
the dispute via e-mail or facsimile (I) within twenty (20) Business Days after delivery of the applicable notice giving rise to
such dispute to the Company or the Required Holders (as the case may be) or (II) if no notice gave rise to such dispute, at any
time after the Required Holders learned of the circumstances giving rise to such dispute. If the Required Holders and the Company
are unable to resolve such dispute relating to the Exercise Price, the Exchange Amount, the Closing Sale Price, the Closing Bid
Price, the Bid Price, the Black Scholes Value—FT or fair market value (as the case may be) by 5:00 p.m. (New York time)
on the third (3rd) Business Day following such delivery by the Company or the Required Holders (as the case may be) of such dispute
to the Company or the Required Holders (as the case may be), then the Required Holders shall select an independent, reputable
investment bank to resolve such dispute.
(ii)
The Required Holders and the Company shall each deliver to such investment bank (x) a copy of the initial dispute submission so
delivered in accordance with the first sentence of this Section 13(a) and (y) written documentation supporting its position with
respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which the Required Holders selected such investment bank (the “Dispute Submission Deadline”) (the
documents referred to in the immediately preceding clauses (x) and (y) are collectively referred to herein as the “Required
Dispute Documentation”) (it being understood and agreed that if either the Required Holders or the Company fails to
so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit
all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any
written documentation or other support to such investment bank with respect to such dispute and such investment bank shall resolve
such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute
Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Required Holders or otherwise requested
by such investment bank, neither the Company nor the Required Holders shall be entitled to deliver or submit any written documentation
or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii)
The Company and the Required Holders shall cause such investment bank to determine the resolution of such dispute and notify the
Company and the Required Holders of such resolution no later than ten (10) Business Days immediately following the Dispute Submission
Deadline. The fees and expenses of such investment bank shall be borne by the Company (provided that such fees and expenses shall
be borne equally by the Company and the Required Holders only if such investment bank’s determination of the disputed Exercise
Price, Exchange Amount, Closing Sale Price, Closing Bid Price, Bid Price, Black Scholes Value—FT or fair market value (as
the case may be) was equal to or greater than 98% of the Company’s determination thereof that gave rise to the applicable
dispute), and such investment bank’s resolution of such dispute shall be final and binding upon all parties absent manifest
error.
(b)
Disputes Over Arithmetic Calculation of Warrant Shares.
(i)
In the case of a dispute as to the arithmetic calculation of the number of Warrant Shares, the Company or the Required Holders
(as the case may be) shall submit the disputed arithmetic calculation via facsimile (i) within twenty (20) Business Days after
delivery of the applicable notice giving rise to such dispute to the Company or the Required Holders (as the case may be) or (ii)
if no notice gave rise to such dispute, at any time after the Required Holders learned of the circumstances giving rise to such
dispute. If the Required Holders and the Company are unable to resolve such disputed arithmetic calculation of the number of Warrant
Shares by 5:00 p.m. (New York time) on the third (3rd) Business Day following such delivery by the Company or the Required Holders
(as the case may be) of such disputed arithmetic calculation of the number of Warrant Shares to the Company or the Required Holders
(as the case may be), then the Required Holders shall select an independent, reputable accountant or accounting firm to perform
such disputed arithmetic calculation of the number of Warrant Shares.
