UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
August 18, 2015
Attitude Drinks Incorporated
(Exact name of Registrant as specified in
its charter)
| Delaware |
| (State or other jurisdiction of incorporation) |
| |
(000-52904) |
|
65-0109088 |
| |
(Commission File Number) |
|
(I.R.S. Employer Identification No.) |
712 U.S. Highway 1, Suite #200
North Palm Beach, Florida 33408
(Address of principal executive offices zip
code)
(561) 227-2727
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed
since last report)
________________________
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
| □ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| □ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| □ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| □ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
On August 18, 2015,
Attitude Drinks Incorporated (the “Company”) issued (i) shares of its newly created Series C Convertible
Preferred Stock (the “Series C Preferred Stock”), (ii) 7-year warrants (the “Promissory Notes
Warrants”) to purchase shares of the Company’s common stock, par value $0.00001 per share (the “Common
Stock”), and (iii) an additional investment right (the “Promissory Notes Additional Investment Rights”) to
certain holders of its promissory notes upon the closing of the transactions contemplated by the various exchange agreements
(the “Promissory Notes Exchange Agreements”) entered into on May 21, 2015 between Attitude Drinks Incorporated
(the “Company”), and the holders of certain of its outstanding promissory notes (the “Promissory
Notes”). Each holder of Promissory Notes exchanged amounts outstanding (principal and interest) under their Promissory
Notes for: (a) shares of Series C Preferred Stock , (b) Promissory Notes Warrants , and (c) Promissory Notes Additional
Investment Rights. The exchange ratio was $1,000 of converted promissory notes and/or accrued interest for 1 share of Series
C Convertible Preferred Stock, Promissory Notes Warrants exercisable for the same number of shares of Common Stock from the
converted Series C Convertible Preferred Stock and Promissory Notes Additional Investment Rights to purchase up to the same
number of Stated Value of Series C Convertible Preferred Stock and corresponding Promissory Notes Warrants. Promissory Notes
and accrued interest payable in the aggregate principal amount of $3,341,680 were exchanged for an aggregate of 3,344
shares of Series C Convertible Preferred Stock, Promissory Notes Warrants exercisable for an aggregate of the same number of
shares of Common Stock from the conversion of the Series C Convertible Preferred Stock and Promissory Notes Additional
Investment Rights to purchase an aggregate of the same number of Stated Value of Series C Convertible Preferred Stock and
corresponding Promissory Notes Warrants.
In addition, on
August 18, 2015, the Company issued (i) shares of Series C Preferred Stock, (ii) 7-year warrants (the “Accrued Salary
Warrants”) to purchase shares of Common Stock, and (iii) an additional investment right (the “Accrued Salary
Additional Investment Rights”) to purchase additional shares of Series C Convertible Preferred Stock and corresponding
Accrued Salary Warrants upon the closing of the transactions contemplated by the various exchange agreements (the
“Accrued Salary Exchange Agreements”) entered into on May 21, 2015 between the Company and certain
individuals (the “Subscribers”) who are owed accrued and unpaid salary (the “Accrued Salary”) by the
Company. Each Subscriber exchanged Accrued Salary for: (a) shares of Series C Preferred Stock, (b) Accrued Salary Warrants,
and (c) Accrued Salary Additional Investment Rights. The exchange ratio was $1,000 of converted accrued and unpaid salary for
1 share of Series C Convertible Preferred Stock, Accrued Salary Warrants exercisable for the same number of shares of Common
Stock from the conversion of the Series C Convertible Preferred Stock and Accrued Salary Additional Investment Rights to
purchase up to the same number of Stated Value of Series C Convertible Preferred Stock and corresponding Accrued Salary Notes
Warrants. An aggregate of $863,674 of Accrued Salary was exchanged for an aggregate of 863 shares of Series C Convertible
Preferred Stock, Accrued Salary Warrants exercisable for an aggregate of the same number of shares of Common Stock from the
conversion of the Series C Convertible Preferred Stock and Accrued Salary Additional Investment Rights to purchase
an aggregate of the same number of Stated Value of Series C Convertible Preferred Stock and corresponding Promissory Notes
Warrants.
A summary of the material
provisions of the Series C Preferred Stock as set forth in the Certificate of Designations, Preferences, and Rights of the Series
C Convertible Preferred Stock is set forth below.
Designation, Amount and Par Value
The number of shares designated
and authorized as Series C Convertible Preferred Stock is 100,000. Each share of Series C Convertible Preferred Stock has a par
value of $0.00001 per share and a stated value of $1,000 per share (the “Stated Value”).
Dividends
Each holder of Series C
Convertible Preferred Stock is entitled to receive, when, as and if declared by the Company’s Board of Directors, an annual
dividend per share equal to 6% of the Stated Value, which is payable at the option of the Company through the issuance of shares
of Common Stock, in cash, or a combination thereof. Dividends are cumulative and accrue (whether or not earned or declared) from
the date such shares are issued and are payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January
1, 2016.
Conversion
At any time after the issuance
date of the Series C Convertible Preferred Stock and subject to requirements of Rule 144 where applicable, each share of Series
C Convertible Preferred Stock is, at the option of the holder, convertible into a number of shares of Common Stock determined by
dividing the Stated Value and accrued but unpaid dividends by an amount equal to a 50% discount to the lowest closing price for
the previous thirty (30) trading days, but in any event no more than $0.0002 per share of Common Stock (the “Conversion Price”)
(as adjusted for any stock splits, stock dividends, recapitalizations and the like).
Liquidation
In the event of a
liquidation, dissolution or winding up of the Company, holders of Series C Convertible Preferred Stock are entitled to receive,
after distribution to the holders of senior securities and prior to the distribution to holders of Common Stock or any other class
of preferred stock ranking junior to the Series C Convertible Preferred Stock, the Stated
Value (as adjusted for any stock splits, stock dividends, recapitalizations and the like).
Anti-Dilution
The Conversion Price is
subject to adjustment if the Company effectuates certain transactions, including the issuance of shares of its capital stock, any
subdivision, combination of shares or recapitalization, stock split or issues a dividend in Common Stock. In addition, if the Company
issues shares of its capital stock for consideration per share less than the Conversion Price (other than certain exempted issuances),
then the Conversion Price shall be reduced to the issuance price of any such securities so issued.
Voting Rights
Holders of shares of Series
C Convertible Preferred Stock have no voting rights.
The Subscribers of the
Promissory Notes Exchange Agreements have tacking rights to convert their preferred shares into Common Stock without the six months’
holding period. The Subscribers of the Accrued Salary Exchange agreements must hold the Series C Convertible Preferred Stock for
six months under the requirements of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”),
in order to convert to Common Stock. Each Promissory Note Warrant entitles the holder to purchase one share of Common Stock, has
an exercise price of $0.0002 per share and expires 7 years from date of issuance. Each Accrued Salary Warrant entitles the holder
to purchase one share of Common Stock, has an exercise price of $0.0002 per share and expires 7 year from date of issuance.
The foregoing descriptions
of the Series C Convertible Preferred Stock, the Promissory Notes Warrants, the Promissory Notes Additional Investment Rights,
the Accrued Salary Warrants, the Accrued Salary Additional Investment Rights, the Promissory Notes Exchange Agreements and the
Accrued Salary Exchange Agreements are qualified in their entirety by reference to the full text of the Certificate of Designations
of the Series C Convertible Preferred Stock, the form of Promissory Notes Warrant, the Form of Promissory Notes Additional Investment
Right, the form of Accrued Salary Warrant, the form of Accrued Salary Additional Investment Right, the form of Promissory Notes
Exchange Agreement, and the form of Accrued Salary Exchange Agreement, copies of which are attached hereto or incorporated by reference
herein as Exhibits 3.1, 4.1, 4.2, 4.3, 4.4, 10.1, and 10.2, respectively.
Item 3.02. Unregistered Sales
of Equity Securities.
The information set forth
under Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.02. The offer and issuance
of the Series C Convertible Preferred Stock, the Promissory Notes Warrants and the Promissory Notes Additional Investment Rights
to the holders of the Promissory Notes were not registered under the Securities Act at the time of issuance, and therefore may
not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. For
the issuance of these securities to the holders of the Promissory Notes, the Company intends to rely on the exemption from federal
registration under Section 3(a)(9) of the Securities Act. For the issuance of the Series C Convertible Preferred Stock, the Accrued
Salary Warrants and the Accrued Salary Additional Investment Rights, the Company intends to rely on the exemption from federal
registration under the Section 4(a)(2) of the Securities Act, based on the Company’s belief that the offer and sale of these
securities has not and will not involve a public offering as the investors are all “accredited investors” as defined
under Section 501 promulgated under the Securities Act, and no general solicitation has been involved in the offering.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. |
|
Name of Exhibit |
| |
|
|
| 3.1 |
|
Certificate of Designations, Preferences, and Rights of Series C Convertible Preferred Stock of Attitude Drinks Incorporated (incorporated by reference to Exhibit 3.3 of the Company’s Form 8-K (File No. 000-52904) filed with the Securities and Exchange Commission on August 12, 2015) |
| 4.1 |
|
Form of Promissory Notes Warrant |
| 4.2 |
|
Form of Promissory Notes Additional Investment Right |
| 4.3 |
|
Form of Accrued Salary Warrant |
| 4.4 |
|
Form of Accrued Salary Additional Investment Right |
| 10.1 |
|
Form of Promissory Notes Exchange Agreement |
| 10.2 |
|
Form of Accrued Salary Exchange Agreement |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
ATTITUDE DRINKS INCORPORATED |
| |
|
|
| Date: August 18, 2015 |
By: |
/s/ Roy G. Warren |
| |
|
Name: |
Roy G. Warren |
| |
|
Title:
|
Chief Executive Officer |
| |
|
|
|
EXHIBIT 4.1
FORM OF PROMISSORY
WARRANT
NEITHER THIS SECURITY NOR THE SECURITIES
FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE CLASS A WARRANT
ATTITUDE
DRINKS INCORPORATED
Warrant Shares: [REQUIRES
COMPLETION] Initial
Exercise Date: May ___, 2015
Warrant No: [REQUIRES
COMPLETION]
THIS COMMON STOCK
PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [REQUIRES
COMPLETION] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations
on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise
Date”) and on or prior to the close of business on the seven (7) year anniversary of the Initial Exercise Date (the
“Termination Date”) but not thereafter, to subscribe for and purchase from ATTITUDE DRINKS INCORPORATED, a
New York corporation (the “Company”), up to [REQUIRES COMPLETION]
shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase
price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Exchange Agreement (the
“Exchange Agreement”), dated May ___, 2015, among the Company and the purchasers signatory thereto.
Section 2. Exercise.
a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or
after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency
of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the
books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within two (2) Trading
Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified
in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless
exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything
herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company),
the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to
the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of
Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form
within one (1) Trading Day of delivery of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder,
the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face
hereof.
b)
Exercise Price. The initial exercise price per share of the Common Stock under this Warrant shall be $0.0002,
subject to adjustment hereunder (the “Exercise Price”).
c)
Cashless Exercise. If at any time after the Initial Exercise Date, there is no effective registration statement registering,
or no current prospectus available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised
at the Holder’s election, in whole or in part, at such time by means of a “cashless exercise” in which the Holder
shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP
on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;
(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and
(X) = the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.
Notwithstanding
anything herein to the contrary, on the Termination Date, unless the Holder notifies the Company otherwise, if there is no effective
Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then
this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d)
Mechanics of Exercise.
i. Delivery
of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to
the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either
(A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the
Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise and Rule 144 is available, and
otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3)
Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if
required) and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted)
(such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued,
and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or
by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi)
prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant
Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for
such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant
Shares upon exercise of this Warrant the proportionate amount of $10 per Trading Day (increasing to $20 per Trading Day after
the fifth (5th) Trading Day) after the Warrant Share Delivery Date for each $1,000 of Exercise Price of Warrant
Shares for which this Warrant is exercised which are not timely delivered. The Company shall pay any payments incurred under
this Section in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be
available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the
Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to
such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions
immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above
shall be payable through the date notice of revocation or rescission is given to the Company.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing
the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right, at any
time prior to issuance of such Warrant Shares, to rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the
Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date
the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares
which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in
cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant
Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at
which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of
the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of
Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such
exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal
to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder
for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be
issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing
of any Notice of Exercise.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall
not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number
of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged
by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall
be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and
of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic
or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a
more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’
prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided
that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions
of this Section 2(e) shall continue to apply. Any such increase or decrease will not be effective until the 61st day
after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to
a successor holder of this Warrant.
Section 3. Certain
Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company
upon exercise of this Warrant or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of
the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in
the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase
Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro
Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of
Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)),
then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP
on such record date less the then per share fair market value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the
record date mentioned above.
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”),
then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the
Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant) the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental Transaction.
Notwithstanding anything to the contrary, in the event of
a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange
or trading market (with such exchange or market including, without limitation, the Nasdaq Global Select Market, the Nasdaq Global
Market, or the Nasdaq Capital Market, The New York Stock Exchange, Inc., the NYSE or Amex), the Company or any Successor Entity
(as defined below) shall, at the Holder’s option, exercisable concurrently with the consummation of the Fundamental Transaction,
purchase this Warrant from the Holder by paying to the Holder the higher of (i) an amount of cash equal to the Black Scholes Value
of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction, or (ii)
the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Exercise Price.
“Black Scholes Value” means the value of the unexercised portion of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined
as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the
applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the “HVT” function on Bloomberg as of the Trading Day immediately following the public
announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the
sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered
in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the
obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section
3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange
for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent
entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the
exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock
pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock
and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation
of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence
of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the
date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity
had been named as the Company herein.
e)
Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is
outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise issue (or
announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents,
at an effective price per share less than the Exercise Price then in effect, excluding Exempt Issuances as defined in the
Exchange Agreement (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive
Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued
shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price,
such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such
effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and
only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that
the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal
to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section
3(e) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day
following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(e),
indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other
pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3(e), upon the occurrence of any Dilutive Issuance, the
Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the
Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate
Transaction, despite the prohibition thereon in the Exchange Agreement, the Company shall be deemed to have issued Common
Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be
converted or exercised. Notwithstanding the foregoing, the issuance of any Common Stock or Common Stock Equivalents pursuant
to the Exchange Agreement shall not be deemed a Dilutive Issuance.
f)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section
3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, to the extent that such information constitutes material
non-public information (as determined in good faith by the Company) the Company shall follow the procedure described in Section
13 of the Subscription Agreement and shall deliver to the Holder at its last address as it shall appear upon the Warrant Register
of the Company, at least fifteen (15) calendar days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it
is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided
that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with
the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise
be expressly set forth herein.
Section 4. Transfer
of Warrant.
a)
Transferability. Subject to compliance with any applicable securities laws and the provisions of the Exchange Agreement,
this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment
of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may
be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the
number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that
purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may
deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(a).
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised
on the next succeeding Trading Day.
d)
Authorized Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued
upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by
this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue).
Except and to
the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
e)
Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant
shall be determined in accordance with the provisions of the Exchange Agreement.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not
registered, or unless exercised in a cashless exercise when Rule 144 is available, and the Holder does not utilize cashless exercise,
will have restrictions upon resale imposed by state and federal securities laws.
g)
Non-waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part
of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without
limiting any other provision of this Warrant or the Exchange Agreement, if the Company willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such
amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the
Company shall be delivered in accordance with the notice provisions of the Exchange Agreement.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise
this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the
Company and the Holders of not less than a majority of the outstanding Warrants issued pursuant to the Exchange Agreement.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose,
be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
|
ATTITUDE DRINKS INCORPORATED
|
|
By:__________________________________________
Name:
Title:
|
NOTICE OF EXERCISE
To: ATTITUDE
DRINKS INCORPORATED
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
[ ] in lawful
money of the United States; or
[ ] [if permitted]
the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c),
to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:
_______________________________
(4)
After giving effect to this Notice of Exercise, the undersigned will not have exceeded the
Beneficial Ownership Limitation.
The Warrant Shares shall be delivered to the
following DWAC Account Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
ATTITUDE
DRINKS INCORPORATED
FOR VALUE RECEIVED,
[____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
Holder’s Signature: _____________________________
Holder’s Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form
must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever,
and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT 4.2
FORM OF PROMISSORY NOTES ADDITIONAL INVESTMENT
RIGHT
“NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE -OR- EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
ADDITIONAL INVESTMENT RIGHT
To Purchase for up to
$[RC] of Stated Value of Series C Convertible Preferred Stock and Common Stock
Purchase Warrants of:
ATTITUDE DRINKS INCORPORATED
A Delaware corporation
(the “Company”)
THIS ADDITIONAL INVESTMENT
RIGHT (the “AIR”) certifies that, for value received, [RC](the
“HOLDER”), may voluntarily purchase, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “INITIAL EXERCISE DATE”) and on or prior
to the close of business twenty four (24) months after the date hereof (“EXPIRATION DATE”) with respect to
up to $[RC] of Stated Value of Series C Convertible Preferred Stock (“AIR
PREFERRED STOCK”) and corresponding amount of Warrants (“AIR WARRANTS”). One AIR Warrants to purchase
Common Stock will be issued for each share of Common Stock that would be issued on the exercise date of the AIR assuming the complete
conversion of the AIR Preferred Stock on such date at the Conversion Price of the AIR Preferred Stock then in effect. The AIR
Preferred Stock and AIR Warrants will be identical to the Preferred Stock and Warrants issued pursuant to the Exchange Agreement
except that all time effective or time triggered clauses and provisions of the Transaction Documents in so far as they relate
to the AIR Preferred Stock and AIR Warrant shall be determined from the issue date of the AIR Preferred Stock and AIR Warrant
and extend for the corresponding periods and until the corresponding extended termination dates or deadlines as applicable to
the Preferred Stock and Warrants issuable on the Closing Date, mutatis mutandis. Collectively, the AIR Preferred Stock
and AIR Warrants issuable upon exercise of the AIR are referred to herein as the “AIR SECURITIES”.
