Document:

Blueprint

 

 Exhibit
10.7

 

WARRANT

 

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE
OF THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) AND APPLICABLE
STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR (II) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

 

EXACTUS, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

	

Warrant No. A1

	

Original Issue Date: November 27, 2019

 

Exactus Inc., a Nevada corporation (the “Company”),
hereby certifies that, for value received, Alliance Global
Partners, or its permitted registered assigns (the
“Holder”),
is entitled to purchase from the Company shares of common stock,
$0.0001 par value (the “Common
Stock”), of the Company
(each such share, a “Warrant
Share” and all such
shares, the “Warrant
Shares”) as determined in
accordance with the terms herein, at the Exercise Price (as defined
below) at any time and from time to time from on or after the date
hereof (the “Trigger
Date”) and through and
including 5:00 P.M., prevailing Eastern time, on November __, 2023
(the “Expiration
Date”), and subject to
the following terms and conditions:

 

This Warrant (this “Warrant”)
is issued pursuant to that certain Engagement Agreement dated
October 25, 2019 between the Company and the Holder (the
“Engagement
Agreement”).

 

1. Definitions

 

.. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the
meanings given to such terms in as set forth in that certain
Securities Purchase Agreement (as may be amended from time to time,
the “Purchase
Agreement”), dated
November 27, 2019, among the Company and the purchasers signatory
thereto.

 

2. Exercise
Price

 

.. For purposes of this Warrant, the “Exercise
Price” shall be equal to
110% of the of the then Closing Sale Price of the Company’s
Common Stock as of the Initial Closing Date (as adjusted from time
to time as provided in Section 11 herein).

 

3. Number
of Warrant Shares

 

.. The aggregate number of Warrant Shares shall be equal to 8% of
the aggregate number of shares of Common Stock issued by the
Company upon conversion of of Eight Hundred and
Thirty Three Thousand Three Hundred Thirty Three and 33/100 Dollars
($833,333.33) in Principal Amount of Notes (the
“Initial
Notes”).

 

4. Registration
of Warrants

 

.. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the
“Warrant
Register”), in the name
of the record Holder (which shall include the initial Holder or, as
the case may be, any registered assignee to which this Warrant is
permissibly assigned hereunder) from time to time. The Company may
deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.

 

 

 

-1-

 

5. Transfers;
Lock-Up Period

..

(a) The
Company shall register the transfer of all or any portion of this
Warrant in the Warrant Register, upon (i) surrender of this
Warrant, with the Form of Assignment attached as
Schedule
2 hereto duly completed and
signed, to the Company’s transfer agent or to the Company at
its address specified herein (ii) delivery, at the request of the
Company, of an opinion of counsel reasonably satisfactory to the
Company to the effect that the transfer of such portion of this
Warrant may be made pursuant to an available exemption from the
registration requirements of the Securities Act of 1933
(“Securities
Act”) and all applicable
state securities or blue sky laws and (iii) delivery by the
transferee of a written statement to the Company certifying that
the transferee is an “accredited investor” as defined
in Rule 501(a) under the Securities Act and making the
representations and certifications as the Company may reasonably
request to procure an exemption from Section 5 of the Securities
Act. Upon any such registration or transfer, a new warrant to
purchase Common Stock in substantially the form of this Warrant
(any such new warrant, a “New
Warrant”) evidencing the
portion of this Warrant so transferred shall be issued to the
transferee, and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the
transferring Holder. The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a Holder of a
Warrant.

 

(b) The
Holder agrees that in the event of a public offering of the
Company’s securities, pursuant to the Lock-Up Period (as
defined below) contained in Rule 5110(g)(1) of the Financial
Industry Regulatory Authority, Inc. (“FINRA”),
it will not (a) sell, transfer, assign, pledge, hypothecate or
otherwise transfer the Warrant (including any Warrant Shares issued
or issuable hereunder) other than to a bona fide officer, partner
or other associated person of the Holder or any selected dealer (or
any officer, partner or other associated person thereof) in
connection with the initial public offering, in each case in
accordance with FINRA Conduct Rule 5110(g)(1), or (b) cause the
Warrant or any Warrant Shares issued or issuable hereunder to be
the subject of any hedging, short sale, derivative, put or call
transaction that would result in the effective economic disposition
of the Warrant or any Warrant Shares issued or issuable hereunder,
except as provided for in FINRA Rule 5110(g)(2). As used herein,
the term “Lock-Up
Period” means the period
beginning on the date that a registration statement of the Company
under the Securities Act is declared effective by the Securities
and Exchange Commission (the “Effective
Date”) and ending on the
one hundred eighty day anniversary of the Effective
Date.

 

6. Exercise
and Duration of Warrants.

 

(a) All
or any part of this Warrant shall be exercisable by the registered
Holder at any time and from time to time on or after the Trigger
Date and through and including 5:00 P.M. prevailing Pacific
time on the Expiration Date. At 5:00 P.M., prevailing Pacific time,
on the Expiration Date, the portion of this Warrant not exercised
prior thereto shall be and become void and of no value and this
Warrant shall be terminated and no longer outstanding.

 

(b) The
Holder may exercise this Warrant by delivering to the Company
(i) an exercise notice, in the form attached as Schedule 1
hereto (the “Exercise
Notice”), appropriately
completed and duly signed, (ii) payment of the Exercise Price for
the number of Warrant Shares as to which this Warrant is being
exercised (which may take the form of a “cashless
exercise” if so indicated in the Exercise Notice and if a
“cashless exercise” may occur at such time pursuant
to Section 12
below), and the date such items are
delivered to the Company (as determined in accordance with the
notice provisions hereof) is an “Exercise
Date.” The Holder shall
not be required to deliver the original Warrant in order to effect
an exercise hereunder, but shall do so reasonably shortly
thereafter. Execution and delivery of the Exercise Notice shall
have the same effect as cancellation of the original Warrant and
issuance of a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.

 

 

 

-2-

 

 

(c) The
Holder may not exercise this Warrant at any time that Holder is
unable to establish to the Company’s reasonable satisfaction
that the exercise complies with an exemption from the registration
provisions of Section 5 of the Securities Act.

 

7. Delivery
of Warrant Shares

 

.. Upon exercise of this Warrant, the Company shall promptly issue
or cause to be issued and cause to be delivered to or upon the
written order of the Holder and in such name or names as the Holder
may designate a certificate for the Warrant Shares issuable upon
such exercise, with an appropriate restrictive legend. The Holder,
or any Person permissibly so designated by the Holder to receive
Warrant Shares, shall be deemed to have become the holder of record
of such Warrant Shares as of the Exercise Date.

 

8. Charges,
Taxes and Expenses

 

.. Issuance and delivery of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the
Company; 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.

 

9. Replacement
of Warrant

 

.. If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss,
theft or destruction (in such case) and, in each case, a customary
and reasonable indemnity (which shall not include a surety bond),
if requested. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the
Company may prescribe. If a New Warrant is requested as a result of
a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the
Company’s obligation to issue the New Warrant.

 

10. Reservation
of Warrant Shares

 

.. The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued and
otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant
as herein provided, the number of Warrant Shares which are then
issuable and deliverable upon the exercise of this entire Warrant,
free from preemptive rights or any other contingent purchase rights
of persons other than the Holder (taking into account the
adjustments and restrictions of Section
11). The Company covenants that
all Warrant Shares so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with
the terms hereof, be duly and validly authorized, issued and fully
paid and nonassessable. The Company will take all such action as
may be necessary to assure that such shares of Common Stock may be
issued as provided herein without violation of any applicable law
or regulation, or of any requirements of any securities exchange or
automated quotation system upon which the Common Shares may be
listed.

