Blueprint








EXHIBIT
10.1











 



PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

 


 


THIS
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
(“Agreement”) is made as of the ____ day of
_______________ 2017 by and among Visualant, Incorporated, a Nevada
corporation (the “Company”), and the Investor(s) set
forth on the signature pages affixed hereto (each an
“Investor” and collectively the
“Investors”).

 



Recitals

 


A.           The
Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Section 4(a)(2) of the
Securities Act of 1933, as amended, and Regulation D
(“Regulation D”), as promulgated by the U.S. Securities
and Exchange Commission (the “SEC”) thereunder;
and

 


B.           The
Investors wish to purchase from the Company, and the Company wishes
to sell and issue to the Investors, upon the terms and conditions
stated in this Agreement, (i) an aggregate of up to 3,906,250 shares (the
“Shares”) of the Company’s Series D Preferred
Stock, par value $0.001 par value (the “Preferred
Stock”), for an aggregate purchase price of up to $2,734,375,
such Preferred Stock to have the relative rights, preferences,
limitations and designations set forth in the Amended and Restated
Certificate of Designation set forth in Exhibit A attached hereto (the
“Amended and Restated Certificate of Designation”) and
to be convertible into shares of the Company’s Common Stock,
par value $0.001 per share (together with any securities into which
such shares may be reclassified, whether by merger, charter
amendment or otherwise, the “Common Stock”), at a
conversion price of $0.70 per Share (subject to adjustment) and
(ii) Series F Warrants to purchase an aggregate of 3,906,250 shares
of Common Stock (subject to adjustment) (the “Warrant
Shares”) at an exercise price of $0.70 per share (subject to
adjustment) in the form attached hereto as Exhibit B (the
“Warrants”); and

 


C.           Contemporaneous
with the sale of the Shares and Warrants, the parties hereto will
execute and deliver an Amended and Restated Registration Rights
Agreement, in the form attached hereto as Exhibit C (the “Amended
and Restated Certificate of Designation”), pursuant to which
the Company will agree to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, and applicable state securities
laws.

 


In
consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as
follows:

 


1.           Definitions.
In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms
shall have the meanings set forth below:

 



 

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“Affiliate” means, with
respect to any Person, any other Person which directly or
indirectly through one or more intermediaries Controls, is
controlled by, or is under common Control with, such
Person.

 


“Business Day” means a
day, other than a Saturday or Sunday, on which banks in New York
City are open for the general transaction of business.

 


“Company’s
Knowledge” means the actual knowledge of the executive
officers (as defined in Rule 405 under the 1933 Act) of the
Company, after due inquiry.

 


“Control” (including the
terms “controlling”, “controlled by” or
“under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or
otherwise.

 


“Conversion Shares” means
the shares of Common Stock issuable upon conversion of the
Shares.

 


“Effective Date” means the
date on which the initial Registration Statement is declared
effective by the SEC.

 


“Effectiveness Deadline”
means the date on which the initial Registration Statement is
required to be declared effective by the SEC under the terms of the
Amended and Restated Certificate of Designation.

 


“Insider” means each
director, executive officer, other officer of the Company
participating in the offering, any beneficial owner of 20% or more
of the Company’s outstanding voting equity securities,
calculated on the basis of voting power, and any promoter connected
with the Company in any capacity on the date hereof.

 


“Material Adverse Effect”
means a material adverse effect on (i) the assets, liabilities,
results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as
a whole, or (ii) the ability of the Company to perform its
obligations under the Transaction Documents.

 


“Material Contract” means
any contract, instrument or other agreement to which the Company or
any Subsidiary is a party or by which it is bound which is material
to the business of the Company and its Subsidiaries, taken as a
whole, including those that have been filed or were required to
have been filed as an exhibit to the SEC Filings pursuant to Item
601(b)(4) or Item 601(b)(10) of Regulation S-K.

 


“Person” means an
individual, corporation, partnership, limited liability company,
trust, business trust, association, joint stock company, joint
venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically
listed herein.

 


“Purchase Price” means up
to Two Million Seven Hundred Thirty Four Thousand Three Hundred
Seventy Five Dollars ($2,734,375).

 



 

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“Registration Statement”
has the meaning set forth in the Amended and Restated Certificate
of Designation.

 


“Required Investors” means
Investors who, together with their Affiliates, beneficially own
(calculated in accordance with Rule 13d-3 under the 1934 Act
without giving effect to any limitation on the conversion of the
Preferred Stock set forth therein and any limitation on the
exercise of the Warrants set forth therein) 85% of the Conversion
Shares and the Warrant Shares issuable pursuant
hereto.

 


“SEC Filings” has the
meaning set forth in Section 4.6.

 


“Securities” means the
Shares, the Conversion Shares, the Warrants and the Warrant
Shares.