(ii)
The Required Holders and the Company shall each deliver to such accountant or accounting firm (as the case may be) (x) a copy
of the initial dispute submission so delivered in accordance with the first sentence of this Section 13(b) and (y) written documentation
supporting its position with respect to such disputed arithmetic calculation of the number of Warrant Shares, in each case, no
later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Required Holders
selected such accountant or accounting firm (as the case may be) (the “Submission Deadline”) (the documents
referred to in the immediately preceding clauses (x) and (y) are collectively referred to herein as the “Required Documentation”)
(it being understood and agreed that if either the Required Holders or the Company fails to so deliver all of the Required Documentation
by the Submission Deadline, then the party who fails to so submit all of the Required Documentation shall no longer be entitled
to (and hereby waives its right to) deliver or submit any written documentation or other support to such accountant or accounting
firm (as the case may be) with respect to such disputed arithmetic calculation of the number of Warrant Shares and such accountant
or accounting firm (as the case may be) shall perform such disputed arithmetic calculation of the number of Warrant Shares based
solely on the Required Documentation that was delivered to such accountant or accounting firm (as the case may be) prior to the
Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Required Holders or otherwise requested
by such accountant or accounting firm (as the case may be), neither the Company nor the Required Holders shall be entitled to
deliver or submit any written documentation or other support to such accountant or accounting firm (as the case may be) in connection
with such disputed arithmetic calculation of the number of Warrant Shares (other than the Required Documentation).
(iii)
The Company and the Required Holders shall cause such accountant or accounting firm (as the case may be) to perform such disputed
arithmetic calculation and notify the Company and the Required Holders of the results no later than ten (10) Business Days immediately
following the Submission Deadline. The fees and expenses of such accountant or accounting firm (as the case may be) shall be borne
solely by the Company, and such accountant’s or accounting firm’s (as the case may be) arithmetic calculation shall
be final and binding upon all parties absent manifest error.
(c)
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate
between the Company and the Required Holders (and constitutes an arbitration agreement) under § 7501, et seq. of the New
York Civil Practice Law and Rules (“CPLR”) and that each party is authorized to apply for an order to compel
arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) the terms of this Warrant
shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall
be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines
are required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute
such investment bank shall apply such findings, determinations and the like to the terms of this Warrant, (iii) the terms of this
Warrant shall serve as the basis for the selected accountant’s or accounting firm’s performance of the applicable
arithmetic calculation of the number of Warrant Shares, (iv) for clarification purposes and without implication that the contrary
would otherwise be true, disputes relating to matters described in Section 13(a) shall be governed by Section 13(a) and not by
Section 13(b), (v) the Required Holders (and only the Required Holders), in their sole discretion, shall have the right to submit
any dispute described in this Section 13 to any state or federal court sitting in The City of New York, Borough of Manhattan in
lieu of utilizing the procedures set forth in this Section 13 and (vi) nothing in this Section 13 shall limit the Holder from
obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described
in Section 13(a) or Section 13(b)).
14.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue damages for any
failure by the Company to comply with the terms of this Warrant. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments,
exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as
expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without
the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information
and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance
with the terms and conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance
of shares and certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to
the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder or its agent on its behalf.
15.
TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.
16.
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“Bid Price” means, for any security as of the particular time of determination, the bid price for such security
on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of
such time of determination, the average of the bid prices of all of the market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. as of such time of determination. If the Bid Price cannot be calculated for a security
as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination
shall be the fair market value as mutually determined by the Company and the Required Holders. If the Company and the Required
Holders are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with
the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period.
(b)
“Black Scholes Value” means the Black Scholes value of an option for one share of Common Stock at the date
of the applicable Cashless Exercise, as such Black Scholes value is determined, calculated using the Black Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing
Bid Price of the Common Stock as of the Date of Issuance (adjusted to the same extent that the Exercise Price hereunder has been
adjusted pursuant to Section 2(a) hereof), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of the Warrant as of the applicable Cashless Exercise, (iii) a strike price equal to the Exercise
Price in effect at the time of the applicable Cashless Exercise, (iv) an expected volatility equal to 135% and (v) a remaining
term of such option equal to five (5) years (regardless of the actual remaining term of the Warrant).