 

11. Certain
Adjustments

 

.. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 11.

 

 

 

-3-

 

 

(a) Stock
Dividends and Splits. If the
Company, at any time while this Warrant is outstanding, (i) pays a
stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides its outstanding shares
of Common Stock into a larger number of shares, or
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately before
such event and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall
become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii)
of this paragraph shall become effective immediately after the
effective date of such subdivision or
combination.

 

(b) Fundamental
Transactions. If, at any time
while this Warrant is outstanding (i) the Company effects any
merger or consolidation of the Company with or into another Person,
in which the Company is not the survivor, (ii) the Company effects
any sale of all or substantially all of its assets or a majority of
its Common Stock is acquired by a third party, in each case, in one
or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Company or another Person) is
completed pursuant to which all or substantially all of the holders
of Common Stock are permitted to tender or exchange their shares
for other securities, cash or property, or (iv) the Company effects
any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares
of Common Stock covered by Section 11(a)
above) (in any such case, a
“Fundamental
Transaction”), then the
Holder shall have the right thereafter to receive, upon exercise of
this Warrant (including payment of the Exercise Price), the same
amount and kind of securities, cash or property as it would have
been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant without regard to
any limitations on exercise contained herein (the
“Alternate
Consideration”). The
Company shall not effect any such Fundamental Transaction unless
prior to or simultaneously with the consummation thereof, any
successor to the Company, surviving entity or the corporation
purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the
Holder, such Alternate Consideration as, in accordance with the
foregoing provisions, the Holder may be entitled to purchase and/or
receive (as the case may be), and the other obligations under this
Warrant. The provisions of this paragraph (c) shall similarly apply
to subsequent transactions analogous to a Fundamental
Transaction.

 

(c) Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant
to paragraph (a) of this Section, the number of Warrant Shares that
may be purchased upon exercise of this Warrant shall be increased
or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased or
decreased number of Warrant Shares shall be the same as the
aggregate Exercise Price in effect immediately prior to such
adjustment.

 

(d) Calculations.
All calculations under this Section 11
shall be made to the nearest cent or
the nearest 1/100th of a share, as applicable. The number of shares
of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the
sale or issuance of any such shares shall be considered an issue or
sale of Common Stock.

 

(e) Notice
of Adjustments. Upon the
occurrence of each adjustment pursuant to this Section
11, the Company at its expense
will, at the written request of the Holder, promptly compute such
adjustment, in good faith, in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment,
including a statement of the adjusted Exercise Price and adjusted
number or type of Warrant Shares or other securities issuable upon
exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail
the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such
certificate to the Holder and to the Company’s transfer
agent.

 

 

 

-4-

 

 

(f) Notice
of Corporate Events. If, while
this Warrant is outstanding, the Company (i) declares a dividend or
any other distribution of cash, securities or other property in
respect of its Common Stock, including, without limitation, any
granting of rights or warrants to subscribe for or purchase any
capital stock of the Company, (ii) authorizes or approves, enters
into any agreement contemplating or solicits stockholder approval
for any Fundamental Transaction or (iii) authorizes the voluntary
dissolution, liquidation or winding up of the affairs of the
Company, then, except if such notice and the contents thereof shall
be deemed to constitute material non-public information, the
Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction at least ten (10)
Trading Days prior to the applicable record or effective date on
which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to insure
that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with
respect to such transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate
action required to be described in such notice.

 

12. Payment
of Exercise Price

 

.. The Holder shall pay the Exercise Price in immediately available
funds; provided, however, the Holder may, in its sole discretion,
commencing on the date that is 18 months from the date of this
Warrant, satisfy its obligation to pay the Exercise Price through a
“cashless exercise”, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as
follows:

 

X =
Y [(A-B)/A]

 

where:

 

X =
the number of Warrant Shares to be issued to the
Holder.

 

Y =
the total number of Warrant Shares with respect to which this
Warrant is being exercised.

 

A =
the average of the Closing Sale Prices of the shares of Common
Stock (as reported by Bloomberg Financial Markets) for the five
Trading Days ending on the date immediately preceding the Exercise
Date.

 

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

 

For purposes of this Warrant, “Closing
Sale Price” means, for
any security as of any date, the last trade price for such security
on the principal securities exchange or trading market for such
security, as reported by Bloomberg Financial Markets, or, if such
exchange or trading market begins to operate on an extended hours
basis and does not designate the last trade price, then the last
trade price of such security prior to 4:00:00 p.m., New York Time,
as reported by Bloomberg Financial Markets, or if the foregoing do
not apply, the last trade price of such security in the
over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg Financial Markets, or, if no last
trade price is reported for such security by Bloomberg Financial
Markets, 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. If the Closing Sale
Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Closing Sale 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
the Company shall, within two business days submit via facsimile
(a) the disputed determination of the Warrant Exercise Price to an
independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic
calculation of the Warrant Shares to the Company’s
independent, outside accountant. The Company shall cause at its
expense 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. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error. All such determinations
to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the
applicable calculation period.

 

 

 

-5-

 

 

For purposes of Rule 144 promulgated under the Securities Act, it
is intended, understood and acknowledged that the Warrant Shares
issued in a cashless exercise transaction 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 Consulting Agreement
(provided that the Commission continues to take the position that
such treatment is proper at the time of such
exercise).

 

13. Limitation on Exercises. 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, the Holder
(together with such Holder’s affiliates) would beneficially
own in excess of 4.99% (“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 Holder 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 (A) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such
Holder and its affiliates and (B) 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. To the extent that the limitation contained in
this Section 13 applies, the
determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any
affiliate) and of which portion of this Warrant is exercisable
shall be in the sole discretion of the Holder, and the submission
of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any
affiliate) and of which portion of this Warrant is exercisable, in
each case subject to such aggregate percentage limitation, and the
Company shall have no obligation to verify or confirm the accuracy
of the determination. 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 (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 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 one (1)
business day confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder 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, any
Holder may decrease the Maximum Percentage to any other percentage
specified in such notice; provided that such decrease will apply
only to the Holder sending such notice and not to any other holder
of Warrants. In addition, by written notice to the Company, any
Holder may remove the limitations on exercises provided in this
Section 13
entirely; provided that (i) any such removal will not be
effective until the 61st day after such notice is delivered to the
Company, and (ii) any such removal will apply only to the Holder
sending such notice and not to any other holder of Warrants. The
provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this
Section 13 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.

 

14. No
Fractional Shares

 

.. No fractional Warrant Shares will be issued in connection with
any exercise of this Warrant. In lieu of any fractional shares
which would otherwise be issuable, the number of Warrant Shares to
be issued shall be rounded up to the next whole
number.

 

 

 

-6-

 

 

15. Notices

 

.. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice)
shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or
communication is delivered via email at the email address specified
in the Engagement Agreement prior to 5:00 p.m. (prevailing Pacific
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via
email at the email address specified in the Engagement Agreement t
on a day that is not a Trading Day or later than 5:00 p.m.
(prevailing Pacific time) on any Trading Day, (iii) the Trading Day
following the date of mailing, if sent by nationally recognized
overnight courier service specifying next business day delivery, or
(iv) upon actual receipt by the party to whom such notice is
required to be given, if by hand delivery. The address and
facsimile number of a party for such notices or communications
shall be as set forth in the Engagement Agreement unless changed by
such party by two Trading Days’ prior notice to the other
party in accordance with this Section
15.