 


“Subsidiary” of any Person
means another Person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors
or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or
indirectly by such first Person.

 


“Transaction Documents”
means this Agreement, the Amended and Restated Certificate of
Designation, the Warrants and the Amended and Restated Certificate
of Designation.

 


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

 


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

 


2.           Purchase
and Sale of the Shares and Warrants. Subject to the terms
and conditions of this Agreement, on the Closing Date, each of the
Investors shall severally, and not jointly, purchase, and the
Company shall sell and issue to each Investor, the Shares and
Warrants in the respective amounts set forth opposite such
Investor’s name on the signature pages attached hereto in
exchange for the portion of the Purchase Price as specified in
Section 3 below.

 


3.           Closing.
Upon confirmation that the other conditions to closing specified
herein have been satisfied or duly waived by the Investors, the
Company shall file the Amended and Restated Certificate of
Designation with the Secretary of State of Nevada. Upon
confirmation that the Amended and Restated Certificate of
Designation has been filed and has become effective and the other
conditions to closing specified herein have been satisfied or duly
waived by the Investors, unless other arrangements have been made
with a particular Investor, (i) each Investor shall promptly cause
a wire transfer in same day funds to be sent to the account of the
Company as instructed in writing by the Company, in an amount
representing such Investor’s pro rata portion of the Purchase
Price as set forth on the signature pages to this Agreement and
(ii) the Company shall mail to each Investor or its designee by
overnight courier, a certificate or certificates, registered in
such name or names as the Investors may designate, representing the
Shares and Warrants purchased by such Investor. The date on which
such transactions are consummated is hereinafter referred to as the
“Closing Date.” The closing of the purchase and sale of
the Shares and Warrants (the “Closing”) shall take
place at the offices of Lucosky Brookman, 101 Wood Avenue South,
Woodbridge, New Jersey 08830 concurrently with the execution of
this Agreement or at such other location and on such other date as
the Company and the Investors shall mutually agree.

 



 

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4.           Representations
and Warranties of the Company. The Company hereby represents
and warrants to the Investors that, except as set forth in the SEC
Filings:

 


4.
1           Organization,
Good Standing and Qualification. Each of the Company and its
Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority
to carry on its business as now conducted and to own or lease its
properties. Each of the Company and its Subsidiary is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and
could not reasonably be expected to have a Material Adverse Effect.
The Company’s only Subsidiary is TransTech Systems, Inc., an
Oregon corporation.

 


4.2           Authorization.
The Company has full power and authority and, except for the filing
of the Amended and Restated Certificate of Designation with the
Secretary of State of Nevada, has taken all requisite action on the
part of the Company, its officers, directors and stockholders
necessary for (i) the authorization, execution and delivery of the
Transaction Documents, (ii) the authorization of the performance of
all obligations of the Company hereunder or thereunder, and (iii)
the authorization, issuance (or reservation for issuance) and
delivery of the Securities. The Transaction Documents constitute
the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally and to general equitable principles.

 


4.3           Capitalization.
Company’s Quarterly Report on Form 10-Q for the quarter ended
December 31, 2016 (the “December 2016 Form 10-Q”) sets
forth as of the date thereof (a) the authorized capital stock of
the Company; (b) the number of shares of capital stock issued and
outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company’s stock plans; and (d) the number of
shares of capital stock issuable and reserved for issuance pursuant
to securities (other than the Shares and the Warrants) exercisable
for, or convertible into or exchangeable for any shares of capital
stock of the Company. All of the issued and outstanding shares of
the Company’s capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of
pre-emptive rights and were issued in full compliance with
applicable state and federal securities law and any rights of third
parties. All of the issued and outstanding shares of capital stock
of each Subsidiary have been duly authorized and validly issued and
are fully paid, nonassessable and free of pre-emptive rights, were
issued in full compliance with applicable state and federal
securities law and any rights of third parties and are owned by the
Company, beneficially and of record, subject to no lien,
encumbrance or other adverse claim. Except as described in the SEC
Filings (as defined below), no Person is entitled to pre-emptive or
similar statutory or contractual rights with respect to any
securities of the Company. Except as described in the SEC Filings,
there are no outstanding warrants, options, convertible securities
or other rights, agreements or arrangements of any character under
which the Company or any of its Subsidiaries is or may be obligated
to issue any equity securities of any kind. Except as described in
the SEC Filings, there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other
agreements of any kind among the Company and any of the security
holders of the Company relating to the securities of the Company
held by them. Except as described in the SEC Filings, no Person has
the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for
its own account or for the account of any other
Person.

 



 

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The
issuance and sale of the Securities hereunder will not obligate the
Company to issue shares of Common Stock or other securities to any
other Person (other than the Investors) and will not result in the
adjustment of the exercise, conversion, exchange or reset price of
any outstanding security, except for such rights as have been
irrevocably waived with respect to the issuance and sale of the
Securities hereunder on or prior to the date hereof.

