WARRANT AGENT AGREEMENT

 

WARRANT AGENT AGREEMENT (this “Warrant Agreement”) dated as of August 15, 2019
(the “Issuance Date”) between Guardion Health Sciences, Inc., a company
incorporated under the laws of the State of Delaware (the “Company”), and VStock
Transfer, LLC (the “Warrant Agent”).

 

WHEREAS, pursuant to the terms of that certain Underwriting Agreement
(“Underwriting Agreement”), dated August 13, 2019, by and among the Company and
Maxim Group LLC and WallachBeth Capital, LLC, as representatives of the several
underwriters set forth therein, the Company is engaged in a public offering (the
“Offering”) of up to 12,000,000 shares (the “Shares”) of common stock, par value
$0.001 per share (the “Common Stock”) of the Company, 13,000,000 Warrants (the
“Warrants”), to purchase up to 13,000,000 shares of Common Stock (the “Warrant
Shares”), and 1,000,000 pre-funded warrants (the “Pre-Funded Warrants”) to
purchase up to 1,000,000 shares of Common Stock (“Pre-Funded Warrant Shares”) in
lieu of shares of Common Stock to certain investors who would otherwise result
in beneficially owning more than 4.99% (or, at the election of the holder,
9.99%) of the Company’s outstanding Common Stock immediately following the
consummation of the Offering, including Shares and Warrants issuable pursuant to
the underwriters’ over-allotment option;

 

WHEREAS, the Company has filed with the Securities and Exchange Commission (the
“Commission”) a Registration Statement on Form S-1 (File No. 333-233067)(as the
same may be amended from time to time, the “Registration Statement”), for the
registration under the Securities Act of 1933, as amended (the “Securities
Act”), of the Shares, Warrants, Warrant Shares, Pre-Funded Warrants and Pre-
Funded Warrant Shares, and such Registration Statement was declared effective on
August 12, 2019.

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in accordance with the terms set
forth in this Warrant Agreement in connection with the issuance, registration,
transfer, exchange and exercise of the Warrants;

 

WHEREAS, the Company desires to provide for the provisions of the Warrants, the
terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the
holders of the Warrants; and

 

WHEREAS, all acts and things have been done and performed which are necessary to
make the Warrants the valid, binding and legal obligations of the Company, and
to authorize the execution and delivery of this Warrant Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:

 

1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent
to act as agent for the Company with respect to the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in
accordance with the express terms and conditions set forth in this Warrant
Agreement (and no implied terms or conditions).

 

2. Warrants. The Warrants shall be registered securities and shall initially be
evidenced by a global certificate (“Global Certificate”) in the form of Exhibit
A to this Warrant Agreement, which shall be deposited on behalf of the Company
with a custodian for The Depository Trust Company (“DTC”) and registered in the
name of Cede & Co., a nominee of DTC. If DTC subsequently ceases to make its
book- entry settlement system available for the Warrants, the Company shall
instruct the Warrant Agent regarding making other arrangements for book-entry
settlement. In the event that the Warrants are not eligible for, or it is no
longer necessary to have the Warrants available in, book-entry form, the Company
shall instruct the Warrant Agent to provide written instructions to DTC to
deliver to the Warrant Agent for cancellation the Global Certificate, and the
Company shall instruct the Warrant Agent to deliver to DTC separate certificates
evidencing Warrants (“Definitive Certificates” and, together with the Global
Certificate, “Warrant Certificates”) registered as requested through the DTC
system. The Warrants, together with the form of election to purchase Common
Stock (the “Notice of Election”) and the form of assignment to be printed on the
reverse thereof, whether a Definitive Certificate or a Global Certificate, shall
be substantially in the form of Exhibit A hereto.

 

   

 

 

2.1. Issuance and Registration of Warrants.

 

2.1.1. Warrant Register. The Warrant Agent shall maintain books (“Warrant
Register”) for the registration of original issuance and the registration of
transfer of the Warrants.

 

2.1.2. Issuance of Warrants. Upon the initial issuance of the Warrants, the
Warrant Agent shall issue the Global Certificate and deliver the Warrants in the
DTC book-entry settlement system in accordance with written instructions
delivered to the Warrant Agent by the Company. Ownership of security
entitlements in the Warrants shall be shown on, and the transfer of such
ownership shall be effected through, records maintained (i) by DTC and (ii) by
institutions that have accounts with DTC (each, a “Participant”). A Holder has
the right to elect at any time or from time to time a Warrant Exchange (as
defined below) pursuant to a Warrant Certificate Request Notice (as defined
below). Upon written notice by a Holder to the Warrant Agent for the exchange of
some or all of such Holder’s Warrants held in book entry form for a Definitive
Certificate evidencing the same number of Warrants, which request shall be in
the form attached hereto as Annex A (a “Warrant Certificate Request Notice” and
the date of delivery of such Warrant Certificate Request Notice by the Holder,
the “Warrant Certificate Request Notice Date” and the actual surrender upon
delivery by the Holder of a number of Warrants for the same number of Warrants
evidenced by a Definitive Certificate, a “Warrant Exchange”), the Warrant Agent
shall promptly effect the Warrant Exchange and shall promptly issue and deliver
to the Holder a Definitive Certificate for such number of Warrants in the name
set forth in the Warrant Certificate Request Notice. Such Definitive Certificate
shall be dated the original issue date of the Warrants and shall be manually
executed by an authorized signatory of the Warrant Agent. In connection with a
Warrant Exchange, the Company agrees to deliver, or to direct the Warrant Agent
to deliver, the Definitive Certificate to the Holder within two (2) Business
Days of the Warrant Certificate Request Notice pursuant to the delivery
instructions in the Warrant Certificate Request Notice (“Warrant Certificate
Delivery Date”). If the Company fails for any reason to deliver to the Holder
the Definitive Certificate subject to the Warrant Certificate Request Notice by
the Warrant Certificate Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000 of shares of
common stock underlying the Warrants evidenced by such Definitive Certificate
(based on the VWAP (as defined in the Warrant) of the Common Stock on the
Warrant Certificate Request Notice Date), $10 per Business Day (increasing to
$20 per Business Day on the fifth Business Day after such liquidated damages
begin to accrue) for each Business Day after such Warrant Certificate Delivery
Date until such Definitive Certificate is delivered or, prior to delivery of
such Warrant Certificate, the Holder rescinds such Warrant Exchange.
Notwithstanding the forgoing, the Warrant Agent shall not, in any event, be
subject to, or responsible for, liquidated damages or any “buy-in” penalties
contemplated in connection with the Warrants. The Company covenants and agrees
that, upon the date of delivery of the Warrant Certificate Request Notice, the
Holder shall be deemed to be the holder of the Definitive Certificate and,
notwithstanding anything to the contrary set forth herein, the Definitive
Certificate shall be deemed for all purposes to contain all of the terms and
conditions of the Warrants evidenced by such Definitive Certificate and the
terms of this Agreement. In the event a beneficial owner requests a Warrant
Exchange, upon issuance of the paper Definitive Certificate, the Warrant Agent
shall continue to act as warrant agent and the terms of the paper Definitive
Certificate so issued shall exclusively govern in respect thereof.