 

16. Warrant
Agent

 

.. The Company shall serve as warrant agent under this Warrant. Upon
thirty (30) days’ notice to the Holder, the Company may
appoint a new warrant agent. Any corporation into which the Company
or any new warrant agent may be merged or any corporation resulting
from any consolidation to which the Company or any new warrant
agent shall be a party or any corporation to which the Company or
any new warrant agent transfers substantially all of its corporate
trust or shareholders’ services business shall be a successor
warrant agent under this Warrant without any further act. Any such
successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail,
postage prepaid) to the Holder at the Holder’s last address
as shown on the Warrant Register.

 

17. Registration
Rights

 

(a) Demand
Registration. Reference is made
to the Registration Rights Agreement, as referred to in the
Purchase Agreement. The Company agrees to include the Warrant
Shares of the Holder in the Registration Statement (as defined in
the Registration Rights Agreement), which shall be filed and
maintained effective as and to the extent provided in the
Registration Rights Agreement, all at no cost or expense to the
Holder (other than any costs or commissions which would be borne by
the Holder under the terms of the Registration Rights Agreement
were the Warrant Shares deemed to be Registrable Securities under
that agreement).

 

(b) Piggyback
Registration. In addition to
the registration rights referred to in the preceding provisions of
Section 17(a), effective after the expiration of the effectiveness
of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration
rights with respect to the Warrant Shares then held by the Holder
or then subject to issuance upon exercise of this Warrant
(collectively, the “Remaining Warrant Shares”), subject
to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company
participates (whether voluntarily or by reason of an obligation to
a third party) in the registration of any shares of the
Company’s stock (other than a registration on Form S-8 or on
Form S-4), the Company shall give written notice thereof to the
Holder and the Holder shall have the right, exercisable within ten
(10) Trading Days after receipt of such notice, to demand inclusion
of all or a portion of the Holder’s Remaining Warrant Shares
in such registration statement. If the Holder exercises such
election, the Remaining Warrant Shares so designated shall be
included in the registration statement at no cost or expense to the
Holder (other than any costs or commissions which would be borne by
the Holder under the terms of the Registration Rights Agreement).
The Holder’s rights under this Section 17 shall expire at
such time as the Holder can sell all of the Remaining Warrant
Shares under Rule 144 without volume or other restrictions or
limit.

 

 

 

-7-

 

 

18. Miscellaneous

 

(a) 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, amalgamation,
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. Notwithstanding this
Section
18(a), the Company shall
provide the Holder with copies of the same notices and other
information given to the shareholders of the Company,
contemporaneously with the giving thereof to the
shareholders.

 

(b) Subject
to the restrictions on transfer set forth on the first page hereof,
and compliance with applicable securities laws, this Warrant may be
assigned by the Holder. This Warrant may not be assigned by the
Company except to a successor in the event of a Fundamental
Transaction. This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and
assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and
the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing
signed by the Company and the Holder, or their successors and
assigns.

 

(c) GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF
MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY
OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND
AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS
TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES
THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF
PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE
DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL
BY JURY.

 

(d) The
headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of
the provisions hereof.

 

(e) In
case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this
Warrant shall not in any way be affected or impaired thereby, and
the parties will attempt in good faith to agree upon a valid and
enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Warrant.

 

(f) Except
as otherwise set forth herein, prior to exercise of this Warrant,
the Holder hereof shall not, by reason of by being a Holder, be
entitled to any rights of a stockholder with respect to the Warrant
Shares.

 

 

 

-8-

 

 

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

 

	
 

	

COMPANY

 

Exactus, Inc.

 

By: /s/ Kenneth
Puzder

Name: 
Kenneth Puzder

Title: CFO

 

 

 

 

 

 

 

 

-9-

 

 

SCHEDULE 1

 

FORM OF EXERCISE NOTICE

 

(To be executed by the Holder to exercise the right to purchase
shares of

 

Common Stock under the foregoing Warrant)

 

Ladies and Gentlemen:

 

(1)           The
undersigned is the Holder of Warrant No. _______ (the
“Warrant”) issued by Exactus, Inc. (the
“Company”). Capitalized terms used herein and not
otherwise defined herein have the respective meanings set forth in
the Warrant.

 

(2)           The
undersigned hereby exercises its right to purchase _______ Warrant
Shares pursuant to the Warrant.

 

(3)           The
Holder intends that payment of the Exercise Price shall be made as
(check one):

 

   Cash Exercise

 

   “Cashless Exercise” under
Section
12

 

(4)           If
the Holder has elected a Cash Exercise, the Holder shall pay the
sum of $_______ in immediately available funds to the Company in
accordance with the terms of the Warrant.

 

(5)           Pursuant
to this Exercise Notice, the Company shall deliver to the Holder
_______ Warrant Shares in accordance with the terms of the
Warrant.

 

	

Dated:                                            ,            

[Company]

 

By:

	
 

 

(Signature must conform in all respects to name of Holder as
specified on the face of the Warrant)

 

 

-10-

 

 

SCHEDULE 2

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of
Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______ (the “Transferee”
the right represented by the within Warrant to purchase _______
shares of Common Stock of Exactus, Inc. (the
“Company”)
to which the within Warrant relates and appoints _______ attorney
to transfer said right on the books of the Company with full power
of substitution in the premises. In connection therewith, the
undersigned represents, warrants, covenants and agrees to and with
the Company that:

 

(a) 

the offer and sale of the Warrant contemplated
hereby is being made in compliance with Section 4(a)(1) of the
United States Securities Act of 1933, as amended (the
“Securities
Act”) or another valid
exemption from the registration requirements of Section 5 of the
Securities Act and in compliance with all applicable securities
laws of the states of the United States;

 

(b) 

the
undersigned has not offered to sell the Warrant by any form of
general solicitation or general advertising, including, but not
limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media
or broadcast over television or radio, and any seminar or meeting
whose attendees have been invited by any general solicitation or
general advertising;

 

(c) 

the
undersigned has read the Transferee’s investment letter
included herewith, and to its actual knowledge, the statements made
therein are true and correct; and

 

(d) 

the
undersigned understands that the Company may condition the transfer
of the Warrant contemplated hereby upon the delivery to the Company
by the undersigned or the Transferee, as the case may be, of a
written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without
registration under the Securities Act and under applicable
securities laws of the states of the United States.

 

(Continued on Next Page)

 

	

Dated:                                 ,            

[Company]

By:                                                                 

(Signature must conform in all respects to name of Holder as
specified on the face of the Warrant)

 

	

Address of Transferee

	

In the presence of:

 

	
 

 

 

 

 

 

 

 

-11-Blueprint

 

 Exhibit
10.8

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is made and
entered into as of

November
27, 2019 by and among Exactus,
Inc., a Nevada corporation (the “Company”), and each
purchaser identified on the signature pages hereto (including its
successors and assigns, the “Purchaser”).

 

This
Agreement is being entered into pursuant to the Securities Purchase
Agreement dated as of the date hereof between the Company and the
Purchaser (the “Purchase
Agreement”).

 

The
Company and each Purchaser hereby agrees as follows:

 

1.           Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings given such terms in the Purchase Agreement. As used in
this Agreement, the following terms shall have the following
meanings:

 

“Advice” shall have
meaning set forth in Section 3(m).

 

“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. For
the avoidance of doubt, with respect to a Purchaser which is a
general or limited partnership, an Affiliate shall be deemed to
include affiliated partnerships managed by the same management
company or managing general partner or by an entity which controls,
is controlled by, or is under common control with, such management
company or managing general partner.

