Document:

Security Devices International Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

EXHIBIT B

STOCK OPTION PLAN

WHEREAS SECURITY DEVICES INTERNATIONAL INC. (the
“Issuer”) is a corporation subject to the laws of the State of Delaware;

AND WHEREAS the board of directors of the Issuer wishes to
replace its existing stock option plan; 

NOW THEREFORE a stock option plan of the Issuer (the
“Plan”) is hereby established on the terms and conditions set out
below:

1. Definitions

In this Plan, the following terms shall have the following
meanings respectively: 

“Board” has the meaning given to that term in Section
4.

“Company” means a corporation, incorporated association
or organization, body corporate, partnership, trust, association or other entity
other than an individual.

“Eligible Person” means: 

so long as the Issuer is listed on the
Exchange, a person to whom options may be granted under a stock option plan of
the Issuer pursuant to Policy 4.4 of the Exchange; and 

if the Issuer ceases to be listed on
the Exchange, a person to whom options may be granted under section 2.24 of NI
45-106.

“Exchange” means the TSX Venture Exchange.

“Expiry Date” has the meaning given to that term in
Section 9.

“NI 45-106” means National Instrument 45-106 (Prospectus
Exemptions) of the Canadian Securities Administrators. 

“Optionee” means the recipient of a stock option granted
by the Issuer.

“person” means an individual, corporation, incorporated
association or organization, body corporate, partnership, trust, association or
other entity. 

“Shares” means shares of common stock in the capital of
the Issuer.

2. Exchange Definitions

So long as the Issuer is listed on the Exchange, the following
terms shall have the meaning assigned to them in the policies of the Exchange:
“Consultant”, “Director”, “Employee”, “Investor Relations Activities”, “Insider”
and “Management Company Employee”

3. Purpose

The purpose of this Plan is to advance the interests of the
Issuer by encouraging Eligible Persons to acquire Shares, thereby increasing
their proprietary interest in the Issuer, encouraging them to remain associated
with the Issuer and furnishing them with additional incentive in their efforts
on behalf of the Issuer.

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4. Administration

The Plan shall be administered by the board of directors of the
Issuer or by a committee of the board of directors given responsibility to
administer the Plan (such committee or, if no such committee is appointed, the
board of directors of the Issuer, is hereinafter referred to as the
“Board”). 

Subject to the provisions of this Plan, the Board shall have
authority to construe and interpret this Plan and all options subject to this
Plan, to prescribe, amend and rescind rules and regulations relating to this
Plan and to make all other determinations necessary or advisable for the
administration of this Plan. All determinations and interpretations made by the
Board shall be binding and conclusive on all Eligible Persons and Optionees and
on their legal personal representatives and beneficiaries.

5. Stock Exchange
Requirements

All options which are granted under this Plan shall be subject
to, and must comply with, the rules and policies of the stock exchange on which
the Shares are listed and any other regulatory body having jurisdiction.

So long as the Shares are listed on the Exchange: 

the aggregate number of options granted to any one Consultant
in a 12 month period must not exceed 2% of the issued Shares, calculated at the
date an option is granted to the Consultant; 

the aggregate number of options granted to all persons retained
to provide Investor Relations Activities must not exceed 2% of the issued Shares
in any 12 month period, calculated at the date an option is granted to any such
person; 

disinterested shareholder approval will be obtained for any
reduction in the exercise price of an option if the Optionee is an Insider of
the Issuer at the time of the proposed amendment; and 

for stock options granted to Employees, Consultants or
Management Company Employees, the Issuer and the Optionee are responsible for
ensuring and confirming that the Optionee is a bona fide Employee, Consultant or
Management Company Employee, as the case may be.

6. Shares Offered under the
Plan

Subject to adjustment as provided in Section 15, 

options granted under this Plan shall entitle the Optionee to
purchase Shares; and 

the maximum number of Shares which may be reserved for issuance
pursuant to the exercise of options which are subject to this Plan (the “Plan
Reserve”) is 18,993,274; provided that, so long as the Company is listed on
the Exchange, this maximum will be reduced to 20% of the issued and outstanding
Shares on December 19, 2017.

If any options granted hereunder shall be cancelled or shall
expire without being exercised, the unpurchased Shares subject to those options
shall again be available for options granted under this Plan.

The Issuer shall at all times during the term of this Plan
reserve and keep available such numbers of Shares as will be sufficient to
satisfy the exercise of options subject to this Plan.

The Issuer had issued compensation warrants (the
“Warrants”) to purchase 4,319,000 Shares at the time of its listing on
the Exchange. Any holder of Warrants shall be entitled to exchange those
Warrants for an option to purchase an equal number of Shares for the same price
and expiring on the same date as the Warrants. Until Warrants are exchanged for
options, the Plan Reserve shall be reduced by the number of Shares which may be
purchased under those Warrants.

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7. Eligibility and
Participation

Options shall be granted only to Eligible Persons.

Subject to the terms of this Plan, the Board shall have full
and final authority to determine the persons who are to be granted options under
this Plan and the number of options granted to each such person, the terms and
provisions of each option agreement, and the time or times at which options
shall be granted, vested and expire.

8. Exercise Price

The exercise price of options shall be determined by the Board
at the time the options are granted. That exercise price shall not be lower than
the last closing price of the Shares on the stock exchange on which the Shares
are listed prior to the grant of the option.

Once the exercise price has been determined by the Board and
the options have been granted, the exercise price of the options may be reduced
upon receipt of Board approval, provided that, so long as the Issuer is listed
on the Exchange, in the case of options held by Insiders the exercise price of
the options may be reduced only if disinterested shareholder approval is
obtained in compliance with the policies of the Exchange.

9. Duration of Options

Each option shall remain in effect for such option period as is
fixed by the Board and shall expire at 5:00 p.m. (Toronto time) on the last day
of that period (the “Expiry Date”), subject to earlier termination as
provided in this Plan. The maximum term of an option may not exceed 10 years
from the date of grant (subject to extension where the Expiry Date falls within
a Blackout Period, as provided for in Section 13).

10. Vesting and Exercise

Options may be subject to such vesting restrictions as are
determined by the Board in its discretion; provided that, so long as the Shares
are listed on the Exchange, options granted to persons retained to provide
Investor Relations Activities must vest in stages over a period of not less than
12 months with no more than 1/4 of the options vesting in any three month
period.

Subject to any vesting restrictions, options may be exercised
in whole or in part at any time and from time to time prior to the expiry of
those options.

Except as otherwise specifically permitted under this Plan, no
option may be exercised unless the Optionee is at the time of such exercise an
Eligible Person.

The exercise of any option shall be contingent upon receipt by
the Issuer at its head office of (i) a written notice of exercise, specifying
the number of options being exercised, and (ii) payment in cash of the full
purchase price of the options being exercised under that notice of exercise.