 


The
Company does not have outstanding stockholder purchase rights or
“poison pill” or any similar arrangement in effect
giving any Person the right to purchase any equity interest in the
Company upon the occurrence of certain events.

 


4.4           Valid
Issuance. Upon the filing of the Amended and Restated
Certificate of Designation with the Secretary of State of Nevada,
the Shares will have been duly and validly authorized and, when
issued and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and shall be free and clear
of all encumbrances and restrictions (other than those created by
the Investors), except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws.
Upon the due conversion of the Shares, the Conversion Shares will
be validly issued, fully paid and non-assessable and free and clear
of all encumbrances and restrictions, except for restrictions on
transfer set forth in the Transaction Documents or imposed by
applicable securities laws. The Company has reserved a sufficient
number of shares of Common Stock for issuance upon the conversion
of the Shares. The Warrants have been duly and validly authorized.
Upon the due exercise of the Warrants, the Warrant Shares will be
validly issued, fully paid and non-assessable free and clear of all
encumbrances and restrictions, except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable
securities laws and except for those created by the Investors. The
Company has reserved a sufficient number of shares of Common Stock
for issuance upon the exercise of the Warrants.

 


4.5           Consents.
Except for the filing of the Amended and Restated Certificate of
Designation with the Secretary of State of Nevada, the execution,
delivery and performance by the Company of the Transaction
Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than
filings that have been made pursuant to applicable state securities
laws and post-sale filings pursuant to applicable state and federal
securities laws which the Company undertakes to file within the
applicable time periods. Subject to the accuracy of the
representations and warranties of each Investor set forth in
Section 5 hereof, the Company has taken all action necessary to
exempt (i) the issuance and sale of the Securities, (ii) the
issuance of the Conversion Shares upon due conversion of the
Shares, (iii) the issuance of the Warrant Shares upon due exercise
of the Warrants, and (iv) the other transactions contemplated by
the Transaction Documents from the provisions of any stockholder
rights plan or other “poison pill” arrangement, any
anti-takeover, business combination or control share law or statute
binding on the Company or to which the Company or any of its assets
and properties may be subject and any provision of the
Company’s Certificate of Incorporation or Bylaws that is or
could reasonably be expected to become applicable to the Investors
as a result of the transactions contemplated hereby, including
without limitation, the issuance of the Securities and the
ownership, disposition or voting of the Securities by the Investors
or the exercise of any right granted to the Investors pursuant to
this Agreement or the other Transaction Documents.

 



 

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4.6           Delivery
of SEC Filings; Business. The Company has made available to
the Investors through the EDGAR system, true and complete copies of
the Company’s most recent Annual Report on Form 10-K for the
fiscal year ended September 30, 2016 (the “10-K”), and
all other reports filed by the Company pursuant to the 1934 Act
since the filing of the 10-K and prior to the date hereof,
including, without limitation, the December 2016 Form 10-Q
(collectively, the “SEC Filings”). The SEC Filings are
the only filings required of the Company pursuant to the 1934 Act
for such period. The Company and its Subsidiaries are engaged in
all material respects only in the business described in the SEC
Filings and the SEC Filings contain a complete and accurate
description in all material respects of the business of the Company
and its Subsidiaries, taken as a whole.

 


4.7           Use
of Proceeds. The net proceeds of the sale of the Shares and
the Warrants hereunder shall be used by the Company for repayment
of existing debt up to a maximum of $210,000 and general working
capital purposes.

 


4.8           No
Material Adverse Change. Since September 30, 2016, except as
identified and described in the SEC Filings, there has not
been:

 


(i)           any
change in the consolidated assets, liabilities, financial condition
or operating results of the Company from that reflected in the
financial statements included in the December 2016 Form 10-Q,
except for changes in the ordinary course of business which have
not had and could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate;

 


(ii)           any
declaration or payment of any dividend, or any authorization or
payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the
Company;

 


(iii)           any
material damage, destruction or loss, whether or not covered by
insurance to any assets or properties of the Company or its
Subsidiaries;

 



 

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(iv)           any
waiver, not in the ordinary course of business, by the Company or
any Subsidiary of a material right or of a material debt owed to
it;

 


(v)           any
satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company or a Subsidiary, except in
the ordinary course of business and which is not material to the
assets, properties, financial condition, operating results or
business of the Company and its Subsidiaries taken as a whole (as
such business is presently conducted and as it is proposed to be
conducted);

 


(vi)           other
than the Amended and Restated Certificate of Designation, any
change or amendment to the Company's Certificate of Incorporation
or Bylaws, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to
which any of their respective assets or properties is
subject;

 


(vii)           any
material labor difficulties or labor union organizing activities
with respect to employees of the Company or any
Subsidiary;

 


(viii)        
any material transaction entered into by the Company or a
Subsidiary other than in the ordinary course of
business;

 


(ix)           the
loss of the services of any key employee, or material change in the
composition or duties of the senior management of the Company or
any Subsidiary;

 


(x)           the
loss or threatened loss of any customer which has had or could
reasonably be expected to have a Material Adverse Effect;
or

 


(xi)           any
other event or condition of any character that has had or could
reasonably be expected to have a Material Adverse
Effect.