SECTION 1. DEFINITIONS. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in that certain Exchange Agreement (the “EXCHANGE
AGREEMENT”), dated May 21, 2015, among the Company and the Subscribers signatory thereto pursuant to which this AIR was
issued.
SECTION 2. EXERCISE.
a) i. EXERCISE BY HOLDER. Exercise
of the purchase rights represented by this AIR may be made in whole or in part at any time or times on or after the Initial Exercise
Date and on or before the Expiration Date by the Holder by (i) delivery to the Company of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of such Holder appearing on the books of the Company), and (ii) upon receipt of the AIR
Securities by the Holder, the payment to the Company of the aggregate Purchase Price of the AIR Preferred Stock and Warrants thereby
purchased (“AGGREGATE EXERCISE PRICE”). If exercised in part, the Holder may continue to exercise the balance
of this AIR at any time until the earlier of; (i) this AIR has been exercised in whole; or (ii) the Expiration Date.
ii. Upon payment for the AIR Securities,
Holder will receive a legal opinion in form reasonably acceptable to Holder and such other representations and certificates reasonably
requested by Holder.
b) MECHANICS OF EXERCISE.
i. AUTHORIZATION OF AIR SECURITIES.
The Company covenants that its issuance of this AIR shall constitute full authority to its officers who are charged with the duty
of executing certificates to execute and issue the necessary certificates for the AIR Securities upon the exercise of the purchase
rights under this AIR. The Company will take all such reasonable action as may be necessary to assure that the AIR Securities may
be issued as provided herein without violation of any applicable law or regulation.
ii. DELIVERY OF CERTIFICATES UPON EXERCISE.
AIR Preferred Stock and AIR Warrants purchased hereunder shall be delivered to the Holder within five (5) Trading Days after the
delivery to the Company of the Notice of Exercise Form as set forth above (“AIR SECURITIES DELIVERY DATE”).
This AIR shall be deemed to have been exercised on the date the payment of the Purchase Price is received by the Company. The AIR
Securities shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of the AIR Securities for all purposes, as of the date the AIR has been exercised by payment
to the Company of the Aggregate Exercise Price to be paid by the Holder. This AIR certificate is not required to be delivered to
the Company until fourteen (14) days after this AIR has been fully exercised.
iii. DELIVERY OF NEW AIRS UPON EXERCISE.
If this AIR shall have been exercised in part prior to the Expiration Date and this AIR was delivered to the Company in connection
therewith, the Company shall, at the time of delivery of the certificate or certificates representing the AIR Securities, deliver
to Holder a new AIR evidencing the rights of Holder to purchase the unpurchased AIR Securities called for by this AIR, which new
AIR shall in all other respects be identical with this AIR.
iv. RESCISSION RIGHTS. If the Company
fails to deliver to the Holder a certificate or certificates representing the AIR Securities pursuant to this Section 2(e)(iv)
by the AIR Securities Delivery Date, then the Holder will have the right, at Holder’s election, to enforce the exercise of
this AIR or rescind such exercise and in any event be entitled to actual damages incurred, and the Company will not have the right
thereafter to compel exercise of this AIR.
v.
CHARGES, TAXES AND EXPENSES. Issuance of certificates for AIR Securities shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such AIR Securities shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; PROVIDED, HOWEVER, that in the event certificates for AIR Securities are to be issued
in a name other than the name of the Holder, this AIR when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
vi.
CLOSING OF BOOKS. The Company will not close its records in any manner which prevents the timely exercise of this AIR,
pursuant to the terms hereof or the conversion of the AIR Preferred Stock or exercise of the AIR Warrants.
SECTION 3. NOTICE. If (A) the approval
of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (B) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case,
the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the AIR Register of the Company,
at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close,
and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of
the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer
or share exchange. The Holder is entitled to exercise this AIR during the 20-day period commencing the date of such notice to the
effective date of the event triggering such notice.
SECTION 4. TRANSFER OF AIR.
a) TRANSFERABILITY. Subject to compliance
with any applicable securities laws, and provided such assignee agrees to be bound to the terms of this Agreement and the Exchange
Agreement, this AIR and all rights hereunder are transferable, in whole or in part, upon surrender of this AIR at the principal
office of the Company, together with a written assignment of this AIR substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon
such surrender and, if required, such payment, the Company shall execute and deliver a new AIR or AIRs in the name of the assignee
or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor
a new AIR evidencing the portion of this AIR not so assigned, and this AIR shall promptly be cancelled. An AIR, if properly assigned,
may be exercised by a new holder for the purchase of AIR Securities without having a new AIR issued.
b) NEW AIRS. This AIR may be divided
or combined with other AIRs upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying
the names and denominations in which new AIRs are to be issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver
a new AIR or AIRs in exchange for the AIR or AIRs to be divided or combined in accordance with such notice.
c) AIR REGISTER. The Company shall register
this AIR, upon records to be maintained by the Company for that purpose (the “AIR REGISTER”), in the name of
the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this AIR as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice
to the contrary.
SECTION 5. MISCELLANEOUS.
a) TITLE TO THE ADDITIONAL INVESTMENT
RIGHT. Prior to the Expiration Date and subject to compliance with applicable laws and Section 4 of this AIR, this AIR and all
rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this AIR together with the Assignment Form annexed hereto properly endorsed and an opinion
of Holder’s counsel, if required by the Company. As a condition to such transfer, the transferee shall sign an investment
letter, and deliver such other documents, in form and substance reasonably satisfactory to the Company.
b) NO RIGHTS AS SHAREHOLDER. This AIR
does not entitle the Holder to any voting rights or other rights as a shareholder of the Company. Upon the surrender of this AIR
and the payment of the aggregate principal, the AIR Securities so purchased shall be and be deemed to be issued to such Holder
as the record owner of such AIR Securities as of the close of business on the later of the date of such surrender or payment.
c) LOSS, THEFT, DESTRUCTION OR MUTILATION
OF AIR. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this AIR or any certificate relating to the AIR Securities, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the AIR, shall not include the posting of any bond), and upon
surrender and cancellation of such AIR or certificate, if mutilated, the Company will make and deliver, at Holder’s expense,
a new AIR or certificate of like tenor and dated as of such cancellation, in lieu of such AIR or certificate.
d) ANTI-DILUTION. The conversion price
of the AIR Preferred Stock, the exercise price of the AIR Warrants and the number of shares of Common Stock purchasable upon conversion
and exercise shall be adjusted from and after the date of issue of this AIR in the same manner and in the same proportions as is
applicable to the Preferred Stock and Warrants.
SECTION 6. INCORPORATION. This AIR is
subject to the terms of the Exchange Agreement which is incorporated herein by this reference.
[-Signature Page Follows-]
IN WITNESS WHEREOF, the
Company has caused this AIR to be executed by its officer thereunto duly authorized.
Dated: May 21, 2015
ATTITUDE DRINKS INCORPORATED
By: _____________________________________
Name:
Title:
NOTICE OF EXERCISE
TO: [_______________
(1) The undersigned hereby
elects to purchase $________ Stated Value of secured Series C Convertible Preferred Stock of ATTITUDE DRINKS INCORPORATED (the
“Company”) pursuant to the terms of the attached AIR and tenders herewith payment of the amount equal to such Stated
Value.
(2) Payment shall take
the form of (check applicable box) in lawful money of the United States,
☐ Cash;
☐ Wire
Transfer; or
☐ Check
(3) Please issue a certificate
or certificates representing said AIR Preferred Stock and AIR Warrants representing the right to purchase ___________ shares of
the Company’s Common Stock in the name of the undersigned or in such other name as is specified below:
________________________________________
The AIR Preferred Stock and AIR Warrants shall be delivered to the
following:
________________________________________
________________________________________
________________________________________
(4) ACCREDITED INVESTOR. The undersigned is
an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ______________________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY:
_________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing AIR, execute this form and supply required
information. Do not use this form to exercise the AIR.)
FOR VALUE RECEIVED, the foregoing AIR and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
____________________
________________________________________________________________.
________________________________________________________________
Dated: ______________, _______
Holder's Signature: ______________________________________________________
Holder's Address: ______________________________________________________
______________________________________________________________________
EXHIBIT 4.3
FORM OF ACCRUED
SALARY WARRANT
NEITHER THIS SECURITY NOR THE SECURITIES
FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE CLASS A WARRANT
ATTITUDE
DRINKS INCORPORATED
Warrant Shares: [REQUIRES
COMPLETION] Initial
Exercise Date: May ___, 2015
Warrant No: [REQUIRES
COMPLETION]
THIS COMMON STOCK
PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [REQUIRES
COMPLETION] or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations
on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise
Date”) and on or prior to the close of business on the seven (7) year anniversary of the Initial Exercise Date (the
“Termination Date”) but not thereafter, to subscribe for and purchase from ATTITUDE DRINKS INCORPORATED, a
New York corporation (the “Company”), up to [REQUIRES COMPLETION]
shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase
price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Exchange Agreement (the
“Exchange Agreement”), dated May ___, 2015, among the Company and the purchasers signatory thereto.
Section 2. Exercise.
a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or
after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency
of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the
books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within two (2) Trading
Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified
in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless
exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything
herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company),
the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to
the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of
Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form
within one (1) Trading Day of delivery of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder,
the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face
hereof
b)
Exercise Price. The initial exercise price per share of the Common Stock under this Warrant shall be $0.0002,
subject to adjustment hereunder (the “Exercise Price”).
c)
Cashless Exercise. If at any time after the Initial Exercise Date, there is no effective registration statement registering,
or no current prospectus available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised
at the Holder’s election, in whole or in part, at such time by means of a “cashless exercise” in which the Holder
shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP
on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;
(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and
(X) = the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.
Notwithstanding
anything herein to the contrary, on the Termination Date, unless the Holder notifies the Company otherwise, if there is no effective
Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then
this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d)
Mechanics of Exercise.
i. Delivery
of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to
the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either
(A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by the Holder or (B) this Warrant is being exercised via cashless exercise and Rule 144 is available, and otherwise by
physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days
after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required)
and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date,
the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the
issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares after
the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the
Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon
exercise of this Warrant the proportionate amount of $10 per Trading Day (increasing to $20 per Trading Day after the fifth
(5th) Trading Day) after the Warrant Share Delivery Date for each $1,000 of Exercise Price of Warrant Shares for
which this Warrant is exercised which are not timely delivered. The Company shall pay any payments incurred under this
Section in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be available to
the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share
Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to
the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to
the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be
payable through the date notice of revocation or rescission is given to the Company.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will
have the right, at any time prior to issuance of such Warrant Shares, to rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the
Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder
of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the
exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which
such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such
exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal
to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder
for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be
issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing
of any Notice of Exercise.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall
not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number
of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged
by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall
be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and
of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic
or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a
more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’
prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided
that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions
of this Section 2(e) shall continue to apply. Any such increase or decrease will not be effective until the 61st day
after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to
a successor holder of this Warrant.
Section 3. Certain
Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company
upon exercise of this Warrant or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of
the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in
the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase
Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders
of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights
or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then
in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall
be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date
less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case
the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness
so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the record date mentioned above.
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more
related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held
by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then,
upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 2(e) on the exercise of this Warrant) the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental Transaction.
Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person
or entity not traded on a national securities exchange or trading market (with such exchange or market including, without
limitation, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, The New York Stock
Exchange, Inc., the NYSE or Amex), the Company or any Successor Entity (as defined below) shall, at the Holder’s
option, exercisable concurrently with the consummation of the Fundamental Transaction, purchase this Warrant from the Holder
by paying to the Holder the higher of (i) an amount of cash equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of the consummation of such Fundamental Transaction, or (ii) the positive difference
between the cash per share paid in such Fundamental Transaction minus the then in effect Exercise Price. “Black
Scholes Value” means the value of the unexercised portion of this Warrant based on the Black and Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as
of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public
announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the
greater of 100% and the 100 day volatility obtained from the “HVT” function on Bloomberg as of the Trading Day
immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per
share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The
Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the
“Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the
other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of
capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the
other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and
the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
e)
Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is
outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise issue (or
announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents,
at an effective price per share less than the Exercise Price then in effect, excluding Exempt Issuances as defined in the
Exchange Agreement (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive
Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued
shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price,
such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such
effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and
only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that
the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal
to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section
3(e) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day
following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(e),
indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other
pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3(e), upon the occurrence of any Dilutive Issuance, the
Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the
Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate
Transaction, despite the prohibition thereon in the Exchange Agreement, the Company shall be deemed to have issued Common
Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be
converted or exercised. Notwithstanding the foregoing, the issuance of any Common Stock or Common Stock Equivalents pursuant
to the Exchange Agreement shall not be deemed a Dilutive Issuance.
f)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3,
the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share
exchange whereby the Common Stock is converted into other securities, or (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, to the extent that such
information constitutes material non-public information (as determined in good faith by the Company) the Company shall follow
the procedure described in Section 13 of the Subscription Agreement and shall deliver to the Holder at its last address as it
shall appear upon the Warrant Register of the Company, at least fifteen (15) calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or
any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission
pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period
commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section 4. Transfer
of Warrant.
a)
Transferability. Subject to compliance with any applicable securities laws and the provisions of the Exchange Agreement,
this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment
of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may
be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the
number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that
purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may
deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(a).
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised
on the next succeeding Trading Day.
d)
Authorized Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued
upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by
this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue).
Except and to
the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
e)
Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant
shall be determined in accordance with the provisions of the Exchange Agreement.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not
registered, or unless exercised in a cashless exercise when Rule 144 is available, and the Holder does not utilize cashless exercise,
will have restrictions upon resale imposed by state and federal securities laws.
g)
Non-waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part
of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without
limiting any other provision of this Warrant or the Exchange Agreement, if the Company willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such
amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the
Company shall be delivered in accordance with the notice provisions of the Exchange Agreement.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise
this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holders
of not less than a majority of the outstanding Warrants issued pursuant to the Exchange Agreement.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose,
be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
|
ATTITUDE DRINKS INCORPORATED
|
|
By:__________________________________________
Name:
Title:
|
NOTICE OF EXERCISE
To: ATTITUDE
DRINKS INCORPORATED
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
[ ] in lawful
money of the United States; or
[ ] [if permitted]
the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c),
to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:
_______________________________
(4)
After giving effect to this Notice of Exercise, the undersigned will not have exceeded the
Beneficial Ownership Limitation.
The Warrant Shares shall be delivered to the
following DWAC Account Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
ASSIGNMENT
FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
ATTITUDE
DRINKS INCORPORATED
FOR VALUE RECEIVED,
[____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
Holder’s Signature: _____________________________
Holder’s Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form
must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever,
and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing Warrant.
16
EXHIBIT 4.4
FORM OF ACCRUED SALARY ADDITIONAL INVESTMENT
RIGHT
“NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE -OR- EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
ADDITIONAL INVESTMENT RIGHT
To Purchase for up to
$[RC] of Stated Value of Series C Convertible Preferred Stock and Common Stock
Purchase Warrants of:
ATTITUDE DRINKS INCORPORATED
A Delaware corporation
(the “Company”)
THIS ADDITIONAL INVESTMENT
RIGHT (the “AIR”) certifies that, for value received, [RC](the
“HOLDER”), may voluntarily purchase, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “INITIAL EXERCISE DATE”) and on or prior
to the close of business twenty four (24) months after the date hereof (“EXPIRATION DATE”) with respect to
up to $[RC] of Stated Value of Series C Convertible Preferred Stock (“AIR
PREFERRED STOCK”) and corresponding amount of Warrants (“AIR WARRANTS”). One AIR Warrants to purchase
Common Stock will be issued for each share of Common Stock that would be issued on the exercise date of the AIR assuming the complete
conversion of the AIR Preferred Stock on such date at the Conversion Price of the AIR Preferred Stock then in effect. The AIR
Preferred Stock and AIR Warrants will be identical to the Preferred Stock and Warrants issued pursuant to the Exchange Agreement
except that all time effective or time triggered clauses and provisions of the Transaction Documents in so far as they relate
to the AIR Preferred Stock and AIR Warrant shall be determined from the issue date of the AIR Preferred Stock and AIR Warrant
and extend for the corresponding periods and until the corresponding extended termination dates or deadlines as applicable to
the Preferred Stock and Warrants issuable on the Closing Date, mutatis mutandis. Collectively, the AIR Preferred Stock
and AIR Warrants issuable upon exercise of the AIR are referred to herein as the “AIR SECURITIES”.
SECTION 1. DEFINITIONS. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in that certain Exchange Agreement (the “EXCHANGE
AGREEMENT”), dated May 21, 2015, among the Company and the Subscribers signatory thereto pursuant to which this AIR was
issued.
SECTION 2. EXERCISE.
a) i. EXERCISE BY HOLDER. Exercise
of the purchase rights represented by this AIR may be made in whole or in part at any time or times on or after the Initial Exercise
Date and on or before the Expiration Date by the Holder by (i) delivery to the Company of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of such Holder appearing on the books of the Company), and (ii) upon receipt of the AIR
Securities by the Holder, the payment to the Company of the aggregate Purchase Price of the AIR Preferred Stock and Warrants thereby
purchased (“AGGREGATE EXERCISE PRICE”). If exercised in part, the Holder may continue to exercise the balance
of this AIR at any time until the earlier of; (i) this AIR has been exercised in whole; or (ii) the Expiration Date.
ii. Upon payment for the AIR Securities,
Holder will receive a legal opinion in form reasonably acceptable to Holder and such other representations and certificates reasonably
requested by Holder.
b) MECHANICS OF EXERCISE.
i. AUTHORIZATION OF AIR SECURITIES.