 

“Board” shall have meaning
set forth in Section 3(n).

 

“Business Day” means any
day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New
York generally are authorized or required by law or other
government actions to close.

 

“Closing Date” means the
date of the closing of the purchase and sale of the Securities
pursuant to the Purchase Agreement.

 

“Commission” means the
Securities and Exchange Commission.

 

“Common Stock” means the
Company’s common stock, par value $0.0001 per
share.

 

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

 

“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.

 

“Effectiveness Date” means
with respect to the Registration Statement under Section 2(a), the
earlier of (A) the ninetieth (90th) day following the Closing Date,
or (B) the date which is within three (3) Business Days after the
date on which the Commission informs the Company (i) that the
Commission will not review the Registration Statement or
(ii) that the Company
may request the acceleration of the effectiveness of the
Registration Statement; provided, however, that, if the Effectiveness Date
falls on a Saturday, Sunday or any other day which shall be a legal
holiday or a day on which the Commission is authorized or required
by law or other government actions to close, the Effectiveness Date
shall be the following Business Day.

 

“Effectiveness Period”
shall have the meaning set forth in Section 2(a).

 

“Event” shall have the
meaning set forth in Section 7(f).

 

“Event Date” shall have
the meaning set forth in Section 7(f).

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

 

 

-1-

 

 

“Filing Date” means with
respect to a Registration Statement under Section 2(a), the date
that is the forty-fifth (45th) day following the Closing Date;
provided,
however that if the
Filing Date falls on a Saturday, Sunday or any other day which
shall be a legal holiday or a day on which the Commission is
authorized or required by law or other government actions to close,
the Filing Date shall be the following Business Day.

 

“Holder” or
“Holders” means the holder
or holders, as the case may be, from time to time of Registrable
Securities.

 

“Indemnified Party” shall
have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall
have the meaning set forth in Section 5(c).

 

“Losses” shall have the
meaning set forth in Section 5(a).

 

“Notes” means the original
issue discount 8% Senior Secured Convertible Notes issued or to be
issued to the Purchaser pursuant to the Purchase Agreement and such
additional original issue discount 8% Senior Secured Convertible
Notes as may thereafter be issued and sold to the Purchaser
pursuant to the terms and conditions of the Purchase
Agreement.

 

“Offering” means the
offering made pursuant to Section 4(a)(2) of the Securities Act and
Rule 506 promulgated thereunder of the Securities of the Company
pursuant to the Purchase Agreement.

 

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

 

“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the
prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.

 

“Purchase Agreement” means
the Securities Purchase Agreement, dated the date hereof by and
between the Company and the Purchaser.

 

“Registrable Securities”
means, collectively (i) the Conversion Shares; (ii) the Warrant
Shares; (iii) any other securities of the Company subsequently
acquired by the Purchaser pursuant to the Purchase Agreement; (iv)
any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect
to the foregoing; provided, that the Holder has
completed and delivered to the Company a Selling Stockholder
Questionnaire; and provided, further, that the Conversion
Shares and Warrant Shares shall cease to be Registrable Securities
upon the sale pursuant to a Registration Statement or Rule 144
under the Securities Act (in which case, only such security sold
shall cease to be a Registrable Security).

 

“Registration Statement”
means either (a) an appropriate Registration Statement that
register the Registrable Securities, or (b) a registration
statement and any additional registration statements contemplated
by Section 2, including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration
statement.

 

 

 

-2-

 

 

“Required Registration
Amount” means the number
of shares of Common Stock equal to the Required
Minimum.

 

“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.

 

“Rule 158” means Rule 158
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.

 

“Rule 415” means Rule 415
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.

 

“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.

 

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

 

“Securities Act” means the
Securities Act of 1933, as amended.

 

“SEC Guidance” means (i)
any publicly available written or oral guidance of the Commission
staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.

 

“Selling Stockholder
Questionnaire” means a questionnaire in the form
attached as Exhibit
B hereto, or such other form of questionnaire as may
reasonably be adopted by the Company from time to
time.

 

“Warrants” means the
warrants to purchase the Warrant Shares issued to the Purchaser
pursuant to the Purchase Agreement.

 

“Warrant Shares” means the
shares of Common Stock issuable upon exercise of the
Warrant.

 

2.           Resale
Registration.

 

(a)           On
or prior to the Filing Date, the Company shall prepare and file
with the Commission a “resale” Registration Statement
providing for the resale of all Registrable Securities by means of
an offering to be made on a continuous basis pursuant to Rule 415
provided that such initial
Registration Statement shall register for resale at least the
number of shares of Common Stock equal to the Required Registration
Amount as of the date such Registration Statement is initially
filed with the Commission. The Registration Statement shall
be on Form S-1 (or another appropriate form in accordance
herewith). The Company shall (i) not permit any securities other
than the Registrable Securities to be included in the Registration
Statement and (ii) use its commercially reasonable efforts to cause
the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof,
but in any event prior to the Effectiveness Date, and to keep such
Registration Statement continuously effective under the Securities
Act until such date when all Registrable Securities covered by such
Registration Statement have been sold (the “Effectiveness Period”).
The Company shall request that the effective time of the
Registration Statement be 4:00 p.m. Eastern Time on the
Effectiveness Date. If at any time and for any reason, an
additional Registration Statement is required to be filed because
at such time the actual number of Registrable Securities exceeds
the number of Registrable Securities remaining under the
Registration Statement, the Company shall have thirty (30) Business
Days to file such additional Registration Statement, and the
Company shall use its commercially reasonable efforts to cause such
additional Registration Statement to be declared effective by the
Commission as soon as possible, but in no event later than ninety
(90)) days after such filing; provided, however that if the prior
Registration Statement was filed within six months of such sixty
(60) or ninety (90) day period, then the sixty (60) and ninety (90)
days shall commence immediately after the expiration of the date
that is six months after the filing of the prior Registration
Statement, unless then current securities laws permit the earlier
registration of same.

 

 

 

-3-

 

 

(b)           Notwithstanding
anything to the contrary set forth in this Section 2, in the event
the Commission does not permit the Company to register all of the
Registrable Securities in the Registration Statement because of the
Commission’s application of Rule 415, the number of
Registrable Securities to be registered on such Registration
Statement will be reduced in the order of the Registrable
Securities represented by the total number of Conversion Shares and
Warrant Shares owned by the Holders, applied on a pro rata basis.
In the event the number of shares available under any Registration
Statement is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement,
the Company shall amend such Registration Statement (if
permissible), or file with the Commission a new Registration
Statement (on the short form available therefor, if applicable), or
both, so as to cover at least the Required Registration Amount as
of the Trading Day immediately preceding the date of the filing of
such amendment or new Registration Statement twenty (20)) days
after the necessity therefor arises (but taking account of any
Commission position with respect to the date on which the
Commission will permit such amendment to the Registration Statement
and/or such new Registration Statement (as the case may be) to be
filed with the Commission). The Company shall use its reasonable
best efforts to cause such amendment to such Registration Statement
and/or such new Registration Statement (as the case may be) to
become effective as soon as practicable following the filing
thereof with the Commission, but in no event later than the
applicable Effectiveness Date for such Registration Statement. For
purposes of the foregoing provision, the number of shares available
under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time
the number of shares of Common Stock available for resale under the
applicable Registration Statement is less than the Required
Registration Amount. The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on
conversion, amortization and/or redemption of the Notes (and such
calculation shall assume (A) that the Notes are then convertible in
full into shares of Common Stock at the then prevailing Conversion
Rate (as defined in the Notes), and (B) the initial outstanding
principal amount of the Notes remains outstanding through the
scheduled Maturity Date (as defined in the Notes) and no
redemptions of the Notes occur prior to the scheduled Maturity
Date).