 


4.9           SEC
Filings; S-3 Eligibility.

 


(a)           At
the time of filing thereof, the SEC Filings complied as to form in
all material respects with the requirements of the 1934 Act and did
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not
misleading.

 


(b)           The
Company is not currently eligible to use Form S-3 to register the
Registrable Securities (as such term is defined in the Amended and
Restated Certificate of Designation) for sale or other disposition
by the Investors as contemplated by the Amended and Restated
Certificate of Designation.

 



 

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4.10           No
Conflict, Breach, Violation or Default. Subject to the
filing of the Amended and Restated Certificate of Designation with
the State of Nevada, the execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the
Securities will not (i) conflict with or result in a breach or
violation of (a) any of the terms and provisions of, or constitute
a default under the Company’s Certificate of Incorporation or
the Company’s Bylaws, both as in effect on the date hereof
(true and complete copies of which have been made available to the
Investors through the EDGAR system), or (b) any statute, rule,
regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company,
any Subsidiary or any of their respective assets or properties, or
(ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under,
result in the creation of any lien, encumbrance or other adverse
claim upon any of the properties or assets of the Company or any
Subsidiary or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time
or both) of, any Material Contract.

 


4.11           Registration
of Common Stock. The Common Stock is registered pursuant to
Section 12(g) of the 1934 Act and is quoted on OTCQB maintained by
OTC Markets Group Inc. (the “OTCQB”), and the Company
has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the 1934 Act
or removal from quotation of the Common Stock from the OTCQB, nor
has the Company received any notification that the SEC, the OTCQB
or the Financial Industry Regulatory Authority, Inc. is
contemplating terminating such registration or
quotation.

 


4.12           Brokers
and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid
right, interest or claim against or upon the Company, any
Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company other
than Garden State Securities, Inc., which will receive a cash fee
of 10% and warrants equal to 10% of the securities issued in the
Offering (on an as converted basis).

 


4.13           No
Directed Selling Efforts or General Solicitation. Neither
the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are
used in Regulation D) in connection with the offer or sale of any
of the Securities.

 


4.14           No
Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any Company
security or solicited any offers to buy any security under
circumstances that would adversely affect reliance by the Company
on Section 4(a)(2) for the exemption from registration for the
transactions contemplated hereby or would require registration of
the Securities under the 1933 Act.

 



 

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4.15           Rule
506 Compliance. To the Company's knowledge, neither the
Company nor any Insider is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) under the 1933 Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2)(i) or
(d)(3) of the 1933 Act. The Company is not disqualified from
relying on Rule 506 of Regulation D under the 1933 Act (“Rule
506”) for any of the reasons stated in Rule 506(d) in
connection with the issuance and sale of the Securities to the
Investors pursuant to this Agreement. The Company has exercised
reasonable care, including without limitation, conducting a factual
inquiry that is appropriate in light of the circumstances, into
whether any such disqualification under Rule 506(d) exists. The
Company has furnished to each Investor, a reasonable time prior to
the date hereof, a description in writing of any matters relating
to the Company and the Insiders that would have triggered
disqualification under Rule 506(d) but which occurred before
September 23, 2013, in each case, in compliance with the disclosure
requirements of Rule 506(e). The Company has exercised reasonable
care, including without limitation, conducting a factual inquiry
that is appropriate in light of the circumstances, into whether any
such disqualification under Rule 506(d) would have existed and
whether any disclosure is required to be made to Investor under
Rule 506(e). Any outstanding securities of the Company (of any kind
or nature) that were issued in reliance on Rule 506 at any time on
or after September 23, 2013 have been issued in compliance with
Rule 506(d) and (e).

 


4.16           Private
Placement. The offer and sale of the Securities to the
Investors as contemplated hereby is exempt from the registration
requirements of the 1933 Act.

 


4.17           Disclosures.
Neither the Company nor any Person acting on its behalf has
provided the Investors or their agents or counsel with any
information that constitutes or might constitute material,
non-public information, other than the terms of the transactions
contemplated hereby. The written materials delivered to the
Investors in connection with the transactions contemplated by the
Transaction Documents do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the
circumstances under which they were made, not
misleading.

 


4.18           Investment
Company. The Company is not required to be registered as,
and is not an Affiliate of, and immediately following the Closing
will not be required to register as, an “investment
company” within the meaning of the Investment Company Act of
1940, as amended.