11. Investor Relations

So long as the Shares are listed on the Exchange, if the
Optionee performs Investor Relations Activities, then the Optionee shall report
all trading in the securities of the Issuer to the Secretary of the Issuer for
delivery to the Board, by submitting a report which details the dates of those
trades, the number of securities traded and the prices at which securities were
traded. That report shall be delivered to the Secretary of the Issuer no later
than the date on which an insider trading report would be required in respect of
that trade under the insider trading requirements of applicable securities
legislation as if the Optionee was an insider of the Issuer under that
legislation.

37

12. Ceasing to be an Eligible
Person

If an Optionee ceases to be an Eligible Person (including,
without limitation, by reason of death or termination with or without cause),
such Optionee’s options shall expire at 5:00 p.m. (Eastern Time) on the earlier
of (i) the Expiry Date, and (ii) the 90th day after the date on which the
Optionee ceases to be an Eligible Person (or such earlier date, if any, as is
determined by the Board when the Board grants the option). 

Notwithstanding the foregoing, if an Optionee ceases to be an
Eligible Person for any reason such Optionee’s options may only be exercised if
and to the extent that the Optionee is entitled to exercise the options on the
date the Optionee ceases to be an Eligible Person.

Nothing contained in this Plan, or in any option granted
pursuant to this Plan, shall confer upon an Optionee any right to continue as an
employee, officer, director or consultant of the Issuer.

In the event of the death of a Optionee, the options granted to
that Optionee may be exercised by the person or persons to whom the Optionee’s
rights under the options shall pass by the Optionee’s will or the laws of
intestacy.

13. Blackout Extensions

The Expiry Date of an option shall be automatically extended if
the Expiry Date falls within a period (a “Blackout Period”) during which
the Issuer prohibits Optionees from exercising their options; provide that: 

The Blackout Period must be formally imposed by the Issuer
pursuant to its internal trading policies as a result of the bona fide existence
of undisclosed material information. For greater certainty, in the absence of
the Issuer formally imposing a Blackout Period, the expiry date of any options
will not be automatically extended in any circumstances.

The Blackout Period shall expire upon the general disclosure of
the undisclosed material information. The Expiry Date shall be extended to 5:00
p.m. (Eastern Time) on that day which follows the expiry of the Blackout Period
by the lesser of (i) ten business days, and (ii) the number of business days
falling within the Blackout Period. For this purpose, a business day means a day
which is not a Saturday, a Sunday or a date on which banks generally are closed
in the Optionee’s municipality of residence.

The automatic extension of an Optionee’s options will not be
permitted where the Optionee or the Issuer is subject to a cease trade order (or
similar order under applicable securities laws) in respect of the Issuer’s
securities.

14. Rights as a Shareholder

No person entitled to exercise any option granted under this
Plan shall have any of the rights or privileges of a shareholder of the Issuer
in respect of any Share issuable upon exercise of such option until such Share
has been issued.

15. Adjustments

If there is any subdivision or consolidation of the Shares into
a greater or lesser number, and if this subdivision or consolidation occurs
during the term of any options, then upon exercise of those options by the
Optionee the Issuer shall deliver to the Optionee the number of Shares which the
Optionee would have held as a result of the subdivision or consolidation if on
the record date thereof the Optionee had been the registered holder of the
number of Shares in respect of which the Optionee is exercising the options.

Except as described in the preceding paragraph, if the Shares
are reclassified, reorganized or otherwise changed, or the Issuer consolidates,
merges or amalgamates with or into another Company, (any such event being a
“Reorganization”), and if this Reorganization occurs during the term of
any options, then upon exercise of those options by the Optionee the Issuer, or
the Company resulting or continuing from the Reorganization, shall deliver the
number and kind of securities and/or other consideration that the Optionee would
have been entitled to receive as a result of the Reorganization, if on the
record date of the Reorganization the Optionee had been the registered holder of
the number of Shares in respect of which the Optionee is exercising the
options.

38

The securities and other consideration delivered to an Optionee
under this Section shall be in substitution for the Shares called for delivery
to the Optionee under the options and the exercise price of the options shall be
the consideration for the substitute securities and other consideration.

16. Transferability

So long as the Issuer is listed on the Exchange, all options
shall be non-assignable and non-transferable. If the Issuer ceases to be listed
on the Exchange, all options shall be non-assignable and non-transferable except
to a “permitted assign” under NI 45-106.

All option agreements and Shares issued under options shall be
subject to, and legended with, such hold periods as may apply under applicable
securities laws or the requirements of any stock exchange on which the Shares
are listed. All Shares which are issued subject to such a hold period shall be
legended as required under applicable securities laws or the requirements of any
stock exchange on which the Shares are listed.

17. Tax Withholding

To the extent the grant or exercise of an option gives rise to
any withholding tax obligation or other statutory withholding obligation
(including, without limitation, income and payroll withholding taxes imposed by
any jurisdiction), prior to the delivery of the option or Shares being acquired
upon the exercise of the option, as the case may be, the Issuer may: 

require the Optionee to pay to the Issuer an amount, or 

withhold an amount from any remuneration or consideration
whatsoever payable to the Optionee, 

sufficient to pay any tax or other statutory withholding
obligation associated with the grant or exercise of the option, as the case may
be.

18. Amendment and Termination of
Plan

Subject to the approval of the Exchange (if required), the
Board may, at any time, suspend or terminate this Plan. Subject to any
applicable approval of the Exchange (if required), the Board may at any time
amend or revise the terms of this Plan; provided that no such amendment or
revision shall result in a material adverse change to the terms of any option
previously granted under this Plan.

19. Approvals

This Plan is subject to the acceptance of the Plan by the
Exchange and the approval of the Plan by the Issuer’s shareholders in compliance
with the requirements of the Exchange and NI 45-106. Options may be granted
under this Plan prior to the satisfaction of those conditions provided that no
such option may be exercised prior to the satisfaction of those conditions.

The ability of an Optionee to exercise options, and the
obligation of the Issuer to issue and deliver Shares under options, is subject
to any approvals which may be required from shareholders of the Issuer, the
Exchange and any regulatory authority having jurisdiction over the securities of
the Issuer. If any Shares cannot be issued to any Optionee as a result of the
failure to obtain that approval, the obligation of the Issuer to issue such
Shares shall terminate and any exercise price paid to the Issuer will be
returned to the Optionee.

39

20. Effective Date of Plan

This Plan shall take effect on such date as is approved by the
Board. On that date, this Plan shall replace and supercede the Issuer’s existing
stock option plan. All options which were issued under the Issuer’s existing
plan shall be deemed to have been properly issued under this Plan and shall be
subject to the terms of this Plan.

21. Interpretation

The Plan will be governed by and construed in accordance with
the laws of the Province of Ontario.

40Security Devices International Inc.: Exhibit 10.7 - Filed by newsfilecorp.com

REGISTRATION RIGHTS AGREEMENT 

This Registration Rights
Agreement (this “Agreement”) is made and entered into effective as of
November ____, 2017 (the “Effective Date”) between Security Devices
International Inc., a Delaware corporation (the “Company”), and the
persons who have executed the signature page(s) hereto (each, a
“Purchaser” and collectively, the “Purchasers”). 

