Blueprint








EXHIBIT 10.3











 



THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE
TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR
SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH
SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.


 



PURSUANT TO THE TERMS OF SECTION 1 OF THIS WARRANT, ALL OR A
PORTION OF THIS WARRANT MAY HAVE BEEN EXERCISED, AND THEREFORE THE
ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT MAY BE
LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.


 



VISUALANT, INCORPORATED


 



Series F Warrant To Purchase Common Stock


 



Warrant No.:
[_____________]


Number
of Shares of Common Stock: [___________]


Date of
Issuance: [__________, 2017] (“Issuance
Date”)


Registered
Holder: [______________________]


 



Visualant, Incorporated, a corporation organized under the laws of
the State of Nevada (the “Company”), hereby certifies
that, for value received, [●], with an address at
[●], or its assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from
the Company at any time after the Issuance Date until 5:00 p.m.,
E.D.T. on the [five (5) year anniversary] of the Issue Date (the
“Expiration Date”), up to [●] fully paid and
non-assessable shares of the Company’s common stock, par
value $0.001 per share (the “Common Stock”) at a per
share purchase price of $0.70. The aforedescribed purchase price
per share, as adjusted from time to time as herein provided, is
referred to herein as the “Purchase Price.” The number
and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that
certain Subscription Agreement (the “Subscription Agreement”), of even date
herewith, entered into by the Company and Holder. This
Warrant is one of a series of warrants (collectively, the
“Warrants”)
containing substantially identical terms and conditions issued
pursuant to the Preferred Stock and Warrant Purchase Agreement
(collectively, the “Subscription
Agreement”).

 

1. EXERCISE
OF WARRANT.

 



 

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(a) Mechanics of Exercise. Subject
to the terms and conditions hereof, this Warrant may be exercised
by the Holder on any day on or after the Issuance Date, in whole or
in part (but not as to fractional shares), by (i) delivery of a
written notice, in the form attached hereto as Exhibit A (the
“Exercise
Notice”), of the Holder’s election to exercise
this Warrant and (ii) if both (A) the Holder is not electing a
Cashless Exercise (as defined below) pursuant to Section 1(d) of
this Warrant and (B) a registration statement registering the
issuance of the Warrant Shares under the Securities Act of 1933, as
amended (the “Securities
Act”), is effective and available for the issuance of
the Warrant Shares, or an exemption from registration under the
Securities Act is available for the issuance of the Warrant Shares,
payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash
or wire transfer of immediately available funds (a
“Cash Exercise”)
(the items under (i) and (ii) above, the “Exercise Delivery Documents”). The
Holder shall not be required to surrender this Warrant in order to
effect an exercise hereunder; provided, however, that in the event
that this Warrant is exercised in full or for the remaining
unexercised portion hereof, the Holder shall deliver this Warrant
to the Company for cancellation within a reasonable time after such
exercise. On or before the first Trading Day following the date on
which the Company has received the Exercise Delivery Documents (the
date upon which the Company has received all of the Exercise
Delivery Documents, the “Exercise Date”), the Company shall
transmit by facsimile or e-mail transmission an acknowledgment of
confirmation of receipt of the Exercise Delivery Documents to the
Holder and the Company’s transfer agent for the Common Stock
(the “Transfer
Agent”). The Company shall deliver any objection to
the Exercise Delivery Documents on or before the second Trading Day
following the date on which the Company has received all of the
Exercise Delivery Documents. On or before the second Trading Day
following the date on which the Company has received all of the
Exercise Delivery Documents (the “Share Delivery Date”), the Company
shall, (X) provided
that the Transfer Agent is participating in The Depository Trust
Company (“DTC”)
Fast Automated Securities Transfer Program (the “FAST Program”) and so long as the
certificates therefor are not required to bear a legend regarding
restriction on transferability, upon the request of the Holder,
credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its
Deposit Withdrawal Agent Commission system, or (Y), if the Transfer
Agent is not participating in the FAST Program or if the
certificates are required to bear a legend regarding restriction on
transferability, issue and dispatch by overnight courier to the
address as specified in the Exercise Notice, a certificate,
registered in the Company’s share register in the name of the
Holder or its designee, for the number of shares of Common Stock to
which the Holder is entitled pursuant to such exercise. Upon
delivery of the Exercise Delivery Documents, the Holder shall be
deemed for all corporate purposes to have become the holder of
record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date such Warrant Shares are
credited to the Holder’s DTC account or the date of delivery
of the certificates evidencing such Warrant Shares, as the case may
be. If this Warrant is submitted in connection with any exercise
pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than
the number of Warrant Shares being acquired upon an exercise, then
the Company shall as soon as practicable and in no event later than
three Trading Days after any such submission and at its own
expense, issue a new Warrant (in accordance with Section 7(e))
representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant,
less the number of Warrant Shares with respect to which this
Warrant has been and/or is exercised. The Company shall pay any and
all taxes and other expenses of the Company (including overnight
delivery charges) that may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant;
provided,
however, that the
Company shall not be required to pay any tax which may be payable
in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than
that of the Holder or an affiliate thereof. The Holder shall be
responsible for all other tax liability that may arise as a result
of holding or transferring this Warrant or receiving Warrant Shares
upon exercise hereof.