 


4.19           Series
A Preferred Stock. The Company covenants and agrees to not
issue any of its Series A Preferred Stock while the Series D
Preferred is issued and outstanding.

 


5.           Representations
and Warranties of the Investors. Each of the Investors
hereby severally, and not jointly, represents and warrants to the
Company that:

 


5.1           Organization
and Existence. If applicable, such Investor is a validly
existing corporation, limited partnership or limited liability
company and has all requisite corporate, partnership or limited
liability company power and authority to invest in the Securities
pursuant to this Agreement.

 


5.2           Authorization.
The execution, delivery and performance by such Investor of the
Transaction Documents to which such Investor is a party have been
duly authorized and each will constitute the valid and legally
binding obligation of such Investor, enforceable against such
Investor in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to
or affecting creditors’ rights generally.

 



 

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5.3           Purchase
Entirely for Own Account. The Securities to be received by
such Investor hereunder will be acquired for such Investor’s
own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof in violation of the 1933
Act, and such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same
in violation of the 1933 Act without prejudice, however, to such
Investor’s right at all times to sell or otherwise dispose of
all or any part of such Securities in compliance with applicable
federal and state securities laws. Nothing contained herein shall be
deemed a representation or warranty by such Investor to hold the
Securities for any period of time. Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an
entity engaged in a business that would require it to be so
registered.

 


5.4           Investment
Experience. Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities
and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of
the investment contemplated hereby.

 


5.5           Disclosure
of Information. Such Investor has had an opportunity to
receive all information related to the Company requested by it and
to ask questions of and receive answers from the Company regarding
the Company, its business and the terms and conditions of the
offering of the Securities. Such Investor acknowledges receipt of
copies of the SEC Filings. Neither such inquiries nor any other due
diligence investigation conducted by such Investor shall modify,
limit or otherwise affect such Investor’s right to rely on
the Company’s representations and warranties contained in
this Agreement.

 


5.6           Restricted
Securities. Such Investor understands that the Securities
are characterized as “restricted securities” under the
U.S. federal securities laws inasmuch as they are being acquired
from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities
may be resold without registration under the 1933 Act only in
certain limited circumstances.

 


5.7           Legends.
It is understood that, except as provided below, certificates
evidencing the Securities may bear the following or any similar
legend:

 


(a)           “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.”

 


(b)           If
required by the authorities of any state in connection with the
issuance of sale of the Securities, the legend required by such
state authority.

 


5.8           Accredited
Investor. Such Investor is an accredited investor as defined
in Rule 501(a) of Regulation D, as amended, under the 1933 Act, as
amended by the Dodd-Frank Wall Street Reform and Consumer
Protection Act.

 


5.9           No
General Solicitation. Such Investor did not learn of the
investment in the Securities as a result of any general
solicitation or general advertising.

 



 

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5.10           Brokers
and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid
right, interest or claim against or upon the Company, any
Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such Investor, other
than Garden State Securities, Inc.

 


5.11           Prohibited
Transactions. Since the earlier of (a) such time as such
Investor was first contacted by the Company or any other Person
acting on behalf of the Company regarding the transactions
contemplated hereby or (b) thirty (30) days prior to the date
hereof, neither such Investor nor any Affiliate of such Investor
which (x) had knowledge of the transactions contemplated hereby,
(y) has or shares discretion relating to such Investor’s
investments or trading or information concerning such
Investor’s investments, including in respect of the
Securities, or (z) is subject to such Investor’s review or
input concerning such Affiliate’s investments or trading
(collectively, “Trading Affiliates”) has, directly or
indirectly, effected or agreed to effect any short sale, whether or
not against the box, established any “put equivalent
position” (as defined in Rule 16a-1(h) under the 1934 Act)
with respect to the Common Stock, granted any other right
(including, without limitation, any put or call option) with
respect to the Common Stock or with respect to any security that
includes, relates to or derived any significant part of its value
from the Common Stock or otherwise sought to hedge its position in
the Securities (each, a “Prohibited Transaction”).
Prior to the earliest to occur of (i) the termination of this
Agreement, (ii) the Effective Date or (iii) the Effectiveness
Deadline, such Investor shall not, and shall cause its Trading
Affiliates not to, engage, directly or indirectly, in a Prohibited
Transaction. Such Investor acknowledges that the representations,
warranties and covenants contained in this Section 5.11 are being
made for the benefit of the Investors as well as the Company and
that each of the other Investors shall have an independent right to
assert any claims against such Investor arising out of any breach
or violation of the provisions of this Section 5.11.

 


As long
as at least 85% of the Series D is still outstanding, the Company
will not issue any variable priced financing, any security senior
to the Series D and will not issue any debt (secured or
non-secured) senior to the Series D.