The Company covenants that its issuance of this AIR shall constitute full authority to its officers who are charged with the duty
of executing certificates to execute and issue the necessary certificates for the AIR Securities upon the exercise of the purchase
rights under this AIR. The Company will take all such reasonable action as may be necessary to assure that the AIR Securities may
be issued as provided herein without violation of any applicable law or regulation.
ii. DELIVERY OF CERTIFICATES UPON EXERCISE.
AIR Preferred Stock and AIR Warrants purchased hereunder shall be delivered to the Holder within five (5) Trading Days after the
delivery to the Company of the Notice of Exercise Form as set forth above (“AIR SECURITIES DELIVERY DATE”).
This AIR shall be deemed to have been exercised on the date the payment of the Purchase Price is received by the Company. The AIR
Securities shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of the AIR Securities for all purposes, as of the date the AIR has been exercised by payment
to the Company of the Aggregate Exercise Price to be paid by the Holder. This AIR certificate is not required to be delivered to
the Company until fourteen (14) days after this AIR has been fully exercised.
iii. DELIVERY OF NEW AIRS UPON EXERCISE.
If this AIR shall have been exercised in part prior to the Expiration Date and this AIR was delivered to the Company in connection
therewith, the Company shall, at the time of delivery of the certificate or certificates representing the AIR Securities, deliver
to Holder a new AIR evidencing the rights of Holder to purchase the unpurchased AIR Securities called for by this AIR, which new
AIR shall in all other respects be identical with this AIR.
iv. RESCISSION RIGHTS. If the Company
fails to deliver to the Holder a certificate or certificates representing the AIR Securities pursuant to this Section 2(e)(iv)
by the AIR Securities Delivery Date, then the Holder will have the right, at Holder’s election, to enforce the exercise of
this AIR or rescind such exercise and in any event be entitled to actual damages incurred, and the Company will not have the right
thereafter to compel exercise of this AIR.
v. CHARGES, TAXES AND EXPENSES. Issuance
of certificates for AIR Securities shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such
AIR Securities shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; PROVIDED, HOWEVER,
that in the event certificates for AIR Securities are to be issued in a name other than the name of the Holder, this AIR when surrendered
for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require,
as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
vi. CLOSING OF BOOKS. The Company will
not close its records in any manner which prevents the timely exercise of this AIR, pursuant to the terms hereof or the conversion
of the AIR Preferred Stock or exercise of the AIR Warrants.
SECTION 3. NOTICE. If (A) the approval
of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (B) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case,
the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the AIR Register of the Company,
at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close,
and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of
the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer
or share exchange. The Holder is entitled to exercise this AIR during the 20-day period commencing the date of such notice to the
effective date of the event triggering such notice.
SECTION 4. TRANSFER OF AIR.
a) TRANSFERABILITY. Subject to compliance
with any applicable securities laws, and provided such assignee agrees to be bound to the terms of this Agreement and the Exchange
Agreement, this AIR and all rights hereunder are transferable, in whole or in part, upon surrender of this AIR at the principal
office of the Company, together with a written assignment of this AIR substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon
such surrender and, if required, such payment, the Company shall execute and deliver a new AIR or AIRs in the name of the assignee
or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor
a new AIR evidencing the portion of this AIR not so assigned, and this AIR shall promptly be cancelled. An AIR, if properly assigned,
may be exercised by a new holder for the purchase of AIR Securities without having a new AIR issued.
b) NEW AIRS. This AIR may be divided
or combined with other AIRs upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying
the names and denominations in which new AIRs are to be issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver
a new AIR or AIRs in exchange for the AIR or AIRs to be divided or combined in accordance with such notice.
c) AIR REGISTER. The Company shall register
this AIR, upon records to be maintained by the Company for that purpose (the “AIR REGISTER”), in the name of
the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this AIR as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice
to the contrary.
SECTION 5. MISCELLANEOUS.
a) TITLE TO THE ADDITIONAL INVESTMENT
RIGHT. Prior to the Expiration Date and subject to compliance with applicable laws and Section 4 of this AIR, this AIR and all
rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this AIR together with the Assignment Form annexed hereto properly endorsed and an opinion
of Holder’s counsel, if required by the Company. As a condition to such transfer, the transferee shall sign an investment
letter, and deliver such other documents, in form and substance reasonably satisfactory to the Company.
b) NO RIGHTS AS SHAREHOLDER. This AIR
does not entitle the Holder to any voting rights or other rights as a shareholder of the Company. Upon the surrender of this AIR
and the payment of the aggregate principal, the AIR Securities so purchased shall be and be deemed to be issued to such Holder
as the record owner of such AIR Securities as of the close of business on the later of the date of such surrender or payment.
c) LOSS, THEFT, DESTRUCTION OR MUTILATION
OF AIR. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this AIR or any certificate relating to the AIR Securities, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the AIR, shall not include the posting of any bond), and upon
surrender and cancellation of such AIR or certificate, if mutilated, the Company will make and deliver, at Holder’s expense,
a new AIR or certificate of like tenor and dated as of such cancellation, in lieu of such AIR or certificate.
d) ANTI-DILUTION. The conversion price
of the AIR Preferred Stock, the exercise price of the AIR Warrants and the number of shares of Common Stock purchasable upon conversion
and exercise shall be adjusted from and after the date of issue of this AIR in the same manner and in the same proportions as is
applicable to the Preferred Stock and Warrants.
SECTION 6. INCORPORATION. This AIR is
subject to the terms of the Exchange Agreement which is incorporated herein by this reference.
[-Signature Page Follows-]
IN WITNESS WHEREOF, the
Company has caused this AIR to be executed by its officer thereunto duly authorized.
Dated: May 21, 2015
ATTITUDE DRINKS INCORPORATED
By: _____________________________________
Name:
Title:
NOTICE OF EXERCISE
TO: [_______________
(1) The undersigned hereby
elects to purchase $________ Stated Value of secured Series C Convertible Preferred Stock of ATTITUDE DRINKS INCORPORATED (the
“Company”) pursuant to the terms of the attached AIR and tenders herewith payment of the amount equal to such Stated
Value.
(2) Payment shall take
the form of (check applicable box) in lawful money of the United States,
☐ Cash;
☐
Wire Transfer; or
☐
Check
(3) Please issue a certificate
or certificates representing said AIR Preferred Stock and AIR Warrants representing the right to purchase ___________ shares of
the Company’s Common Stock in the name of the undersigned or in such other name as is specified below:
________________________________________
The AIR Preferred Stock and AIR Warrants shall be delivered to the
following:
________________________________________
________________________________________
________________________________________
(4) ACCREDITED INVESTOR. The undersigned is
an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ______________________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY:
_________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing AIR, execute this form and supply required
information. Do not use this form to exercise the AIR.)
FOR VALUE RECEIVED, the foregoing AIR and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
____________________
________________________________________________________________.
________________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________________________________
Holder's Address: ______________________________________________________
____________________________________________________________________
EXHIBIT 10.1
FORM
OF PROMISSORY NOTES EXCHANGE AGREEMENT
THIS
EXCHANGE AGREEMENT (this “Exchange Agreement”), is dated as of May 21, 2015, by and between Attitude Drinks
Incorporated, a Delaware corporation (the “Company”), and the subscribers identified on Schedule 1
hereto (the “Subscribers”).
WHEREAS,
the Company and the Subscribers are executing and delivering this Agreement in reliance upon an exemption from securities registration
afforded by the provisions of Section 4(a)(2) as promulgated by the United States Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “1933 Act”);
WHEREAS,
the Subscribers are owed money (the “Debt”) in the amounts set forth opposite their names on Schedule 1 annexed hereto,
which Debt is evidenced by promissory notes (the “Surrendered Notes”);
WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained herein, the Notes, including all accrued interest
thereon, shall be exchanged (the “Exchange”) for the following securities of the Company, up to (i) [ ] shares of
the Company’s Series C Variable Rate Convertible Preferred Stock (“Preferred Stock”) issued hereunder
having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto,
convertible into shares of the Company’s Common Stock, $0.00001 par value (the “Common Stock”), (ii)
warrants to purchase the Company’s Common Stock in the form annexed hereto as Exhibit B (the “Warrants”),
and (iii) Additional Investment Rights (“AIRs”) in the form annexed hereto as Exhibit C granting the Subscriber
the right to purchase (x) additional shares of Preferred Stock , and (y) a corresponding amount of Warrants. The Preferred Stock,
Warrants, AIRs and shares of Common Stock issuable upon conversion of the Preferred Stock and exercise of the Warrants (the “Conversion
Shares”) are collectively referred to herein as the “Securities”; and
NOW,
THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Subscribers
hereby agree as follows:
1.1 Exchange.
On the Closing Date the Subscribers will exchange the Surrendered Notes identified on Schedule 1 for the Preferred Stock, Warrants,
AIRs in the amounts set forth on Schedule 1.
1.2 Closing.
The “Closing Date” shall be the date that the Preferred Stock, Warrants, AIRs and Surrendered Notes are delivered
to the respective parties. Subject to the satisfaction or waiver of the terms and conditions of this Exchange Agreement, on the
Closing Date, the Subscribers shall be issued the Preferred Stock, Warrants, AIRs.
2. Subscribers
Representations and Warranties. Each Subscriber for itself only, hereby represents to and agrees with the Company that:
(a) Organization
and Standing of the Subscriber. Subscriber is duly incorporated or organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization.
(b) Authorization
and Power. Subscriber has the requisite power and authority to enter into and perform this Exchange Agreement and to
purchase the Securities. The execution, delivery and performance of this Exchange Agreement by Subscriber and the
consummation by Subscriber of the transactions contemplated hereby and thereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of Subscriber or its Board of Directors or stockholders, if
applicable, is required. This Exchange Agreement has been or will be duly authorized and executed and when delivered by
Subscriber will constitute valid and binding obligations of Subscriber, enforceable against Subscriber in accordance with the
terms thereof.
(c) No
Conflicts. The execution, delivery and performance of this Exchange Agreement and the consummation by Subscriber of the transactions
contemplated hereby and thereby or relating hereto do not and will not (i) result in a violation of Subscriber’s charter
documents, bylaws or other organizational documents, if applicable, (ii) conflict with nor constitute a default (or an event which
with notice or lapse of time or both would become a default) under any agreement to which Subscriber is a party, nor (iii) result
in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable
to Subscriber or its properties (except for such conflicts, defaults and violations as would not, individually or in the aggregate,
have a material adverse effect on Subscriber). Subscriber is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its
obligations under this Exchange Agreement nor to purchase the Securities in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, Subscriber is assuming and relying upon the accuracy of the relevant representations
and agreements of the Company herein.
(d) Information
on Subscriber. Subscriber is, and will be at the time of the conversion of the Preferred Stock, or exercise of the Warrant
or AIRs an “accredited investor”, as such term is defined in Regulation D promulgated by the Commission under
the 1933 Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such
knowledge and experience in financial, tax and other business matters as to enable Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment. Subscriber has the authority and is duly and legally qualified to purchase
and own the Securities. Subscriber is able to bear the risk of such investment for an indefinite period and to afford a complete
loss thereof. The Subscriber agrees to provide the Company with such information reasonably required from time to time for the
Company to comply with the Company’s regulatory filing requirements.
(g) Purchase
of Preferred Stock, Warrants, AIRs. On the Closing Date, Subscriber will purchase the Preferred Stock, Warrants, AIRs as principal
for its own account for investment only and not with a view toward, or for resale in connection with, the public sale or any distribution
thereof.
(h) Compliance
with Securities Act. Subscriber understands and agrees that the Securities have not been registered under the 1933 Act or
any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the
1933 Act (based in part on the accuracy of the representations and warranties of the Subscriber contained herein), and that such
Securities must be held indefinitely unless a subsequent disposition is registered under the 1933 Act or any applicable state
securities laws or is exempt from such registration. Subject to compliance with applicable securities laws, the Subscriber may
enter into lawful hedging transactions in the course of hedging the position they assume and the Subscriber may also enter into
lawful short positions or other derivative transactions relating to the Securities, or interests in the Securities, and deliver
the Securities, or interests in the Securities, to close out their short or other positions or otherwise settle other transactions,
or loan or pledge the Securities, or interests in the Securities, to third parties who in turn may dispose of these Securities.
The immediately preceding sentence does not affect, mitigate or impair any of the Subscriber’s representations, warranties
and agreements of this Section 2.
(i) Conversion
Shares Legend. The Securities shall bear the following or similar legend:
"THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I)
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES."
(j) Communication
of Offer. The offer to sell the Securities was directly communicated to Subscriber by the Company. At no time was Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form
of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with
such communicated offer.
(k) Restricted
Securities. Subscriber understands that the Securities have not been registered under the 1933 Act and Subscriber will not
sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any of the Securities unless pursuant to an effective registration
statement under the 1933 Act, or unless an exemption from registration is available. Notwithstanding anything to the contrary
contained in this Exchange Agreement, Subscriber may transfer (without restriction and without the need for an opinion of counsel)
the Securities to its Affiliates (as defined below) provided that each such Affiliate is an “accredited investor”
under Regulation D and such Affiliate agrees to be bound by the terms and conditions of this Exchange Agreement. For the purposes
of this Exchange Agreement, an “Affiliate” of any person or entity means any other person or entity directly
or indirectly controlling, controlled by or under direct or indirect common control with such person or entity. Affiliate includes
each Subsidiary of the Company. For purposes of this definition, “control” means the power to direct the management
and policies of such person or firm, directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise.
(l) No
Governmental Review. Subscriber understands that no United States federal or state agency or any other governmental or state
agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(m) Correctness
of Representations. Subscriber represents that the foregoing representations and warranties are true and correct as of the
date hereof and, unless Subscriber otherwise notifies the Company prior to the Closing Date, shall be true and correct as of the
Closing Date.
(n)
On the date hereof and on the Closing Date, the Notes are owned by the Subscriber and are free and clear of any liens, mortgages,
encumbrances, pledges or any other similar restrictions.
3. Company
Representations and Warranties. The Company represents to and agrees with each Subscriber that:
(a) Due
Incorporation. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power to own its properties and to carry on its business as
presently conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions
in which the failure to so qualify would not have a Material Adverse Effect. For purposes of this Exchange Agreement, a “Material
Adverse Effect” shall mean a material adverse effect on the financial condition, results of operations, prospects, properties
or business of the Company and its Subsidiaries taken as a whole. For purposes of this Exchange Agreement, “Subsidiary”
means, with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 30% of (i) the outstanding
capital stock having ordinary voting power to elect a majority of the board of directors or other managing body of such entity,
(ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership
or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly
or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control of the Company.
(b) Authority;
Enforceability. This Exchange Agreement, the Preferred Stock, Warrants, AIRs and any other agreements delivered or required
to be delivered together with or pursuant to this Exchange Agreement or in connection herewith (collectively “Transaction
Documents”) have been duly authorized, executed and delivered by the Company and Subsidiaries, as the case may be, and
are valid and binding agreements of the Company and Subsidiaries, as the case may be, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights generally and to general principles of equity. The Company and Subsidiaries, as the case may
be, have full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform their
obligations thereunder.
(c) Consents.
No consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over
the Company, or any of its Affiliates, the OTC Bulletin Board (the “Bulletin Board”) or the Company's shareholders
is required for the execution by the Company of the Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the issuance and sale of the Securities. The Transaction
Documents and the Company’s performance of its obligations thereunder have been unanimously approved by the Company’s
Board of Directors. No consent, approval, order or authorization of, or registration, qualification, designation, declaration
or filing with, any governmental authority in the world, including without limitation, the United States, or elsewhere is required
by the Company or any Affiliate of the Company in connection with the consummation of the transactions contemplated by this Exchange
Agreement, except as would not otherwise have a Material Adverse Effect or the consummation of any of the other agreements, covenants
or commitments of the Company or any Subsidiary contemplated by the other Transaction Documents. Any such qualifications and filings
will, in the case of qualifications, be effective on the Closing and will, in the case of filings, be made within the time prescribed
by law.
(d) The
Securities. The Securities upon issuance:
(i) are
owned by the Subscriber, and will be, free and clear of any security interests, liens, claims or other encumbrances, subject only
to restrictions upon transfer under the 1933 Act and any applicable state securities laws;
(ii) have
been, or will be, duly and validly authorized and on the dates of issuance of the Preferred Stock, Warrants, AIRs the issuance
of the Conversion Shares upon conversion of the Preferred Stock or exercise of the Warrants, the Preferred Stock, Warrants, AIRs
and Conversion Shares will be duly and validly issued, fully paid and non-assessable and if registered pursuant to the 1933 Act
and resold pursuant to an effective registration statement or an exemption from registration, will be free trading, unrestricted
and unlegended;
(iii) will
not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company
or rights to acquire securities or debt of the Company;
(iv) will
not subject the holders thereof to personal liability by reason of being such holders; and
(v) assuming
the representations and warranties of the Subscribers as set forth in Section 2 hereof are true and correct, will not result in
a violation of Section 5 under the 1933 Act.
(e) No
Integrated Offering. Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales of any security of the Company nor solicited any offers to buy any security of the Company
under circumstances that would cause the offer of the Securities pursuant to this Exchange Agreement to be integrated with prior
offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of the Bulletin Board. No prior offering will impair the exemptions relied upon in the Exchange
or the Company’s ability to timely comply with its obligations hereunder. Neither the Company nor any of its Affiliates
will take any action or suffer any inaction or conduct any offering other than the transactions contemplated hereby that may be
integrated with the offer or issuance of the Securities or that would impair the exemptions relied upon in the Exchange or the
Company’s ability to timely comply with its obligations hereunder.