 



 

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(b) Exercise Price. For purposes of
this Warrant, “Exercise
Price” means $0.70 subject to adjustment as provided
herein.

 


(c) Company’s Failure to Timely
Deliver Securities. If the Company shall fail for any reason
or for no reason to issue to the Holder within three (3) Business
Days of the Exercise Date a certificate for the number of shares of
Common Stock to which the Holder is entitled and register such
shares of Common Stock on the Company’s share register or to
credit the Holder’s balance account with DTC for such number
of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise of this Warrant, and if on or after such
Trading Day the Holder purchases, or another Person purchasers on
the Holder’s behalf or for the Holder’s account (in an
open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of shares of Common
Stock issuable upon such exercise that the Holder anticipated
receiving from the Company (a “Buy-In”), then the Company
shall, within three (3) Business Days after the Holder’s
written request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
(the “Buy-In
Price”), at which point the Company’s obligation
to deliver such certificate (and to issue such Warrant Shares)
shall terminate, or (ii) promptly honor its obligation to deliver
to the Holder a certificate or certificates representing such
Warrant Shares and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) the Closing Bid Price
on the date of exercise.

 


(d) Cashless Exercise.
Notwithstanding anything contained herein to the contrary, if at
any time after the Issuance Date a registration statement covering
the Warrant Shares that are the subject of the Exercise Notice (the
“Unavailable Warrant
Shares”) is not available for the resale of such
Unavailable Warrant Shares, the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Exercise Price,
elect instead to receive upon such exercise the “Net Number” of shares of
Common Stock determined according to the following formula (a
“Cashless
Exercise”):

 


Net
Number = (A x B) - (A x
C)


B


For
purposes of the foregoing formula:

 




A=


the
total number of shares with respect to which this Warrant is then
being exercised.





 




B=


the
volume weighted average price of the Closing Sale Prices of the
shares of Common Stock the date immediately preceding the date of
the Exercise Notice.





 



 

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C=


the
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.






 


(e) Rule 144. For purposes of Rule
144(d) promulgated under the Securities Act, as in effect on the
date hereof, assuming the Holder is not an affiliate of the
Company, it is intended that the Warrant Shares issued in a
Cashless Exercise shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was originally
issued pursuant to the Subscription Agreement.

 


(f) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the volume
weighted average price of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed.