 


6.           Conditions
to Closing.

 


6.1           Conditions
to the Investors’ Obligations. The obligation of each
Investor to purchase the Shares and the Warrants at the Closing is
subject to the fulfillment to such Investor’s satisfaction,
on or prior to the Closing Date, of the following conditions, any
of which may be waived by such Investor (as to itself
only):

 


(a)           The
representations and warranties made by the Company in Section 4
hereof qualified as to materiality shall be true and correct at all
times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true
and correct as of such earlier date, and, the representations and
warranties made by the Company in Section 4 hereof not qualified as
to materiality shall be true and correct in all material respects
at all times prior to and on the Closing Date, except to the extent
any such representation or warranty expressly speaks as of an
earlier date, in which case such representation or warranty shall
be true and correct in all material respects as of such earlier
date. The Company shall have performed in all material respects all
obligations and covenants herein required to be performed by it on
or prior to the Closing Date.

 



 

11







 





 


(b)           The
Company shall have obtained any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for
consummation of the purchase and sale of the Securities and the
consummation of the other transactions contemplated by the
Transaction Documents, all of which shall be in full force and
effect.

 


(c)           The
Company shall have executed and delivered the Amended and Restated
Certificate of Designation.

 


(d)           The
Amended and Restated Certificate of Designation shall have been
filed with the Secretary of State of Nevada and shall be effective;
a filed copy of the Amended and Restated Certificate of Designation
shall have been provided to the Investors.

 


(e)           No
judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy
court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been
instituted by any governmental authority, enjoining or preventing
the consummation of the transactions contemplated hereby or in the
other Transaction Documents.

 


(f)           No
stop order or suspension of trading shall have been imposed by
OTCQB, the SEC or any other governmental or regulatory body with
respect to public trading in the Common Stock.

 


6.2           Conditions
to Obligations of the Company. The Company's obligation to
sell and issue the Shares and the Warrants at the Closing is
subject to the fulfillment to the satisfaction of the Company on or
prior to the Closing Date of the following conditions, any of which
may be waived by the Company:

 


(a)           The
representations and warranties made by the Investors in Section 5
hereof, other than the representations and warranties contained in
Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the
“Investment Representations”), shall be true and
correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same
force and effect as if they had been made on and as of said date.
The Investment Representations shall be true and correct in all
respects when made, and shall be true and correct in all respects
on the Closing Date with the same force and effect as if they had
been made on and as of said date. The Investors shall have
performed in all material respects all obligations and covenants
herein required to be performed by them on or prior to the Closing
Date.

 


(b)           The
Investors shall have executed and delivered the Amended and
Restated Certificate of Designation.

 


(c)           The
Investors shall have delivered the Purchase Price to the
Company.

 


7.           Covenants
and Agreements of the Company.

 



 

12







 





 


7.1           Reservation
of Common Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of providing for the conversion of
the Shares and the exercise of the Warrants, such number of shares
of Common Stock as shall from time to time equal the number of
shares sufficient to permit the conversion of the Shares and the
exercise of the Warrants issued pursuant to this Agreement in
accordance with their respective terms.

 


7.2           Reports.
The Company will furnish to the Investors and/or their assignees
such information relating to the Company and its Subsidiaries as
from time to time may reasonably be requested by the Investors
and/or their assignees; provided, however, that the Company shall
not disclose material nonpublic information to the Investors, or to
advisors to or representatives of the Investors, unless prior to
disclosure of such information the Company identifies such
information as being material nonpublic information and provides
the Investors, such advisors and representatives with the
opportunity to accept or refuse to accept such material nonpublic
information for review and any Investor wishing to obtain such
information enters into an appropriate confidentiality agreement
with the Company with respect thereto.

 


7.3        
No Conflicting
Agreements. The Company will not take any action, enter into
any agreement or make any commitment that would conflict or
interfere in any material respect with the Company’s
obligations to the Investors under the Transaction
Documents.

 


7.3           Compliance
with Laws. The Company will comply in all material respects
with all applicable laws, rules, regulations, orders and decrees of
all governmental authorities.

 


7.4           Termination
of Covenants. The provisions of Section 7.2 shall terminate
and be of no further force and effect on the date on which the
Company’s obligations under the Amended and Restated
Certificate of Designation to register or maintain the
effectiveness of any registration covering the Registrable
Securities (as such term is defined in the Amended and Restated
Certificate of Designation) shall terminate.