(c)
“Black Scholes Value—FT” means the value of the unexercised portion of this Warrant remaining on the
date of the Holder’s request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the
greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding
the earliest to occur of (x) the public disclosure of the applicable Fundamental Transaction, (y) the consummation of the applicable
Fundamental Transaction and (z) the date on which the Holder first became aware of the applicable Fundamental Transaction and
ending on the Trading Day of the Holder’s request pursuant to Section 4(c) and (2) the sum of the price per share being
offered in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered
in the applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the
Holder’s request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to
Section 4(c) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction
and (iv) an expected volatility equal to the greater of 135% and the 100 day volatility obtained from the HVT function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (x)
the public disclosure of the applicable Fundamental Transaction, (y) the consummation of the applicable Fundamental Transaction
and (z) the date on which the Holder first became aware of the applicable Fundamental Transaction.
(d)
“Bloomberg” means Bloomberg, L.P.
(e)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
(f)
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and the last closing trade price, respectively, for such security on the Principal Market, as reported
by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid
price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the average of the bid prices, or the ask prices, respectively, of all of the market makers for such security as reported
in the “pink sheets” by OTC Markets Group, Inc. If the Closing Bid Price or the Closing Sale Price cannot be calculated
for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case
may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Required Holders.
If the Company and the Required Holders are unable to agree upon the fair market value of such security, then such dispute shall
be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during such period.
(g)
“Common Stock” means (i) the Company’s shares of common stock, $0.001 par value per share, and (ii) any
capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such
common stock.
(h)
“Convertible Securities” means any stock, note, debenture or other security (other than Options) that is, or
may become, at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for,
or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(i)
“Early Exercise Trigger Date” means either: (i) 15 days after the tenth (10th) consecutive trading day upon
which the Common Stock trades above 200% of the Exercise Price (subject to adjustment as set forth in Section 2), or (ii) immediately
upon the delisting of the Units, provided, however, that such 10-day period under (i) cannot begin, nor any Early Exercise Trigger
Date cannot take place until at least thirty (30) days after the date of the prospectus included in the registration statement
pursuant to which the Units were issued of which this Warrant was a component (the “Date of Issuance”).
(j)
“Eligible Market” means the NYSE MKT, the New York Stock Exchange, The Nasdaq Global Select Market, The Nasdaq
Global Market, the Principal Market, the OTCQX or the OTCQB (or any successor to any of the foregoing).
(k)
“Equity Conditions” means: (i) the Company shall have complied in all material respects with all applicable
securities laws and regulations and all rules and regulations of the Eligible Markets in respect of the offer, sale and issuance
of the Securities, (ii) the Common Stock (including all shares of Common Stock to be received by Holder) shall be listed or designated
for quotation (as applicable) on an Eligible Market and no Trading Market Event (or event which with notice or passage of time
would be a Trading Market Event) has occurred, nor shall delisting or suspension by any Eligible Market be pending or threatened,
unless upon the occurrence of such Trading Market Event, delisting or suspension, the Common Stock would be eligible for listing
or for quotation (as applicable) on another Eligible Market, (iii) the Company shall be in compliance in all material respects
with all of its obligations under this Warrant, (iv) each of the Registration Statement (as defined in the Underwriting Agreement)
and the prospectus contained therein shall be effective and fully available for use with respect to the issuance of all of the
Securities, including, without limitation, any Warrant Shares issued pursuant to a cash exercise hereof, (v) all Warrant Shares
(including any Warrant Shares to be received upon exercise or exchange of this Warrant and including any Warrant Shares to be
issued in a cash exercise, but taking into account the limitations of Section 1(f)) shall be then (or upon such issuance (as the
case may be)) freely tradable by the Holder without restriction of any kind or nature (and the Company shall have no knowledge
of any fact which would reasonably be expected to negate the foregoing in the foreseeable future), (vi) no limitation shall be
applicable with respect to the issuance of any Warrant Shares hereunder (other than under Section 1(f)), and (vii) the Company
is fully reporting under the Securities Exchange Act of 1934, as amended (“1934 Act”). For purposes hereof, a “Trading
Market Event” shall mean if the Company or the Common Stock or any shares of Common Stock issued or issuable hereunder
shall cease or fail to be listed for trading or quoted on any Eligible Market or shall fall below any dollar threshold for listing
or qualification or the Company shall then not be in compliance with any applicable listing or qualification standard (or will
be with the passage of time).