 

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2.1.3. Beneficial Owner; Holder. Prior to due presentment for registration of
transfer of any Warrant, the Company and the Warrant Agent shall deem and treat
the person in whose name that Warrant shall be registered on the Warrant
Register (the “Holder”) as the absolute owner of such Warrant for purposes of
any exercise thereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization furnished by
DTC governing the exercise of the rights of a holder of a beneficial interest in
any Warrant. The rights of beneficial owners in a Warrant evidenced by the
Global Certificate shall be exercised by the Holder or a Participant through the
DTC system, except to the extent set forth herein or in the Global Certificate.

 

2.1.4. Execution. The Warrant Certificates shall be executed on behalf of the
Company by any authorized officer of the Company (an “Authorized Officer”),
which need not be the same authorized signatory for all of the Warrant
Certificates, either manually or by facsimile signature. The Warrant
Certificates shall be countersigned by an authorized signatory of the Warrant
Agent, which need not be the same signatory for all of the Warrant Certificates,
and no Warrant Certificate shall be valid for any purpose unless so
countersigned. In case any Authorized Officer of the Company that signed any of
the Warrant Certificates ceases to be an Authorized Officer of the Company
before countersignature by the Warrant Agent and issuance and delivery by the
Company, such Warrant Certificates, nevertheless, may be countersigned by the
Warrant Agent, issued and delivered with the same force and effect as though the
person who signed such Warrant Certificates had not ceased to be such officer of
the Company; and any Warrant Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Warrant
Certificate, shall be an Authorized Officer of the Company authorized to sign
such Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such an Authorized Officer.

 

2.1.5. Registration of Transfer. Subject to the provisions of the Warrant, at
any time at or prior to the Expiration Date (as defined below), a transfer of
any Warrants may be registered and any Warrant Certificate or Warrant
Certificates may be split up, combined or exchanged for another Warrant
Certificate or Warrant Certificates evidencing the same number of Warrants as
the Warrant Certificate or Warrant Certificates surrendered. Any Holder desiring
to register the transfer of Warrants or to split up, combine or exchange any
Warrant Certificate shall make such request in writing delivered to the Warrant
Agent, and shall surrender to the Warrant Agent the Warrant Certificate or
Warrant Certificates evidencing the Warrants the transfer of which is to be
registered or that is or are to be split up, combined or exchanged and, in the
case of registration of transfer, shall provide a signature guarantee.
Thereupon, the Warrant Agent shall countersign and deliver to the person
entitled thereto a Warrant Certificate or Warrant Certificates, as the case may
be, as so requested. The Company and the Warrant Agent may require payment, by
the Holder requesting a registration of transfer of Warrants or a split-up,
combination or exchange of a Warrant Certificate (but, for purposes of clarity,
not upon the exercise of the Warrants and issuance of Warrant Shares to the
Holder), of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with such registration of transfer, split-up, combination
or exchange, together with reimbursement to the Company and the Warrant Agent of
all reasonable expenses incidental thereto.

 

2.1.6. Loss, Theft and Mutilation of Warrant Certificates. Upon receipt by the
Company and the Warrant Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Warrant Certificate, and, in case of
loss, theft or destruction, of indemnity or security in customary form and
amount, and reimbursement to the Company and the Warrant Agent of all reasonable
expenses incidental thereto, and upon surrender to the Warrant Agent and
cancellation of the Warrant Certificate if mutilated, the Warrant Agent shall,
on behalf of the Company, countersign and deliver a new Warrant Certificate of
like tenor to the Holder in lieu of the Warrant Certificate so lost, stolen,
destroyed or mutilated. The Warrant Agent may charge the Holder an
administrative fee for processing the replacement of lost Warrant Certificates,
which shall be charged only once in instances where a single surety bond
obtained covers multiple certificates. The Warrant Agent may receive
compensation from the surety companies or surety agents for administrative
services provided to them. The Company agrees to secure a bond on behalf of the
Holder in connection with the replacement of such Warrant Certificates, if
requested by the Warrant Agent.

 

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2.1.7. Proxies. The Holder of a Warrant may grant proxies or otherwise authorize
any person, including the Participants and beneficial holders that may own
interests through the Participants, to take any action that a Holder is entitled
to take under this Agreement or the Warrants; provided, however, that at all
times that Warrants are evidenced by a Global Certificate, exercise of those
Warrants shall be effected on their behalf by Participants through DTC in
accordance the procedures administered by DTC.

 

3. Terms and Exercise of Warrants.

 

3.1. Exercise Price. Each Warrant shall entitle the Holder, subject to the
provisions of the applicable Warrant Certificate and of this Warrant Agreement,
to purchase from the Company the number of shares of Common Stock stated
therein, at the price of $0.585 per whole share, subject to the subsequent
adjustments provided by Section 3 of the Warrant Certificate. The term “Exercise
Price” as used in this Warrant Agreement refers to the price per share at which
shares of Common Stock may be purchased at the time a Warrant is exercised.

 

3.2. Duration of Warrants. Warrants may be exercised only during the period
(“Exercise Period”) commencing on the Issuance Date and terminating at 5:00
P.M., Eastern Standard Time (the “close of business”) on August 15, 2024
(“Expiration Date”). Each Warrant not exercised on or before the Expiration Date
shall become void, and all rights thereunder and all rights in respect thereof
under this Warrant Agreement shall cease at the close of business on the
Expiration Date.

 

3.3. Exercise of Warrants.

 

3.3.1. Exercise and Payment. (a) Subject to the provisions of this Warrant
Agreement, a Holder (or a Participant or a designee of a Participant acting on
behalf of a Holder) may exercise Warrants by delivering to the Warrant Agent, a
duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail
attachment) of the Notice of Exercise in the form annexed to the Warrant
Certificate. In the case of the Holder of a Global Certificate, the Holder shall
deliver the executed Notice of Exercise and payment of the Exercise Price
pursuant to Section 2(b) of the Warrant Certificate (other than in the case of a
Cashless Exercise). Notwithstanding any other provision in this Agreement, a
holder whose interest in a Global Warrant is a beneficial interest in a Global
Certificate held in book-entry form through the DTC (or another established
clearing corporation performing similar functions), shall effect exercises by
delivering to the DTC (or such other clearing corporation, as applicable) the
appropriate instruction form for exercise, complying with the procedures to
effect exercise that are required by the DTC (or such other clearing
corporation, as applicable). The Company acknowledges that the bank accounts
maintained by the Warrant Agent in connection with the services provided under
this Agreement will be in its name and that the Warrant Agent may receive
investment earnings in connection with the investment at Warrant Agent risk and
for its benefit of funds held in those accounts from time to time. Neither the
Company nor the Holders will receive interest on any deposits or Exercise Price.
The “Exercise Date” will be the date on which the materials in the foregoing
sentence are received by the Warrant Agent (if by 5:00 P.M., New York City
time), or the following Trading Day (if after 5:00 P.M., New York City time),
regardless of any earlier date written on the materials. If the materials
discussed in this Section 3.3.1 are received or deemed to be received after the
Expiration Date, the exercise thereof will be null and void and any funds
delivered to the Company will be returned to the Holder or Participant, as the
case may be, as soon as practicable. In no event will interest accrue on any
funds deposited with the Company in respect of an exercise or attempted exercise
of the Warrants.