 


7.5           Removal
of Legends. In connection with any sale or disposition of
the Securities by an Investor pursuant to Rule 144 or pursuant to
any other exemption under the 1933 Act such that the purchaser
acquires freely tradable shares and upon compliance by the Investor
with the requirements of this Agreement, the Company shall or, in
the case of Common Stock, shall cause the transfer agent for the
Common Stock (the “Transfer Agent”) to issue
replacement certificates representing the Securities sold or
disposed of without restrictive legends. Upon the earlier of (i)
registration for resale pursuant to the Amended and Restated
Certificate of Designation or (ii) the Shares becoming freely
tradable by a non-affiliate pursuant to Rule 144 the Company shall
(A) deliver to the Transfer Agent irrevocable instructions that the
Transfer Agent shall reissue a certificate representing shares of
Common Stock without legends upon receipt by such Transfer Agent of
the legended certificates for such shares, together with either (1)
a customary representation by the Investor that Rule 144 applies to
the shares of Common Stock represented thereby or (2) a statement
by the Investor that such Investor has sold the shares of Common
Stock represented thereby in accordance with the Plan of
Distribution contained in the Registration Statement, and (B) cause
its counsel to deliver to the Transfer Agent one or more blanket
opinions to the effect that the removal of such legends in such
circumstances may be effected under the 1933 Act. From and after
the earlier of such dates, upon an Investor’s written
request, the Company shall promptly cause certificates evidencing
the Investor’s Securities to be replaced with certificates
which do not bear such restrictive legends, and Conversion Shares
subsequently issued upon due conversion of the Shares and Warrant
Shares subsequently issued upon due exercise of the Warrants shall
not bear such restrictive legends provided the provisions of either
clause (i) or clause (ii) above, as applicable, are satisfied with
respect thereto. When the Company is required to cause an
unlegended certificate to replace a previously issued legended
certificate, if: (1) the unlegended certificate is not delivered to
an Investor within three (3) Business Days of submission by that
Investor of a legended certificate and supporting documentation to
the Transfer Agent as provided above and (2) prior to the time such
unlegended certificate is received by the Investor, the Investor,
or any third party on behalf of such Investor or for the
Investor’s account, purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Investor of shares represented by such certificate (a
“Buy-In”), then the Company shall pay in cash to the
Investor (for costs incurred either directly by such Investor or on
behalf of a third party) the amount by which the total purchase
price paid for Common Stock as a result of the Buy-In (including
brokerage commissions, if any) exceeds the proceeds received by
such Investor as a result of the sale to which such Buy-In relates.
The Investor shall provide the Company written notice indicating
the amounts payable to the Investor in respect of the
Buy-In.

 



 

13







 





 


7.6           Equal
Treatment of Investors. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification
of any provision of any of the Transaction Documents unless the
same consideration is also offered to all of the parties to the
Transaction Documents. For clarification purposes, this provision
constitutes a separate right granted to each Investor by the
Company and negotiated separately by each Investor, and is intended
for the Company to treat the Investors as a class and shall not in
any way be construed as the Investors acting in concert or as a
group with respect to the purchase, disposition or voting of
Securities or otherwise.

 


8.           Survival
and Indemnification.

 


8.1           Survival.
The representations, warranties, covenants and agreements contained
in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement.

 


8.2           Indemnification.
The Company agrees to indemnify and hold harmless each Investor,
Garden State Securities, Inc. and its Affiliates and their
respective directors, officers, trustees, members, managers,
employees and agents, and their respective successors and assigns,
from and against any and all losses, claims, damages, liabilities
and expenses (including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with
investigating, preparing or defending any action, claim or
proceeding, pending or threatened and the costs of enforcement
thereof) (collectively, “Losses”) to which such Person
may become subject as a result of any breach of representation,
warranty, covenant or agreement made by or to be performed on the
part of the Company under the Transaction Documents, and will
reimburse any such Person for all such amounts as they are incurred
by such Person.

 

 

 



 

14







 





 


8.3           Conduct
of Indemnification Proceedings. Any person
entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person
entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the
expense of such person unless (a) the indemnifying party has agreed
to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the
indemnifying party with respect to such claims (in which case, if
the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such person); and
provided, further, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying
party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation.
It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable
for fees or expenses of more than one separate firm of attorneys at
any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.

 


9.           Miscellaneous.

 


9.1           Successors
and Assigns. This Agreement may not be assigned by a party
hereto without the prior written consent of the Company or the
Investors, as applicable, provided, however, that an Investor may
assign its rights and delegate its duties hereunder in whole or in
part to an Affiliate or to a third party acquiring some or all of
its Securities in a transaction complying with applicable
securities laws without the prior written consent of the Company or
the other Investors. The provisions of this Agreement shall inure
to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Without limiting the
generality of the foregoing, in the event that the Company is a
party to a merger, consolidation, share exchange or similar
business combination transaction in which the Common Stock is
converted into the equity securities of another Person, from and
after the effective time of such transaction, such Person shall, by
virtue of such transaction, be deemed to have assumed the
obligations of the Company hereunder, the term
“Company” shall be deemed to refer to such Person and
the term “Shares” shall be deemed to refer to the
securities received by the Investors in connection with such
transaction. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

 



 

15







 





 


9.2           Counterparts;
Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This
Agreement may also be executed via facsimile, which shall be deemed
an original.

