Document:

Blueprint

 

Exhibit 4.2

 

NEITHER THE OFFER NOR SALE OF THE SECURITIES REPRESENTED BY THIS
NOTE HAS BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (THE “1933 ACT”). THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR AN OPINION OF COUNSEL, IN
FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN
COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER
THE 1933 ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER THE 1933 ACT.

 

YOUNGEVITY INTERNATIONAL, INC.

8% CONVERTIBLE PROMISSORY NOTE

DUE: JULY , 2020

No.
2017-00_                                                                                      

            

July , 2017 (the “Issuance Date”)

$____,000                                                                 

                                 

New York, New
York

 

FOR
VALUE RECEIVED, the undersigned, YOUNGEVITY INTERNATIONAL, INC. (herein
called the “Company”), a Delaware corporation,
promises to pay to the order of _________, or his, her or its registered
assigns (the “Holder” or “Holders”), the principal
sum of ____________ Dollars (US$___,000), as such amount is reduced
pursuant to the terms hereof pursuant to redemption, conversion or
otherwise (the “Principal”), on July , 2020 (the
“Maturity
Date”), together with interest (computed on the basis
of a 365-day year) on the outstanding principal amount at the rate
of eight percent (8%) per annum (the “Interest Rate”) from the date
hereof, payable commencing on September 30, 2017, and, thereafter,
quarterly in arrears, until the
principal hereof shall have become due and payable.

 

1.            

Note Purchase
Agreement. This Note
has been issued pursuant to the terms and conditions set forth in
the Note Purchase Agreement dated as of July , 2017 by and among
the Company and the Holder, (as from time to time amended, the
“Note Purchase
Agreement”). All of the terms and conditions of such
Note Purchase Agreement are incorporated herein by this reference,
and all capitalized terms not separately defined in this Note,
shall have the same meanings as defined in the Note Purchase
Agreement.

 

2.            

Notes.
Payments of principal of, and interest on, this Note are to be made
in lawful money of the United States of America at such place as
provided in the Note Purchase Agreement. This Note is one of a
series of up to $9,000,000
aggregate amount (including the over-allotment option) (the
“Offering
Amount”) of eight percent (8%) Convertible Promissory
Notes (herein called the “Notes”) issued pursuant to the
Note Purchase Agreement, and is subject to other terms as set forth
in the Note Purchase Agreement.

 

a.

Prepayment.
Following the twelve (12) month anniversary of the Closing Date,
and prior to the Maturity Date, the Company shall have the right to
prepay this Note in full or any portion thereof at the rate of 110%
of the then outstanding principal balance, including all accrued
interest, provided
that the Company give written notice to the Purchasers at least ten
(10) business days before the
prepayment and; provided
further that Purchasers may elect to
convert the Notes in accordance with their terms set forth herein
within five business days after receipt of such written notice,
although such conversion shall not be effective until sixty-one
(61) days following the date of Purchasers’ notice of
election.

 

3.            

Interest. Interest
on this Note shall commence accruing on the Issuance Date, shall
accrue daily at the Interest Rate on the outstanding Principal
amount from time to time, shall be computed on the basis of a
365-day year comprised of twelve (12) months and shall be payable
in arrears upon the earlier of: (i) the last day of each September,
December, March and June, commencing on the Issuance Date, until
the principal hereof shall have become due and payable; and (ii)
the date of conversion into Common Stock in accordance with Section
6 herein below. From and after the occurrence and during the
continuance of any Event of Default, the Interest Rate shall
automatically be increased to fifteen percent (15%) (the
“Default Rate”).
In the event that such Event of Default is subsequently cured, the
increase referred to in the preceding sentence shall cease to be
effective as of the date of such cure, provided that the Interest as
calculated and unpaid at such increased rate during the continuance
of such Event of Default shall continue to apply to the extent
relating to the days after the occurrence of such Event of Default
through and including the date of such cure of such Event of
Default.

 

 

 

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4.            

Intentionally
Left Blank.

 

5. 

Conversion
into Common Stock.

 

a. General.

 

(i) Conversion
into Common Stock. Subject to the provisions of Section
5(a)(iv), on any one or more occasions on or after the date hereof,
the Holder shall be entitled to convert any portion of the
outstanding and unpaid Conversion Amount (as defined below) into
fully paid and non-assessable shares of common stock of the Company, par value $0.001 per
share (the “Common Stock”), or any shares of capital stock or other
securities of the Company into which such Common Stock shall
hereafter be changed, exchanged or reclassified in
accordance with Section 5 at the Conversion Rate (as defined below)
then in effect. The Company shall not issue any fraction of a share
of Common Stock upon any conversion. If the issuance would result
in the issuance of a fraction of a share of Common Stock, the
Company shall round such fraction of a share of Common Stock up to
the nearest whole share. The Company shall pay any and all
transfer, stamp and similar taxes that may be payable with respect
to the issuance and delivery of Common Stock upon conversion of any
Conversion Amount. Any such conversion
set forth in a conversion notice dated prior thereto, shall be deemed to be
effective as of the date of such conversion notice (the
“Conversion
Date”).