 

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3.3.2. Issuance of Warrant Shares.

 

(a) The Warrant Agent shall, by 11:00 a.m., New York City time, on the Trading
Day following the date of exercise of any Warrant, advise the Company, the
transfer agent and registrar for the Company’s Common Stock, in respect of (i)
the number of Warrant Shares indicated on the Notice of Exercise as issuable
upon such exercise with respect to such exercised Warrants, (ii) the
instructions of the Holder or Participant, as the case may be, provided to the
Warrant Agent with respect to the delivery of the Warrant Shares and the number
of Warrants that remain outstanding after such exercise and (iii) such other
information as the Company or such transfer agent and registrar shall reasonably
request.

 

(b) Upon the Warrant Agent’s receipt, at or prior to the Close of Business on
the Termination Date set forth in a Warrant Certificate, of the executed Notice
of Exercise, accompanied by payment of the Exercise Price pursuant to Section
2(b) of the Warrant Certificate (other than in the case of a Cashless Exercise)
, the Warrant Agent shall cause the Warrant Shares underlying such Warrant to be
delivered to or upon the order of the Holder of such Warrant, registered in such
name or names as may be designated by such Holder, no later than the Warrant
Share Delivery Date. If the Company is then a participant in the DWAC system of
the Depositary and either (A) there is an effective registration statement
permitting the issuance of the Warrant Shares to or resale of the Warrant Shares
by Holder or (B) the Warrant is being exercised via Cashless Exercise, then the
certificates for Warrant Shares shall be transmitted by the Warrant Agent to the
Holder

 

3.3.3. Valid Issuance. All Warrant Shares issued by the Company upon the proper
exercise of a Warrant in conformity with this Warrant Agreement shall be validly
issued, fully paid and non- assessable.

 

3.3.4. No Fractional Exercise. No fractional Warrant Shares will be issued upon
the exercise of the Warrant. As to any fraction of a share which a 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.

 

3.3.5. Charges, Taxes, and Expenses. Issuance of Warrant Shares shall be made
without charge to a Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of a Holder or in such name or names as may be directed by a
Holder; provided, however, that in the event that Warrant Shares are to be
issued in a name other than the name of a Holder, the Warrant, when surrendered
for exercise, shall be accompanied by the Assignment Form attached to the
Warrant 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 and all fees to DTC (or another
established clearing corporation performing similar functions) required for
same-day electronic delivery of the Warrant Shares.

 

3.3.6. Date of Issuance. The Company will treat an exercising Holder as a
beneficial owner of the Warrant Shares as of the date of exercise of any
Warrant, except that, if such date of exercise is a date when the stock transfer
books of the Company are closed, such person shall be deemed to have become the
holder of such shares at the open of business on the next succeeding date on
which the stock transfer books are open.

 

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3.3.7. Cashless Exercise Under Certain Circumstances. The Company shall provide
to the Warrant Agent and each Holder prompt written notice of any time that
there is no effective registration statement covering the Warrants and the
Warrant Shares thereunder.

 

Upon receipt of a Notice of Exercise for a cashless exercise, the Warrant Agent
will promptly deliver a copy of the Notice of Exercise to the Company to confirm
the number of Warrant Shares issuable in connection with the cashless exercise.
The Company shall promptly calculate and transmit to the Warrant Agent in a
written notice, and the Warrant Agent shall have no duty, responsibility or
obligation under this section to calculate, the number of Warrant Shares
issuable in connection with any cashless exercise. The Warrant Agent shall be
entitled to rely conclusively on any such written notice provided by the
Company, and the Warrant Agent shall not be liable for any action taken,
suffered or omitted to be taken by it in accordance with such written
instructions or pursuant to this Warrant Agreement.

 

3.3.8. Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the number of Warrant Shares
issuable in connection with any exercise, the Company shall promptly deliver to
the Holder the number of Warrant Shares that are not disputed.

 

3.3.9. Beneficial Ownership Limitation. A Holder shall not have the right to
exercise any Warrants to the extent that after giving effect to the issuance of
Warrant Shares after exercise as set forth on the applicable Notice of Exercise,
such Holder or a person holding through such Holder, and any other persons
acting as a group together with that Holder or person or any of that Holder’s or
person’s Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as that term is defined in the Warrant) pursuant to
Section 2(e) of the Warrant Certificate.

 

4. Adjustments. The Exercise Price, the number of shares covered by each Warrant
and the number of Warrants outstanding are subject to adjustment from time to
time as provided in Section 3 of the Warrant Certificate. All Warrants
originally issued by the Company subsequent to any adjustment made to the
Exercise Price pursuant to the Warrant shall evidence the right to purchase, at
the adjusted Exercise Price, the number of shares of Common Stock purchasable
from time to time hereunder upon exercise of the Warrants, all subject to
further adjustment as provided herein. Whenever the Exercise Price or the number
of shares of Common Stock issuable upon the exercise of each Warrant is adjusted
as provided in this Section 4, the Company shall (a) promptly prepare a
certificate setting forth the Exercise Price of each Warrant as so adjusted, and
a brief statement of the facts accounting for such adjustment, (b) promptly file
with the Warrant Agent and with each transfer agent for the Common Stock a copy
of such certificate and (c) instruct the Warrant Agent to send a brief summary
thereof to each Holder of a Warrant.

 

5. Restrictive Legends; Fractional Warrants. In the event that a Warrant
Certificate surrendered for transfer bears a restrictive legend, the Warrant
Agent shall not register that transfer until the Warrant Agent has received an
opinion of counsel for the Company stating that such transfer may be made and
indicating whether the Warrants must also bear a restrictive legend upon that
transfer. The Company shall not issue fractions of Warrants or distribute a
Global Warrant or Warrant Certificates that evidence fractional Warrants.
Whenever any fractional Warrant would otherwise be required to be issued or
distributed, the actual issuance or distribution shall reflect a rounding of
such fraction either up or down to the nearest whole Warrant. The Warrant Agent
shall not be required to effect any registration of transfer or exchange which
will result in the transfer of or delivery of a Warrant Certificate for a
fraction of a Warrant. The Company shall not issue fractions of shares of Common
Stock upon exercise of Warrants or distribute stock certificates that evidence
fractional shares of Common Stock. Whenever any fraction of a share of Common
Stock would otherwise be required to be issued or distributed, the actual
issuance or distribution in respect thereof shall be made in accordance with
Section 2(d)(v) of the Warrant Certificate.