(f) No
General Solicitation. Neither the Company, nor any of its Affiliates, nor to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933
Act) in connection with the offer or sale of the Securities.
(g) Dilution.
The Company's executive officers and directors understand the nature of the Securities being sold hereby and recognize that the
issuance of the Securities will have a potential dilutive effect on the equity holdings of other holders of the Company’s
equity or rights to receive equity of the Company. The board of directors of the Company has concluded, in its good faith business
judgment that the issuance of the Securities is in the best interests of the Company. The Company specifically acknowledges that
its obligation to issue the Preferred Stock and Warrants upon the exercise of the AIRS and the issuance of the Conversion Shares
upon conversion of the Preferred Stock and exercise of the Warrants is binding upon the Company and enforceable regardless of
the dilution such issuance may have on the ownership interests of other stockholders of the Company or parties entitled to receive
equity of the Company.
(h) Investment
Company. Neither the Company nor any Affiliate of the Company is an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.
(i) Reporting
Company/Shell Company. The Company is subject to reporting obligations pursuant to Section 15(d) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”).
Pursuant
to the provisions of the 1934 Act, except as set forth on Schedule 3(i) the Company has timely filed all reports and other materials
required to be filed thereunder with the Commission during the preceding twelve months. The Company is not a “shell company”
or “former shell company” as those terms are employed in Rule 144 under the 1933 Act.
(j) Company
Predecessor and Subsidiaries. The Company makes each of the representations contained in Sections 3(a), (b), (c), (h) (k)
and (l) of this Exchange Agreement, as same relate or could be applicable to each Subsidiary. All representations made by or relating
to the Company of a historical or prospective nature and all undertakings and obligations to act or refrain from certain actions
described herein shall relate, apply and refer to the Company and Subsidiaries and their predecessors and successors.
(k) Correctness
of Representations. The Company represents that the foregoing representations and warranties are true and correct as of the
date hereof in all material respects, and, unless the Company otherwise notifies the Subscribers prior to the Closing Date, shall
be true and correct in all material respects as of the Closing Date; provided, that, if such representation or warranty is made
as of a different date, in which case such representation or warranty shall be true as of such date.
(l) Survival.
The foregoing representations and warranties shall survive the Closing Date.
4. Regulation
D Offering/Legal Opinion. The offer and issuance of the Securities to the Subscribers is being made pursuant to the exemption
from the registration provisions of the 1933 Act afforded by Section 4(a)(2) or Section 4(6) of the 1933 Act and/or Rule 506 of
Regulation D promulgated thereunder. The Preferred Stock, Warrants, AIRs issued pursuant to this agreement tack, for Rule 144
purposes, to the issue date of the Surrendered Notes. The Company will provide, at the Company's expense, to the Subscribers,
such other legal opinions, if any, as are reasonably necessary in Subscribers’ opinion for the issuance and resale of the
Preferred Stock and Conversion Shares pursuant to an effective registration statement, Rule 144 under the 1933 Act or an exemption
from registration.
5.1. Conversion
of Preferred Stock and Exercise of the Warrants.
(a) Upon
the conversion of a Preferred Stock, exercise of the Warrants or any part thereof, the Company shall, at its own cost and expense,
take all necessary action, including obtaining and delivering an opinion of counsel to assure that the Company's transfer agent
shall issue stock certificates in the name of a Subscriber (or its permitted nominee) or such other persons as designated by Subscriber
and in such denominations to be specified at conversion representing the number of shares of Common Stock issuable upon such conversion.
The Company warrants that no instructions other than these instructions have been or will be given to the transfer agent of the
Company's Common Stock and that the certificates representing such shares shall contain no legend other than the legend set forth
in Section 2(i). If and when a Subscriber sells the Conversion Shares, assuming (i) a registration statement including such Conversion
Shares for registration has been filed with the Commission, is effective and the prospectus, as supplemented or amended, contained
therein is current and (ii) Subscriber or its agent confirms in writing to the transfer agent that Subscriber has complied with
the prospectus delivery requirements, the Company will reissue the Conversion Shares without restrictive legend and the Conversion
Shares will be free-trading, and freely transferable. In the event that the Conversion Shares are sold in a manner that complies
with an exemption from registration, the Company will, upon request, promptly instruct its counsel to issue to the transfer agent
an opinion permitting removal of the legend indefinitely if such sale is intended to be made in conformity with Rule 144(b)(1)(i)
of the 1933 Act, provided that Subscriber delivers reasonably requested representations in support of such opinion.
(b) Each
Subscriber will give notice of its decision to exercise its right to convert its Preferred Stock, dividends, or part thereof by
emailing, telecopying or otherwise delivering a completed Notice of Conversion (a form of which is annexed as Exhibit A to the
Preferred Stock) to the Company via confirmed telecopier transmission or otherwise pursuant to this Exchange Agreement. Subscribers
will not be required to surrender the certificate representing the Preferred Stock until the Preferred Stock has been fully converted.
Each date on which a Notice of Conversion is faxed or emailed to the Company in accordance with the provisions hereof by 6 PM
Eastern Time (“ET”) (or if received by the Company after 6 PM ET, then the next business day) shall be deemed
a “Conversion Date.” The Company will itself or cause the Company’s transfer agent to transmit the Company’s
Common Stock certificates representing the Conversion Shares issuable upon conversion of the Preferred Stock to Subscribers via
express courier for receipt by Subscribers within three (3) business days after the Conversion Date (such fifth day being the
“Delivery Date”). In the event the Conversion Shares are electronically transferable, then delivery of the
Shares must be made by electronic transfer provided request for such electronic transfer has been made by the Subscribers.
A certificate representing the balance of the Preferred Stock not so converted will be provided by the Company to a Subscriber
if requested by a Subscriber, provided such Subscriber delivers the original certificate to the Company.
(c) The
Company understands that a delay in the delivery of the Conversion Shares in the form required pursuant to Section 5.1 hereof
later than the Delivery Date could result in economic loss to the Subscribers. As compensation to Subscribers for such loss, the
Company agrees to pay (as liquidated damages and not as a penalty) to each applicable Subscriber for late issuance of Conversion
Shares in the form required pursuant to Section 5.1 hereof upon Conversion of the Preferred Stock or exercise of the Warrants,
the amount of $100 per business day after the Delivery Date for each $10,000 of Preferred Stock stated value and dividends (and
proportionately for other amounts) being converted of the corresponding Conversion Shares which are not timely delivered. The
Company shall pay any payments incurred under this Section upon demand. Furthermore, in addition to any other remedies which may
be available to the Subscribers, in the event that the Company fails for any reason to effect delivery of the Conversion Shares
on or before the Delivery Date, the Subscriber will be entitled to revoke all or part of the relevant Notice of Conversion by
delivery of a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective
positions immediately prior to the delivery of such notice, except that the damages payable in connection with the Company’s
default shall be payable through the date notice of revocation or rescission is given to the Company.
5.2. Maximum
Conversion. A Subscriber shall not be entitled to convert on a Conversion Date that amount of the Preferred Stock nor may
the Company make any payment including stated value, dividends, or liquidated or other damages by delivery of Conversion Shares
in connection with that number of Conversion Shares which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by Subscriber and its Affiliates on a Conversion Date or payment date, and (ii) the number of Conversion
Shares issuable upon the conversion of the Preferred Stock with respect to which the determination of this provision is being
made on a calculation date, which would result in beneficial ownership by Subscriber and its Affiliates of more than 4.99% of
the outstanding shares of Common Stock of the Company on such Conversion Date. For the purposes of the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended,
and Rule 13d-3 thereunder. Subject to the foregoing, the Subscribers shall not be limited to aggregate conversions of only 4.99%
and aggregate conversions by the Subscribers may exceed 4.99%. A Subscriber may increase it ownership limitation to 9.99% upon
61 days notice to the Company. The Subscribers shall have the authority to determine whether the restriction contained in this
Section 5.2 will limit any conversion of a Preferred Stock and the extent such limitation applies and to which convertible or
exercisable instrument or part thereof such limitation applies.
5.3. Injunction
Posting of Bond. In the event a Subscriber shall elect to convert Preferred Stock, exercise the Warrant or any part thereof,
the Company may not refuse conversion based on any claim that such Subscriber or anyone associated or affiliated with such Subscriber
has not complied with Subscriber’s obligations under the Transaction Documents, or for any other reason, unless, a final
non-appealable injunction from a court made on notice to Subscriber, restraining and or enjoining conversion of all or part of
such Preferred Stock shall have been sought and obtained by the Company and the Company has posted a surety bond for the benefit
of Subscriber equal to the greater of (i) 125% of the outstanding stated value and accrued but unpaid dividends of the Preferred
Stock, and the aggregate purchase price of the Conversion Shares which are sought to be subject to the injunction, or (ii) the
closing price of the Common Stock on the trading day before the issue date of the injunction multiplied by the number of Conversion
Shares issuable upon conversion of the Preferred Stock, which bond shall remain in effect until the completion of arbitration/litigation
of the dispute and the proceeds of which shall be payable to Subscriber to the extent the judgment or decision is in Subscriber’s
favor.
5.4. Buy-In.
In addition to any other rights available to Subscribers, if the Company fails to deliver to a Subscriber Conversion Shares
by the Delivery Date and if after the Delivery Date Subscriber or a broker on Subscriber’s behalf purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by Subscriber of the Common
Stock which Subscriber was entitled to receive upon such conversion (a “Buy-In”), then the Company shall
pay to Subscriber (in addition to any remedies available to or elected by the Subscribers) the amount by which (A)
Subscriber’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (B) the aggregate stated value and/or dividend amount of the Preferred Stock for which such conversion request was
not timely honored together with interest thereon at a rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Subscriber purchases shares of Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of $10,000 of Preferred Stock
stated value and/or dividends, the Company shall be required to pay Subscriber $1,000 plus interest. Subscriber shall provide
the Company written notice and evidence indicating the amounts payable to Subscriber in respect of the Buy-In.
6. left
intentionally blank.
7. Covenants
of the Company. The Company covenants and agrees with the Subscribers as follows:
(a) Stop
Orders. Subject to the prior notice requirement described in Section 7(h), the Company will advise the Subscribers, within
twenty-four hours after it receives notice of issuance by the Commission, any state securities commission or any other regulatory
authority of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the
suspension of the qualification of the Common Stock of the Company for offering or sale in any jurisdiction, or the initiation
of any proceeding for any such purpose. The Company will not issue any stop transfer order or other order impeding the sale, resale
or delivery of any of the Securities, except as may be required by any applicable federal or state securities laws and only if
at least two business days prior notice of such instruction is given to the Subscribers.
(b) Listing/Quotation.
The Company shall promptly secure the quotation or listing of the Conversion Shares upon such national securities exchange,
or automated quotation system upon which the Company’s Common Stock is quoted or listed and upon which such Conversion
Shares are or become eligible for quotation or listing (subject to official notice of issuance) and shall maintain same so
long as any Securities are outstanding. The Company will maintain the quotation or listing of its Common Stock on the
American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market, Bulletin Board, or New
York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock
(the “Principal Market”), and will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable. Subject to the limitation set forth in Section
7(h), the Company will provide Subscribers with copies of all notices it receives notifying the Company of the threatened and
actual delisting of the Common Stock from any Principal Market. As of the date of this Exchange Agreement and the Closing
Date, the Bulletin Board is the Principal Market.
(c) Market
Regulations. If required, the Company shall notify the Commission, the Principal Market and applicable state authorities,
in accordance with their requirements, of the transactions contemplated by this Exchange Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance
of the Securities to the Subscribers and promptly provide copies thereof to the Subscribers.
(d) Filing
Requirements. From the date of this Exchange Agreement and until the last to occur of all the Securities have been paid back,
resold or transferred by the Subscribers pursuant to a registration statement or pursuant to Rule 144(b)(1)(i) (the date of such
latest occurrence being the “End Date”), the Company will (A) cause its Common Stock to continue to be registered
under Section 12(b) or 12(g) of the 1934 Act, (B) comply in all respects with its reporting and filing obligations under the 1934
Act, and (C) voluntarily comply with all reporting requirements that are applicable to an issuer with a class of shares registered
pursuant to Section 12(g) of the 1934 Act, if the Company is not subject to such reporting requirements. The Company will use
its best efforts not to take any action or file any document (whether or not permitted by the 1933 Act or the 1934 Act or the
rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under
said acts until the End Date. Until the End Date, the Company will continue the listing or quotation of the Common Stock on a
Principal Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws
or rules of the Principal Market. The Company agrees to timely file a Form D with respect to the Securities if required under
Regulation D and to provide a copy thereof to Subscribers promptly after such filing.
(e) Reservation.
Prior to the Closing, the Company undertakes to reserve on behalf of Subscribers from its authorized but unissued Common Stock,
a number of shares of Common Stock equal to 150% of the amount of Common Stock necessary to allow Subscribers to be able to convert
all of the Preferred Stock, Warrants, and AIRs including dividends that would accrue thereon through the End Date (“Required
Reservation”). Failure to have sufficient shares reserved pursuant to this Section 7(e) at any time shall be a material
default of the Company’s obligations under this Exchange Agreement. Without waiving the foregoing requirement, if at any
time Preferred Stock, Warrants, and AIRs are owned by the Subscribers, the Company has reserved on behalf of the Subscribers less
than 125% of the amount necessary for full conversion of the outstanding Preferred Stock, Warrants, and AIRs and dividends at
the conversion price in effect on every such date (“Minimum Required Reservation”), the Company will promptly
reserve the Minimum Required Reservation, or if there are insufficient authorized and available shares of Common Stock to do so,
the Company will take all action necessary to increase its authorized capital to be able to fully satisfy its reservation requirements
hereunder, including the filing of a preliminary proxy with the Commission not later than fifteen business days after the first
day the Company has reserved less than the Minimum Required Reservation. The Company agrees to provide notice to the Subscribers
not later than three days after the date the Company has less than the Minimum Required Reservation reserved on behalf of the
Subscribers.
(f)
DTC Program. At all times that Preferred Stock, Warrants, and AIRs are outstanding or issuable, the Company will
take such steps as are necessary for the Conversion Shares to be delivered electronically to a participant in the Depository
Trust Company Automated Securities Transfer Program. In the event that there is a chill on delivery of shares via the
Depository Trust Company Automated Securities Transfer Program, the Company shall immediately and in any event no less than
one day after such chill is announced, inform the Subscribers of such chill.
(g) Confidentiality/Public
Announcement. From the date of this Exchange Agreement and until the End Date, the Company agrees that except in connection
with a Form 8-K, Form 10-K, Form 10-Q and a registration statement or statements which include the Securities for registration
with the Commission or in correspondence with the Commission regarding same or in respect to a stock exchange listing, it will
not disclose publicly or privately the identity of the Subscribers unless expressly agreed to in writing by Subscribers or only
to the extent required by law and then only upon not less than three days prior notice to Subscribers. In any event and subject
to the foregoing, the Company undertakes to file a Form 8-K describing the Exchange not later than the fourth (4th)
business day after the Closing Date. Prior to the filing date of such Form 8-K, a draft in the final form will be provided to
Subscribers for Subscribers’ review and approval. In the Form 8-K, the Company will specifically disclose the amount of
Common Stock outstanding immediately after the Closing. Upon delivery by the Company to the Subscribers after the Closing
Date of any notice or information, in writing, electronically or otherwise, and while Securities are held by Purchases, unless
the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic
information relating to the Company or Subsidiaries, the Company shall within one business day after any
such delivery publicly disclose such material, nonpublic information on a Report on Form 8-K.
In the event that the Company believes that a notice or communication to Subscribers contains
material, nonpublic information relating to the Company or Subsidiaries, the Company shall so indicate to Subscribers prior to
delivery of such notice or information. Subscribers will be granted sufficient time to notify the Company that such Subscriber
elects not to receive such information. In such case, the Company will not deliver such information to any such Subscriber. In
the absence of any such indication, Subscribers shall be allowed to presume that all matters relating to such notice and
information do not constitute material, nonpublic information relating to the Company or Subsidiaries.
(h) Non-Public
Information. The Company covenants and agrees that except for the Reports, Other Written Information and exhibits to this
Exchange Agreement and the Transaction Documents, which information the Company undertakes to publicly disclose on the Form 8-K
described in Section 7(g) above, neither it nor any other person acting on its behalf will at any time provide Subscribers or
their agents or counsel with any information that the Company believes constitutes material non-public information, unless prior
thereto Subscribers shall have agreed in writing to accept such information. The Company understands and confirms that Subscribers
shall be relying on the foregoing representations in effecting transactions in securities of the Company.
(i) Negative
Covenants. So long as Securities are outstanding, without the Consent of the Subscribers, the Company and its officers and
directors will not and will not permit any of its Subsidiaries to directly or indirectly:
(i) amend
its Articles, bylaws or its charter documents so as to materially and adversely affect any rights of the Subscribers;
(ii) repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any dividend or distribution in respect of any of its Common
Stock, Preferred Stock, or other equity securities other than to the extent permitted or required under the Transaction Documents;
(iii) prepay
or redeem any financing related debt or past due obligations or securities, or past due obligations (except with respect to vendor
obligations, or any such obligations which in management’s good faith, reasonable judgment must be repaid to avoid disruption
of the Company’s businesses);
(iv) liquidate,
merger, consolidate, nor sell a substantial amount of its assets with or to any other entity, except for a migratory merger with
a wholly-owned subsidiary, result of which does not change the relative ownership or rights of the holders of the Securities and
Common Stock.
8. Covenants
of the Company Regarding Indemnification.
(a) Indemnification.