 

For
purposes of this Section 2(b), “Effectiveness Date” means
with respect to each subsequent Registration Statement filed
pursuant hereto, the earlier of (A) the sixtieth (60th) day following the
filing date of such Registration Statement (or in the event such
Registration Statement receives a “full review” by the
Commission, the ninetieth (90th) day following such
filing date) or (B) the date which is within three (3) Business
Days after the date on which the Commission informs the Company (i)
that the Commission will not review such Registration Statement or
(ii) that the Company
may request the acceleration of the effectiveness of such
Registration Statement; provided, that, if the
Effectiveness Date falls on a Saturday, Sunday or any other day
which shall be a legal holiday or a day on which the Commission is
authorized or required by law or other government actions to close,
the Effectiveness Date shall be the following Business
Day.

 

(c)           Each
Holder agrees to furnish to the Company a completed Selling
Stockholder Questionnaire not more than ten (10) Business Days
prior to the filing of a Registration Statement. Each Holder
further agrees that it shall not be entitled to be named as a
selling security holder in the Registration Statement or use the
Prospectus for offers and resales of Registrable Securities at any
time, unless such Holder has returned to the Company a completed
and signed Selling Stockholder Questionnaire. If a Holder of
Registrable Securities returns a Selling Stockholder Questionnaire
after the deadline specified in the previous sentence, the Company
shall use its commercially reasonable efforts to take such actions
as are required to name such Holder as a selling security holder in
the Registration Statement or any pre-effective or post-effective
amendment thereto and to include (to the extent not theretofore
included) in the Registration Statement the Registrable Securities
identified in such late Selling Stockholder Questionnaire;
provided that the
Company shall not be required to file an additional Registration
Statement solely for such shares. Each Holder acknowledges and
agrees that the information in the Selling Stockholder
Questionnaire will be used by the Company in the preparation of the
Registration Statement and hereby consents to the inclusion of such
information in the Registration Statement.

 

 

 

-4-

 

 

3.            

Registration Procedures.

 

In
connection with the Company’s registration obligations
hereunder, the Company shall:

 

(a)           Prepare
and file with the Commission, on or prior to the Filing Date, a
Registration Statement on Form S-1 (or another appropriate form in
accordance herewith) in accordance with the plan of distribution as
set forth on Exhibit
A hereto and in accordance with applicable law, and cause
the Registration Statement to become effective and remain effective
as provided herein; provided, however, that not less than
five (5) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement
thereto, the Company shall (i) furnish to the Holders copies of all
such documents proposed to be filed, which documents will be
subject to the review of such Holders, and (ii) cause its officers
and directors, counsel and independent certified public accountants
to respond to such inquiries as shall be necessary to conduct a
reasonable review of such documents. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Purchasers shall reasonably object
in writing within three (3) Business Days of their receipt
thereof.

 

(b)           (i)
Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective
as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional
Registration Statements as necessary in order to register for
resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 (or any similar provisions
then in force) promulgated under the Securities Act; (iii) respond
as promptly as possible, but in no event later than twenty (20)
Business Days, to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and
as promptly as possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to
the Registration Statement; (iv) file the final prospectus pursuant
to Rule 424 of the Securities Act no later than two (2) Business
Days following the date the Registration Statement is declared
effective by the Commission; and (v) comply in all material
respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the Effectiveness
Period in accordance with the intended methods of disposition by
the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

 

(c)           Notify
the Holders of Registrable Securities as promptly as possible (i)
when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is filed; with respect to
the Registration Statement or any post-effective amendment, when
the same has become effective; (ii)of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable
Securities or the initiation or threatening of any Proceedings for
that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities
for sale in any jurisdiction, or the initiation or threatening of
any Proceeding for such purpose; and (iv) of the occurrence of any
event that makes any statement made in the Registration Statement
or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in
the light of the circumstances under which they were made) not
misleading.

 

                       

(d)            

Use its
commercially reasonable efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, as promptly as possible, (i) any
order suspending the effectiveness of the Registration Statement or
(ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction.

 

 

 

-5-

 

 

(e)           If
requested by the Holders of a majority in interest of the
Registrable Securities, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment.

 

(f)           If
requested by any Holder, furnish to such Holder, without charge, at
least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules,
all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the
Commission.

 

(g)           Promptly
deliver to each Holder, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and
each amendment or supplement thereto as such Persons may reasonably
request; and subject to the provisions of Sections 3(m) and 3(n),
the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement
thereto.

 

(h)           Prior
to any resale of Registrable Securities, use its commercially
reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or
qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder requests in writing, to keep each
such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all
other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any
action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the
Company to any material tax in any such jurisdiction where it is
not then so subject.

 

(i)           Cooperate
with the Holders to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold
pursuant to a Registration Statement, which certificates, to the
extent permitted by the Purchase Agreement and applicable federal
and state securities laws, shall be free of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names of the Holder in
connection with any sale of Registrable Securities.

 

(j)           Upon
the occurrence of any event contemplated by Section 3(c)(iv), as
promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither
the Registration Statement nor such Prospectus will contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of
the circumstances under which they were made) not
misleading.

 

(k)           Use
its commercially reasonable efforts to cause all Registrable
Securities relating to the Registration Statement, to continue to
be quoted or listed on a securities exchange, quotation system or
market, if any, on which similar securities issued by the Company
are then listed or traded as and when required pursuant to the
Purchase Agreement.

 

(l)           Comply
in all material respects with all applicable rules and regulations
of the Commission and make generally available to its security
holders all documents filed or required to be filed with the
Commission, including, but not limited, to, earning statements
satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such
period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the
requirements of Rule 158.

 

 

 

-6-

 

 

(m)           The
Company may require each selling Holder to furnish to the Company a
certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and the natural persons thereof
that have voting and dispositive control over the Registrable
Securities. During any periods that the Company is unable to meet
its obligations hereunder with respect to the registration of the
Registrable Securities solely because any Holder fails to furnish
such information within five (5) Business Days of the
Company’s request, any liquidated damages that are accruing
at such time as to such Holder only shall be tolled and any Event
that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is
delivered to the Company.

 

If the
Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name
or otherwise is not required by the Securities Act or any similar
federal statute then in force) the deletion of the reference to
such Holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such
reference ceases to be required.

 

Each
Holder covenants and agrees that it will not sell any Registrable
Securities under the Registration Statement until the Company has
electronically filed the Prospectus as then amended or supplemented
as contemplated in Section 3(e) and notice from the Company that
the Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section
3(c).

 

Each
Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(c)(ii), 3(c)(iii),
or 3(c)(iv)or 3(n), such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration
Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(e), or until it is advised in writing
(the “Advice”) by the Company
that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration
Statement.

 

(n)           If
(i) there is material non-public information regarding the Company
which the Company’s Board of Directors (the
“Board”) determines not to
be in the Company’s best interest to disclose and which the
Company is not otherwise required to disclose, (ii) there is a
significant business opportunity (including, but not limited to,
the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender
offer or other similar transaction) available to the Company which
the Board determines not to be in the Company’s best interest
to disclose, or (iii) the Company is required to file a
post-effective amendment to the Registration Statement to
incorporate the Company’s quarterly and annual reports and
audited financial statements on Forms 10-Q and 10-K, then the
Company may (x) postpone or suspend filing of a registration
statement for a period not to exceed thirty (30) consecutive days
or (y) postpone or suspend effectiveness of a registration
statement for a period not to exceed thirty (30) consecutive days;
provided that the
Company may not postpone or suspend effectiveness of a registration
statement under this Section 3(n) for more than sixty (60) days in
the aggregate during any three hundred sixty (360) day period;
provided,
however, that no
such postponement or suspension shall be permitted for consecutive
twenty (20) day periods arising out of the same set of facts,
circumstances or transactions.