 

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6. Other Provisions Relating to Rights of Holders of Warrants.

 

6.1. No Rights as Stockholder. Except as otherwise specifically provided herein
and in accordance with Section 5(a) of the Warrant Certificate, a Holder, solely
in its capacity as a holder of Warrants, shall not be entitled to vote or
receive dividends or be deemed the holder of share capital of the Company for
any purpose, nor shall anything contained in this Warrant Agreement be construed
to confer upon a Holder, solely in its capacity as the registered holder of
Warrants, any of the rights of a stockholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of share capital,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights or rights to participate in new issues
of shares, or otherwise, prior to the issuance to the Holder of the Warrant
Shares which it is then entitled to receive upon the due exercise of Warrants.

 

6.2. Reservation of Common Stock. The Company shall at all times reserve and
keep available a number of its authorized but unissued shares of Common Stock
pursuant to Section 5(d) of the Warrant Certificate.

 

7. Concerning the Warrant Agent and Other Matters.

 

7.1. Any instructions given to the Warrant Agent orally, as permitted by any
provision of this Warrant Agreement, shall be confirmed in writing by the
Company as soon as practicable. The Warrant Agent shall not be liable or
responsible and shall be fully authorized and protected for acting, or failing
to act, in accordance with any oral instructions which do not conform with the
written confirmation received in accordance with this Section 7.1.

 

7.2. (a) Whether or not any Warrants are exercised, for the Warrant Agent’s
services as agent for the Company hereunder, the Company shall pay to the
Warrant Agent such fees as may be separately agreed between the Company and
Warrant Agent and the Warrant Agent’s out of pocket expenses in connection with
this Warrant Agreement, including, without limitation, the reasonable fees and
expenses of the Warrant Agent’s counsel. While the Warrant Agent endeavors to
maintain out-of-pocket charges (both internal and external) at competitive
rates, these charges may not reflect actual out-of-pocket costs, and may include
handling charges to cover internal processing and use of the Warrant Agent’s
billing systems. (b) All amounts owed by the Company to the Warrant Agent under
this Warrant Agreement are due within 30 days of the invoice date. Delinquent
payments are subject to a late payment charge of one and one-half percent (1.5%)
per month commencing 45 days from the invoice date. The Company agrees to
reimburse the Warrant Agent for any reasonable attorney’s fees and any other
costs associated with collecting delinquent payments. (c) No provision of this
Warrant Agreement shall require Warrant Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
under this Warrant Agreement or in the exercise of its rights.

 

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7.3. As agent for the Company hereunder the Warrant Agent: (a) shall have no
duties or obligations other than those specifically set forth herein or as may
subsequently be agreed to in writing by the Warrant Agent and the Company; (b)
shall be regarded as making no representations and having no responsibilities as
to the validity, sufficiency, value, or genuineness of the Warrants or any
Warrant Shares; (c) shall not be obligated to take any legal action hereunder;
if, however, the Warrant Agent determines to take any legal action hereunder,
and where the taking of such action might, in its judgment, subject or expose it
to any expense or liability it shall not be required to act unless it has been
furnished with an indemnity reasonably satisfactory to it; (e) may rely on and
shall be fully authorized and protected in acting or failing to act upon any
certificate, instrument, opinion, notice, letter, telegram, telex, facsimile
transmission or other document or security delivered to the Warrant Agent and
believed by it to be genuine and to have been signed by the proper party or
parties; (f) shall not be liable or responsible for any recital or statement
contained in the Registration Statement or any other documents relating thereto;
(g) shall not be liable or responsible for any failure on the part of the
Company to comply with any of its covenants and obligations relating to the
Warrants, including without limitation obligations under applicable securities
laws; (h) may rely on and shall be fully authorized and protected in acting or
failing to act upon the written, telephonic or oral instructions with respect to
any matter relating to its duties as Warrant Agent covered by this Warrant
Agreement (or supplementing or qualifying any such actions) of officers of the
Company, and is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Company or counsel
to the Company, and may apply to the Company, for advice or instructions in
connection with the Warrant Agent’s duties hereunder, and the Warrant Agent
shall not be liable for any delay in acting while waiting for those
instructions; any applications by the Warrant Agent for written instructions
from the Company may, at the option of the Agent, set forth in writing any
action proposed to be taken or omitted by the Warrant Agent under this Warrant
Agreement and the date on or after which such action shall be taken or such
omission shall be effective; the Warrant Agent shall not be liable for any
action taken by, or omission of, the Warrant Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than five business days after the date such
application is sent to the Company, unless the Company shall have consented in
writing to any earlier date) unless prior to taking any such action, the Warrant
Agent shall have received written instructions in response to such application
specifying the action to be taken or omitted; (i) may consult with counsel
satisfactory to the Warrant Agent, including its in-house counsel, and the
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered, or omitted by it hereunder in good
faith and in accordance with the advice of such counsel; (j) may perform any of
its duties hereunder either directly or by or through nominees, correspondents,
designees, or subagents, and it shall not be liable or responsible for any
misconduct or negligence on the part of any nominee, correspondent, designee, or
subagent appointed with reasonable care by it in connection with this Warrant
Agreement; (k) is not authorized, and shall have no obligation, to pay any
brokers, dealers, or soliciting fees to any person; and (l) shall not be
required hereunder to comply with the laws or regulations of any country other
than the United States of America or any political subdivision thereof.

 

7.4. (a) In the absence of gross negligence or willful or illegal misconduct on
its part, the Warrant Agent shall not be liable for any action taken, suffered,
or omitted by it or for any error of judgment made by it in the performance of
its duties under this Warrant Agreement. Anything in this Warrant Agreement to
the contrary notwithstanding, in no event shall Warrant Agent be liable for
special, indirect, incidental, consequential or punitive losses or damages of
any kind whatsoever (including but not limited to lost profits), even if the
Warrant Agent has been advised of the possibility of such losses or damages and
regardless of the form of action. Any liability of the Warrant Agent will be
limited in the aggregate to the amount of fees paid by the Company hereunder.
The Warrant Agent shall not be liable for any failures, delays or losses,
arising directly or indirectly out of conditions beyond its reasonable control
including, but not limited to, acts of government, exchange or market ruling,
suspension of trading, work stoppages or labor disputes, fires, civil
disobedience, riots, rebellions, storms, electrical or mechanical failure,
computer hardware or software failure, communications facilities failures
including telephone failure, war, terrorism, insurrection, earthquakes, floods,
acts of God or similar occurrences. (b) In the event any question or dispute
arises with respect to the proper interpretation of the Warrants or the Warrant
Agent’s duties under this Warrant Agreement or the rights of the Company or of
any Holder, the Warrant Agent shall not be required to act and shall not be held
liable or responsible for its refusal to act until the question or dispute has
been judicially settled (and, if appropriate, it may file a suit in interpleader
or for a declaratory judgment for such purpose) by final judgment rendered by a
court of competent jurisdiction, binding on all persons interested in the matter
which is no longer subject to review or appeal, or settled by a written document
in form and substance satisfactory to Warrant Agent and executed by the Company
and each such Holder. In addition, the Warrant Agent may require for such
purpose, but shall not be obligated to require, the execution of such written
settlement by all the Holders and all other persons that may have an interest in
the settlement.