The Company agrees to indemnify, hold harmless, reimburse and defend the Subscribers, the Subscribers’ officers, directors,
agents, counsel, Affiliates, members, managers, control persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Subscribers
or any such person which results, arises out of or is based upon (i) any material misrepresentation by Company or breach of any
representation or warranty by Company in this Exchange Agreement or in any Exhibit attached hereto in any Transaction Document,
or other agreement delivered pursuant hereto or in connection herewith, now or after the date hereof; or (ii) after any applicable
notice and/or cure periods, any breach or default in performance by the Company of any covenant or undertaking to be performed
by the Company hereunder, or any other agreement entered into by the Company and Subscribers relating hereto.
(b) Indemnification
Procedures. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party
in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may
have to such indemnified party other than under this Section 8(b) and shall only relieve it from any liability which it may have
to such indemnified party under this Section 8(b), except and only if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume
and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not
be liable to such indemnified party under this Section 8(b) for any legal expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected, provided,
however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnifying
party shall have reasonably concluded that there may be reasonable defenses available to indemnified party which are different
from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be
deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to
select one separate counsel, reasonably satisfactory to the indemnified and indemnifying party, and to assume such legal defenses
and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the indemnifying party as incurred.
9. Unlegended
Shares and 144 Sales.
(a) Delivery
of Unlegended Shares. Within five (5) business days (such fifth business day being the “Unlegended Shares
Delivery Date”) after the day on which the Company has received (i) a notice that Conversion Shares or any other
Common Stock held by Subscribers has been sold pursuant to a registration statement or Rule 144 under the 1933 Act, (ii) a
representation that the prospectus delivery requirements, or the requirements of Rule 144, as applicable and if required,
have been satisfied, (iii) the original share certificates representing the shares of Common Stock that have been sold, and
(iv) in the case of sales under Rule 144, customary representation letters of the Subscribers and, if required,
Subscribers’ broker regarding compliance with the requirements of Rule 144, the Company at its expense, (y) shall
deliver, and shall cause legal counsel selected by the Company to deliver to its transfer agent (with copies to Subscribers)
an appropriate instruction and opinion of such counsel, directing the delivery of shares of Common Stock without any legends
including the legend set forth in Section 2(h) above (the “Unlegended Shares”); and (z) cause the
transmission of the certificates representing the Unlegended Shares together with a legended certificate representing the
balance of the submitted Common Stock certificate, if any, to the Subscribers at the address specified in the notice of sale,
via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date.
(b) DWAC.
In lieu of delivering physical certificates representing the Unlegended Shares, upon request of Subscriber, so long as the certificates
therefor do not bear a legend and the Subscriber is not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Subscribers’
prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission system, if such transfer agent
participates in such DWAC system. Such delivery must be made on or before the Unlegended Shares Delivery Date.
(c) Late
Delivery of Unlegended Shares. The Company understands that a delay in the delivery of the Unlegended Shares pursuant to Section
9 hereof later than the Unlegended Shares Delivery Date could result in economic loss to a Subscribes. As compensation to a Subscriber
for such loss, the Company agrees to pay late payment fees (as liquidated damages and not as a penalty) to the Subscriber for
late delivery of Unlegended Shares in the amount of $100 per business day after the Unlegended Shares Delivery Date for each $10,000
of purchase price of the Unlegended Shares subject to the delivery default. If during any 360 day period, the Company fails to
deliver Unlegended Shares as required by this Section 9 for an aggregate of thirty days, then each Subscriber or assignee holding
Securities subject to such default may, at its option, require the Company to redeem all or any portion of the Unlegended Shares
subject to such default at a price per share equal to the greater of (i) 105% of the Purchase Price paid by the Subscriber for
the Unlegended Shares that were not timely delivered, or (ii) a fraction in which the numerator is the highest closing price of
the Common Stock during the aforedescribed thirty day period and the denominator of which is the lowest conversion price or exercise
price, as the case may be, during such thirty day period, multiplied by the price paid by Subscriber for such Common Stock (“Unlegended
Redemption Amount”). The Company shall pay any payments incurred under this Section in immediately available funds upon
demand.
(d) Injunction.
In the event a Subscriber shall request delivery of Unlegended Shares as described in Section 9 and the Company is required to
deliver such Unlegended Shares pursuant to Section 9, the Company may not refuse to deliver Unlegended Shares based on any claim
that Subscriber or anyone associated or affiliated with Subscriber has not complied with Subscriber’s obligations under
the Transaction Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice,
restraining and or enjoining delivery of such Unlegended Shares shall have been sought and obtained by the Company and the Company
has posted a surety bond for the benefit of Subscriber in the amount of the greater of (i) 120% of the amount of the aggregate
purchase price of the Common Stock which is subject to the injunction or temporary restraining order, (ii) the closing price of
the Common Stock on the trading day before the issue date of the injunction multiplied by the number of Unlegended Shares to be
subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and
the proceeds of which shall be payable to Subscriber to the extent Subscriber obtains judgment in Subscriber’s favor.
(e) Buy-In.
In addition to any other rights available to Subscribers, if the Company fails to deliver to a Subscriber Unlegended Shares
as required pursuant to this Agreement and after the Unlegended Shares Delivery Date the Subscriber, or a broker on the
Subscriber’s behalf, purchases (in an open market transaction or otherwise) shares of common stock to deliver in
satisfaction of a sale by Subscriber of the shares of Common Stock which the Subscriber was entitled to receive from the
Company (a “Buy-In”), then the Company shall promptly pay in cash to the Subscriber (in addition to any
remedies available to or elected by the Subscriber) the amount by which (A) the Subscriber’s total purchase price
(including brokerage commissions, if any) for the shares of common stock so purchased exceeds (B) the aggregate purchase
price of the shares of Common Stock delivered to the Company for reissuance as Unlegended Shares together with interest
thereon at a rate of 15% per annum accruing until such amount and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages and not as a penalty). For example, if a Subscriber’s purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase price of shares of
Common Stock delivered to the Company for reissuance as Unlegended Shares, the Company shall be required to pay the
Subscriber $1,000, plus interest. The Subscriber shall provide the Company written notice indicating the amounts payable to
the Subscriber in respect of the Buy-In.
(f) 144
Default. At any time commencing six months after the Closing Date, in the event the Subscribers are not permitted to sell
any of the Conversion Shares without any restrictive legend or if such sales are permitted but subject to volume limitations or
further restrictions on resale as a result of the unavailability to Subscribers of Rule 144(b)(1)(i) under the 1933 Act or any
successor rule (a “144 Default”), for any reason including but not limited to failure by the Company to file
quarterly, annual or any other filings required to be made by the Company by the required filing dates, or the Company’s
failure to make information publicly available which would allow Subscribers’ reliance on Rule 144 in connection with sales
of Conversion Shares, except due to a change in current applicable securities laws or because the Subscriber is an Affiliate (as
defined under Rule 144) of the Company, then the Company shall pay Subscribers as liquidated damages and not as a penalty for
each thirty days (or such lesser pro-rata amount for any period less than thirty days) an amount equal to one percent (1%) of
the purchase price of the Conversion Shares subject to such 144 Default. Liquidated Damages shall not be payable pursuant to this
Section 9(f) in connection with Shares for such times as such Shares may be sold by the holder thereof without any legend or volume
or other restrictions pursuant to Section 144(b)(1)(i) of the 1933 Act or pursuant to an effective registration statement.
10. Miscellaneous.
(a) Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be: (i) if to the Company, to: Attitude Drinks Incorporated, 712 U.S. Highway 1, Suite
#200, North Palm Beach, FL 33408, Attn: Roy Warren, CEO and President, facsimile: (561) 799-5039, with a copy by facsimile only
to: ________, _______________, Attn: _____, Esq., facsimile: (___) ___-____, and (ii) if to the Subscribers, to: the address and
fax number indicated on the Signature page hereto, with an additional copy by fax only to: Grushko & Mittman, P.C., 515 Rockaway
Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.
(b) Entire
Agreement; Assignment. This Exchange Agreement and other documents delivered in connection herewith represent the entire
agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed
by both parties. Neither the Company nor the Subscribers has relied on any representations not contained or referred to in
this Exchange Agreement and the documents delivered herewith. No right or obligation of the Company shall be assigned without
prior notice to and the written consent of the Subscribers.
(c) Counterparts/Execution.
This Exchange Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same
instrument. This Exchange Agreement may be executed by facsimile signature and delivered by electronic transmission.
(d) Law
Governing this Exchange Agreement. This Exchange Agreement shall be governed by and construed in accordance with the laws
of the State of New York without regard to principles of conflicts of laws. References in the Transaction Documents to laws, rules,
regulations and forms shall also include successors to and functionally equivalent replacements of such laws, rules, regulations
and forms. A successor rule to Rule 144(b)(1)(i) shall include any rule that would be available to a non-Affiliate of the Company
for the sale of Common Stock not subject to volume restrictions and after a six month holding period. Any action brought by either
party against the other concerning the transactions contemplated by this Exchange Agreement shall be brought only in the state
courts of New York or in the federal courts located in the state and county of New York. The parties to this Exchange Agreement
hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Exchange Agreement
and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in
personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Exchange Agreement
or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process
and consents to process being served in any suit, action or proceeding in connection with this Exchange Agreement or any other
Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Exchange Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.
(e) Specific
Enforcement, Consent to Jurisdiction. The Company and Subscribers acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Exchange Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Exchange Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which any of them may be entitled by law or equity. Subject to Section 10(d) hereof,
the Company and each Subscribers hereby irrevocably waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction in New York of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Nothing in this Section shall
affect or limit any right to serve process in any other manner permitted by law.
(f) Damages.
In the event the Subscribers is entitled to receive any liquidated or other damages pursuant to the Transactions Documents,
the Subscribers may elect to receive the greater of actual damages or such liquidated damages. In the event the Subscribers
is granted rights under different sections of the Transaction Documents relating to the same subject matter or which may be
exercised contemporaneously, or pursuant to which damages or remedies are different, Subscriber is granted the right in
Subscriber’s absolute discretion to proceed under such section as Subscriber elects.
(g) Calendar
Days. All references to “days” in the Transaction Documents shall mean calendar days unless otherwise stated.
The terms “business days” and “trading days” shall mean days that the New York Stock Exchange is open
for trading for three or more hours. Time periods shall be determined as if the relevant action, calculation or time period were
occurring in New York City. Any deadline that falls on a non-business day in any of the Transaction Documents shall be automatically
extended to the next business day and interest, if any, shall be calculated and payable through such extended period.
(h) Captions:
Certain Definitions. The captions of the various sections and paragraphs of this Exchange Agreement have been inserted only
for the purposes of convenience; such captions are not a part of this Exchange Agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the provisions of this Exchange Agreement.
(i) Severability.
In the event that any term or provision of this Exchange Agreement shall be finally determined to be superseded, invalid, illegal
or otherwise unenforceable pursuant to applicable law by an authority having jurisdiction and venue, that determination shall
not impair or otherwise affect the validity, legality or enforceability: (i) by or before that authority of the remaining terms
and provisions of this Exchange Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or
(ii) by or before any other authority of any of the terms and provisions of this Exchange Agreement.
(k) Maximum
Liability. In no event shall the liability of the Subscribers or permitted successor hereunder or under any Transaction Document
or other agreement delivered in connection herewith be greater in amount than the dollar amount of the net proceeds actually received
by Subscribers or successor upon the sale of Conversion Shares.
[SIGNATURE
PAGE TO FOLLOW]
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT
Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing and returning a copy to the undersigned whereupon
it shall become a binding agreement between us.
Attitude
Drinks, Inc.
a
Delaware corporation
By:
_________________________________
Name:
Roy G. Warren
Title:
CEO
Dated:
May 21, 2015
| SUBSCRIBER |
|
Surrendered Notes being |
Preferred Stock |
| |
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| |
|
|
|
| Name of Subscriber |
|
|
|
| |
|
|
|
| [RC] |
|
|
|
| |
|
|
|
| Address: |
|
|
Warrants |
| |
|
|
|
|
|
|
|
| |
|
|
|
| Fax
No.: __________________________ |
|
|
|
| |
|
|
|
| Taxpayer
ID# (if applicable):___________ |
|
|
AIRs |
| |
|
|
|
| |
|
|
|
| (Signature) |
|
|
|
| By: |
|
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|
LIST
OF EXHIBITS AND SCHEDULES
| |
Exhibit
A |
Certificate of Designation (filed as Exhibit 3.3 on Form 8-K August 12, 2015) |
| |
|
|
| |
Exhibit
B |
Form of Warrant (filed as Exhibit 4.1 on Form 8-K August 18, 2015) |
| |
|
|
| |
Exhibit
C |
Form of AIR (filed as Exhibit 4.2 on Form 8-K August 18, 2015) |
| |
|
|
| |
Exhibit
D |
Form of Legal Opinion (Not provided at closing) |
| |
|
|
| |
Schedule
1 |
List of Subscribers |
| |
|
|
| |
Schedule 3(i) |
Past due SEC Reports |
Schedule
1
List
of Subscribers
| Name of
Subscriber & Address |
$ Amount to Convert |
Issued Preferred Stock Shares |
| |
|
|
| Alpha
Capital Anstalt |
$2,178,568 |
2,179 |
| Pradafant
7 |
|
|
| 9490 Furstentums |
|
|
| Vaduz,
Lichenstein |
|
|
| |
|
|
| Whalehaven
Capital Fund Limited |
578,304 |
579 |
| 285 Grand
Avenue |
|
|
| Patriot
Center |
|
|
| Building
5, 2nd Floor |
|
|
| Englewood,
New Jersey 07631 |
|
|
| |
|
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| Southridge
Partners II LP |
552,308 |
553 |
| 90 Grove
Street |
|
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| Suite
206 |
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| Ridgefield,
Connecticut 06877 |
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| |
|
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| Tarpon
Bay Partners LLC |
32,500 |
33 |
| 90 Grove
Street |
|
|
| Suite
206 |
|
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| Ridgefield,
Connecticut 06877 |
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| |
|
|
Schedule
3(i)
Past
due SEC Reports
For
Attitude Drinks Incorporated
Attitude
Drinks Incorporated will be preparing and filing the following past due SEC filings in the next 30-60 days:
Form 10-Q
for the 3 months ended June 30, 2014
Form 10-Q
for the 6 months ended September 30, 2014
Form 10-Q
for the 9 months ended December 31, 2014
Note as
of the August 18, 2015 closing date, the above filings have been prepared and filed with the Securities Exchange Commission. The
Form 10-K for the fiscal year ended March 31, 2015 is expected to be filed in late August, 2015 and first half of September, 2015
based on the receipt of additional financing.
19
Exhibit
10.2
FORM
OF ACCRUED
SALARY EXCHANGE
AGREEMENT
THIS
EXCHANGE AGREEMENT
(this “Exchange
Agreement”), is dated
as of May
21, 2015, by
and between Attitude
Drinks Incorporated, a
Delaware corporation
(the “Company”),
and the subscribers identified
on Schedule 1
hereto (the “Subscribers”).
WHEREAS,
the Company
and the Subscribers
are executing
and delivering this
Agreement in reliance upon
an exemption
from securities registration
afforded by the
provisions of Section
4(a)(2), Section 4(6) and/or
Regulation D (“Regulation
D”) as
promulgated
by the United
States Securities and
Exchange Commission
(the “Commission”)
under the Securities
Act of 1933,
as amended (the
“1933 Act”);
WHEREAS,
the Subscribers are
owed an aggregate
of [ ]
for accrued and
unpaid salary (the “Accrued
Salary”) set
forth on Schedule
1 annexed hereto;
WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained herein, the amount owed as Accrued Salary shall
be exchanged (the “Exchange”)for in the aggregate, up to [ ] shares of the Company’s Series C Variable Rate
Convertible Preferred Stock (“Preferred Stock”) issued hereunder having the rights, preferences and privileges
set forth in the Certificate of Designation, in the form of Exhibit A hereto, convertible into shares of the Company’s
Common Stock, $0.00001 par value (the “Common Stock”), warrants to purchase the Company’s Common Stock
in the form annexed hereto as Exhibit B (the “Warrants”), and Additional Investment Rights (“AIRs”)
in the form annexed hereto as Exhibit C granting the Subscriber the right to purchase (y) additional shares of Preferred
Stock , and (z) a corresponding amount of Warrants, with payment therefore (“Purchase Price”) will be made
by Subscribers of amounts owed to Subscribers for unpaid salary (:Accrued Salary”) as set forth on the signature page hereto
and all accrued rights thereon (the “Exchange”).. The Preferred Stock, Warrants, AIRs and shares of Common Stock issuable
upon conversion of the Preferred Stock and exercise of the Warrants (the “Conversion Shares”) are collectively
referred to herein as the “Securities”; and
NOW,
THEREFORE,
in consideration of
the mutual
covenants and
other agreements
contained in this Agreement
the Company
and the
Subscribers hereby agree
as follows:
1.1
Exchange. On the
Closing Date
the Subscribers will
exchange the Accrued
Salary identified on Schedule
1 for
the Preferred Stock,
Warrants, AIRs
in the amounts
set forth on
Schedule 1.
1.2
Closing. The
“Closing Date”
shall be the
date that the
Preferred Stock, Warrants, AIRs
are delivered
to the Subscribers.
Subject to the
satisfaction or waiver
of the terms
and conditions
of this Exchange Agreement,
on the Closing
Date, Subscribers
shall purchase and
the Company
shall sell to Subscribers
the Preferred Stock, Warrants,
AIRs.
2. Subscribers
Representations and
Warranties. Each Subscriber
for itself only,
hereby represents to and
agrees with
the Company
that:
(a)
Organization and Standing
of the Subscriber. Subscriber
is duly incorporated or
organized, validly
existing and
in good
standing under
the laws
of the jurisdiction
of its incorporation
or organization.