 


(g) Beneficial Ownership. The
Company shall not effect the exercise of this Warrant, and the
Holder shall not have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, such Person
(together with such Person’s affiliates) would beneficially
own in excess of 4.99% (the “Maximum Percentage”) of the shares
of Common Stock outstanding immediately after giving effect to such
exercise. For purposes of the foregoing sentence, the aggregate
number of shares of Common Stock beneficially owned by such Person
and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (i) exercise of
the remaining, unexercised portion of this Warrant beneficially
owned by such Person and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other
securities of the Company beneficially owned by such Person and its
affiliates (including, without limitation, any convertible notes or
convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). For purposes of
this Warrant, in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in the most recent of (1) the
Company’s most recent Form 10-K, Form 10-Q, Current Report on
Form 8-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or
oral request of the Holder, the Company shall within two (2)
Business Days confirm 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 and its affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. By written notice to the Company, the Holder may from
time to time increase or decrease the Maximum Percentage to any
other percentage not in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the
Company, and (ii) any such increase or decrease will apply only to
the Holder. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this Section 1(g) 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.

 



 

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2. Adjustment
for Reorganization, Consolidation, Merger, etc.

 


(a) Adjustment upon Issuance of shares of
Common Stock. Until the
Expiration Date, if the Company shall issue any Common Stock,
except for Excepted Issuances, prior to the complete exercise of
this Warrant for a consideration less than the Purchase Price that
would be in effect at the time of such issuance, then, and
thereafter successively upon each such issuance, the Purchase Price
shall be reduced to such other lower price for then outstanding
Warrants. For purposes of this adjustment, the issuance of any
security or debt instrument of the Company carrying the right to
convert such security or debt instrument into Common Stock or of
any warrant to purchase Common Stock shall result in an adjustment
to the Purchase Price upon the issuance of the of the
above-described security, debt instrument, warrant, right, or
option if such security or debt instrument may be converted or
exercised at a price lower than the Purchase Price in effect upon
such issuance and again at any time upon any actual, permitted,
optional, or allowed issuances of shares of Common Stock upon any
actual, permitted, optional, or allowed exercise of such conversion
or purchase rights if such issuance is at a price lower than the
Purchase Price in effect upon any actual, permitted, optional, or
allowed such issuance. Common Stock issued or issuable by the
Company for no consideration will be deemed issuable or to have
been issued for $0.001 per share of Common
Stock.

 


(b) Voluntary Adjustment by
Company. The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors
of the Company.

 


(c) Adjustment upon Subdivision or
Combination of Common Stock. If the Company at any time on
or after the Subscription Date subdivides (by any stock split,
stock dividend, recapitalization, reorganization, scheme,
arrangement or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be
proportionately increased. If the Company at any time on or after
the Subscription Date combines (by any stock split, stock dividend,
recapitalization, reorganization, scheme, arrangement or otherwise)
one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately
decreased. Any adjustment under this Section 2(c) shall become
effective at the close of business on the date the subdivision or
combination becomes effective.

 


(d) Other Events. If any event
occurs of the type contemplated by the provisions of this Section 2
but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights or
phantom stock rights), then the Company’s Board of Directors
will make an appropriate adjustment in the Exercise Price and the
number of Warrant Shares so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 2(d) will
increase the Exercise Price or decrease the number of Warrant
Shares as otherwise determined pursuant to this Section
2.

 



 

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3. RIGHTS UPON DISTRIBUTION OF
ASSETS.

 


(a) If the Company, at
any time while this Warrant is outstanding, shall distribute to all
holders of Common Stock (and not to the Holders) evidences of its
indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security other
than the Common Stock (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),
then in each such case the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator
shall be the Weighted Average Price determined as of the record
date mentioned above, and of which the numerator shall be such
Weighted Average Price on such record date less the then per share
fair market value at such record date of the portion of such assets
or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be
described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned
above.

 


4. PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.

 


(a) Purchase Rights.  In
addition to any adjustments pursuant to Section 2 above, if at any
time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class 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 the exercise of this Warrant) 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.