 

8

   

 

7.5. The Company covenants to indemnify the Warrant Agent and hold it harmless
from and against any loss, liability, claim or expense (“Loss”) arising out of
or in connection with the Warrant Agent’s duties under this Warrant Agreement,
including the costs and expenses of defending itself against any Loss, unless
such Loss shall have been determined by a court of competent jurisdiction to be
a result of the Warrant Agent’s gross negligence or willful misconduct.

 

7.6. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 90 days after the earlier of the Expiration Date and the date on which
no Warrants remain outstanding (the “Termination Date”). On the business day
following the Termination Date, the Agent shall deliver to the Company any
entitlements, if any, held by the Warrant Agent under this Warrant Agreement.
The Agent’s right to be reimbursed for fees, charges and out-of-pocket expenses
as provided in this Section 7 shall survive the termination of this Warrant
Agreement.

 

7.7. If any provision of this Warrant Agreement shall be held illegal, invalid,
or unenforceable by any court, this Warrant Agreement shall be construed and
enforced as if such provision had not been contained herein and shall be deemed
an Agreement among the parties to it to the full extent permitted by applicable
law.

 

7.8. The Company represents and warrants that: (a) it is duly incorporated and
validly existing under the laws of its jurisdiction of incorporation; (b) the
offer and sale of the Warrants and the execution, delivery and performance of
all transactions contemplated thereby (including this Warrant Agreement) have
been duly authorized by all necessary corporate action and will not result in a
breach of or constitute a default under the articles of association, bylaws or
any similar document of the Company or any indenture, agreement or instrument to
which it is a party or is bound; (c) this Warrant Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid, binding
and enforceable obligation of the Company; (d) the Warrants will comply in all
material respects with all applicable requirements of law; and (e) to the best
of its knowledge, there is no litigation pending or threatened as of the date
hereof in connection with the offering of the Warrants.

 

7.9. In the event of inconsistency between this Warrant Agreement and the
descriptions in the Registration Statement, as they may from time to time be
amended, the terms of this Warrant Agreement shall control.

 

7.10. Set forth in Exhibit B hereto is a list of the names and specimen
signatures of the persons authorized to act for the Company under this Warrant
Agreement (the “Authorized Representatives”). The Company shall, from time to
time, certify to you the names and signatures of any other persons authorized to
act for the Company under this Warrant Agreement.

 

7.11. Except as expressly set forth elsewhere in this Warrant Agreement, all
notices, instructions and communications under this Agreement shall be in
writing, shall be effective upon receipt and shall be addressed, if to the
Company, to its address set forth beneath its signature to this Agreement, or,
if to the Warrant Agent, to VStock Transfer, LLC 18 Lafayette Place, Woodmere,
New York 11598, or to such other address of which a party hereto has notified
the other party.

 

9

   

 

7.12. (a) This Warrant Agreement shall be governed by and construed in
accordance with the laws of the State of New York. All actions and proceedings
relating to or arising from, directly or indirectly, this Warrant Agreement may
be litigated in courts located within the Borough of Manhattan in the City and
State of New York. The Company hereby submits to the personal jurisdiction of
such courts and consents that any service of process may be made by certified or
registered mail, return receipt requested, directed to the Company at its
address last specified for notices hereunder. Each of the parties hereto hereby
waives the right to a trial by jury in any action or proceeding arising out of
or relating to this Warrant Agreement. (b)  This Warrant Agreement shall inure
to the benefit of and be binding upon the successors and assigns of the parties
hereto. This Warrant Agreement may not be assigned, or otherwise transferred, in
whole or in part, by either party without the prior written consent of the other
party, which the other party will not unreasonably withhold, condition or delay;
except that (i) consent is not required for an assignment or delegation of
duties by Warrant Agent to any affiliate of Warrant Agent and (ii) any
reorganization, merger, consolidation, sale of assets or other form of business
combination by Warrant Agent or the Company shall not be deemed to constitute an
assignment of this Warrant Agreement. (c) No provision of this Warrant Agreement
may be amended, modified or waived, except in a written document signed by both
parties. The Company and the Warrant Agent may amend or supplement this Warrant
Agreement without the consent of any Holder for the purpose of curing any
ambiguity, or curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the parties may deem
necessary or desirable and that the parties determine, in good faith, shall not
adversely affect the interest of the Holders. All other amendments and
supplements shall require the vote or written consent of Holders of at least
50.1% of the then outstanding Warrants, provided that adjustments may be made to
the Warrant terms and rights in accordance with Section 4 without the consent of
the Holders.

 

7.13. Payment of Taxes. The Company will from time to time promptly pay all
taxes and charges that may be imposed upon the Company or the Warrant Agent in
respect of the issuance or delivery of Warrant Shares upon the exercise of
Warrants, but the Company may, pursuant to the terms of the Warrant, require the
Holders to pay any transfer taxes in respect of the Warrants or such shares. The
Warrant Agent may refrain from registering any transfer of Warrants or any
delivery of any Warrant Shares unless or until the persons requesting the
registration or issuance shall have paid to the Warrant Agent for the account of
the Company the amount of such tax or charge, if any, or shall have established
to the reasonable satisfaction of the Company and the Warrant Agent that such
tax or charge, if any, has been paid.