 

4.
Registration
Expenses. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company, except as and
to the extent specified in this Section 4, shall be borne by the
Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are
sold pursuant to the Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings
required to be made with any securities exchange or market on which
Registrable Securities are required hereunder to be listed, if any,
(B) with respect to filing fees required to be paid to the
Financial Industry Regulatory Authority, Inc. (including, without
limitation, pursuant to FINRA Rule 5110) and (C) in compliance with
state securities or Blue Sky laws (including, without limitation,
fees and disbursements of one counsel for the Holders up to a
maximum amount of $5,000), (ii) printing expenses (including,
without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing
of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) Securities
Act liability insurance, if the Company so desires such insurance,
and (v) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, the
Company’s independent public accountants (including the
expenses of any comfort letters or costs associated with the
delivery by independent public accountants of a comfort letter or
comfort letters). In addition, the Company shall be responsible for
all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the
expense of any annual audit, the fees and expenses incurred in
connection with the listing of the Registrable Securities on any
securities exchange if required hereunder. The Company shall not be
responsible for any discounts, commissions, transfer taxes or other
similar fees incurred by the Holders in connection with the sale of
the Registrable Securities.

 

 

 

-7-

 

 

5.
Indemnification.

 

(a)           Indemnification
by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each
Holder, the officers, directors, managers, partners, members,
shareholders, agents, brokers, investment advisors and employees of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs
of preparation and attorneys’ fees) and expenses
(collectively, “Losses”), as incurred,
arising out of or relating to any violation of securities laws or
untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission of a material fact
required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which
they were made) not misleading, except to the extent, but only to
the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder or such other
Indemnified Party furnished in writing to the Company by such
Holder for use therein. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions
contemplated by this Agreement.

 

(b)           Indemnification
by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents and
employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as
incurred, arising out of or based upon any untrue statement of a
material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising out of or based upon any omission of
a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in the light of the circumstances
under which they were made) not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained
in any information so furnished in writing by such Holder or other
Indemnifying Party to the Company specifically for inclusion in the
Registration Statement or such Prospectus. Notwithstanding anything
to the contrary contained herein, each Holder shall be liable under
this Section 5(b) only for the lesser of (a) the actual damages
incurred or (b) that amount as does not exceed the gross proceeds
to such Holder as a result of the sale of his/her/its Registrable
Securities pursuant to such Registration Statement.

 

(c)           Conduct
of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall be entitled to assume the
defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided
that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying
Party.

 

An
Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses; or (2)
the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or
(3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such parties shall have been advised by
counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld or
delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any
pending or threatened Proceeding in respect of which any
Indemnified Party is a party and indemnity has been sought
hereunder, unless such settlement includes an unconditional release
of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

 

 

 

-8-

 

 

(d)           Contribution.
If a claim for indemnification under Section 5(a) or 5(b) is due
but unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification
in accordance with its terms (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Party on the one hand and the
Indemnified Party on the other from the offering of the Note and
Warrants. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing
sentence but also the relative fault, as applicable, of the
Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as
well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action
in question, including any untrue statement of a material fact or
omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys’ or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms. In no event
shall any selling Holder be required to contribute an amount under
this Section 5(d) in excess of the gross proceeds received by such
Holder upon sale of such Holder’s Registrable Securities
pursuant to the Registration Statement giving rise to such
contribution obligation.

 

The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent
misrepresentation.

 

The
indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties pursuant to applicable law.

 

6.           Filing
Obligations. The Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the
date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act.
As long as any Holder owns Warrants or Registrable Securities, if
the Company is not required to file reports pursuant to Section
13(a) or 15(d) of the Exchange Act, it will prepare and furnish to
the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act, annual and quarterly
financial statements, together with a discussion and analysis of
such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in
reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period
that such filings would have been required to have been made under
the Exchange Act. The Company further covenants that it will take
such further action as any Holder may reasonably request, all to
the extent reasonably required from time to time to enable such
Person to sell the Conversion Shares and the Warrant Shares without
registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities
Act, including providing any legal opinions relating to such sale
pursuant to Rule 144. Upon the request of any Holder, the Company
shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such
requirements.

 

7.           Miscellaneous.

 

(a)           Remedies.
In the event of a breach by the Company or by a Holder of any of
their obligations under this Agreement, such Holder or the Company,
as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights
under this Agreement.
Each of the Company and each Holder agrees that monetary damages
would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be
adequate.

 

 

 

-9-

 

 

(b)           No
Inconsistent Agreements. The Company has not entered into,
and shall not enter into on or after the date of this Agreement,
any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement that is currently in effect
granting any registration rights with respect to any of its
securities to any Person. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority
of the then outstanding Registrable Securities, the Company shall
not grant to any Person the right to request the Company to
register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the
prior rights in full of the Holders set forth herein, and are not
otherwise in conflict with the provisions of this
Agreement.

 

(c)           No
Piggyback on Registrations for Other Securities. Neither the
Company nor any of its security holders may include securities of
the Company in the Registration Statement, and the Company shall
not after the date hereof enter into any agreement providing such
right to any of its security holders, unless the right so granted
is subject in all respects to the prior rights in full of the
Holders set forth herein, and is not otherwise in conflict with the
provisions of this Agreement.

 

(d)           Piggy-Back
Registrations for Registrable Securities. If at any time
when there is not an effective Registration Statement covering the
Conversion Shares and Warrant Shares, the Company shall determine
to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition
of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the
Company shall send to each Holder of Registrable Securities written
notice of such determination and, if within ten (10) calendar days
after receipt of such notice, or within such shorter period of time
as may be specified by the Company in such written notice as may be
necessary for the Company to comply with its obligations with
respect to the timing of the filing of such registration statement,
any such Holder shall so request in writing (which request shall
specify the Registrable Securities intended to be disposed of by
the such Holder), the Company will cause the registration under the
Securities Act of all Registrable Securities which the Company has
been so requested to register by the Holder, to the extent
requisite to permit the disposition of the Registrable Securities
so to be registered, provided that if at any time after giving
written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for
any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice
of such determination to such Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay expenses
in accordance with Section 4 hereof), and (ii) in the case of a
determination to delay registering, shall be permitted to delay
registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering
such other securities. The Company shall include in such
registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the Company shall
not be required to register any Registrable Securities pursuant to
this Section 7(d) that are eligible for sale pursuant to Rule 144
of the Securities Act. In the case of an underwritten public
offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in
such registration statement, then if the Company after consultation
with the managing underwriter should reasonably determine that the
inclusion of such Registrable Securities would materially adversely
affect the offering contemplated in such registration statement,
and based on such determination recommends inclusion in such
registration statement of fewer or none of the Registrable
Securities of the Holders, then (x) the number of Registrable
Securities of the Holders included in such registration statement
shall be reduced among such Holders based upon the number of
Registrable Securities requested to be included in the registration
in the order set forth in Section 2(b) hereof, if the Company after
consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable
Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable
Securities; provided, however, that if securities are
being offered for the account of other persons or entities as well
as the Company, such reduction shall not represent a greater
fraction of the number of Registrable Securities intended to be
offered by the Holders than the fraction of similar reductions
imposed on such other persons or entities (other than the Company).
For purposes of this Section 7(d), Registrable Securities shall
include any shares actually issued to the Purchasers pursuant to
the Securities Escrow Agreement.