RECITALS:

WHEREAS, the Company proposes to
raise up to USD$4,500,000 (the “Offering”) from the sale of units (the “Units”)
at a price of USD$0.106 per Unit (the “Purchase Price”) pursuant to the
exemption from registration under the Securities Act of 1933, as amended (the
“Securities Act”), by virtue of Section 4(a)(2) thereof and/or Rule 506 of
Regulation D (“Regulation D”) promulgated thereunder. Each Unit consists of one
share (a “Share”) of the Company’s common stock, par value $0.001 per share (the
“Common Stock”) and one-half (1/2) of a warrant (each whole warrant is referred
to herein as a “Warrant”) to purchase one-half (1/2) share of Common Stock; and

WHEREAS, in connection with the
Offering, the Company agrees to provide certain registration rights related to
the Shares and the shares of Common Stock issuable upon exercise of the Warrants
(the “Warrant Shares”), on the terms set forth herein; and 

NOW, THEREFORE, in consideration
of the mutual promises, representations, warranties, covenants, and conditions
set forth herein, the parties mutually agree as follows:

1.    
Certain Definitions. As used in this Agreement, the following terms shall
have the following respective meanings: 

“Approved Market” means
the Over-the-Counter Bulletin Board, the OTC Markets, the Nasdaq Stock Market,
the New York Stock Exchange or the American Stock Exchange. 

“Blackout Period” means,
with respect to a registration, a period, in each case commencing on the day
immediately after the Company notifies the Purchasers that they are required,
because of the occurrence of an event of the kind described in Section 4(f)
hereof, to suspend offers and sales of Registrable Securities during which the
Company, in the good faith judgment of its board of directors, determines
(because of the existence of, or in anticipation of, any acquisition, financing
activity, or other transaction involving the Company, or the unavailability for
reasons beyond the Company’s control of any required financial statements,
disclosure of information which is in its best interest not to publicly
disclose, or any other event or condition of similar significance to the
Company) that the registration and distribution of the Registrable Securities to
be covered by such Registration Statement, if any, would be seriously
detrimental to the Company and its stockholders and ending on the earlier of (1)
the date upon which the material non-public information commencing the Blackout
Period is disclosed to the public or ceases to be material and (2) such time as
the Company notifies the selling Holders that the Company will no longer delay
such filing of the Registration Statement, recommence taking steps to make such
Registration Statement effective, or allow sales pursuant to such Registration
Statement to resume. 

 “Business Day” means any
day of the year, other than a Saturday, Sunday, or other day on which the
Commission is required or authorized to close. 

“Commission” means the U.
S. Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act. 

“Common Stock” means the
common stock, par value $0.001 per share, of the Company and any and all shares
of capital stock or other equity securities of: (i) the Company which are added
to or exchanged or substituted for the Common Stock by reason of the declaration
of any stock dividend or stock split, the issuance of any distribution or the
reclassification, readjustment, recapitalization or other such modification of
the capital structure of the Company; and (ii) any other corporation, now or
hereafter organized under the laws of any state or other governmental authority,
with which the Company is merged, which results from any consolidation or
reorganization to which the Company is a party, or to which is sold all or
substantially all of the shares or assets of the Company, if immediately after
such merger, consolidation, reorganization or sale, the Company or the
stockholders of the Company own equity securities having in the aggregate more
than 50% of the total voting power of such other corporation. 

“Effective Date” has the
meaning given it in the preamble to this Agreement.

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

 “Family Member” means (a)
with respect to any individual, such individual’s spouse, any descendants
(whether natural or adopted), any trust all of the beneficial interests of which
are owned by any of such individuals or by any of such individuals together with
any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust. 

“Holder” means each
Purchaser or any of such Purchaser’s respective successors and Permitted
Assignees who acquire rights in accordance with this Agreement with respect to
any Registrable Securities directly or indirectly from a Purchaser or from any
Permitted Assignee. 

“Initial Registration
Statement” means the initial Registration Statement filed pursuant to this
Agreement. 

 “Majority Holders” means
at any time Holders representing a majority of the Registrable Securities. 

“Permitted Assignee” means
(a) with respect to a partnership, its partners or former partners in accordance
with their partnership interests, (b) with respect to a corporation, its
stockholders in accordance with their interest in the corporation, (c) with
respect to a limited liability company, its members or former members in
accordance with their interest in the limited liability company, (d) with
respect to an individual party, any Family Member of such party, (e) an entity
that is controlled by, controls, or is under common control with a transferor,
or (f) a party to this Agreement. 

“Piggyback Registration”
means, in any registration of Common Stock as set forth in Section 3(b), the
ability of holders of Registrable Securities to include Registrable Securities
in such registration. 

The terms “register,”
“registered,” and “registration” refer to a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement. 

“Registrable Securities”
means the Shares and the Warrant Shares but excluding (i) any Registrable
Securities that have been publicly sold or may be sold immediately without
registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person in
a transaction pursuant to a registration statement filed under the Securities
Act, or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act. 

“Registration Default
Date” means the date that is 150 days after the date the Registration
Statement is actually filed with the Commission. 

“Registration Filing Date”
means the date that is 120 days after date of the final closing of the
Offering.

“Registration Statement”
means the registration statement that the Company is required to file pursuant
to this Agreement to register the Registrable Securities. 

“Rule 144” means Rule 144
promulgated by the Commission under the Securities Act. 

“Rule 145” means Rule 145
promulgated by the Commission under the Securities Act.

“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 SEC having substantially the same purpose and effect as such
Rule. 

“Securities Act” means the
Securities Act of 1933, as amended, or any similar federal statute promulgated
in replacement thereof, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. 

“SEC Effective Date” means
the date the Registration Statement is declared effective by the Commission.

“Trading Day” means (a) if
the Common Stock is listed or quoted on an Approved Market, then any day during
which securities are generally eligible for trading on the Approved Market, or
(b) if the Common Stock is not then listed or quoted and traded on an Approved
Market, then any business day. 

“Warrants” has the meaning
given it in the recitals of this Agreement. 

2.     
Term. This Agreement shall continue in full force and effect for a period
of one year from the SEC Effective Date, unless terminated sooner hereunder.

3.    
Registration. 

(a)    
Registration on Form S-1. Not later than the Registration Filing Date,
the Company shall file with the Commission a Registration Statement on Form S-1,
or other applicable form, relating to the resale by the Holders of all of the
Registrable Securities, and the Company shall use its commercially reasonably
efforts to cause such Registration Statement to be declared effective prior to
the Registration Default Date. 