 

7.14. Resignation of Warrant Agent.

 

7.14.1. Appointment of Successor Warrant Agent. The Warrant Agent, or any
successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving thirty (30) days’
notice in writing to the Company and the Holders of the Warrants, or such
shorter period of time agreed to by the Company. The Company may terminate the
services of the Warrant Agent, or any successor Warrant Agent, after giving
thirty (30) days’ notice in writing to the Warrant Agent or successor Warrant
Agent and the Holders of the Warrants, or such shorter period of time as agreed.
If the office of the Warrant Agent becomes vacant by resignation, termination or
incapacity to act or otherwise, the Company shall appoint in writing a successor
Warrant Agent in place of the Warrant Agent. If the Company shall fail to make
such appointment within a period of 30 days after it has been notified in
writing of such resignation or incapacity by the Warrant Agent, then the Warrant
Agent or any Holder may apply to any court of competent jurisdiction for the
appointment of a successor Warrant Agent at the Company’s cost. Pending
appointment of a successor to such Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company. Any successor Warrant Agent (but not including the initial Warrant
Agent), whether appointed by the Company or by such court, shall be a person
organized and existing under the laws of any state of the United States of
America, in good standing, and authorized under such laws to exercise corporate
trust powers and subject to supervision or examination by federal or state
authority. After appointment, any successor Warrant Agent shall be vested with
all the authority, powers, rights, immunities, duties, and obligations of its
predecessor Warrant Agent with like effect as if originally named as Warrant
Agent hereunder, without any further act or deed, and except for executing and
delivering documents as provided in the sentence that follows, the predecessor
Warrant Agent shall have no further duties, obligations, responsibilities or
liabilities hereunder, but shall be entitled to all rights that survive the
termination of this Warrant Agreement and the resignation or removal of the
Warrant Agent, including but not limited to its right to indemnity hereunder. If
for any reason it becomes necessary or appropriate or at the request of the
Company, the predecessor Warrant Agent shall execute and deliver, at the expense
of the Company, an instrument transferring to such successor Warrant Agent all
the authority, powers, and rights of such predecessor Warrant Agent hereunder;
and upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties, and obligations.

 

10

   

 

7.14.2. Notice of Successor Warrant Agent. In the event a successor Warrant
Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.

 

7.14.3. Merger or Consolidation of Warrant Agent. Any person into which the
Warrant Agent may be merged or converted or with which it may be consolidated or
any person resulting from any merger, conversion or consolidation to which the
Warrant Agent shall be a party or any person succeeding to the shareowner
services business of the Warrant Agent or any successor Warrant Agent shall be
the successor Warrant Agent under this Warrant Agreement, without any further
act or deed. For purposes of this Warrant Agreement, “person” shall mean any
individual, firm, corporation, partnership, limited liability company, joint
venture, association, trust or other entity, and shall include any successor (by
merger or otherwise) thereof or thereto.

 

8. Miscellaneous Provisions.

 

8.1. Persons Having Rights under this Warrant Agreement. Nothing in this Warrant
Agreement expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the parties hereto and the Holders any right,
remedy, or claim under or by reason of this Warrant Agreement or of any
covenant, condition, stipulation, promise, or agreement hereof.

 

8.2. Examination of the Warrant Agreement. A copy of this Warrant Agreement
shall be available at all reasonable times at the office of the Warrant Agent
designated for such purpose for inspection by any Holder. Prior to such
inspection, the Warrant Agent may require any such holder to provide reasonable
evidence of its interest in the Warrants.

 

8.3. Counterparts. This Warrant Agreement may be executed in any number of
original, facsimile or electronic counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.

 

8.4. Effect of Headings. The Section headings herein are for convenience only
and are not part of this Warrant Agreement and shall not affect the
interpretation thereof.

 

9. Certain Definitions. As used herein, the following terms shall have the
following meanings:

 

(a) “Business Day” means any day except any Saturday, any Sunday, any day which
is a federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

(b) “Standard Settlement Period” means the standard settlement period, expressed
in a number of Trading Days, on the Company’s primary Trading Market with
respect to the Common Stock as in effect on the date of delivery of the Notice
of Exercise.

 

(c) “Trading Day” means any day on which the Common Stock is traded on the
Trading Market.

  

(d) “Trading Market” means any of the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question: the
NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market or the New York Stock Exchange (or any successors to any of
the foregoing).

 

(e) “Warrant Share Delivery Date” means the date that is the earliest of: (i)
two (2) Trading Days after the delivery to the Company of the Notice of
Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise
Price to the Company and (iii) the number of Trading Days comprising the
Standard Settlement Period after the delivery to the Company of the Notice of
Exercise, all subject to receipt of any cash payments required by the Holder.

 

[Signature Page to Follow]

 

11

   

 

Please execute this letter in the space indicated to acknowledge your agreement
to act in accordance with these instructions.

 

  Very truly yours,       GUARDION HEALTH SCIENCES, INC.           /s/ Michael
Favish   Name: Michael Favish   Title: Chief Executive Officer

 

THE FOREGOING INSTRUCTIONS ARE

ACKNOWLEDGED AND AGREED TO

 

this 15th day of August, 2019

 

VSTOCK TRANSFER, LLC           /s/ Shay Galam   Name: Shay Galam   Title:
Compliance officer  

 

   

 

 

ANNEX A

 

WARRANT CERTIFICATE REQUEST NOTICE

 

To: VStock Transfer, LLC, as Warrant Agent for Guardion Health Sciences, Inc.
(the “Company”)

 

The undersigned Holder of Common Stock Purchase Warrants (“Warrants”) in the
form of Global Warrants issued by the Company hereby elects to receive a
Definitive Certificate evidencing the Warrants held by the Holder as specified
below:

 

  1. Name of Holder of Warrants in form of Global Warrants:               2.
Name of Holder in Definitive Certificate (if different from name of Holder of
Warrants in form of Global Warrants):               3. Number of Warrants in
name of Holder in form of Global Warrants:               4. Number of Warrants
for which Definitive Certificate shall be issued:               5. Number of
Warrants in name of Holder in form of Global Warrants after issuance of
Definitive Certificate, if any:               6. Definitive Certificate shall be
delivered to the following address:

 

 

 

 

 

 

 

 

 

The undersigned hereby acknowledges and agrees that, in connection with this
Warrant Exchange and the issuance of the Definitive Certificate, the Holder is
deemed to have surrendered the number of Warrants in form of Global Warrants in
the name of the Holder equal to the number of Warrants evidenced by the
Definitive Certificate.

 

[SIGNATURE OF HOLDER]

 

   

 

 

Name of Investing Entity:

 

 

Signature of Authorized Signatory of Investing Entity:

 

 

Name of Authorized Signatory:

 

 

Title of Authorized Signatory:

 

 

Date: _____________________________________________________

 

   

 

 

EXHIBIT A

 

[FORM OF GLOBAL WARRANT CERTIFICATE]

 

Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

 

GLOBAL COMMON STOCK PURCHASE WARRANT CERTIFICATE

 

GUARDION HEALTH SCIENCES, INC.

 

Certificate No. 1

Warrant Shares: Up to 13,000,000

 

CUSIP No.: 40145Q112

Initial Exercise Date: August 15, 2019

 

THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value
received, Cede & Co. 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 5:00 p.m. (New York City time) on August 15, 2024 (the
“Termination Date”) but not thereafter, to subscribe for and purchase from
Guardion Health Sciences, Inc., a Delaware corporation (the “Company”), up to
Thirteen Million (13,000,000) shares (as subject to adjustment hereunder, the
“Warrant Shares”) of Common Stock. The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b). This Warrant shall initially be issued and maintained in the form
of a security held in book-entry form and the Depository Trust Company or its
nominee (“DTC”) shall initially be the sole registered holder of this Warrant,
subject to the Holder’s right to elect to receive a Warrant in certificated form
pursuant to the terms of the Warrant Agent Agreement, in which case this
sentence shall not apply.