 

 

 



 

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(b) Fundamental Transactions. The
Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing (unless
the Company is the Successor Entity) all of the obligations of the
Company under this Warrant and the other Transaction Documents in
accordance with the provisions of this Section (4)(b) pursuant to
written agreements in form and substance reasonably satisfactory to
the Required Holders and approved by the Required Holders prior to
such Fundamental Transaction, including agreements to deliver to
each holder of the Warrants in exchange for such Warrants a
security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant,
including, without limitation, an adjusted exercise price equal to
the value for the shares of Common Stock reflected by the terms of
such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of
Common Stock acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this
Warrant) prior to such Fundamental Transaction, and reasonably
satisfactory to the Required Holders. Upon the occurrence of any
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. Upon consummation of the Fundamental
Transaction, the Successor Entity shall deliver to the Holder
confirmation that there shall be issued upon exercise of this
Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of Common Stock (or other
securities, cash, assets or other property) issuable upon the
exercise of the Warrant prior to such Fundamental Transaction, such
shares of the publicly traded common stock or common shares (or its
equivalent) of the Successor Entity (including its Parent Entity)
which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had this Warrant been
converted immediately prior to such Fundamental Transaction, as
adjusted in accordance with the provisions of this Warrant. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the Corporate Event
but prior to the Expiration Date, in lieu of shares of Common Stock
(or other securities, cash, assets or other property) purchasable
upon the exercise of this Warrant prior to such Corporate Event,
such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or
subscription rights) which the Holder would have been entitled to
receive upon the happening of such Corporate Event had this Warrant
been exercised immediately prior to such Corporate Event. Provision
made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Required Holders. The
provisions of this Section 4(b) shall apply similarly and equally
to successive Fundamental Transactions and Corporate Events and
shall be applied without regard to any limitations on the exercise
of this Warrant.

 


(c) Black Scholes Value.
Notwithstanding the foregoing and the provisions of Section 4(b)
above, in the event of the consummation of a Fundamental
Transaction that is (1) an all-cash transaction, (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the
Exchange Act or (3) a Fundamental Transaction involving a person or
entity not traded on an Eligible Market, at the request of the
Holder delivered at any time commencing on the earliest to occur of
(x) the public disclosure of the Fundamental Transaction or (y) the
consummation of the Fundamental Transaction, through the date that
is ninety (90) days after the public disclosure of the consummation
of such Fundamental Transaction by the Company pursuant to a
Current Report on Form 8-K filed with the SEC, the Company or the
Successor Entity (as the case may be) shall purchase this Warrant
from the Holder on the later of (i) the date of consummation of the
Fundamental Transaction and (ii) the fifth Trading Day following
the date of such request, in each case by paying to the Holder cash
in an amount equal to the Black Scholes Value.

 


(d) Applicability to Successive
Transactions. The provisions of this Section shall apply
similarly and equally to successive Fundamental Transactions and
Corporate Events and shall be applied without regard to any
limitations on the exercise of this Warrant.

 



 

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5. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation, Bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, and will at all
times in good faith comply with all the provisions of this Warrant
and take all actions consistent with effectuating the purposes of
this Warrant. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, (ii)  shall take all such
actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii)
shall, so long as this Warrant is outstanding, take all action
necessary to reserve and keep available out of its authorized and
unissued shares of Common Stock, solely for the purpose of
effecting the exercise of this Warrant, 100% of the number of
shares of Common Stock issuable upon exercise of this Warrant then
outstanding (without regard to any limitations on
exercise).

 


6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a
holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company
for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in such Person’s
capacity as the Holder of this Warrant, 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 stock, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is
then entitled to receive upon the due exercise of this Warrant. In
addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of
the Company, whether such liabilities are asserted by the Company
or by creditors of the Company.

 


7. REISSUANCE OF
WARRANTS.

 


(a) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company and deliver the completed and executed
Assignment Form, in the form attached hereto as Exhibit B, whereupon the
Company will forthwith issue and deliver upon the order of the
Holder a new Warrant (in accordance with Section 7(d)), registered
as the Holder may request, representing the right to purchase the
number of Warrant Shares being transferred by the Holder and, if
less than the total number of Warrant Shares then underlying this
Warrant is being transferred, a new Warrant (in accordance with
Section 7(d)) to the Holder representing the right to purchase the
number of Warrant Shares not being transferred.

 


(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares
then underlying this Warrant.

 



 

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(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender; provided, however, that no Warrants for fractional
shares of Common Stock shall be given.