(b)    
Piggyback Registration. In addition to the Company agreement pursuant to
Section 3(a) above, if the Company shall determine to register for sale for cash
any of its Common Stock, for its own account or for the account of others (other
than the Holders), other than (i) a registration relating solely to employee
benefit plans or securities issued or issuable to employees, consultants (to the
extent the securities owned or to be owned by such consultants could be
registered on Form S-8) or any of their Family Members (including a registration
on Form S-8) or (ii) a registration relating solely to a Securities Act Rule 145
transaction or a registration on Form S-4 in connection with a merger,
acquisition, divestiture, reorganization or similar event, the Company shall
promptly give to the Holders written notice thereof (and in no event shall such
notice be given less than 20 calendar days prior to the filing of such
registration statement), and shall, subject to Section 3(c), include as a
Piggyback Registration all of the Registrable Securities specified in a written
request delivered by the Holder thereof within 10 calendar days after receipt of
such written notice from the Company. However, the Company may, without the
consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company or such other stockholders have elected to
abandon the proposal to register the securities proposed to be registered
thereby. 

(c)    
Underwriting. If a Piggyback Registration is for a registered public
offering that is to be made by an underwriting, the Company shall so advise the
Holders of the Registrable Securities eligible for inclusion in such
Registration Statement pursuant to Sections 3(b). In that event, the right of
any Holder to Piggyback Registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to sell any of their Registrable Securities through such
underwriting shall (together with the Company and any other stockholders of the
Company selling their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter selected for such
underwriting by the Company or the selling stockholders, as applicable.
Notwithstanding any other provision of this Section, if the underwriter or the
Company determines that marketing factors require a limitation on the number of
shares of Common Stock or the amount of other securities to be underwritten, the
underwriter may exclude some or all Registrable Securities from such
registration and underwriting. The Company shall so advise all Holders (except
those Holders who failed to timely elect to include their Registrable Securities
through such underwriting or have indicated to the Company their decision not to
do so), and indicate to each such Holder the number of shares of Registrable
Securities that may be included in the registration and underwriting, if any.
The number of shares of Registrable Securities to be included in such
registration and underwriting shall be allocated among such Holders as follows:

(i)     If the Piggyback Registration was
initiated by the Company, the number of shares that may be included in the
registration and underwriting shall be allocated first to the Company and then,
subject to obligations and commitments existing as of the date hereof, to all
selling stockholders, including the Holders, who have requested to sell in the
registration on a pro rata basis according to the number of shares requested to
be included therein; and 

(ii)     If the Piggyback Registration was
initiated by the exercise of demand registration rights by a stockholder or
stockholders of the Company (other than the Holders), then the number of shares
that may be included in the registration and underwriting shall be allocated
first to such selling stockholders who exercised such demand and then, subject
to obligations and commitments existing as of the date hereof, to all other
selling stockholders, including the Holders, who have requested to sell in the
registration on a pro rata basis according to the number of shares requested to
be included therein. 

No Registrable Securities
excluded from the underwriting by reason of the underwriter’s marketing
limitation shall be included in such registration. If any Holder disapproves of
the terms of any such underwriting, such Holder may elect to withdraw such
Holder’s Registrable Securities therefrom by delivering a written notice to the
Company and the underwriter. The Registrable Securities so withdrawn from such
underwriting shall also be withdrawn from such registration; provided,
however, that, if by the withdrawal of such Registrable Securities, a
greater number of Registrable Securities held by other Holders may be included
in such registration (up to the maximum of any limitation imposed by the
underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities pursuant to the terms and limitations set forth herein in
the same proportion used above in determining the underwriter limitation. 

(d)   
 (i) if the Commission does not declare the Registration
Statement effective on or before the Registration Default Date, or (ii) if the
Commission allows the Registration Statement to be declared effective at any
time before or after the Registration Default Date, subject to the withdrawal of
certain Registrable Securities from the Registration Statement, and the reason
for (i) or (ii) is the Commission’s determination that (x) the offering of any
of the Registrable Securities constitutes a primary offering of securities by
the Company, (y) Rule 415 may not be relied upon for the registration of the
resale of any or all of the Registrable Securities, and/or (z) a Holder of any
Registrable Securities must be named as an underwriter, the Holders understand
and agree that in the case of (ii) the Company may reduce, on a pro rata
basis, the total number of Registrable Securities to be registered on behalf of
each such Holder, and, in the case of (i) or (ii), and that a Holder shall not
be entitled to any liquidated damages with respect to the Registrable Securities
not registered for the reason set forth in (i), or so reduced on a pro
rata basis as set forth in (ii). In any such pro reduction, the
number of Registrable Securities to be registered on such Registration Statement
will first be reduced by the Registrable Securities represented by the Warrant
Shares (applied, in the case that some Warrant Shares may be registered, to the
Holders on a pro rata basis based on the total number of unregistered Warrant
Shares held by such Holders on a fully diluted basis), and second by Registrable
Securities represented by the Shares (applied, in the case that some of the
Shares may be registered, to the Holders on a pro rata basis based on the total
number of unregistered Shares held by such Holders). In addition, any such
affected Holder shall be entitled to Piggyback Registration rights after the
Registration Statement is declared effective by the Commission until such time
as: (AA) all Registrable Securities have been registered pursuant to an
effective Registration Statement, (BB) the Registrable Securities may be resold
without restriction pursuant to Rule 144 of the Securities Act, or (CC) the
Holder agrees to be named as an underwriter in any such registration statement.
The Holders acknowledge and agree the provisions of this paragraph may apply to
more than one Registration Statement. 

4.    
Registration Procedures for Registrable Securities. The Company will keep
each Holder reasonably advised as to the filing and effectiveness of the
Registration Statement. At its expense with respect to the Registration
Statement, the Company will: 

(a)    
prepare and file with the Commission with respect to the Registrable Securities,
a Registration Statement on Form S-1, or any other form for which the Company
then qualifies or which counsel for the Company shall deem appropriate and which
form shall be available for the sale of the Registrable Securities in accordance
with the intended methods of distribution thereof, and use its commercially
reasonable efforts to cause such Registration Statement to become effective and
shall remain effective for a period of one year or for such shorter period
ending on the earlier to occur of (i) the date as of which all of the Holders as
selling stockholders thereunder may sell all of the Registrable Securities
registered for resale thereon without restriction pursuant to Rule 144 (or any
successor rule thereto) promulgated under the Securities Act or (ii) the date
when all of the Registrable Securities registered thereunder shall have been
sold (the “Effectiveness Period”). Thereafter, the Company shall be
entitled to withdraw such Registration Statement and the Investors shall have no
further right to offer or sell any of the Registrable Securities registered for
resale thereon pursuant to the respective Registration Statement (or any
prospectus relating thereto); 

(b)    
if the Registration Statement is subject to review by the Commission, promptly
respond to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission; 

(c)    
prepare and file with the Commission such amendments and supplements to such
Registration Statement as may be necessary to keep such Registration Statement
effective during the Effectiveness Period; 

(d)    
furnish, without charge, to each Holder of Registrable Securities covered by
such Registration Statement (i) a reasonable number of copies of such
Registration Statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as such Holder
may reasonably request, (ii) such number of copies of the prospectus included in
such Registration Statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 of the Securities Act) as such Holders may
reasonably request, in conformity with the requirements of the Securities Act,
and (iii) such other documents as such Holder may require to consummate the
disposition of the Registrable Securities owned by such Holder, but only during
the Effectiveness Period; 

(e)    
use its commercially reasonable efforts to register or qualify such registration
under such other applicable securities laws of such jurisdictions as any Holder
of Registrable Securities covered by such Registration Statement reasonably
requests and as may be necessary for the marketability of the Registrable
Securities (such request to be made by the time the applicable Registration
Statement is deemed effective by the Commission) and do any and all other acts
and things necessary to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder;
provided, that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction. 