 

Section 1. Definitions. In addition to the terms defined elsewhere in this
Warrant, the following terms have the meanings indicated in this Section 1:

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

 

“Bid Price” means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the bid price of the Common Stock for the time in question
(or the nearest preceding date) on the Trading Market on which the Common Stock
is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if
OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as
applicable, (c) if the Common Stock is not then listed or quoted for trading on
OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink
Sheets” published by OTC Markets Group, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of a majority in interest of the
Warrants then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

   

 

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close. 

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock. 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Registration Statement” means the Company’s registration statement on Form S-1
(File No. 333-233067).

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Trading Day” means a day on which the Common Stock is traded on a Trading
Market.

 

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market or the New York Stock Exchange (or any successors to any of the
foregoing).

 

“Transfer Agent” means VStock Transfer, LLC, the current transfer agent of the
Company with a mailing address of 8 Lafayette Place, Woodmere, New York 11598, a
phone number of (212) 828-8436 and an email address of shay@vstocktransfer.com,
and any successor transfer agent of the Company.

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported on the Pink Open Market (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in
good faith by the holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.

 

   

 

 

“Warrant Agent Agreement” means that certain warrant agent agreement, dated on
or about the Initial Exercise Date, between the Company and the Warrant Agent.

 

“Warrant Agent” means the Transfer Agent and any successor warrant agent of the
Company.

 

“Warrants” means this Warrant and other Common Stock purchase warrants issued by
the Company pursuant to the Registration Statement.

 

Section 2. Exercise.

 

a) Exercise of Warrant. Subject to the provisions of Section 2(e) herein,
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 Warrant Agent
(or such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of the Holder appearing on the
books of the Company) of a duly executed facsimile copy or PDF copy submitted by
e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed
hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard Settlement
Period (as defined in Section 2(d)(i) herein) following the date of exercise as
aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant
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. No ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any Notice
of Exercise be required. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
or the Warrant Agent 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 or Warrant Agent for
cancellation within three (3) Trading Days of the date on which 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 or Warrant Agent shall deliver any objection to any Notice of
Exercise within one (1) Trading Day of receipt 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.

 

Notwithstanding the foregoing in this Section 2(a), a Holder whose interest in
this Warrant is a beneficial interest in certificate(s) representing this
Warrant held in book-entry form through DTC (or another established clearing
corporation performing similar functions), shall effect exercises made pursuant
to this Section 2(a) by delivering to DTC (or such other clearing corporation,
as applicable) the appropriate instruction form for exercise, complying with the
procedures to effect exercise that are required by DTC (or such other clearing
corporation, as applicable), subject to a Holder’s right to elect to receive a
Warrant in certificated form pursuant to the terms of the Warrant Agent
Agreement, in which case this sentence shall not apply.

 

   

 

 

b) Exercise Price. The exercise price per share of Common Stock under this
Warrant shall be $0.585, subject to adjustment hereunder (the “Exercise Price”).

 

c) Cashless Exercise. If at the time of exercise hereof there is no effective
registration statement registering, or the prospectus contained therein is not
available for the issuance of the Warrant Shares to the Holder, then this
Warrant may also be exercised, 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) = as applicable: (i) the VWAP on the Trading Day immediately preceding the
date of the applicable Notice of Exercise if such Notice of Exercise is (1) both
executed and delivered pursuant to Section 2(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof
on a Trading Day prior to the opening of “regular trading hours” (as defined in
Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws)
on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on
the Trading Day immediately preceding the date of the applicable Notice of
Exercise or (z) the Bid Price of the Common Stock on the principal Trading
Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of
the applicable Notice of Exercise if such Notice of Exercise is executed during
“regular trading hours” on a Trading Day and is delivered within two (2) hours
thereafter (including until two (2) hours after the close of “regular trading
hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on
the date of the applicable Notice of Exercise if the date of such Notice of
Exercise is a Trading Day and such Notice of Exercise is both executed and
delivered pursuant to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;         (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.

 

In addition, a cashless exercise may occur during the period beginning from the
earlier of (i) thirty (30) days from the effective date of the registration
statement (the “Effective Date”) filed with the Commission in connection with
this Warrant, and (ii) the Trading Day on which a total of more than 40,000,000
shares of Common Stock have traded (as reported by Bloomberg L.P.) since the
Company’s public announcement of the pricing of the public offering that
includes this Warrant, until the one year anniversary of the Effective Date (the
“Cashless Period”), if the VWAP of the Common Stock on any Trading Day during
the Cashless Period fails to exceed the Exercise Price in effect as of the date
hereof (subject to adjustment for any stock splits, stock dividends, stock
combinations, recapitalizations and similar events). In such event, in lieu of
the formula, the aggregate number of Warrant Shares issuable in such cashless
exercise pursuant to any given Notice of Exercise electing to effect a cashless
exercise shall equal the product of (x) the aggregate 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 and (y) 1.0.

 

If Warrant Shares are issued in such a cashless exercise, the parties
acknowledge and agree that in accordance with Section 3(a)(9) of the Securities
Act, the Warrant Shares shall take on the registered characteristics of the
Warrants being exercised. The Company agrees not to take any position contrary
to this Section 2(c).

 

   

 

 

d) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant
Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s or its designee’s balance account 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 otherwise by physical
delivery of a certificate, registered in the Company’s share register in the
name of the Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is the earliest of: (i) two
(2) Trading Days after the delivery to the Company or the Warrant Agent of the
Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate
Exercise Price to the Company and (iii) the number of Trading Days comprising
the Standard Settlement Period after the delivery to the Company of the Notice
of Exercise, all subject to receipt of any cash payments required by the Holder
(such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of
Exercise, the Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date of delivery of the Warrant Shares,
provided that payment of the aggregate Exercise Price (other than in the case of
a cashless exercise) is received within the earlier of (i) two (2) Trading Days
and (ii) the number of Trading Days comprising the Standard Settlement Period
following delivery of the Notice of Exercise. If the Company fails for any
reason to deliver to the Holder the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of
Warrant Shares subject to such exercise (based on the VWAP of the Common Stock
on the date of the applicable Notice of Exercise), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth (5th)Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or Holder rescinds
such exercise. Notwithstanding the forgoing, the Warrant Agent shall not, in any
event, be subject to, or responsible for, liquidated damages as contemplated by
this Section 2(d)(i). The Company agrees to maintain a transfer agent that is a
participant in the FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in effect on the date
of delivery of the Notice of Exercise.