 


(d) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to
the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares
then underlying this Warrant (or in the case of a new Warrant being
issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares
designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.

 


8. Stock to be Reserved. The
Corporation will at all times reserve and keep available out of its
authorized but unissued Common Stock solely for the purpose of
issuance upon exercise of this Warrant as herein provided, such
number of shares of Common Stock equal to two hundred percent
(200%) of the amount of Common Stock as shall then be issuable upon
the exercise of this Warrant. All shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid
and nonassessable and free from all liens, duties and charges
arising out of or by reason of the issue thereof (including,
without limitation, in respect of taxes) and, without limiting the
generality of the foregoing, the Corporation covenants that it will
from time to time take all such action as may be requisite to
assure that the par value per share of the Common Stock is at all
times equal to or less than the effective Exercise Price. The
Corporation will take all such action within its control as may be
necessary on its part to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or
regulation, or of any requirements of any national securities
exchange upon which the Common Stock of the Corporation may be
listed.

 


9. NOTICES. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with
Section 9.4 of the Subscription Agreement.

 


10. AMENDMENT AND WAIVER. Except as
otherwise provided herein, the provisions of this Warrant may be
amended and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only
if the Company has obtained the written consent of the Required
Holders. Any such amendment shall apply to all Warrants and be
binding upon all registered holders of such Warrants.

 



 

9







 





 


11. GOVERNING
LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. This
Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the
choice of law provisions thereof. The Company and, by accepting
this Warrant, the Holder, each irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Warrant
and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served
on each party hereto anywhere in the world by the same methods as
are specified for the giving of notices under this Warrant. The
Company and, by accepting this Warrant, the Holder, each
irrevocably consents to the jurisdiction of any such court in any
such suit, action or proceeding and to the laying of venue in such
court. The Company and, by accepting this Warrant, the Holder, each
irrevocably waives any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.
EACH OF THE COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A
TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

 


12. CONSTRUCTION; HEADINGS. This
Warrant shall be deemed to be jointly drafted by the Company and
the Holder and shall not be construed against any person as the
drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation
of, this Warrant.

 


13. DISPUTE RESOLUTION. In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
submit the disputed determinations or arithmetic calculations via
facsimile within two (2) Business Days of receipt of the Exercise
Notice giving rise to such dispute, as the case may be, to the
Holder. If the Holder and the Company are unable to agree upon such
determination or calculation of the Exercise Price or the Warrant
Shares within three Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the
Company shall, within two (2) Business Days submit via facsimile
(a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and
approved by the Holder, which approval shall not be unreasonably
withheld, or (b) the disputed arithmetic calculation of the Warrant
Shares to the Company’s independent, outside accountant. The
Company shall cause the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and
notify the Company and the Holder of the results no later than ten
Business Days from the time it receives the disputed determinations
or calculations. The prevailing party in any dispute resolved
pursuant to this Section 12 shall be entitled to the full amount of
all reasonable expenses, including all costs and fees paid or
incurred in good faith, in relation to the resolution of such
dispute. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

 


14. REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available
under this Warrant, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder to pursue actual damages
for any failure by the Company to comply with the terms of this
Warrant.

 



 

10







 





 


15. TRANSFER. Subject to applicable
laws, this Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company

 


16. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the
following meanings:

 

(a) “Affiliate”, as applied to any
Person, means any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person. For the
purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”,
“controlled by” and “under common control
with”), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or
otherwise.

 

(b) “Approved Stock Plan” means any
employee benefit plan or other issuance, employment agreement or
option grant or similar agreement which has been approved by the
Board of Directors of the Company, pursuant to which the
Company’s securities may be issued to any employee,
consultant, officer or director for services provided to the
Company.