(f)    
notify each Holder of Registrable Securities, the disposition of which requires
delivery of a prospectus relating thereto under the Securities Act, of the
happening of any event (as promptly as practicable after becoming aware of such
event), which comes to the Company’s attention, that will after the occurrence
of such event cause the prospectus included in such Registration Statement, if
not amended or supplemented, to contain an untrue statement of a material fact
or an omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and the Company shall
promptly thereafter prepare and furnish to such Holder a supplement or amendment
to such prospectus (or prepare and file appropriate reports under the Exchange
Act) so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an 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 not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of a
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period; 

(g)    
comply, and continue to comply during the Effectiveness Period, in all material
respects with the Securities Act and the Exchange Act and with all applicable
rules and regulations of the Commission with respect to the disposition of all
securities covered by such Registration Statement; 

(h)    
as promptly as practicable after becoming aware of such event, notify each
Holder of Registrable Securities being offered or sold pursuant to the
Registration Statement of the issuance by the Commission of any stop order or
other suspension of effectiveness of the Registration Statement; 

(i)    
use its commercially reasonable efforts to cause all the Registrable Securities
covered by the Registration Statement to be quoted on the OTC Bulletin Board,
OTCQB or such other Approved Market on which securities of the same class or
series issued by the Company are then listed or traded; 

(j)    
provide a transfer agent and registrar, which may be a single entity, for the
shares of Common Stock at all times; 

(k)    
If requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may request; 

(l)    
during the Effectiveness Period, refrain from bidding for or purchasing any
Common Stock or any right to purchase Common Stock or attempting to induce any
person to purchase any such security or right if such bid, purchase or attempt
would in any way limit the right of the Holders to sell Registrable Securities
by reason of the limitations set forth in Regulation M of the Exchange Act; and

(m)    
take all other reasonable actions necessary to expedite and facilitate the
disposition by the Holders of the Registrable Securities pursuant to the
Registration Statement. 

5.    
Suspension of Offers and Sales. Each Holder agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 4(f) hereof or of the commencement of a Blackout Period, such Holder
shall discontinue the disposition of Registrable Securities included in the
Registration Statement until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. 

6.    
Registration Expenses. The Company shall pay all expenses in connection
with any registration obligation provided herein, including, without limitation,
all registration, filing, stock exchange fees, printing expenses, all fees and
expenses of complying with applicable securities laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided, that, in any registration, each party shall pay for its own
underwriting discounts and commissions and transfer taxes. Except as provided in
this Section and Section 9, the Company shall not be responsible for the
expenses of any attorney or other advisor employed by a Holder. 

7.    
Assignment of Rights. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that any Holder may assign its rights under
this Agreement without such consent to a Permitted Assignee as long as (a) such
transfer or assignment is effected in accordance with applicable securities
laws; (b) such transferee or assignee agrees in writing to become subject to the
terms of this Agreement; and (c) such Holder notifies the Company in writing of
such transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned. 

8.    
Information by Holder. A Holder with Registrable Securities included in
any registration shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required in order to comply with any applicable law
or regulation in connection with the registration of such Holder’s Registrable
Securities or any qualification or compliance with respect to such Holder’s
Registrable Securities and referred to in this Agreement. A form of Selling
Stockholder Questionnaire is attached as Exhibit A hereto for such purposes.

9.    
Indemnification. 

(a)    
In the event of the offer and sale of Registrable Securities under the
Securities Act, the Company shall, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by law, each Holder, its directors, officers,
partners, each other person who participates as an underwriter in the offering
or sale of such securities, and each other person, if any, who controls or is
under common control with such Holder or any such underwriter within the meaning
of Section 15 of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, and expenses to which the Holder or any such
director, officer, partner or underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, or any other federal or
state law, insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement of any material fact contained in any
registration statement prepared and filed by the Company under which Registrable
Securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission to state therein a material fact required to
be stated or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, or any violation or
alleged violation of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any state securities law in connection with this Agreement; and the
Company shall reimburse the Holder, and each such director, officer, partner,
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating, defending or
settling any such loss, claim, damage, liability, action or proceeding;
  provided, that such indemnity agreement found in this Section 9(a) shall
in no event exceed the net proceeds from the Offering, as applicable, received
by the Company; and provided further, that the Company shall not be
liable in any such case (i) to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement in or omission from such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Holder specifically for use
in the preparation thereof or (ii) if the person asserting any such loss, claim,
damage, liability (or action or proceeding in respect thereof) who purchased the
Registrable Securities that are the subject thereof did not receive a copy of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final prospectus (or the
final prospectus as amended or supplemented). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holders, or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder. 

(b)    
As a condition to including Registrable Securities in any registration statement
filed pursuant to this Agreement, each Holder agrees to be bound by the terms of
this Section 9 and to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers, and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act, the Exchange Act, or any
other federal or state law, to the extent arising out of or based solely upon:
(x) such Holder’s failure to comply with the prospectus delivery requirements of
the Securities Act or (y) any untrue or alleged untrue statement of a material
fact contained in any 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 or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading (i) 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 to the Company specifically for inclusion in
the registration statement or such prospectus or (ii) to the extent that (1)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such prospectus or such form of prospectus or in any
amendment or supplement thereto or (2) in the case of an occurrence of an event
of the type specified in Section 4(f) hereof, the use by such Holder of an
outdated or defective prospectus after the Company has notified such Holder in
writing that the prospectus is outdated or defective and prior to the receipt by
such Holder of the advice contemplated in Section 4(f). In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. 

(c)    
Promptly after receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in this Section
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the indemnifying party of the commencement of such action; provided,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Section,
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a claim.

(d)    
If an indemnifying party does or is not permitted to assume the defense of an
action pursuant to Sections 9(c) or in the case of the expense reimbursement
obligation set forth in Sections 9(a) and (b), the indemnification required by
Sections 9(a) and 9(b) shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills received or
expenses, losses, damages, or liabilities are incurred. 

(e)    
If the indemnification provided for in Section 9(a) or 9(b) is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party as
a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission relates to information supplied
by the indemnifying party or the indemnified party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission), or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the
proportionate relative fault of the indemnifying party and the indemnified
party, but also the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other, as well as any other relevant
equitable considerations. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation. 

(f)    
Other Indemnification. Indemnification similar to that specified in this
Section (with appropriate modifications) shall be given by the Company and each
Holder of Registrable Securities with respect to any required registration or
other qualification of securities under any federal or state law or regulation
or governmental authority other than the Securities Act. 