(b) Authorization and Power. Subscriber has the requisite power and authority
to enter into and perform this Exchange Agreement and to purchase the Securities. The execution, delivery
and performance of this Exchange Agreement by Subscriber and the consummation
by Subscriber of the
transactions contemplated hereby and
thereby have been duly authorized by
all necessary corporate action, and no further
consent or authorization of Subscriber or its
Board of Directors or stockholders, if applicable, is required.
This Exchange Agreement has been or will be
duly authorized and executed and when
delivered by Subscriber will constitute valid and binding obligations of
Subscriber, enforceable against Subscriber in accordance with the terms thereof.
(c)
No Conflicts. The
execution, delivery
and performance of
this Exchange Agreement and
the consummation
by Subscriber of
the transactions
contemplated
hereby and thereby
or relating hereto do
not and will not (i)
result in a violation
of Subscriber’s charter
documents, bylaws
or other organizational documents,
if applicable, (ii)
conflict with nor
constitute a default
(or an event
which with notice or
lapse of
time or
both would
become
a default) under
any agreement
to which
Subscriber is a
party, nor (iii)
result in a
violation of any
law, rule, or
regulation, or
any order, judgment
or decree of
any court or governmental
agency applicable to Subscriber or its
properties (except for such conflicts, defaults and violations as would not, individually
or in the aggregate, have a material
adverse effect on Subscriber). Subscriber is
not required to
obtain any consent,
authorization or order
of, or make
any filing or
registration with, any court
or governmental agency in order for it
to execute, deliver or perform any of its obligations under this Exchange
Agreement nor to purchase
the Securities in accordance with
the terms hereof,
provided that for purposes of the representation
made in this sentence, Subscriber is assuming
and relying upon the accuracy of the relevant
representations and agreements of the Company
herein.
(d)
Information on
Subscriber. Subscriber is,
and will be
at the time
of the conversion of
the Preferred Stock,
or exercise
of the Warrant
or AIRs an
“accredited investor”,
as such
term is
defined in Regulation
D promulgated
by the Commission
under the 1933
Act, is experienced
in investments
and business matters,
has made investments
of a speculative nature
and has purchased securities of United States publicly-owned
companies in private placements
in the past and, with its representatives, has such knowledge and experience in financial,
tax and other business matters as to enable
Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed
investment decision
with respect to the proposed purchase,
which
represents a speculative investment.
Subscriber has the
authority and is
duly and
legally qualified to
purchase and
own the Securities. Subscriber
is able to bear the risk of such
investment
for an indefinite period and to afford a complete
loss thereof. The Subscriber agrees to provide the Company with such information
reasonably required from time to time
for the Company
to comply
with the Company’s
regulatory filing
requirements.
(g)
Purchase of Preferred
Stock, Warrants,
AIRs. On the Closing
Date, Subscriber will purchase the Preferred
Stock, Warrants, AIRs as principal
for its own account for investment only
and not with
a view toward,
or for resale
in connection
with, the
public sale or
any distribution thereof.
(h)
Compliance
with Securities Act.
Subscriber understands and agrees
that the Securities
have not been
registered
under the 1933
Act or any
applicable state
securities laws,
by reason of their
issuance in a
transaction that does
not require registration
under the 1933
Act (based in
part on the accuracy
of the representations
and warranties of
the Subscriber contained
herein), and
that such Securities must
be held indefinitely
unless a subsequent
disposition
is registered under
the 1933 Act
or any applicable
state securities laws
or is exempt
from such
registration. Subject to compliance
with applicable securities
laws, the Subscriber may
enter into lawful hedging transactions
in the course
of hedging the
position they assume
and the Subscriber
may also
enter into
lawful short positions or
other derivative transactions relating
to the Securities, or interests
in the Securities, and deliver
the Securities, or interests
in the Securities,
to close out their short or other positions or otherwise settle other transactions, or loan or pledge the Securities, or
interests in the
Securities, to third
parties who in
turn may
dispose of these
Securities. The immediately
preceding sentence does not affect, mitigate
or impair any
of the Subscriber’s
representations, warranties and agreements of this Section 2.
(i)
Legend. The
Securities shall bear the following or similar legend:
"THE
ISSUANCE
AND SALE
OF THE SECURITIES
REPRESENTED BY
THIS CERTIFICATE HAS
NOT BEEN REGISTERED
UNDER
THE SECURITIES
ACT OF
1933, AS
AMENDED,
NOR APPLICABLE
STATE
SECURITIES
LAWS. THE
SECURITIES
MAY NOT
BE OFFERED
FOR SALE,
SOLD, TRANSFERRED
OR ASSIGNED
(I) IN THE
ABSENCE
OF (A) AN EFFECTIVE
REGISTRATION
STATEMENT
FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR (B)
AN OPINION
OF COUNSEL
(WHICH COUNSEL
SHALL BE
SELECTED BY
THE HOLDER),
IN A GENERALLY
ACCEPTABLE
FORM, THAT REGISTRATION
IS NOT REQUIRED
UNDER SAID
ACT OR (II)
UNLESS
SOLD PURSUANT
TO RULE 144 OR
RULE 144A UNDER SAID
ACT. NOTWITHSTANDING
THE FOREGOING,
THE SECURITIES MAY BE
PLEDGED
IN CONNECTION
WITH A BONA
FIDE
MARGIN ACCOUNT
OR OTHER
LOAN OR
FINANCING
ARRANGEMENT
SECURED BY THE SECURITIES."
(j)
Communication
of Offer. The offer
to sell the
Securities was
directly communicated
to Subscriber by the Company.
At no time was Subscriber
presented with or solicited by
any leaflet,
newspaper or magazine
article, radio
or television advertisement,
or any other
form of general advertising
or solicited or
invited to
attend a promotional
meeting otherwise than
in connection and concurrently
with such communicated
offer.
(k)
Restricted Securities. Subscriber
understands that
the Securities
have not been registered
under the 1933
Act and Subscriber
will not sell,
offer to sell,
assign, pledge, hypothecate
or otherwise transfer any
of the
Securities unless pursuant
to an effective
registration statement
under the 1933 Act,
or unless
an exemption
from registration
is available.
Notwithstanding anything
to the
contrary contained in
this Exchange Agreement, Subscriber may
transfer (without restriction
and without the need
for an opinion of counsel)
the Securities to its
Affiliates (as defined below) provided
that each such Affiliate is an “accredited
investor” under Regulation D and such Affiliate agrees to be bound by
the terms and conditions of this Exchange
Agreement. For the
purposes of this Exchange Agreement, an “Affiliate”
of any person or entity
means any
other person or
entity directly
or indirectly controlling,
controlled
by or
under direct or indirect common
control with such person or entity. Affiliate includes
each Subsidiary of the Company.
For purposes of this definition, “control”
means the power to direct
the management
and policies of such person or firm,
directly or indirectly,
whether through the ownership of voting
securities, by contract or otherwise.
(l)
No Governmental
Review. Subscriber understands
that no United
States federal or state
agency or any
other governmental
or state agency
has passed
on or made
recommendations or endorsement
of the Securities
or the suitability
of the investment
in the Securities
nor have such
authorities passed upon or
endorsed the
merits of the
offering of the
Securities.
(m)
Correctness of Representations.
Subscriber represents that
the foregoing representations
and warranties are
true and correct
as of the
date hereof
and, unless Subscriber
otherwise notifies the
Company prior
to the Closing
Date, shall be
true and correct
as of the
Closing Date.
(n)
Pledge –Liens.
Subscriber represents that
the Accrued Salary
is owed to Subscriber
and Subscriber has
not pledged the
Accrued
Salary and the
Accrued Salary is
not the subject
of any levy,
garnishment or liens.
3. Company
Representations and
Warranties. The Company
represents to and
agrees with each
Subscriber that:
(a) Due Incorporation. The Company
is a
corporation duly
incorporated, validly
existing and
in good
standing under
the laws of
the jurisdiction
of its
incorporation and
has the requisite
corporate power to
own its properties
and to carry
on its business
as presently conducted.
The Company
is duly qualified
as a foreign corporation to
do business and is in good standing
in each jurisdiction where the
nature of the business
conducted or property
owned by it makes such
qualification necessary, other
than those jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For
purposes of this Exchange Agreement,
a “Material Adverse Effect”
shall mean a material
adverse effect on the financial
condition, results of operations, prospects, properties or business of the Company
and its Subsidiaries taken as a whole.
For purposes of this Exchange Agreement,
“Subsidiary” means,
with respect to any entity at
any date, any direct or indirect corporation, limited
or general partnership, limited
liability company,
trust, estate, association,
joint venture
or other business
entity of which
(A) more
than 30% of
(i)
the outstanding capital
stock having ordinary
voting power
to elect a
majority of
the board of
directors or other managing
body of such
entity, (ii)
in the case
of a partnership
or limited
liability company,
the interest in the
capital or profits
of such partnership
or limited
liability company or
(iii) in the
case of a
trust, estate, association, joint
venture or other
entity, the beneficial
interest in such
trust, estate, association
or other entity business
is, at the
time
of determination,
owned or controlled
directly or indirectly through
one or more intermediaries,
by such
entity, or
(B) is under the
actual control of the
Company.
(b) Authority; Enforceability.
This Exchange
Agreement, the
Preferred Stock, Warrants, AIRs
and any other
agreements delivered
or required
to be delivered
together with or
pursuant to this
Exchange Agreement
or in connection
herewith (collectively “Transaction
Documents”)
have been duly authorized,
executed and delivered by the Company
and Subsidiaries, as the case may
be, and are valid
and binding agreements of the Company
and Subsidiaries, as the case may be, enforceable
in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization,
moratorium and similar
laws
of general applicability
relating to or affecting creditors'
rights generally and
to general principles of equity.
The Company
and Subsidiaries, as the case may
be, have full corporate power and authority necessary
to enter into and deliver the
Transaction Documents
and to perform their obligations
thereunder.
(c) Consents. No
consent, approval, authorization
or order of
any court, governmental
agency or body or arbitrator
having jurisdiction
over the Company,
or any of
its Affiliates,
the OTC Bulletin Board
(the “Bulletin Board”)
or the Company's
shareholders is required
for the execution
by the Company
of the Transaction
Documents and compliance
and performance by
the Company
of its obligations
under the Transaction Documents,
including, without limitation,
the issuance and sale of the Securities. The Transaction
Documents and the Company’s performance of its obligations
thereunder have been unanimously
approved by
the Company’s
Board of
Directors. No consent, approval,
order or authorization of, or registration, qualification,
designation, declaration or filing with,
any governmental
authority in the world, including without
limitation, the United States, or elsewhere
is required by the Company or any
Affiliate of the Company
in connection with the consummation
of the transactions contemplated
by this Exchange Agreement, except as would
not otherwise have
a Material Adverse Effect or the
consummation of any of the other agreements, covenants or commitments
of the Company
or any Subsidiary contemplated
by the other Transaction Documents.
Any such qualifications and filings will, in the case of qualifications, be effective
on the Closing and will, in the case of filings,
be made within the time prescribed by
law.
(d)
The Securities. The Securities
upon issuance:
(i) are,
or will be,
free and clear
of any security
interests, liens, claims
or other encumbrances,
subject only
to restrictions upon
transfer under the 1933 Act and any applicable state securities
laws;
(ii)
have been, or
will be, duly
and validly
authorized and on
the dates of issuance
of the
Preferred Stock,
Warrants, AIRs the
issuance of the
Conversion Shares upon
conversion of the
Preferred Stock or
exercise of the
Warrants, the Preferred
Stock, Warrants, AIRs
and Conversion Shares
will be duly
and validly
issued, fully
paid and non-assessable
and if registered
pursuant to the
1933 Act and resold
pursuant to an
effective registration statement
or an exemption
from registration, will
be free trading, unrestricted
and unlegended;
(iii)
will not have
been issued or
sold in violation
of any preemptive
or other similar
rights of the
holders of any
securities of the
Company or
rights to acquire
securities or debt
of the Company;
(iv)
will not subject the holders thereof to
personal liability by reason of being such holders;
and
(v)
assuming
the representations
and warranties of
the Subscribers as set
forth in Section
2 hereof
are true and
correct, will not
result in a
violation of Section
5 under the
1933 Act.
(e)
No Integrated Offering.
Neither the Company,
nor any
of its Affiliates,
nor any person acting
on its or
their behalf, has
directly or indirectly
made any
offers or
sales
of any
security of
the Company
nor solicited any
offers to buy
any security
of the Company
under circumstances
that would cause the
offer of the
Securities pursuant to
this Exchange Agreement
to be integrated with
prior offerings by the Company
for purposes of the 1933 Act or any applicable stockholder
approval provisions, including, without
limitation, under the rules and regulations
of the Bulletin Board. No prior offering will impair
the exemptions relied upon in the Exchange
or the Company’s
ability to timely
comply with
its obligations hereunder. Neither the
Company nor any of its Affiliates
will take any action or suffer any inaction or conduct any
offering other than
the transactions contemplated
hereby
that may
be integrated with
the offer or
issuance of the Securities or
that would impair
the exemptions relied upon in
the Exchange or the Company’s
ability to timely comply
with its obligations
hereunder.
(f)
No General Solicitation. Neither
the Company,
nor any of
its Affiliates, nor to its
knowledge, any
person acting on
its or their
behalf, has engaged
in any
form of
general solicitation or general
advertising (within the
meaning of Regulation D
under the 1933
Act) in connection
with the offer
or sale of the
Securities.
(g) Dilution. The Company's executive officers and directors understand the
nature of the Securities being sold hereby and recognize that the issuance of the Securities will have a
potential dilutive effect on the equity holdings of other holders of the Company’s equity or rights to receive
equity of the Company. The board of directors of the Company has concluded, in its good faith business
judgment that the issuance
of the Securities is in the best interests
of the Company.
The Company
specifically acknowledges that its obligation to issue the Preferred
Stock and Warrants upon the exercise of
the AIRS and the issuance of the Conversion Shares upon conversion of
the Preferred Stock and exercise of
the Warrants is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the
ownership interests of other stockholders of the Company or
parties entitled to receive
equity of the Company.
(h)
Investment Company. Neither the Company nor any Affiliate of the Company is an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.
(i)
Reporting Company/Shell
Company.
The Company
is subject to
reporting obligations pursuant
to Section 15(d)
of the Securities
Exchange Act of
1934, as
amended (the “1934
Act”). Pursuant
to the
provisions of the
1934 Act, except
as set forth
on Schedule 3(i)
the Company
has timely
filed all reports and
other materials
required to be filed
thereunder with the
Commission during
the preceding twelve months.
The Company is not a “shell
company” or “former shell company”as
those terms are employed
in Rule 144 under
the 1933 Act.
(j)
Company
Predecessor and Subsidiaries.
The Company
makes
each of the representations
contained in Sections
3(a), (b), (c),
(h) (k) and
(l) of this
Exchange Agreement,
as same relate
or could be
applicable to each
Subsidiary. All
representations made
by or relating
to the Company
of a historical or
prospective nature and all undertakings and
obligations to act or refrain from certain
actions described herein
shall relate, apply and
refer to the
Company and
Subsidiaries and their
predecessors and successors.
(k)
Correctness of Representations.
The Company
represents that the
foregoing representations
and warranties are
true and correct
as of the
date hereof in
all material
respects, and,
unless the Company
otherwise notifies the
Subscribers prior
to the Closing
Date, shall be
true and correct
in all material
respects as
of the Closing
Date;
provided, that, if
such representation or
warranty is made
as of a different
date, in which case
such representation or
warranty
shall be true
as of such
date.
(l)
Survival. The foregoing representations and warranties shall survive the Closing Date.
4.
Regulation D Offering/Legal
Opinion. The
offer and issuance
of the Securities
to the Subscribers is
being made pursuant
to the exemption
from the registration
provisions of the
1933 Act afforded by
Section 4(a)(2) or
Section 4(6) of
the 1933
Act and/or
Rule 506 of
Regulation D promulgated
thereunder. On the
closing date,
the Company
will provide an
opinion reasonably acceptable
to the Subscribers from the
Company’s legal counsel
opining on the
availability of
an exemption
from registration
under the 1933 Act as it relates to the offer and issuance of the Securities and other matters
reasonably requested by Subscribers. A
form of
the legal
opinion is
annexed herto as
Exhibit D. The
Company
will provide, at the Company’s
expense, to the Subscribers, such other legal opinions, if any,
as are reasonably necessary in Subscribers’ opinion for the issuance and resale
of the Preferred Stock and Conversion Shares pursuant to an effective registration
statement, Rule 144 under the 1933 Act or an exemption
from registration.
5.1.
Conversion of
Preferred Stock
and Exercise
of the Warrants.
(a) Upon the conversion
of a Preferred Stock, exercise of the Warrants or any
part thereof, the Company
shall, at its own cost and expense, take all necessary action, including obtaining
and delivering an opinion of counsel to
assure that the Company's
transfer agent shall issue stock certificates
in the name of a Subscriber
(or its permitted
nominee) or such
other persons as designated by
Subscriber and in such denominations to be specified at conversion representing the number
of shares of Common
Stock issuable upon such conversion. The Company
warrants that no instructions other than these instructions
have been or will be given to the
transfer agent of the
Company's Common Stock and that the
certificates representing such shares shall contain no legend
other than the legend set forth
in Section 2(i) If and when a
Subscriber sells the Conversion Shares, assuming
(i) a registration statement including
such Conversion Shares for registration has been filed
with the Commission, is effective and
the prospectus, as supplemented
or amended, contained therein is current and (ii) Subscriber
or its agent confirms in writing to the transfer
agent that Subscriber has complied
with the prospectus delivery requirements,
the Company will reissue the Conversion Shares without restrictive legend and
the Conversion Shares will be free-trading, and freely transferable. In the event
that the Conversion Shares are sold in a manner
that complies with
an exemption from registration, the Company will
promptly instruct its counsel to
issue to the transfer agent an opinion permitting
removal of the legend indefinitely
if such sale is
intended to be made in conformity
with Rule 144(b)(1)(i) of the 1933 Act, provided that Subscriber delivers
reasonably requested representations in support of such opinion.