 

 

 

 

-10-

 

 

(e)           Intentionally
Left Blank.

 

(f)           Failure
to File Registration Statement and Other Events. The Company
and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date
and not declared effective by the Commission on or prior to the
Effectiveness Date and maintained in the manner contemplated herein
during the Effectiveness Period or if certain other events occur.
The Company and the Holders further agree that it would not be
feasible to ascertain the extent of such damages with precision.
Accordingly, if (A) the Registration Statement is not filed on or
prior to the Filing Date, or (B) the Registration Statement is not
declared effective by the Commission on or prior to the
Effectiveness Date, or (C) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within three (3) Business Days
of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration
Statement will not be “reviewed,” or not subject to
further review, or (D) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be
effective as to all Registrable Securities at any time prior to the
expiration of the Effectiveness Period, without being succeeded
immediately by a subsequent Registration Statement filed with and
declared effective by the Commission in accordance with Section
2(a) hereof, or (E) the Company has breached Section 3(n) of this
Agreement, or (F) trading in the Common Stock shall be suspended or
if the Common Stock is no longer quoted on or is delisted from the
OTCQB (or other principal exchange on which the Common Stock is
traded) for any reason for more than three (3) consecutive Business
Days or twelve (12) Business Days in the aggregate for any twelve
month period, (any such failure or breach being referred to as an
“Event,” and for purposes
of clauses (A) and (B) the date on which such Event occurs, or for
purposes of clauses (C) and (F) the date on which such three (3)
Business Day period is exceeded, or for purposes of clause (D)
after more than fifteen (15) Business Days, being referred to as
“Event
Date”), then the Company shall pay to each Holder for
liquidated damages an amount of cash equal to 2% of the product of
(i) the number of Registrable Securities and (ii) the Closing Sale Price or Closing Bid Price as of
the trading
day immediately prior to the Event
Date, such payments to be made on the Event Date and every thirty (30) day anniversary
thereafter with a maximum penalty of 12% until the applicable Event
is cured; provided,
however, that in
the event the Commission does not permit all of the Registrable
Securities to be included in the Registration Statement because of
its application of Rule 415, liquidated damages payable pursuant to
this Section shall only be payable by the Company based on the
portion of the Holder’s initial investment in the Securities
that corresponds to the number of such Holder’s Registrable
Securities permitted to be registered by the Commission in such
Registration Statement pursuant to Rule 415. For further
clarification, the parties understand that no liquidated damages
shall be payable pursuant to this Section with respect to any
Registrable Securities that the Company is not permitted to include
on such Registration Statement due to the Commission’s
application of Rule 415. In addition, no liquidated damages shall
be payable with respect to Registrable Securities that may be sold
pursuant to Rule 144. Notwithstanding anything to the contrary in
this paragraph (e), if (a) any of the Events described in clauses
(A), (B), (C), (D) or (F) shall have occurred, (b) on or prior to
the applicable Event Date, the Company shall have exercised its
rights under Section 3(n) hereof and (c) the postponement or
suspension permitted pursuant to such Section 3(n) shall remain
effective as of such applicable Event Date, then the applicable
Event Date shall be deemed instead to occur on the second Business
Day following the termination of such postponement or suspension.
Liquidated damages payable by the Company pursuant to this Section
7(f) shall be payable on the Event Date and the first (1st)
Business Day of each thirty (30) day period following the Event
Date. Notwithstanding anything to the contrary contained herein, in
no event shall any liquidated damages be payable with respect to
the Warrants or the Warrant Shares.

 

(g)           Amendments
and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of a majority of
the then outstanding Registrable Securities.

 

(h)           Notices.
Whenever notice is required to be given under this Agreement,
unless otherwise provided herein, such notice shall be given in
accordance with Section 5.4 of the Purchase Agreement.

 

(i)           Successors
and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its
successors and assigns. The Company may not assign this Agreement
or any of its rights or obligations hereunder without the prior
written consent of each Holder. Each Purchaser may assign its
rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.

 

 

 

 

-11-

 

 

     (j)         
Assignment of Registration
Rights. The rights of each Holder hereunder, including the
right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Person who acquires
all or a portion of the
Warrants or the Registrable Securities if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and
a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within
a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii)
following such transfer or assignment the further disposition of
such securities by the transferee or assignees is restricted under
the Securities Act and applicable state securities laws unless such
securities are registered in a Registration Statement under this
Agreement (in which case the Company shall be obligated to amend
such Registration Statement to reflect such transfer or assignment)
or are otherwise exempt from registration, (iv) at or before the
time the Company receives the written notice contemplated by clause
(ii) of this Section, the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions of this
Agreement, and (v) such transfer shall have been made in accordance
with the applicable requirements of the Purchase Agreement. The
rights to assignment shall apply to the Holders (and to subsequent)
successors and assigns.

 

(k)           Counterparts.
This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same
Agreement and shall become effective when counterparts have been
signed by each party and delivered to the other parties hereto, it
being understood that all parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as
if such facsimile signature were the original thereof.

 

(l)           Governing
Law; Jurisdiction. All questions concerning the
construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to
the obligations of the Company elsewhere in this Agreement, the
prevailing party in such Action or Proceeding shall be reimbursed
by the non-prevailing party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.

 

(m)           Cumulative
Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

 

(n)           Severability.
If any term, provision, covenant or restriction of this Agreement
is held to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their reasonable efforts to find and
employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and
declared to be the
intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.

 

(o)           Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

(p)           Shares
Held by the Company and its Affiliates. Whenever the consent
or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by
the Company or its Affiliates (other than any Holder or transferees
or successors or assigns thereof if such Holder is deemed to be an
Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required
percentage.

 

 

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

-12-

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.

 

 

EXACTUS,
INC.

 

 

 

By: 
/s/ Emiliano
Aloi      

Name:
Emiliano Aloi

Title:
President & CEO

 

 

 

PURCHASER:

 

3I,
LP

 

 

By:
    /s/ Maier
Tarlow                

Name:
Maier Tarlow

Title:
Authorized Signer

 

 

 

[Signature
Page to Registration Rights Agreement]

 

 

 

-13-

 

Exhibit A

 

Plan of Distribution

 

The
selling security holders and any of their pledgees, donees,
assignees and successors-in-interest may, from time to time, sell
any or all of their shares of common stock being offered under this
prospectus on any stock exchange, market or trading facility on
which shares of our common stock are traded or in private
transactions. These sales may be at fixed or negotiated prices. The
selling security holders may use any one or more of the following
methods when disposing of shares:

 

●

ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

●

block
trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;

 

●

purchases
by a broker-dealer as principal and resales by the broker-dealer
for its account;

 

●

an
exchange distribution in accordance with the rules of the
applicable exchange;

 

●

privately
negotiated transactions;

 

●

to
cover short sales made after the date that the registration
statement of which this prospectus is a part is declared effective
by the Commission;

 

●

broker-dealers
may agree with the selling security holders to sell a specified
number of such shares at a stipulated price per share;

 

●

a
combination of any of these methods of sale; and

 

●

any
other method permitted pursuant to applicable law.

 

The
shares may also be sold under Rule 144 under the Securities Act of
1933, as amended (“Securities Act”), if available,
rather than under this prospectus. The selling security holders
have the sole and absolute discretion not to accept any purchase
offer or make any sale of shares if they deem the purchase price to
be unsatisfactory at any particular time.