10.    
Rule 144. With a view to making available to the Holders the benefits of
Rule 144 and any other rule or regulation of the Commission that may at any time
permit the Holders to sell the Registrable Securities to the public without
registration, the Company agrees: (i) to make and keep public information
available as those terms are understood in Rule 144, (ii) to file with the
Commission in a timely manner all reports and other documents required to be
filed by an issuer of securities registered under the Securities Act or the
Exchange Act pursuant to Rule 144, (iii) as long as any Holder owns any
Registrable Securities, to furnish in writing upon such Holder’s request a
written statement by the Company that it has complied with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, and to
furnish to such Holder a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents so filed by the Company as may
be reasonably requested in availing such Holder of any rule or regulation of the
Commission permitting the selling of any such Registrable Securities without
registration and (iv) undertake any additional actions commercially reasonably
necessary to maintain the availability of the use of Rule 144. 

11.    
Corporate Existence. After the date of this Agreement and prior to the
effectiveness of the Registration Statement,, the Company shall not directly or
indirectly consummate any merger, reorganization, restructuring, reverse stock
split, consolidation, sale of all or substantially all of the Company’s assets
or any similar transaction or related transactions (each such transaction, an
“Organizational Change”), unless, prior to the consummation of an
Organizational Change, the Company obtains the written consent of the Majority
Holders. 

12.    
Independent Nature of Each Purchaser’s Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein and no action taken by
any Purchaser pursuant hereto, shall be deemed to constitute such Purchasers as
a partnership, an association, a joint venture, or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation
the rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose. 

13.    
Other Registration Rights. After the date of this Agreement and prior to
the effectiveness of the Registration Statement, the Company shall not, without
the prior written consent of the Majority Holders, enter into any agreement with
any holder or prospective holder of any securities of the Company that would
grant such holder registration rights senior or equal to those granted to the
Holders hereunder.

14.    
Miscellaneous. 

(a)    
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Subscription Agreement. 

(b)    
Remedies. In the event of a breach by the Company or by a Holder of any
of their respective obligations under this Agreement, each 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,
shall be entitled to specific performance of its rights under this Agreement.
The Company and each Holder agree 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 not
assert or shall waive the defense that a remedy at law would be adequate. 

(c)    
Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, Permitted Assignees, executors and administrators of the parties
hereto. 

(d)    
No Inconsistent Agreements. The Company has not entered, as of the date
hereof, and shall not enter, on or after the date of this Agreement, into any
agreement with respect to its securities that would have the effect of impairing
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. 

(e)    
Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof. 

(f)    
Notices, etc. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Subscription Agreement or as otherwise provided herein.

(g)    
Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any Holder, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such Holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach or default thereunder occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Holder of any
breach or default under this Agreement, or any waiver on the part of any Holder of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to any
holder, shall be cumulative and not alternative. 

(h)    
Omnibus Signature Page. This Agreement is intended to be read and
construed in conjunction with the Subscription Agreement in connection with the
Offering. Accordingly, it is hereby agreed that the execution by the Purchaser
of the Subscription Agreement, in the place set forth therein, shall constitute
agreement to be bound by the terms and conditions thereof and the terms and
conditions of this Agreement, with the same effect as if each of such separate
but related agreement were separately signed. 

(i)    
Severability. In the case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

(j)    
Amendments. The provisions of this Agreement may be amended at any time
and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and the Majority Holders. The Purchasers acknowledge that by the
operation of this Section, the Majority Holders may have the right and power to
diminish or eliminate all rights of the Purchasers under this Agreement. 

[SIGNATURE PAGES FOLLOW] 

This Registration Rights Agreement is hereby executed as of the
date first above written. 

	COMPANY: 
	  	  
	SECURITY DEVICES
      INTERNATIONAL INC. 
	  	  
	  	  
	  	  
	By: 	 
       s/s Dean Thrasher 
	Name: 	Dean Thrasher 
	Title: 	Chief Executive Officer

THE PURCHASER’S SIGNATURE TO THE SUBSCRIPTION AGREEMENT DATED
OF EVEN 
DATE HEREWITH SHALL CONSTITUTE THE PURCHASER’S SIGNATURE TO THIS

REGISTRATION RIGHTS AGREEMENT. 

Exhibit A

SECURITY DEVICES INTERNATIONAL INC. 
SELLING STOCKHOLDERS’
QUESTIONNAIRE

The following information is
requested from you in connection with the preparation and filing by Security
Devices International Inc. (the “Company”) of a Registration Statement on Form
S-1 or other appropriate form (the “Registration Statement”) with the Securities
and Exchange Commission (the “SEC”) covering the sale of shares of the Company’s
common stock, including shares of common stock underlying Warrants (the
“Registrable Securities”) by certain stockholders of the Company. 

We would appreciate your
answering all of the questions included in this questionnaire, even though your
answers may be in the negative, so that the Company will have a record of your
responses for use in connection with the preparation of the Registration
Statement. It is requested that you give careful attention to each question
and that you complete this questionnaire personally. 

In order to assist you in
completing this questionnaire, certain terms used herein are defined in the
appendix which is attached to this questionnaire. Each of such defined terms has
been bolded and italicized for identification. The term “person,”
as used in this questionnaire, means any natural person, company, government or
political subdivision, agency or instrumentality of a government. 

After you have completed the
following questionnaire, please send the completed questionnaire to the Company
by overnight courier as soon as possible to the attention of Dean Thrasher,
CEO.

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

GENERAL INFORMATION

1.                  Please
provide your full name and address or the full name and address of the entity on
whose behalf you are completing this questionnaire. The address may be a
business, mailing or residence address. 

	Name: 	 
	 	 
	Address: 	 

	2. 	Name the Control Person of your organization: 	 
	 	 	 
	3. 	(a) Are you a broker-dealer registered pursuant to Section
      15 of the Exchange Act? 

[   ] Yes.
[  
] No.

(b) If your response to Item 3(a) above
is no, are you an "affiliate" of a broker-dealer registered pursuant to Section
15 of the Exchange Act?

[   ] Yes.
[  
] No.

For the purposes of this Item 3(b), an
"affiliate" of a registered broker-dealer shall include any company that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such broker-dealer, and does not
include any individuals employed by such broker-dealer or its affiliates.

(c) Full legal name of person through
which you hold the Registrable Securities—(i.e. name of your broker, if
applicable, through which your Registered Securities are held):

	 	Name of broker: 	 
	 	 	 
	 	Contact person: 	 
	 	 	 
	 	Telephone No.: 	 

SECURITIES HOLDINGS

Please fill in all blanks in the
following questions related to your beneficial ownership of the
Company’s common stock. Generally, the term “beneficial ownership”
refers to any direct or indirect interest in the securities which entitles you
to any of the rights or benefits of ownership, even though you may not be the
holder of record of the securities. For example, securities held in “street
name” over which you exercise voting or investment power would be considered
beneficially owned by you. Other examples of indirect ownership
include ownership by a partnership in which you are a partner or by an estate or
trust of which you or any member of your immediate family is a
beneficiary. Ownership of securities held in the names of your spouse, minor
children or other relatives who live in the same household may be attributed to
you. 