 


(c) “Black Scholes Value” means the
value of the unexercised portion of this Warrant remaining on the
date of the Holder’s request pursuant to Section 4(c), which
value is calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing
(i) an underlying price per share equal to the greater of (1) the
highest Closing Sale Price of the Common Stock during the period
beginning on the Trading Day immediately preceding the earlier to
occur of (x) the public disclosure of the applicable Fundamental
Transaction or (y) the consummation of the applicable Fundamental
Transaction and ending on the Trading Day of the consummation of
the Fundamental Transaction and (2) the sum of the price per share
being offered in cash in the applicable Fundamental Transaction (if
any) plus the value of the non-cash consideration being offered in
the applicable Fundamental Transaction (if any), (ii) a strike
price equal to the Exercise Price in effect on the date of the
Holder’s request pursuant to Section 4(c), (iii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the greater of (1) the remaining term of this Warrant as
of the date of the Holder’s request pursuant to Section 4(c)
and (2) the remaining term of this Warrant as of the date of
consummation of the applicable Fundamental Transaction or as of the
date of the Holder’s request pursuant to Section 4(c) if such
request is prior to the date of the consummation of the applicable
Fundamental Transaction and (iv) an expected volatility equal to
the greater of 100% and the 100 day volatility obtained from the
HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following
the public disclosure of the applicable Fundamental
Transaction.

 


(d) “Bloomberg” means Bloomberg
Financial Markets.

 



 

11







 





 


(e) “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks
in The City of New York are authorized or required by law to remain
closed.

 


(f) “Closing Bid Price” and
“Closing Sale
Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price
or the closing trade price, as the case may be, then the last bid
price or the last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or
trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
cannot be calculated for a security on a particular date on any of
the foregoing bases, the Closing Bid Price or the Closing Sale
Price, as the case may be, of such security on such date shall be
the fair market value as mutually determined by the Company and the
Holder. All such determinations to be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.

 


(g) “Common Stock” means
(i) the Company’s shares of Common Stock, par value
$0.001 per share, and (ii) any share capital into which such
Common Stock shall have been changed or any share capital resulting
from a reclassification of such Common Stock.

 


(h) “Convertible Securities”
means any stock or securities (other than Options) directly or
indirectly convertible into or exercisable or exchangeable for
shares of Common Stock.

 


(i) “Eligible Market” means the
Principal Market, The New York Stock Exchange, Inc., The NYSE MKT,
The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ
Global Select Market.


 


(j)  “Excepted Issuance” means:
Excepted Issuances means: (i) the
Company’s issuance of Common Stock in full or partial
consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or
assets of a corporation or other entity, so long as such issuances
are not for the purpose of raising capital and which holders of
such securities or debt are not at any time granted registration
rights, (ii) the Company’s issuance of Common Stock or the
issuances or grants of Options to purchase Common Stock to
employees, directors, and consultants, pursuant to Approved Stock
Plans at or above Fair Market Value, (iii) securities upon the
exercise or exchange of or conversion of any securities exercisable
or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Warrant and pursuant to
terms and conditions that have not been amended since the date
hereof, and (iv) issuance of Common Stock as a result of the
exercise of this Warrant.

 



 

12







 





 


(k) “Fundamental Transaction”
means that the Company shall, directly or indirectly, in one or
more related transactions, (i) consolidate or merge with or into
(whether or not the Company is the surviving corporation) another
Person (but excluding a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the
Company), or (ii) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of
the Company to another Person, or (iii) allow another Person to
make a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the Person
or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange
offer), or (iv) consummate a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires
more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with
the other Persons making or party to, such stock purchase agreement
or other business combination), (v) reorganize, recapitalize or
reclassify its Common Stock, or (vi) any “person” or
“group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act) is or shall become
the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding Common
Stock.

 


(l)  “Options” means any
rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

 


(m) “Parent Entity” of a Person
means an entity that, directly or indirectly, controls the
applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is
more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date
of consummation of the Fundamental Transaction.

 


(n) “Person” means an
individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization,
any other entity and a government or any department or agency
thereof.

 


(o) “Principal Market” means the
OTCQB.

 


(p) “Registration Rights
Agreement” means the Registration Rights Agreement, in
the form of Exhibit
C to the Subscription Agreement, entered into by the Company
and the original Holders pursuant to the Subscription
Agreement.