(b)
Each Subscriber will
give notice of
its decision
to exercise its
right to convert its
Preferred Stock, dividends,
or part thereof
by emailing,
telecopying or
otherwise
delivering a completed
Notice of Conversion
(a form
of which is
annexed as Exhibit
A to the
Preferred Stock) to
the Company
via confirmed
telecopier transmission
or otherwise
pursuant to this
Exchange Agreement. Subscribers
will not be
required to surrender
the certificate
representing the Preferred
Stock until the Preferred Stock
has been fully
converted. Each date on which
a Notice of Conversion
is faxed or emailed to the Company
in accordance with the provisions hereof by 6 PM Eastern Time
(“ET”) (or if
received by the Company after 6
PM ET, then the next business day)
shall be deemed a “Conversion
Date.” The Company
will itself or cause the Company’s
transfer agent to transmit the Company’s
Common Stock certificates representing
the Conversion Shares issuable upon conversion of the Preferred
Stock to Subscribers via express courier for receipt by Subscribers within three (3)
business days after the Conversion Date (such fifth
day being the “Delivery
Date”). In the event the Conversion
Shares are electronically transferable,
then delivery of the Shares must
be made by electronic transfer
provided request for such electronic transfer has been made
by the Subscribers. A certificate
representing
the balance of the
Preferred
Stock not so converted will
be provided
by the Company
to a Subscriber if
requested by a Subscriber,
provided such Subscriber delivers
the original certificate to the Company.
(c)
The Company
understands that
a delay in
the delivery
of the Conversion Shares
in the form
required pursuant to
Section 5.1
hereof later
than the
Delivery Date could
result in economic
loss to the
Subscribers. As
compensation to Subscribers
for such loss,
the Company
agrees to pay (as
liquidated damages and
not as a
penalty)
to each applicable
Subscriber for late
issuance of Conversion Shares in
the form required pursuant to Section 5.1 hereof upon
Conversion of the Preferred Stock or exercise
of the Warrants, the amount
of $100 per business day after
the Delivery Date for each $10,000 of Preferred
Stock
stated value and dividends
(and proportionately
for other amounts) being
converted of the corresponding Conversion
Shares which are not timely delivered.
The Company shall pay
any payments
incurred under this Section upon demand.
Furthermore, in addition
to any other remedies
which may be available to
the Subscribers, in the
event that
the Company fails for
any reason to
effect delivery of the
Conversion Shares
on or before
the Delivery Date, the
Subscriber will be
entitled to revoke
all or part of
the relevant Notice of Conversion by
delivery of a notice to such effect to
the Company whereupon the
Company and Subscriber shall each be restored
to their respective positions immediately prior to the delivery of such notice, except
that the damages payable
in connection with the Company’s
default shall be payable
through the date notice of revocation or rescission is given to the Company.
5.2. Maximum Conversion. A Subscriber shall
not be entitled to convert on a
Conversion Date that amount of the
Preferred Stock nor may the Company
make any payment
including stated value, dividends, or liquidated or other damages by delivery of Conversion Shares in connection with
that number of Conversion Shares which would be in excess of the sum
of (i) the number
of shares of Common
Stock beneficially owned by Subscriber and its Affiliates on a Conversion
Date or payment
date, and (ii) the number
of Conversion Shares issuable upon
the conversion
of the Preferred Stock with
respect to which the determination
of this provision is being made on
a calculation date, which would result in beneficial ownership
by Subscriber and its Affiliates of more than 4.99% of the outstanding shares
of Common Stock of the Company
on such Conversion Date. For the
purposes of the immediately preceding sentence, beneficial ownership shall be
determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended,
and Rule 13d-3 thereunder. Subject
to the foregoing, the
Subscribers shall not be limited
to aggregate conversions of only 4.99%
and aggregate conversions by the
Subscribers may exceed 4.99%. A Subscriber may increase it ownership
limitation to 9.99% upon 61 days
notice to the Company.
The Subscribers shall have the authority to determine
whether the restriction contained in this Section 5.2 will limit any conversion
of a Preferred Stock and the extent such limitation applies and to which
convertible or exercisable instrument or part thereof such limitation
applies.
5.3.
Injunction Posting
of Bond. In
the event a
Subscriber shall elect
to convert Preferred Stock,
exercise the
Warrant or any
part thereof,
the Company
may
not refuse conversion
based on any claim
that such Subscriber
or anyone
associated or affiliated with
such Subscriber has not
complied with Subscriber’s
obligations under the
Transaction Documents,
or for any
other reason,
unless, a final
non- appealable injunction
from a court
made
on notice to
Subscriber, restraining and
or enjoining
conversion of all
or part of
such Preferred Stock
shall have been
sought and obtained
by the
Company
and the Company
has posted a
surety bond for
the benefit of
Subscriber equal to
the greater of
(i) 125% of the
outstanding stated value and accrued but unpaid dividends
of the Preferred Stock,
and the aggregate purchase price of
the Conversion Shares which
are sought to
be subject to
the injunction,
or (ii) the
closing price of
the Common
Stock on the trading day before the issue date of the injunction multiplied
by the number of Conversion Shares issuable
upon conversion of the Preferred Stock,
which bond shall remain in effect until
the completion
of arbitration/litigation of the
dispute and the
proceeds of which
shall be payable
to Subscriber to the extent the judgment
or decision is in Subscriber’s favor.
5.4. Buy-In. In addition to any other rights available to Subscribers, if the Company fails
to deliver to a Subscriber Conversion Shares by the Delivery Date and if after the Delivery Date Subscriber
or a broker on Subscriber’s behalf purchases
(in an open market
transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by Subscriber of the Common Stock which Subscriber was entitled
to receive upon such conversion (a “Buy-In”),
then the Company
shall pay to Subscriber (in addition to any
remedies available to or elected by
the Subscribers) the amount by which
(A) Subscriber’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (B)
the aggregate stated value and/or dividend
amount of the Preferred Stock for which such conversion request
was not timely
honored together with interest thereon at a rate of 15% per annum,
accruing until such amount
and any accrued interest thereon is
paid in full (which
amount shall be
paid as liquidated damages and
not as a penalty). For example, if
a Subscriber purchases shares of Common
Stock having a total purchase price
of $11,000 to cover
a Buy-In with respect to an attempted conversion of $10,000
of Preferred Stock stated value
and/or dividends, the Company
shall be required to pay Subscriber
$1,000 plus interest. Subscriber shall provide the Company written
notice and evidence indicating
the amounts payable
to Subscriber in respect
of the Buy-In.
6.
left intentionally blank.
7. Covenants
of the Company. The Company covenants and agrees with the Subscribers as follows:
(a)
Stop Orders. Subject
to the prior
notice requirement described
in Section 7(h), the
Company
will advise the
Subscribers, within
twenty-four
hours after it
receives notice of
issuance by the Commission,
any state securities
commission
or any other
regulatory authority
of any stop order or of any
order preventing or
suspending any
offering of any
securities of the
Company,
or of the
suspension of the qualification of the Common Stock of the Company
for offering or sale in any jurisdiction, or the initiation of any proceeding for any
such purpose. The Company will not issue
any stop transfer order or other order impeding
the sale, resale
or delivery of
any of the
Securities, except
as may be
required by any applicable federal
or state securities laws
and only if at least two business days prior notice of such instruction is given to
the Subscribers.
(b)
Listing/Quotation. The
Company shall
promptly secure
the quotation or listing
of the Conversion
Shares upon such
national securities
exchange, or automated
quotation system
upon which the Company’s
Common Stock
is quoted or
listed and
upon which
such Conversion Shares
are or become
eligible for quotation
or listing
(subject to official
notice of issuance)
and shall maintain
same so long as
any Securities
are outstanding. The
Company
will maintain
the quotation
or listing of
its Common Stock on the American
Stock Exchange, Nasdaq Capital Market,
Nasdaq Global Market, Nasdaq Global Select Market, Bulletin
Board, or New York Stock
Exchange (whichever of the foregoing
is at the time the principal trading
exchange or market
for the
Common
Stock (the “Principal
Market”), and will comply
in all respects with the Company's
reporting, filing and other obligations
under the bylaws or rules of the
Principal Market, as applicable. Subject to the limitation
set forth in Section 7(h), the Company
will provide Subscribers with
copies of all
notices it receives
notifying the
Company of
the threatened and
actual delisting of the Common
Stock from any Principal Market. As of
the date of this Exchange Agreement and
the Closing Date, the Bulletin Board is the Principal Market.
(c)
Market Regulations.
If required,
the Company
shall notify the
Commission, the Principal
Market and applicable
state authorities,
in accordance
with their requirements,
of the transactions contemplated
by this Exchange
Agreement, and shall
take all other
necessary action and proceedings
as may be
required and permitted
by applicable law,
rule and regulation,
for the legal
and valid issuance
of the Securities to
the Subscribers and promptly
provide copies thereof to
the Subscribers.
(d)
Filing Requirements.
From the date
of this Exchange
Agreement
and until the last
to occur of
all the Securities
have been paid
back, resold or
transferred by the
Subscribers pursuant to a
registration statement or
pursuant to Rule
144(b)(1)(i) (the
date of such
latest occurrence being
the “End Date”),
the Company
will (A) cause
its Common
Stock to continue
to be registered
under Section
12(b) or 12(g) of
the 1934
Act, (B) comply
in all
respects with its
reporting and filing
obligations
under the 1934
Act, and (C)
voluntarily comply
with all reporting
requirements
that are applicable
to an issuer
with a
class
of shares registered
pursuant to Section 12(g) of the 1934
Act, if the Company
is not subject to such reporting requirements.
The Company will use its best efforts
not to take any action or file any document
(whether or not permitted by the 1933
Act or the 1934 Act or the rules thereunder) to terminate or suspend such registration
or to terminate or suspend its reporting
and filing obligations under said acts
until the End Date. Until the End Date, the Company
will continue the listing
or quotation of the Common
Stock on a Principal Market and will comply
in all respects with the Company’s
reporting, filing and other obligations
under the bylaws or rules of the Principal Market. The Company
agrees to timely file a Form D with respect to the Securities if
required under
Regulation D and
to provide
a copy thereof
to Subscribers
promptly
after such filing.
(e) Reservation. Prior to the Closing, the Company undertakes to reserve
on behalf of Subscribers from its authorized but unissued Common Stock, a number
of shares of Common Stock
equal to 150% of the amount
of Common Stock necessary to allow Subscribers to be able to
convert all of the Preferred Stock, Warrants, and AIRs including dividends that would accrue thereon through the End Date
(“Required Reservation”). Failure to have sufficient shares reserved pursuant to this Section 7(e) at
any time shall be a material default
of the Company’s obligations under
this Exchange Agreement. Without waiving the foregoing requirement,
if at any time Preferred Stock,
Warrants, and AIRs are owned by the Subscribers, the Company
has reserved on behalf of the Subscribers less than 125% of the amount
necessary for full conversion of
the outstanding Preferred
Stock, Warrants, and AIRs and dividends
at the conversion price in effect on every such date (“Minimum
Required Reservation”), the
Company will promptly reserve
the Minimum Required Reservation, or
if there are insufficient authorized and available
shares of Common Stock to do so, the Company
will take all action necessary to increase
its authorized capital to be able to fully
satisfy its reservation requirements
hereunder, including the filing of
a preliminary
proxy with the Commission
not later than fifteen business days after the first day
the Company has reserved less than the Minimum Required
Reservation. The Company agrees to
provide notice to the Subscribers not later than three days
after the date the Company
has less than the Minimum
Required Reservation
reserved on behalf of
the Subscribers.
(f) DTC
Program. At
all times
that Preferred
Stock, Warrants, and
AIRs are outstanding or
issuable, the Company
will take such
steps as are
necessary for the
Conversion Shares to
be delivered electronically to
a participant in
the Depository
Trust Company
Automated Securities
Transfer Program. In the event that
there is a chill on delivery of shares via the Depository Trust Company
Automated Securities Transfer Program,
the Company
shall immediately and in any event no
less than one day after such chill is announced, inform
the Subscribers of such chill.
(g)
Confidentiality/Public
Announcement. From
the date of
this Exchange Agreement and
until the
End Date, the
Company
agrees that
except in connection
with a Form
8-K, Form
10- K, Form 10-Q
and a registration
statement or
statements which include
the Securities for
registration with the Commission
or in correspondence
with the Commission
regarding same or
in respect to
a stock exchange listing,
it will not
disclose publicly or
privately the identity of
the Subscribers unless
expressly
agreed to
in writing by Subscribers
or only to
the extent
required by law and
then only
upon not less
than three days
prior notice to Subscribers.
In any event
and subject to
the foregoing,
the Company
undertakes to file
a Form 8-K describing
the Exchange not later than the
fourth (4th) business day after the Closing
Date. Prior to the filing date of such Form 8-K, a draft in the final form will be provided to Subscribers for Subscribers’
review and approval. In the
Form 8-K, the
Company will specifically
disclose the amount
of Common
Stock outstanding immediately
after the Closing. Upon delivery by the Company
to the Subscribers after the Closing Date of any notice or information, in writing,
electronically or otherwise, and while Securities are held
by Purchases, unless the Company
has in good
faith determined
that the matters
relating
to such notice do not
constitute material,
nonpublic information relating
to the Company
or Subsidiaries, the Company
shall within one business day after any such delivery publicly disclose such material,
nonpublic information on a Report
on Form 8-K. In the
event that the Company
believes that a notice or communication
to Subscribers contains material, nonpublic information relating to the Company or Subsidiaries,
the Company shall
so indicate to Subscribers
prior to delivery of such
notice or information. Subscribers will be granted sufficient time to notify the Company that
such Subscriber elects not
to receive such
information. In such case,
the Company
will not deliver
such information to any such Subscriber.
In the absence of any such indication, Subscribers
shall be allowed to presume that all matters
relating to
such notice and information
do not constitute
material, nonpublic information relating to the
Company or Subsidiaries.
(h)
Non-Public Information. The
Company covenants and
agrees that except for
the Reports, Other
Written Information and
exhibits to this
Exchange Agreement and
the Transaction Documents, which information
the Company undertakes to publicly
disclose on the Form 8-K described
in Section 7(g)
above, neither it
nor any other
person acting
on its behalf
will at any time
provide
Subscribers or
their agents
or counsel with
any information
that the Company
believes constitutes material non-public
information, unless prior
thereto Subscribers
shall have agreed in writing to accept
such information. The Company understands
and confirms that Subscribers shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
(i)
Negative Covenants. So
long as Securities
are outstanding, without
the Consent of the Subscribers,
the Company
and its officers
and directors will
not and will not permit
any of its
Subsidiaries to directly
or indirectly:
(i)
amend its
Articles, bylaws
or its
charter documents so
as to materially
and adversely affect
any rights of
the Subscribers;
(ii)
repay, repurchase or
offer to repay, repurchase or otherwise acquire or make any dividend or distribution in respect of any of its Common Stock,
Preferred Stock, or other equity securities other than to the extent permitted or required under the Transaction
Documents;
(iii)
prepay or redeem
any financing
related debt or
past due obligations or
securities, or past
due obligations (except
with respect to
vendor obligations,
or any such
obligations which in management’s
good faith, reasonable
judgment
must be repaid
to avoid disruption
of the Company’s
businesses);
(iv)
liquidate, merger,
consolidate, nor sell
a substantial amount
of its assets
with or to
any other
entity, except
for a migratory
merger
with a wholly-owned
subsidiary, result
of which does not
change the relative
ownership or rights
of the holders
of the Securities
and Common Stock.
| 8. | Covenants of the
Company Regarding
Indemnification. |
(a)
Indemnification. The
Company agrees
to indemnify,
hold harmless,
reimburse
and defend the
Subscribers, the Subscribers’
officers, directors, agents,
counsel, Affiliates,
members,
managers, control persons,
and principal
shareholders, against
any claim,
cost, expense, liability, obligation,
loss or damage
(including reasonable
legal fees) of
any nature, incurred
by or imposed
upon the Subscribers or any
such person which results, arises
out of or is based
upon (i) any material
misrepresentation by Company or breach of any representation
or warranty by Company in this Exchange
Agreement or in any Exhibit attached hereto in any Transaction Document,
or other agreement delivered
pursuant hereto or in connection
herewith, now or after the date hereof;
or (ii) after any applicable notice and/or cure periods, any
breach or default
in performance
by the Company
of any covenant or undertaking to
be performed by the Company
hereunder, or any other agreement entered into by
the Company and Subscribers relating hereto.
(b)
Indemnification
Procedures.
Promptly after
receipt by an
indemnified party hereunder
of notice of
the commencement
of any
action, such
indemnified party
shall, if a
claim in respect
thereof is to
be made
against the indemnifying
party hereunder,
notify the
indemnifying
party in writing
thereof, but the omission
so to notify the indemnifying
party shall not relieve it from
any liability which it may have
to such indemnified party other than under
this Section 8(b) and shall only relieve it from
any liability
which it may
have to such
indemnified party
under this Section
8(b), except and
only if
and to the extent the indemnifying
party is prejudiced by such omission. In
case any such action shall be brought against
any indemnified party and it shall
notify the indemnifying
party of the commencement
thereof, the indemnifying
party shall be
entitled to participate
in and,
to the extent
it shall wish,
to assume and
undertake the defense thereof with counsel satisfactory to such
indemnified party, and, after notice
from the indemnifying
party to such indemnified
party of its election so to assume
and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified
party under
this Section 8(b) for any legal expenses
subsequently incurred
by such indemnified
party in connection
with the defense thereof
other than reasonable costs of investigation and of liaison with counsel so
selected, provided, however, that, if the defendants in any such action include
both the indemnified
party and the indemnifying
party and the indemnifying
party shall have reasonably concluded that there may be reasonable
defenses available to
indemnified party
which are different from or additional
to those available to the indemnifying
party or if the interests of the indemnified
party reasonably may be deemed
to conflict with the interests of the indemnifying
party,
the indemnified parties, as a group,
shall have the right to
select one separate counsel, reasonably satisfactory to the indemnified
and indemnifying
party, and to assume such legal defenses
and otherwise to participate in
the defense of such action,
with the reasonable expenses
and fees of such separate
counsel and other expenses related to such participation
to be reimbursed by the indemnifying
party as incurred.