(l)
“Equity Conditions Failure” means that on any applicable date of determination, any of the Equity Conditions
have not been satisfied.
(m)
“Expiration Date” means the date that is the fifth (5th) anniversary of the Issuance Date or, if such date
falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.
(n)
“Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly,
in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries
is the surviving corporation) any other Person unless the shareholders of the Company immediately prior to such consolidation
or merger continue to hold more than 50% of the outstanding shares of Voting Stock after such consolidation or merger, or (2)
sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or
assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted by the
holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of
the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to,
such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby
such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of
Voting Stock of the Company 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), or (ii) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations
promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly
or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company.
(o)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(p)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.
(q)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(r)
“Principal Market” means The Nasdaq Capital Market.
(s)
“Required Holders” means, collectively, as of a particular time of determination, (as applicable) holders of
Purchased Warrants then exercisable for an aggregate number of shares of Common Stock equal to at least 66.7% of the number of
shares of Common Stock issuable upon exercise of all Purchased Warrants outstanding as of such time of determination (disregarding
all limitations on exercise set forth in the Purchased Warrants).
(t)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(u)
“Trading Day” means, as applicable, (x) with respect to all price determinations relating to the Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on
such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as
a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the
Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(v)
“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the
holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors,
managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
[Signature
page follows]
IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date
set out above.
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VAPOR
CORP. |
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By: |
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Name: |
Jeffrey E. Holman |
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Title: |
Chief Executive
Officer |
[Signature
Page to Warrant to Purchase Common Stock]
SCHEDULE
A
WIRE
INSTRUCTIONS FOR CASH EXERCISE
| [NAME
OF BANK] |
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| ABA # [ ]
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| ACCT # [ ]
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| ACCT NAME: [ ]
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Schedule
A-1
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE COMMON STOCK
VAPOR
CORP.
The
undersigned holder hereby exercises the right to purchase of the shares of Common Stock (“Warrant Shares”)
of Vapor Corp., a company incorporated under the laws of the Delaware (the “Company”), evidenced by Warrant
to Purchase Common Stock No. (the “Warrant”). Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.
1.
Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:
a
“Cash Exercise” with respect to Warrant Shares; and/or
a
“Cashless Exercise” with respect to Warrant Shares.
In
the event of a “Cash Exercise”, this Exercise Notice and the Aggregate Exercise Price shall be delivered to the Warrant
Agent. In the event of a “Cashless Exercise”, this Exercise Notice shall be delivered to the Company.
In
the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares, the Holder represents
and warrants that the Exchange Amount is $ and, if the Company is permitted to elect to issue shares of Common Stock, shares of
Common Stock are to be delivered to Holder as the Net Number pursuant to such Cashless Exercise, as further specified in Annex
A to this Exercise Notice.
2.
Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the
Warrant Shares, the Holder shall pay the Aggregate Exercise Price in the sum of $ to the Warrant Agent in accordance with the
terms of the Warrant.
3.
Delivery of Warrant Shares and Net Number of shares of Common Stock. The Company shall cause the Warrant Agent to deliver
to Holder, or its designee or agent as specified below, shares of Common Stock in respect of the exercise contemplated hereby.
Delivery shall be made to Holder, or for its benefit, to the following address:
Exhibit
A-1
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| Name of Registered Holder |
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| By: |
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| Name: |
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| Title: |
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Account Number: |
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(if electronic book entry transfer) |
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Transaction Code Number: |
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(if electronic book entry transfer) |
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Exhibit
A-2
ANNEX
A TO EXERCISE NOTICE
CASHLESS
EXERCISE EXCHANGE CALCULATION
TO
BE FILLED IN BY THE REGISTERED HOLDER TO EXCHANGE THIS
WARRANT
TO PURCHASE COMMON STOCK FOR COMMON STOCK IN A
CASHLESS
EXERCISE PURSUANT TO SECTION 1(d) OF THE WARRANT
Capitalized
terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
Net Number
= (A x B)/C = shares of Common Stock
For purposes
of the foregoing formula:
A= the total
number of shares with respect to which this Warrant is then being exercised = .