 

The
selling security holders may pledge their shares to their brokers
under the margin provisions of customer agreements. If a selling
security holder defaults on a margin loan, the broker may, from
time to time, offer and sell the pledged shares.

 

Broker-dealers
engaged by the selling security holders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holders (or, if
any broker-dealer acts as agent for the purchaser of shares, from
the purchaser) in amounts to be negotiated, which commissions as to
a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.

 

If
sales of shares offered under this prospectus are made to
broker-dealers as principals, we would be required to file a
post-effective amendment to the registration statement of which
this prospectus is a part. In the post-effective amendment, we
would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such
sales.

 

The
selling security holders and any broker-dealers or agents that are
involved in selling the shares offered under this prospectus may be
deemed to be “underwriters” within the meaning of the
Securities Act in connection with these sales. Commissions received
by these broker-dealers or agents and any profit on the resale of
the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Any
broker-dealers or agents that are deemed to be underwriters may not
sell shares offered under this prospectus unless and until we set
forth the names of the underwriters and the material details of
their underwriting arrangements in a supplement to this prospectus
or, if required, in a replacement prospectus included in a
post-effective amendment to the registration statement of which
this prospectus is a part.

 

The
selling security holders and any other persons participating in the
sale or distribution of the shares offered under this prospectus
will be subject to applicable provisions of the Exchange Act, and
the rules and regulations under that act, including Regulation M.
These provisions may restrict activities of, and limit the timing
of purchases and sales of any of the shares by, the selling
security holders or any other person. Furthermore, under Regulation
M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and other activities
with respect to those securities for a specified period of time
prior to the commencement of such distributions, subject to
specified exceptions or exemptions. All of these limitations may
affect the marketability of the shares.

 

If
any of the shares of common stock offered for sale pursuant to this
prospectus are transferred other than pursuant to a sale under this
prospectus, then subsequent holders could not use this prospectus
until a post-effective amendment or prospectus supplement is filed,
naming such holders. We offer no assurance as to whether any of the
selling security holders will sell all or any portion of the shares
offered under this prospectus.

 

We have
agreed to pay all fees and expenses we incur incident to the
registration of the shares being offered under this prospectus.
However, each selling security holder and purchaser is responsible
for paying any discounts, commissions and similar selling expenses
they incur.

 

We and
the selling security holders have agreed to indemnify one another
against certain losses, damages and liabilities arising in
connection with this prospectus, including liabilities under the
Securities Act.

 

 

A-1

 

Exhibit B

 

Selling Stockholder Questionnaire

 

1.

Name.

 

(a) 

Full Legal Name of
Selling Stockholder:

 

	
 

	
 

 

(b) 

Full Legal Name of
Registered Holder (if not the same as (a) above) through which
Registrable Securities Listed in Item 3 below are
held:

 

	
 

	
 

 

(c) 

Full Legal Name of
Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of
the securities covered by the questionnaire):

 

	
 

	
 

 

2. 

Address
for Notices to Selling Stockholder:

 

	

Telephone: 

	

Fax: 

	

Contact
Person: 

	

E-mail
address of Contact
Person:________________________________________________

 

3. 

Beneficial
Ownership of Registrable Securities:

 

(a)
Type
and Number of Registrable Securities beneficially
owned:

 

	

___________________________________________________________________________

	

___________________________________________________________________________

	

___________________________________________________________________________

 

(b)
Number
of shares of Common Stock to be registered pursuant to this Notice
for resale:

 

	

___________________________________________________________________________

	

___________________________________________________________________________

	

___________________________________________________________________________

 

 

 

B-1

 

 

 

4. 

Broker-Dealer
Status:

 

(a)
Are you
a broker-dealer?

 

Yes
☐ No
☐

 

(b) If “yes” to Section 4(a),
did you receive your Registrable Securities as compensation for
investment banking services to the Company?

 

Yes
☐ No
☐

 

Note:
If no,
the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration
Statement.

 

(c)
Are you
an affiliate of a broker-dealer?

 

Yes
☐ No
☐

 

Note:
If yes,
provide a narrative explanation below:

 

(d)
If you
are an affiliate of a broker-dealer, do you certify that you bought
the Registrable Securities in the ordinary course of business, and
at the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable
Securities?

 

Yes
☐ No
☐

 

Note:
If no,
the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration
Statement.

 

5. 

Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Stockholder.

 

Except as set forth below in this Item 5, the undersigned is not
the beneficial or registered owner of any securities of the Company
other than the Registrable Securities listed above in Item
3.

 

Type
and amount of other securities beneficially owned:

 

______________________________________________________________________________

 

______________________________________________________________________________

 

6. 

Relationships
with the Company:

 

Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners
of 5% of more of the equity securities of the undersigned) has held
any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the
past three years.

 

State
any exceptions here:

 

______________________________________________________________________________

 

______________________________________________________________________________

 

 

 

B-2

 

 

 

7.            

Plan
of Distribution:

 

The undersigned has reviewed the form of Plan of Distribution
attached as Exhibit A to the Agreement, and hereby confirms that,
except as set forth below, the information contained therein
regarding the undersigned and its plan of distribution is correct
and complete.

 

State
any exceptions here:

 

______________________________________________________________________________

 

______________________________________________________________________________

 

***********

 

 The
undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof and prior to the effective date
of any applicable Resale Registration Statement. All notices
hereunder shall be made in writing, by hand delivery, confirmed or
facsimile transmission, first-class mail or air courier
guaranteeing overnight delivery at the address set forth below. In
the absence of any such notification, the Company shall be entitled
to continue to rely on the accuracy of the information in this
Notice and Questionnaire.

 

By
signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items (1) through
(7) above and the inclusion of such information in the Resale
Registration Statement and the Prospectus. The undersigned
understands that such information will be relied upon by the
Company in connection with the preparation or amendment of any such
Registration Statement and the Prospectus.

 

By
signing below, the undersigned acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the rules and regulations
thereunder, particularly Regulation M in connection with any
offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it
understands that the answers to this Questionnaire are furnished
for use in connection with Registration Statements filed pursuant
to the Agreement and any amendments or supplements thereto filed
with the Commission pursuant to the Securities Act.

 

The
undersigned hereby acknowledges and is advised of the following
Interpretation A.65 of the July 1997 SEC Manual of Publicly
Available Telephone Interpretations regarding short
selling:

 

“An Issuer filed a Form S-3 registration statement for a
secondary offering of common stock which is not yet effective. One
of the selling stockholders wanted to do a short sale of common
stock “against the box” and cover the short sale with
registered shares after the effective date. The issuer was advised
that the short sale could not be made before the registration
statement become effective, because the shares underlying the short
sale are deemed to be sold at the time such sale is made. There
would, therefore, be a violation of Section 5 if the shares were
effectively sold prior to the effective date.”

 

By
returning this Questionnaire, the undersigned will be deemed to be
aware of the foregoing interpretation.

 

I
confirm that, to the best of my knowledge and belief, the foregoing
statements (including without limitation the answers to this
Questionnaire) are correct.

 

IN WITNESS WHEREOF, the undersigned, by authority duly
given, has caused this Questionnaire to be executed and delivered
either in person or by its duly authorized agent.

 

 

	

Dated:_________________________

	
 

	

Beneficial
Owner:

 

_______________

	
 

	
 

	
 

	
 

	
 

	

By:__________________________

	
 

	
 

	

Name:

	
 

	
 

	

Title: 

 

 

 

 

 

 

 

 

 

B-3

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