 

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 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 the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise.

 

   

 

 

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares 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 the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an
exercise on or before the Warrant Share Delivery Date (other than any such
failure that is solely due to any action or inaction by the Holder with respect
to such exercise), 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 shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof. Notwithstanding the forgoing, the Warrant
Agent shall not, in any event, be subject to, or responsible for, Buy-In
penalties contemplated by this Section 2(d)(iv).

 

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 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 Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares 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 that 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 and all fees to the Depository
Trust Company (or another established clearing corporation performing similar
functions) required for same-day electronic delivery of the Warrant Shares.

 

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 (such Persons, “Attribution Parties”)), 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 and Attribution Parties 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 or Attribution Parties 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 or
Attribution Parties. 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 Attribution Parties) 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 Attribution
Parties) 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 one Trading Day 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 or
Attribution Parties since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be
[4.99% /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 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 increase in the Beneficial Ownership
Limitation 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), (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 all (or substantially all) of the record holders of
any class of shares of Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights (provided, however, to the extent that the Holder’s right
to participate in any such Purchase Right would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (or beneficial ownership of
such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder
until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).

 

   

 

 

c) Pro Rata Distributions. During such time as this Warrant is outstanding, if
the Company shall declare or make any dividend or other distribution of its
assets (or rights to acquire its assets) to all (or substantially all) of
holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a “Distribution”), at any time after the issuance of this
Warrant, then, in each such case, the Holder shall be entitled to participate in
such Distribution to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in
such Distribution (provided, however, to the extent that the Holder’s right to
participate in any such Distribution would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent)
and the portion of such Distribution shall be held in abeyance for the benefit
of the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).

 

d) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct
or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more
of the outstanding Common Stock, (iv) the Company, directly or indirectly, in
one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder
shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Warrant in
accordance with the provisions of this Section 3(d) pursuant to written
agreements 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). 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 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 with the same effect as if such Successor Entity had been named as the
Company herein. For the avoidance of doubt, if, at any time while this Warrant
is outstanding, a Fundamental Transaction occurs, pursuant to the terms of this
Section 3(d), the Holder shall not be entitled to receive more than one of (i)
the 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, or (ii) the
assumption by the Successor Entity of all of the obligations of the Company
under this Warrant and the option to receive a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to
this Warrant.

 

   

 

 

e) [Reserved.]

 

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 deliver
to the Holder by facsimile or email 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, cash or property, 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, the Company shall cause to be
delivered by facsimile or email to the Holder at its last facsimile number or
email address as it shall appear upon the Warrant Register of the Company, at
least twenty (20) calendar days prior to the applicable record or effective date
hereinafter specified, a notice (unless such information is filed with the
Commission, in which case a notice shall not be required) stating (x) the date
on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such notice. To the
extent that any notice provided in this Warrant 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. This Warrant and all rights hereunder 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 Agent may require a
medallion guarantee (or other type of guarantee or notarization) to effectuate
an assignment or transfer of this Warrant. In order to effectuate a transfer (in
whole or in part) of this Warrant, the Holder shall surrender this Warrant to
the Company or the Warrant Agent within three (3) Trading Days of the date on
which the Holder delivers an assignment form to the Company assigning this
Warrant in full. 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. If this Warrant is not held in global form through DTC (or any
successor depository), 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 Warrant Agent for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company and the
Warrant Agent 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; No Settlement in Cash. This Warrant
does not entitle the Holder to any voting rights, dividends or other rights as a
stockholder of the Company prior to the exercise hereof as set forth in Section
2(d)(i), except as expressly set forth in Section 3. Without limiting the rights
of a Holder to receive Warrant Shares on a “cashless exercise,” and to receive
the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), In no
event, including if the Company is for any reason unable to issue and deliver
Warrant Shares upon exercise of this Warrant as required pursuant to the terms
hereof, shall the Company be required to net cash settle an exercise of this
Warrant or cash settle in any other form.

 

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. The
Company agrees to secure a bond on behalf of the Holder in connection with the
replacement of such Warrant Certificates, if requested by the Warrant Agent.

 

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 Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business 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 issuing the necessary 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 nonassessable 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) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Warrant (whether brought
against a party hereto or their respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. If either party shall commence an action, suit or proceeding
to enforce any provisions of this Warrant, the prevailing party in such action,
suit or proceeding shall be reimbursed by the other party for their reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. Notwithstanding the
foregoing, nothing in this paragraph shall limit or restrict the federal
district court in which a Holder may bring a claim under the federal securities
laws.

 

   

 

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by state and
federal securities laws.

 

g) Nonwaiver 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, 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 and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation, any Notice of
Exercise, shall be in writing and delivered personally, by facsimile or e-mail,
or sent by a nationally recognized overnight courier service, addressed to the
Company, at 15150 Avenue of Science, Suite 200, San Diego, California 92128,
Attention: Chief Executive Officer, facsimile number (858) 605-9055, E-mail:
mfavish@guardionhealth.com, or such other facsimile number, email address or
address as the Company may specify for such purposes by notice to the Holders.
Any and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by facsimile or
e-mail, or sent by a nationally recognized overnight courier service addressed
to each Holder at the facsimile number, e-mail address or address of such Holder
appearing on the books of the Company. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the time of transmission, if such notice or communication is delivered via
facsimile at the facsimile number or via e-mail at the e-mail address set forth
in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the
next Trading Day after the time of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or via e-mail at the e-mail
address set forth in this Section on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company
or any Subsidiaries, the Company shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K.

 

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, on the one hand, and the Holder,
on the other hand.

 

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.

 

o) Warrant Agent Agreement . If this Warrant is held in global form through DTC
(or any successor depositary), this Warrant is issued subject to the Warrant
Agent Agreement. To the extent any provision of this Warrant conflicts with the
express provisions of the Warrant Agent Agreement, the provisions of this
Warrant shall govern and be controlling.

 

********************

 

(Signature Page Follows)

 

   

 

 

IN WITNESS WHEREOF, the Company has caused this Global Warrant to be executed by
its officer thereunto duly authorized as of the date first above indicated.

 

GUARDION HEALTH SCIENCES, INC.         By:     Name:                  Title:    

 

Dated: August 15, 2019

 

Countersigned:

 

VStock Transfer, LLC,

as Warrant Agent

 

By:     Name:        

  Title:  

 

   

 

 

NOTICE OF EXERCISE

 

TO: GUARDION HEALTH SCIENCES, INC.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[  ] if permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).

 

(3) Please issue said Warrant Shares in the name of the undersigned or in such
other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:

_______________________________________________________

 

Signature of Authorized Signatory of Investing Entity:

________________________________________________________

 

Name of Authorized Signatory:

________________________________________________________

 

Title of Authorized Signatory:

________________________________________________________

 

Date:
_____________________________________________________________________________