B= Black
Scholes Value = .
C=
the Closing Bid Price of the Common Stock as of two (2) Trading Days prior to the time of such exercise = .
| Date: , |
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| Name of Registered
Holder |
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Annex
A-1
EXHIBIT
B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs Equity Stock Transfer Co. to issue the above indicated number
of shares of Common Stock.
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VAPOR
CORP. |
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By:
|
|
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Name: |
Jeffrey E. Holman |
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Title: |
Chief Executive Officer |
Exhibit
B-1
Exhibit
5.1
OPINION
AND CONSENT OF
Nason,
Yeager, Gerson, White & Lioce, P.A.
July
20 , 2015
Vapor
Corp.
3001
Griffin Road
Dania
Beach, Florida 33312
Re:
Registration Statement on Form S-1
Ladies
and Gentlemen:
We
have acted as counsel to Vapor Corp., a Delaware corporation (the “Company”), in connection with a Registration
Statement on Form S-1 (File No. 333-204599), (the “Registration Statement”), filed by the Company with the
Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933 (the “Securities
Act”), relating to the offer and sale by the Company of
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(i) |
3,800,000
units (the “Units”), with each Unit consisting of (A) one-fourth of
a share of the Company’s Series A Convertible Preferred Stock, par value $0.001
per share (the “Preferred Stock”), with each share of Preferred Stock
convertible into five shares of the Company’s Common Stock, par value $0.001 per
share (the “Common Stock”; and the shares of Common Stock issuable
upon conversion of the Preferred Stock, the “Preferred Shares”) and
(B) 10 Series A Warrants, (the Series A Warrants collectively, the “Series A
Warrants”), with each Series A Warrant to purchase one share of Common Stock
(the shares of Common Stock issuable upon exercise of the Series A Warrants, the “Warrant
Shares”), and
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(ii) |
a
Unit Purchase Option (the “Unit Purchase Option”) to be issued to the representative of the underwriters
in the offering contemplated by the Registration Statement to purchase a number of Units (the “Representative’s
Units”) equal to an aggregate of 5% of the Units sold pursuant to the Registration Statement (the Preferred Stock
underlying the Representative’s Units, the “Representative’s Stock”; the shares of Common Stock
issuable upon conversion of the Representative’s Preferred Stock, the “Representative’s Preferred Shares”;
the Series A Warrants underlying the Representative’s Units, the “Representative’s Warrants”;
and the shares of Common Stock issuable upon exercise of the Representative’s Warrants, the “Representative’s
Warrant Shares” and, together with the Representative’s Preferred Shares, the “Representative’s
Shares”). |
We
have examined such documents and have reviewed such questions of law as we have considered necessary or appropriate for the purposes
of our opinions set forth below. In rendering our opinions set forth below, we have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted
to us as copies. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect
to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power
and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or
instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties
and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. We have further assumed
that the Units will be priced by the Pricing Committee established by the authorizing resolutions adopted by the Company’s
Board of Directors in accordance with such resolutions. As to questions of fact material to our opinions, we have relied upon
certificates or comparable documents of officers and other representatives of the Company and of public officials.