If you have any reason to believe
that any interest in securities of the Company which you may have, however
remote, is a beneficial interest, please describe such interest. For purposes of
responding to this questionnaire, it is preferable to err on the side of
inclusion rather than exclusion. Where the SEC’s interpretation of
beneficial ownership would require disclosure of your interest or
possible interest in certain securities of the Company, and you believe that you
do not actually possess the attributes of beneficial ownership, an
appropriate response is to disclose the interest and at the same time disclaim
beneficial ownership of the securities. 

Please indicate the amount of
common stock of the Company or any of its subsidiaries which you
beneficially owned as of the date hereof. 

For each holding: 

	 	• 	
      State the nature of the holding (i.e., held in
      your own name, jointly, as a trustee or beneficiary of a trust, as a
      custodian, as an executor, in discretionary accounts, by your spouse or
      minor children, by a partnership of which you are a partner, etc.), and
      

	 	  	
      

	 	• 	
      State whether you are the beneficial owner
      by reason of (i) sole voting power, (ii) shared voting power,
      (iii) sole investment power, (iv) shared investment power, (v) the right
      to acquire stock within 60 days of the end of the calendar year, and/or
      (vi) the right to acquire stock with the purpose of changing or
      influencing control. 

	 	  	
      

	 	• 	
      Indicate in the Remarks column whether you have sole or
      shared voting or investment power with respect to any such securities, and
      in what capacity (i.e., individual, general partner, trustee) you
      have such power or powers. 

	 	  	
      

	 	• 	
      If you wish to disclaim beneficial ownership
      of any shares listed, so indicate by writing the word “Disclaim”
      in the Remarks column below; you understand that such shares will be shown
      separately from your beneficial holdings and an appropriate disclaimer set
      forth. 

	 	  	
      

	 	• 	
      If any of the shares listed are subject to any claim,
      encumbrance, pledge or lien, so indicate in the Remarks column.
  

	1. 	Your Interest in the Registrable Securities. 

	 	(a) 	State the number of such Registrable Securities beneficially
      owned by you. 
	 	 	 
	 	 	 	 

(b)     Other
than as set forth in your response to Item 1(a) above, do you beneficially own
any other securities of the Company?

[   ] Yes.

[   ] No.

(c)     If
your answer to Item 1(b) above is yes, state the type, the aggregate amount and
CUSIP No. (if applicable) of such other securities of the Company beneficially
owned by you:

	 	Type: 	 
	 	 	 
	 	Aggregate amount: 	 
	 	 	 
	 	CUSIP No.: 	 

(d)     Did
you acquire the securities listed in Item 1(a) above in the ordinary course of
business?

[   ] Yes.

[   ] No.

(e)     At
the time of your purchase of the securities listed in Item 1(a) above, did you
have any agreements or understandings, directly or indirectly, with any person
to distribute the securities?

[   ] Yes.

[   ] No.

(f)     If
your response to Item 1(e) above is yes, please describe such agreements or
understandings:

	 	 
	 	 
	 	 

  	2. 	Nature of Your Beneficial Ownership. 

(a)     Does
someone other than yourself have Control over the securities listed in Item 1(a)
above?

[   ] Yes.

[   ] No.

(b)     If
your response to Item 2(a) above is yes, name your controlling shareholder(s) or
other person who has the ability to exercise control over you (the "Controlling
Entity"). If the Controlling Entity is not a natural person and is not a
publicly held entity, name each shareholder of such Controlling Entity. If any
of these named shareholders are not natural persons or publicly held entities,
please provide the same information. This process should be repeated until you
reach natural persons or a publicly held entity.

		(A)(i) 	Full legal name of Controlling
      Entity(ies) or natural person(s) with who have sole or shared voting or
      dispositive power over the Registrable Securities: 
	 	  	 
			Business address (including street
      address) (or residence if no business address), telephone number and
      facsimile number of such person(s): 
	 	  	Address: 	 
	 	  	Telephone: 	 
	 	  	Fax: 	 
	 	  	Name of shareholder:; 	 
	 	 	 	 

	 	(B)(i) 	Full legal name of Controlling
      Entity(ies): 
	 	  	 
	 	  	 
			Business address (including street
      address) (or residence if no business address), telephone number and
      facsimile number of such person(s): 
	 	  	Address: 	 
	 	  	Telephone: 	 
	 	  	Fax: 	 
	 	  	Name of shareholders: 	 
	 	 	 	 

If you need more space for this response, please attach
additional sheets of paper. Please be sure to indicate your name and the number
of the item being responded to on each such additional sheet of paper, and to
sign each such additional sheet of paper before attaching it to this
Questionnaire. Please note that you may be asked to answer additional questions
depending on your responses to the following questions.

	3. 	5% Stockholders 

To the best of my knowledge, all
persons (including myself and my associates and including
corporations, partnerships, trusts, associations and other such groups) who
beneficially own more than 5% of any class of the Company’s stock
are described below:

	 	Name of 	Class of Shares 	Holder of 
	 	Beneficial 	Beneficially 	Voting or 
	 	Owner 	Owned 	Investment Power

	4. 	No Adverse Interest 

All interests I or my
associates have or will have that are adverse to the Company
interests in any pending or contemplated legal proceeding or government
investigation to which the Company is or will be a party (or to which its
property may be subject) are described below:

	5. 	Voting Arrangement 

All voting trusts or similar
agreements or arrangements of which I have knowledge under which
more than 5% of the Company’s outstanding common stock, on an as converted
basis, is held or to be held are described below:

	  	Voting Rights and Other Powers 
	Names and Addresses of Voting Trustees 	Under Trust, Agreement or Arrangement
    

	6. 	Change in Control 

All arrangements of
which I have knowledge, including any pledge by any person of securities of the
Company, the operations of which may at a subsequent date result in a change in
control of the Company, are described below: 

TRANSACTIONS WITH THE COMPANY

1.    
Information regarding all material interests of yours or your
associates in any actual or proposed transaction during the last three fiscal
years to which the Company was or is to be a party and that are identified under
“Securities Holdings” above) is provided below. Further, no such transaction
need be described if:

(a)     the
amount involved (including all periodic installments in the case of any lease or
other agreement provided for periodic payments or installments and including the
value of all transactions In a series of similar transactions) does not exceed
$60,000;

(b)     the
rates or charges involved in the transaction are fixed by law or governmental
authority or determined by competitive bids;

(c)     the
services involved are as a bank depositary of funds, transfer agent, registrar,
trustee under a trust indenture or other similar service;

(d)     my
interest arises solely from my ownership of securities of the Company and I
received no extra or special benefit not shared on a pro rata basis by all other
holders of securities in the same class;

(e)     my
interest in the corporation that is a party to the transaction is solely as a
director; or

(f)     my
interest arose solely as an officer and/or director of the Company (e.g., my
compensation arrangement with the Company). 