9.
Unlegended Shares and 144 Sales.
(a)
Delivery of Unlegended
Shares. Within
five (5) business
days (such fifth business
day being the
“Unlegended Shares
Delivery Date”) after
the day on
which the Company
has received (i) a
notice that Conversion
Shares or any
other Common
Stock held by Subscribers
has been sold pursuant to a registration
statement or Rule 144 under the
1933 Act, (ii)
a representation that the prospectus delivery requirements,
or the requirements of
Rule 144, as applicable and if required,
have been satisfied, (iii) the original
share certificates representing the shares
of Common
Stock that have been sold, and (iv)
in the case of sales under Rule 144, customary
representation letters of the Subscribers and, if required,
Subscribers’ broker regarding compliance
with the requirements of Rule 144,
the Company at its expense, (y)
shall deliver, and shall cause legal counsel selected by the Company
to deliver to its transfer agent (with copies to Subscribers) an appropriate instruction
and opinion of such counsel, directing
the delivery of shares of
Common Stock
without any legends
including the legend
set forth in
Section 2(h) above
(the “Unlegended Shares”); and
(z) cause the transmission
of the certificates representing the
Unlegended Shares together with a legended certificate representing the balance of
the submitted
Common Stock certificate, if any,
to the Subscribers at the address specified
in the notice of sale, via express courier,
by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date.
(b)
DWAC. In lieu of
delivering physical
certificates representing the Unlegended
Shares, upon request
of Subscriber, so
long as the
certificates therefor do
not bear
a legend and the
Subscriber is not
obligated to return
such certificate
for the
placement
of a legend
thereon, the Company
shall cause its
transfer agent to
electronically transmit
the Unlegended Shares
by crediting the
account of Subscribers’ prime
broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission
system, if such
transfer agent participates in
such DWAC
system.
Such delivery must
be made on or before the Unlegended Shares Delivery Date.
(c)
Late Delivery of
Unlegended Shares. The
Company
understands that a delay
in the
delivery of the
Unlegended Shares pursuant
to Section 9
hereof later than
the Unlegended Shares Delivery
Date could result
in economic
loss to a
Subscribes. As compensation
to a Subscriber
for such loss, the
Company agrees
to pay
late payment
fees (as liquidated
damages and
not as
a penalty)
to the Subscriber for
late delivery
of Unlegended Shares in
the amount of $100 per
business day after the Unlegended Shares
Delivery Date for each $10,000 of purchase price of the Unlegended Shares subject
to the delivery default. If during any
360 day period,
the Company fails
to deliver
Unlegended Shares as required by
this Section 9 for an aggregate
of thirty days, then each
Subscriber or assignee holding Securities subject to such default may, at its option,
require the Company
to redeem all or any portion of the Unlegended
Shares subject to such default at
a price per
share equal to
the greater of
(i) 105% of
the Purchase Price
paid by the
Subscriber for the Unlegended Shares that were not timely delivered, or (ii) a fraction in which the numerator is the
highest closing price
of the Common
Stock during
the aforedescribed
thirty day
period and the
denominator of which is
the lowest
conversion price
or exercise price,
as the case may be, during
such thirty
day period, multiplied
by the price
paid by
Subscriber for such
Common
Stock (“Unlegended
Redemption Amount”).
The Company
shall pay any payments
incurred under this Section in immediately available funds upon demand.
(d) Injunction. In the event a Subscriber shall request delivery
of Unlegended Shares as described
in Section 9 and the Company
is required to deliver
such Unlegended Shares pursuant to
Section 9, the Company may not refuse to deliver Unlegended
Shares based on any claim that Subscriber or
anyone associated or affiliated with Subscriber has not complied with Subscriber’s obligations
under the Transaction Documents,
or for any other reason, unless, an injunction
or temporary restraining order from a
court, on notice, restraining and or enjoining delivery of such Unlegended Shares shall have
been sought and obtained by the
Company and the Company
has posted a surety bond for the benefit
of Subscriber in the
amount of the greater of (i) 120% of the amount
of the aggregate purchase price of the Common
Stock which is subject to the injunction
or temporary restraining order,
(ii) the closing price of the
Common Stock on
the trading day before the issue date of the injunction multiplied
by the number of Unlegended Shares to be subject to the
injunction, which bond shall remain in effect until the completion
of arbitration/litigation of the
dispute and the proceeds of which shall be payable
to Subscriber to the extent Subscriber
obtains judgment in Subscriber’s
favor.
(e) Buy-In. In addition to any other rights available to Subscribers, if the
Company fails to deliver to a Subscriber Unlegended Shares as required
pursuant to this Agreement and after
the Unlegended Shares Delivery
Date the Subscriber, or a broker on the Subscriber’s
behalf, purchases (in an
open market
transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by
Subscriber of the shares of Common
Stock which the Subscriber was entitled to receive from the Company (a “Buy-In”), then the Company
shall promptly pay in cash
to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount
by which (A) the Subscriber’s total purchase price (including brokerage
commissions, if any) for the shares
of common stock so purchased exceeds (B)
the aggregate purchase price of the shares of Common Stock delivered to the
Company for reissuance
as Unlegended Shares together with interest thereon at a rate of 15% per annum accruing until such amount
and any accrued interest thereon is paid in full (which amount
shall be paid as liquidated damages
and not as a penalty). For example,
if a Subscriber’s purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
$10,000 of purchase
price of shares of Common
Stock delivered to
the Company for reissuance as
Unlegended Shares, the Company
shall be required to pay the Subscriber $1,000, plus interest. The
Subscriber shall provide the Company
written notice indicating the amounts
payable to the Subscriber in
respect of the Buy-In.
(f)
144 Default. At
any time commencing
six months after
the Closing Date,
in the event the
Subscribers are not
permitted to sell
any of the
Conversion Shares without
any restrictive legend or
if such
sales are permitted
but subject to
volume limitations
or further
restrictions on resale
as a result of
the unavailability
to Subscribers of
Rule 144(b)(1)(i) under
the 1933 Act
or any successor
rule (a “144
Default”), for
any reason
including but not
limited to failure
by the
Company to
file quarterly,
annual or any other filings required
to be made
by the Company
by the required filing dates, or the
Company’s failure to make
information publicly available which
would allow Subscribers’ reliance on Rule 144 in connection with sales of Conversion
Shares, except due to a change in current applicable
securities laws or because the Subscriber is
an Affiliate (as defined under Rule 144)
of the Company,
then the Company
shall pay
Subscribers as liquidated damages
and not as a penalty for each thirty
days (or such lesser pro-rata amount
for any period
less than thirty
days)
an amount
equal to one
percent (1%) of
the purchase price
of the Conversion Shares
subject to such
144 Default. Liquidated
Damages shall
not be payable
pursuant to this Section 9(f) in connection
with Shares for such times as such Shares
may be sold by the holder thereof without any legend or volume or other restrictions
pursuant to Section 144(b)(1)(i) of the 1933 Act or pursuant to an
effective registration statement.
10.
Miscellaneous.
(a) Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein,
shall be (i) personally served,
(ii) deposited in the mail,
registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery,
telegram, or facsimile,
addressed as set forth below or
to such other address as such party shall
have specified most recently
by written notice. Any notice or other communication
required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile,
with accurate confirmation generated by the transmitting facsimile
machine, at
the address or number
designated below (if
delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such
delivery (if delivered other than on a
business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date
of mailing by express
courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing,
whichever shall first occur. The
addresses for such communications
shall be: (i) if to the Company,
to: Attitude Drinks Incorporated, 712 U.S. Highway 1, Suite #200, North
Palm Beach, FL 33408, Attn: Roy Warren, CEO and President, facsimile:
(561) 799-5039, with a copy by facsimile
only to:_______,__________________,Attn:_____, Esq., facsimile: (___)
_____-______, and (ii) if to the Subscribers, to: the address and fax
number indicated on the Signature
page hereto, with an additional copy by fax only to: Grushko & Mittman, P.C.,
515 Rockaway Avenue, Valley Stream,
New York 11581, facsimile:
(212) 697- 3575.
(b)
Entire Agreement; Assignment. This
Exchange Agreement and
other documents
delivered
in connection herewith
represent the entire
agreement between
the parties
hereto with respect
to the subject matter
hereof and may be
amended only
by a writing
executed by both
parties. Neither the Company
nor the Subscribers
has relied on
any representations
not contained or
referred to in
this Exchange Agreement and
the documents delivered
herewith. No right
or obligation
of the Company
shall be assigned without prior notice
to and the written consent of the Subscribers.
(c)
Counterparts/Execution. This
Exchange Agreement
may be executed
in any number
of counterparts and by
the different signatories hereto
on separate counterparts, each of which,
when so executed, shall
be deemed an
original, but
all such counterparts
shall constitute but
one and the
same instrument. This Exchange
Agreement
may
be executed
by facsimile
signature and delivered
by electronic transmission.
(d)
Law Governing this
Exchange Agreement.
This Exchange
Agreement shall be governed
by and construed
in accordance with
the laws of
the State of
New York without
regard to principles
of conflicts of
laws. References
in the Transaction
Documents
to laws,
rules, regulations and forms
shall also include
successors to
and functionally equivalent replacements
of such laws,
rules, regulations and forms.
A successor rule
to Rule 144(b)(1)(i)
shall include any
rule that would
be available to a non-Affiliate of the Company
for the sale of Common Stock not
subject to volume restrictions and after a six month
holding period. Any
action brought by
either party against
the other concerning the transactions contemplated
by this Exchange Agreement shall be brought only
in the state courts of New York or in
the federal courts located in the
state and county of New
York. The parties to this
Exchange Agreement hereby irrevocably
waive any objection to jurisdiction and
venue of any action instituted
hereunder and shall not assert any defense
based on lack of jurisdiction or
venue or based upon forum
non conveniens. The
parties executing this
Exchange Agreement and other agreements
referred to herein or delivered in connection
herewith on behalf of the Company agree
to submit
to the in personam jurisdiction of such courts and hereby irrevocably waive trial by
jury. The prevailing party shall be entitled to recover from
the other party its reasonable attorney's
fees and costs. In the event that any provision
of this Exchange Agreement or any other agreement
delivered in connection herewith is invalid
or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed inoperative
to the extent that it may conflict therewith and
shall be deemed
modified to
conform with
such statute or
rule of law.
Any such provision which may prove
invalid or unenforceable under any
law shall not affect the validity or
enforceability of any
other provision of
any agreement. Each party hereby
irrevocably waives personal service of process
and consents to process being served in any suit, action
or proceeding in connection with this Exchange Agreement or any other Transaction
Document
by mailing a copy thereof via registered or certified mail
or overnight delivery (with
evidence of delivery)
to such party
at the address
in effect for
notices to it under
this Exchange
Agreement and agrees
that such service
shall constitute good
and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed
to limit in any way any
right to serve process in any other manner
permitted by
law.
(e)
Specific Enforcement,
Consent
to Jurisdiction. The Company
and Subscribers acknowledge and
agree that irreparable
damage would
occur in the
event that any
of the provisions of
this Exchange
Agreement were not
performed in
accordance with their
specific terms
or were otherwise
breached. It is
accordingly agreed that
the parties
shall be entitled
to seek an
injunction or injunctions to
prevent or cure
breaches of
the provisions of
this Exchange Agreement
and to enforce specifically
the terms and provisions hereof,
this being
in addition to
any other
remedy
to which
any of them may
be entitled by law or equity.
Subject to Section
10(d) hereof, the Company and each Subscribers
hereby irrevocably waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction
in New York of such court,
that the suit, action or proceeding
is brought in an inconvenient forum or that the venue of the suit, action or proceeding
is improper. Nothing in this Section shall
affect or limit any right to serve
process in any other manner permitted
by law.
(f)
Damages. In the
event the Subscribers
is entitled to
receive any liquidated or
other damages pursuant
to the Transactions
Documents, the Subscribers
may elect to
receive the
greater of actual
damages or
such liquidated damages.
In the event
the Subscribers is
granted rights under
different sections of the
Transaction Documents
relating to the
same subject
matter or which
may
be exercised contemporaneously,
or pursuant to
which damages
or remedies are different,
Subscriber is granted the
right in Subscriber’s absolute
discretion to proceed under such section
as Subscriber elects.
(g)
Calendar Days.
All references to
“days” in
the Transaction Documents
shall mean calendar days
unless otherwise stated.
The terms
“business days”
and “trading days”
shall mean
days that the New
York Stock Exchange
is open for
trading for
three or
more hours.
Time periods
shall be determined
as if the
relevant action, calculation
or time period were
occurring in New
York City.
Any deadline that falls on
a non-business day in any
of the Transaction Documents
shall be automatically
extended to the next
business day and
interest, if any,
shall be calculated
and payable
through such extended period.
(h)
Captions: Certain Definitions. The
captions of the
various sections
and paragraphs of this
Exchange Agreement have
been inserted only
for the
purposes of
convenience; such captions
are not a
part of this
Exchange Agreement
and shall not
be deemed
in any
manner to
modify, explain, enlarge
or restrict any
of the provisions
of this
Exchange Agreement.
(i)
Severability. In the
event that
any term or
provision of this
Exchange Agreement shall be
finally determined
to be superseded,
invalid, illegal or
otherwise unenforceable pursuant
to applicable law
by an authority
having jurisdiction
and venue,
that determination
shall not impair
or otherwise affect
the validity, legality
or enforceability: (i)
by or before that
authority of the remaining
terms and
provisions of this Exchange Agreement,
which shall be enforced as if the unenforceable
term
or provision were deleted, or (ii) by or before
any other
authority of any of the terms
and provisions of this Exchange Agreement.
(k) Maximum
Liability.
In no event
shall the liability
of the Subscribers
or permitted
successor hereunder
or under any
Transaction Document
or other agreement
delivered in connection herewith
be greater in
amount
than the
dollar amount
of the net
proceeds actually received
by Subscribers or successor
upon the
sale of Conversion
Shares.
[SIGNATURE
PAGE TO FOLLOW]
SIGNATURE
PAGE TO
SUBSCRIPTION AGREEMENT
Please
acknowledge your
acceptance of the
foregoing Subscription Agreement
by signing
and returning a copy
to the
undersigned whereupon
it shall
become a binding
agreement between us.
Attitude Drinks,
Inc.
a Delaware
corporation
By:
_________________________________
Name: Roy G. Warren
Title:
CEO
Dated:
May 21, 2015
| SUBSCRIBER |
|
Surrendered Notes being |
Preferred Stock |
| |
|
|
|
| |
|
|
|
| Name of Subscriber |
|
|
|
| |
|
|
|
| [RC] |
|
|
|
| |
|
|
|
| Address: |
|
|
Warrants |
| |
|
|
|
|
|
|
|
| |
|
|
|
| Fax
No.: __________________________ |
|
|
|
| |
|
|
|
| Taxpayer
ID# (if applicable):___________ |
|
|
AIRs |
| |
|
|
|
| |
|
|
|
| (Signature) |
|
|
|
| By: |
|
|
|
LIST
OF EXHIBITS
AND SCHEDULES
| |
Exhibit
A |
Certificate of Designation (filed as Exhibit 3.3 on Form 8-K August 12, 2015) |
| |
|
|
| |
Exhibit
B |
Form of Warrant (filed as Exhibit 4.3 on Form 8-K August 18, 2015) |
| |
|
|
| |
Exhibit
C |
Form of AIR (filed as Exhibit 4.4 on Form 8-K August 18, 2015) |
| |
|
|
| |
Exhibit
D |
Form of Legal Opinion (Not provided at closing) |
| |
|
|
| |
Schedule
1 |
List of Subscribers |
| |
|
|
| |
Schedule 3(i) |
Past due SEC Reports |
Schedule
1
List of
Subscribers
| Name of Subscriber and Address |
$ Amount to Convert |
Issued Preferred Stock Shares |
| |
|
|
| Roy Warren |
$155,838 |
156 |
| 712 U.S. Highway 1 #200 |
|
|
| North Palm Beach, Florida 33408 |
|
|
| |
|
|
| Tommy Kee |
$371,442 |
371 |
| 712 U.S. Highway 1 #200 |
|
|
| North Palm Beach, Florida 33408 |
|
|
| |
|
|
| Craig Peters |
$269,085 |
269 |
| 712 U.S. Highway 1 #200 |
|
|
| North Palm Beach, Florida 33408 |
|
|
| |
|
|
| Debbie Lieblong |
$67,309 |
67 |
| 712 U.S. Highway 1 #200 |
|
|
| North Palm Beach, Florida 3340 |
|
|
| |
|
|
Schedule 3(i)
Past due SEC Reports
For Attitude Drinks Incorporated
Attitude Drinks Incorporated will be preparing and filing the following
past due SEC filings in the next 30-60 days:
Form 10-Q for the 3 months ended June 30, 2014
Form 10-Q for the 6 months ended September 30, 2014
Form 10-Q for the 9 months ended December 31, 2014
Note as of the August 18, 2015 closing date, the above filings have
been prepared and filed with the Securities Exchange Commission. The Form 10-K for the fiscal year ended March 31, 2015 is expected
to be filed in late August, 2015 and first half of September, 2015 based on the receipt of additional financing.
19