 


(q) “Required Holders” means, as
of any date, the holders of at least a 85% of the Warrants
outstanding as of such date.

 



 

13







 





 


(r) “Successor Entity” means the
Person (or, if so elected by the Holder, the Parent Entity) formed
by, resulting from or surviving any Fundamental Transaction or the
Person (or, if so elected by the Holder, the Parent Entity) with
which such Fundamental Transaction shall have been entered
into.

 


(s) “Trading Day” means any day
on which the Common Stock are traded on the Principal Market, or,
if the Principal Market is not the principal trading market for the
Common Stock, then on the principal securities exchange or
securities market on which the Common Stock are then traded;
provided that
“Trading Day” shall not include any day on which the
Common Stock are scheduled to trade on such exchange or market for
less than 4.5 hours or any day that the Common Stock are suspended
from trading during the final hour of trading on such exchange or
market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during
the hour ending at 4:00:00 p.m., New York time).

 


(t) “Weighted Average Price”
means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market during the
period beginning at 9:30:01 a.m., New York time (or such other time
as the Principal Market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other
time as the Principal Market publicly announces is the official
close of trading), as reported by Bloomberg through its
“Volume at Price” function or, if the foregoing does
not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30:01
a.m., New York time (or such other time as the Principal Market
publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York time (or such other time as the Principal
Market publicly announces is the official close of trading), as
reported by Bloomberg, or, if no dollar volume-weighted average
price is reported for such security by Bloomberg for such hours,
the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported
on the Over the Counter Marketplace. If the Weighted Average Price
cannot be calculated for a security on a particular date on any of
the foregoing bases, the Weighted Average Price of such security on
such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 12 with the term
“Weighted Average Price” being substituted for the term
“Exercise Price.” All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable
calculation period.

 



 [Signature Page Follows]


 


 


 


 


 


 


 




 

14








 






 


IN WITNESS WHEREOF, the Company has
caused this Warrant to Purchase Common Stock to be duly executed as
of the Issuance Date set out above.


 


 


	

 

	
VISUALANT,
INCORPORATED

	

 


	

 

	

 

	

 

	

 


	

 

	

 

	

 

	

 


	
 

	
By:  

	
 

	

 


	

 

	

Name:
Ronald P. Erickson


	

 


	

 

	

Title:
President and Chief Executive Officer 



	

 







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 

15








 







  EXHIBIT A


 



EXERCISE NOTICE



TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS



WARRANT TO PURCHASE COMMON STOCK


 



VISUALANT, INCORPORATED


 


The
undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock (“Warrant Shares”) of
Visualant, Incorporated, a Nevada corporation (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized
terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.


 


1.
Form of Exercise
Price. The Holder intends that payment of the Exercise Price
shall be made as:


 



____________ 

a
“Cash
Exercise” with respect to _________________ Warrant
Shares; and/or






 



____________ 

a
“Cashless
Exercise” with respect to _______________ Warrant
Shares.






 


2.
Payment of Exercise
Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be
issued pursuant hereto, the holder shall pay the Aggregate Exercise
Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.


 


3.
Delivery of Warrant
Shares. The Company shall deliver to the holder __________
Warrant Shares in accordance with the terms of the Warrant and,
after delivery of such Warrant Shares, _____________ Warrant Shares
remain subject to the Warrant.


 


Date:
_______________ __, ______


 


 


______________________________




   Name
of Registered Holder


 


 



By:        
__________________________



Name:


Title:


 



A-1









 







  EXHIBIT B


 



ASSIGNMENT FORM

 



VISUALANT, INCORPORATED

 



(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)

 


FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

 


	

Name:

	
__________________________________________




	
 

	

(Please
Print)


 


	

Address:

	
__________________________________________




	
 

	

(Please
Print)


 


	

Dated:
_______________ __, ______


 

	
 


	

Holder’s
Signature:                                                                 


 

	
 


	

Holder’s
Address:                                                                 


 

	
 







NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing
Warrant.


 


 


 

 


 



B-1