 


9.3           Titles
and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this
Agreement.

 


9.4           Notices.
Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal
delivery, then such notice shall be deemed given upon such
delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete
transmittal, (iii) if given by mail, then such notice shall be
deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first
class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice
shall be deemed given one Business Day after delivery to such
carrier. All notices shall be addressed to the party to be notified
at the address as follows, or at such other address as such party
may designate by ten days’ advance written notice to the
other party:

 


If to
the Company:

 


Visualant,
Incorporated


500
Union Street, Suite 420


Seattle, Washington
98101


Attention: Ronald
P. Erickson


Fax:
(206) 826-0451


 

 


If to
the Investors:

 


to the
addresses set forth on the signature pages hereto.

 


9.5           Expenses.
The parties hereto shall pay their own costs and expenses in
connection herewith. The Company shall reimburse the Investors upon
demand for all reasonable out-of-pocket expenses incurred by the
Investors, including without limitation reimbursement of
attorneys’ fees and disbursements, in connection with any
amendment, modification or waiver of this Agreement or the other
Transaction Documents. In the event that legal proceedings are
commenced by any party to this Agreement against another party to
this Agreement in connection with this Agreement or the other
Transaction Documents, the party or parties which do not prevail in
such proceedings shall severally, but not jointly, pay their pro
rata share of the reasonable attorneys’ fees and other
reasonable out-of-pocket costs and expenses incurred by the
prevailing party in such proceedings.

 



 

16







 





 


9.6         
Amendments and
Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
the Required Investors. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of
any Securities purchased under this Agreement at the time
outstanding, each future holder of all such Securities, and the
Company.

 


9.7           Publicity.
Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by
the Company or the Investors without the prior consent of the
Company (in the case of a release or announcement by the Investors)
or the Investors (in the case of a release or announcement by the
Company) (which consents shall not be unreasonably withheld),
except as such release or announcement may be required by law or
the applicable rules or regulations of any securities exchange or
securities market, in which case the Company or the Investors, as
the case may be, shall allow the Investors or the Company, as
applicable, to the extent reasonably practicable in the
circumstances, reasonable time to comment on such release or
announcement in advance of such issuance. By 8:30 a.m. (New York
City time) on the day required by SEC disclosure rules following
the Closing Date, the Company shall issue a press release
disclosing the consummation of the transactions contemplated by
this Agreement. No later than the fourth trading day following the
Closing Date, the Company will file a Current Report on Form 8-K
attaching the press release described in the foregoing sentence as
well as copies of the Transaction Documents. In addition, the
Company will make such other filings and notices in the manner and
time required by the SEC or OTCQB.

 


9.8           Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the
maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any
provision hereof prohibited or unenforceable in any
respect.

 


9.9           Entire
Agreement. This Agreement, including the Exhibits and the
Disclosure Schedules, and the other Transaction Documents
constitute the entire agreement among the parties hereof with
respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, both oral and written, between
the parties with respect to the subject matter hereof and
thereof.

 


9.10       
Further Assurances.
The parties shall execute and deliver all such further instruments
and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein
contained.


 



 

17







 





 


9.11         
Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the internal laws of
the State of Nevada without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York for
the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement 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 Agreement. Each of the parties hereto
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. Each party hereto 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
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

 


9.12         
Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are
several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance
of the obligations of any other Investor under any Transaction
Document. The decision of each Investor to purchase Securities
pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained
herein or in any Transaction Document, and no action taken by any
Investor pursuant thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Investors
are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Documents. Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its
investment hereunder and that no Investor will be acting as agent
of such Investor in connection with monitoring its investment in
the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of the other Transaction
Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that each of the Investors has
been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Investors and not because it
was required or requested to do so by any Investor.

 


[signature
page follows]

 

 

 

 

 

 

 

 

 

 

 

 


 




 

18








 






 


IN
WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the
date first above written.

 

 


	


The
Company:




	
VISUALANT,
INCORPORATED

	

 


	

 

	

 

	

 

	

 


	

 

	

 

	

 

	

 


	



	
By:  

	
 

	

 


	

 

	

Name:
Ronald P. Erickson 


	

 


	

 

	


Title:
President and Chief Executive Officer  



	

 







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 

19








 






 

 


	The
Investor:
	
_____________________________________



	
 

	
 


	
 

	
 


	
 

	By:__________________________________
	
 

	Name:
_______________________________
	
 

	Title:
________________________________
	
 

	
 


	

Aggregate Purchase
Price: $ ______________ 


	

Number
of Shares: ________________ 


	

Number
of Series F Warrants: 


	
 

	
 


	
 

	
 


	Address for
Notice:	
 


	
 

	
_____________________________________
	
 

	
_____________________________________
	
 

	
_____________________________________




 

 

 

 

 

 

 

 

 

 


 

 




 

20