Based
on the foregoing, we are of the opinion that:
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1. |
The
Units, when issued, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance
with their terms. |
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2. |
The
Series A Warrants, when duly executed by the Company and duly delivered to the purchasers thereof against payment therefor
as described in the Registration Statement, will constitute valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms. |
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3. |
The
Warrant Shares have been duly authorized and if, as, and, when the Warrant Shares are issued and delivered by the Company
upon exercise of the Warrant Shares in accordance with the terms thereof and the Company’s Certificate of Incorporation,
including, without limitation, the payment in full of applicable consideration, the Warrant Shares, will be validly issued,
fully paid, and non-assessable. |
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4. |
The
shares of Preferred Stock, when issued, delivered and paid for as described in the Registration Statement, will be validly
issued, fully paid and non-assessable. |
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5. |
The
Preferred Shares have been duly authorized and, upon issuance and delivery as described in accordance with the Certificate
of Designation of the Series A Convertible Preferred Stock (the “Certificate of Designation”) to be filed
in connection with the offering contemplated by the Registration Statement and the Certificate of Incorporation, will be validly
issued, fully paid and non-assessable. |
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6. |
The
Unit Purchase Option, when duly executed by the Company and duly delivered to the purchasers thereof against payment therefor
as described in the Registration Statement, will constitute the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. |
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7. |
The
Representative’s Units, when issued, will constitute valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms. |
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8. |
The
Representative’s Warrants, when duly executed by the Company and duly delivered to the purchasers thereof against payment
therefor as described in the Registration Statement, will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms. |
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9. |
The
Representative’s Warrant Shares have been duly authorized and if, as, and when the Representative’s Warrant Shares
are issued and delivered by the Company upon exercise of the Representative’s Warrant Shares in accordance with the
terms thereof and the Certificate of Incorporation, including, without limitation, the payment in full of applicable consideration,
the Representative’s Warrant Shares will be validly issued, fully paid, and non-assessable. |
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10. |
The
shares of Representative’s Preferred Stock, when issued, delivered and paid for as described in the Registration Statement,
will be validly issued, fully paid and non-assessable. |
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11. |
The
Representative’s Preferred Shares have been duly authorized and, upon issuance and delivery as described in accordance
with the Certificate of Designation to be filed in connection with the offering contemplated by the Registration Statement
and the Certificate of Incorporation, will be validly issued, fully paid and non-assessable. |
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(a) |
Our
opinions set forth in paragraphs 1, 2, 6, 7 and 8 above are subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law relating to or affecting creditors’ rights generally (including, without limitation,
fraudulent conveyance laws). |
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(b) |
Our
opinions set forth in paragraphs 1, 2, 6, 7 and 8 above are subject to the effect of general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability
of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law. |
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(c) |
Our
opinions set forth in paragraphs 1, 2, 6, 7 and 8 above are subject to limitations regarding the availability of indemnification
and contribution where such indemnification or contribution may be limited by applicable law or the application of principles
of public policy. |
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(d) |
We
express no opinion as to the enforceability of (i) provisions that relate to choice of law, forum selection or submission
to jurisdiction (including, without limitation, any express or implied waiver of any objection to venue in any court or of
any objection that a court is an inconvenient forum) to the extent that the validity, binding effect or enforceability of
any such provision is to be determined by any court other than a state court of the State of Florida, (ii) waivers by the
Company of any statutory or constitutional rights or remedies, (iii) terms which excuse any person or entity from liability
for, or require the Company to indemnify such person or entity against, such person’s or entity’s negligence or
willful misconduct or (iv) obligations to pay any prepayment premium, default interest rate, early termination fee or other
form of liquidated damages, if the payment of such premium, interest rate, fee or damages may be construed as unreasonable
in relation to actual damages or disproportionate to actual damages suffered as a result of such prepayment, default or termination. |
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(e) |
We
draw your attention to the fact that, under certain circumstances, the enforceability of terms to the effect that provisions
may not be waived or modified except in writing may be limited. |
Our
opinions expressed above are limited to the laws of the State of Florida and the Delaware General Corporation Law.
We
hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and to the reference to our firm under
the heading “Legal Matters” in the prospectus constituting part of the Registration Statement. In giving this consent,
we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations of the Commission thereunder.
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Very
truly yours, |
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/s/
Nason, Yeager, Gerson, White & Lioce, P.A. |
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