Description:

AFFILIATION WITH ACCOUNTANTS OR
ATTORNEYS

Described below is any interest,
affiliation or connection you have with any law firm or accounting firm that has
been retained by the Company during the last three fiscal years or is proposed
to be retained by the Company:

CONTRACTS WITH THE COMPANY

Described below are all contracts
with the Company or in which the Company has a beneficial interest, or to which
the Company has succeeded by assumption or assignment, to which you or any of
your associates is a party, which are to be performed in whole or
in part at or after the date of the proposed filing of the Registration
Statement, or which were made not more than two years prior thereto: 

FINRA-RELATED QUESTIONS

1.     Are you (i) a “member” of the
Financial Industries Regulatory Authority, Inc. (“FINRA”), (ii) an
“affiliate” of a member of the FINRA, (iii) a “person associated with a member”
or “associated person of a member” of the FINRA or (iv) associated with an
“underwriter or related person” with respect to the proposed public offering of
the Company’s securities?

Yes [   ]     No [  ]

For the sole purpose of this Question: (i) the FINRA defines a
“member” as being either any broker or dealer admitted to membership in the
FINRA or any officer or partner of such a member or the executive representative
of such member or the substitute for such representative; (ii) the term
“affiliate” means a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is in common control with the
person specified. Persons who have acted or are acting on behalf or for the
benefit of a person include, but are not necessarily limited to, directors,
officers, employees, agents, consultants and sales representatives; (iii) the
FINRA defines a “person associated with a member” or “associated person of a
member” as being every sole proprietor, partner, officer, director or branch
manager of any member, or any natural person occupying a similar status or
performing similar functions, or any natural person engaged in the investment
banking or securities business who is directly or indirectly controlling or
controlled by such member (for example, any employee), whether or not any such
person is registered or exempt from registration with the FINRA; and (iv) the
term “underwriter or related person” includes, with respect to a proposed
offering, underwriters, underwriters’ counsel, financial consultants and
advisers, finders, members of the selling or distribution group, and any and all
other persons associated with or related to any such persons. 

If yes, kindly describe such relationship (whether direct or
indirect) and please respond to Questions (2) and (3) below; if no, please
proceed to Question (4). 

2.     Please set forth information as to
all purchases and acquisitions (including contracts for purchase or acquisition)
of securities of the Company by you, regardless of the time acquired or the
source from which derived:

	 	Seller or 	Amount and 	Price or Other 	  
	 	Prospective Seller 	Nature of Securities 	Consideration 	Date 

3.     In connection with your direct or
indirect affiliation or association with a “member” of the FINRA as set forth
above in Question (1), please furnish the identity of such FINRA member and any
information, if known, as to whether such FINRA member intends to participate in
any capacity in this proposed initial public offering, including the details of
such participation:

4.     Please describe any underwriting
compensation and arrangement or any dealings known to you between any
“underwriter or related person”, “member” of the FINRA, “affiliate” of a member
of the FINRA, “person associated with a member”, or “associated
person of a member” of the FINRA on the one hand and the Company or controlling
shareholder thereof on the other hand, other than information relating to the
proposed initial public offering of the Company:

5.     Please set out below any
information, if known, as to whether any “member” of the FINRA, any “underwriter
or related person”, “affiliate” or a member of the FINRA, “person associated
with a member” or “associated person of a member” of the FINRA may receive any
portion of the net offering:

For subscribers answering “Yes” to Item 1 above:

The undersigned FINRA member form acknowledges receipt of the
notice required by Article 3, Sections 28(a) and (b) of the Rules of Fair
Practice. 

	 	 	 	 	 
	Name of FINRA Member Firm 	 	  	 
	  	 	 	  	 
	  	 	 	  	 
	By:	 	 	Date:	 
		Authorized Officer 	 	  	 

The undersigned (including its
donees or pledgees) intends to distribute the Registrable Securities listed
above pursuant to the Registration Statement only as follows (if at all): Such
Registrable Securities may be sold from time to time directly by the undersigned
or, alternatively, through underwriters, broker-dealers or agents. If the
Registrable Securities are sold through underwriters, broker-dealers or agents,
the Selling Holder will be responsible for underwriting discounts or commissions
or agents' commissions. Such Registrable Securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. Such
sales may be effected in transactions (which may involve block transactions) (i)
on any national securities exchange or quotation service on which the
Registrable Securities may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, or (iii) in transactions otherwise than on such
exchanges or services or in the over-the-counter market. 

I understand that material
misstatements or the omission of material facts in the Registration Statement
may give rise to civil and criminal liabilities to the Company, to each officer
and director of the Company signing the Registration Statement and other persons
signing the Registration Statement. I will notify you and the Company of any
misstatement of a material fact in the Registration Statement or any amendment
thereto, and of the omission of any material fact necessary to make the
statements contained therein not misleading, as soon as practicable after a copy
of the Registration Statement or any such amendment has been provided to me.

I confirm that the foregoing statements are correct, to the
best of my knowledge and belief.

Dated: _____________________________. 

	Very truly yours, 
	  
	 
	 
	(Signature) 
	 
	 
	(Typed or Printed Name) 

DEFINITIONS

The term “arrangement” means any plan, contract,
authorization or understanding whether or not set forth in a formal document.

The term “associate” as used throughout this
questionnaire, means (a) any corporation or organization (other than the
Company) of which I am an officer, director or partner or of which I am,
directly or indirectly, the beneficial owner of 5% or more of any class of
equity securities, (b) any trust or other estate in which I have a substantial
beneficial interest or as to which I serve as trustee or in a similar capacity,
(c) my spouse, (d) any relative of my spouse or any relative of mine who has the
same home as me or who is a director or officer or key executive of the Company,
(e) any partner, syndicate member or person with whom I have agreed to act in
concert with respect to the acquisition, holding, voting or disposition of
shares of the Company’s securities. 

The term “beneficially owned” when used in
connection with the ownership of securities, means (a) any interest in a
security which entitles me to any of the rights or benefits of ownership even
though I may not be the owner of record or (b) securities owned by me directly
or indirectly, including those held by me for my own benefit (regardless of how
registered) and securities held by others for my benefit (regardless of how
registered), such as by custodians, brokers, nominees, pledgees, etc., and
including securities held by an estate or trust in which I have an interest as
legatee or beneficiary, securities owned by a partnership of which I am a
partner, securities held by a personal holding company of which I am a
stockholder, etc., and securities held in the name of my spouse, minor children
and any relative (sharing the same home). A “beneficial owner” of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares:

(a)     voting power which includes the
power to vote, or to direct the voting of, such security; and/or

(b)     investment power which includes the
power to dispose, or to direct the disposition, of such security. 

The term “control” means the possession, directly
or indirectly, 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. 

The term “immediate family” means any
relationship by blood, marriage or adoption, not more remote than first cousin.

The term “material,” when used in this
questionnaire to qualify a requirement for the furnishing of information as to
any subject, limits the information required to those matters as to which an
average prudent investor ought reasonably to be informed before purchasing the
Common Stock of the Company.

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