 

(ii) Automatic
Conversion into Common Stock. In the event the Company consummates, prior to the
Maturity Date, an equity financing pursuant to which it sells its
common stock, preferred stock or other equity or equity-linked
securities with an aggregate gross proceeds of no less than $3
million with the principal purpose of raising capital (a
“Qualified
Financing”), the shares
shall automatically convert as described below.

 

(iii) Conversion
Rate. The number of
shares of Common Stock issuable upon conversion of any Conversion
Amount pursuant to Section 5 shall be determined by dividing (x)
such Conversion Amount by (y) the Conversion Price (the
“Conversion
Rate”). The Conversion
Amount shall be subject from time to time to adjustment as
described below.

 

1. “Conversion Amount” means the sum
of (A) the portion of the Principal to be converted, amortized,
redeemed or otherwise with respect to which this determination is
being made, and (B) any accrued and unpaid Interest with respect to
such Principal.

 

2. “Conversion Price” means shall be
$____ per share, subject to adjustment as provided
herein.

 

(iv) Conversion
Limit. Notwithstanding anything to the contrary set forth
in this Note, at no time may a Holder of this Note (other than the
Holder for purposes of this Section 5a(iv)) convert this Note into Common Stock if the number
of shares of Common Stock to be issued pursuant to such conversion
would cause the number of shares of Common Stock beneficially owned
by such Holder at such time to exceed, when aggregated with all
other shares of Common Stock beneficially owned by such Holder and
its affiliates at such time, the number of shares of Common Stock
that would result in such Holder, its affiliates, any investment
manager having discretionary investment authority over the accounts
or assets of such Holder, or any other persons whose beneficial
ownership of Common Stock would be aggregated with such
Holder’s for purposes of Section 13(d) and Section 16 of
the 1934 Act, beneficially owning (as determined in
accordance with Section 13(d) of the 1934 Act and
the rules thereunder) in excess of 9.99% of the then issued and
outstanding shares of Common Stock.

 

 

 

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In addition, the Company shall not issue any
shares of Common Stock upon conversion of this Note or otherwise
pursuant to the terms of this Note if the issuance of such shares
of Common Stock (after taking into account the issuance of Common
Stock upon exercise of the Warrants issued pursuant to the terms of
the Note Purchase Agreement) would exceed the aggregate number of
shares of Common Stock that the Company may issue upon conversion
of the Notes and exercise of the Warrants or otherwise pursuant to
terms of the Notes or Warrants without breaching the
Company’s obligations under the rules and regulations of the
Trading Market (the number of shares which may be issued
without violating such rules and regulations, the
“Exchange Cap”),
except that such limitation shall not apply in the event that the
Company (A) obtains the approval of its stockholders as required by
the applicable rules of the Trading Market for issuances of shares
of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel
to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the Holder. Until such approval
or such written opinion is obtained, the aggregate maximum number
of shares of Common Stock that all Holders may be issued in the
aggregate, upon conversion of any Notes (after taking into account
the issuance of Common Stock upon exercise of the Warrants issued
pursuant to the terms of the Note Purchase Agreement) or any other
issuance pursuant to the terms of the Notes, the Note Purchase
Agreement or Warrants shall not exceed the Exchange Cap and the
Holder shall not be issued any shares of Common Stock pursuant to
the terms of the Notes or Warrants in an amount greater than the
product of (i) the Exchange Cap as of the Initial Closing Date
multiplied by (ii) the quotient of (1) the aggregate maximum number
of shares of Common Stock issuable to the Holder at the time of the
conversion under the Notes and Warrants issued to the Holder
pursuant to the Note Purchase Agreement divided by (2) the maximum
aggregate number of shares of Common Stock issuable to all of the
Purchasers at the time of the conversion under the Notes and
Warrants (with respect to each Purchase, the
“Exchange Cap
Allocation”). In the
event that any Purchaser shall sell or otherwise transfer any of
such Purchaser’s Notes, the transferee shall be allocated a
pro rata portion of such Purchaser’s Exchange Cap Allocation
with respect to such portion of such Notes so transferred, and the
restrictions of the prior sentence shall apply to such transferee
with respect to the portion of the Exchange Cap Allocation so
allocated to such transferee. Upon repayment or conversion in full
of a Holder’s Notes, the difference (if any) between such
holder’s Exchange Cap Allocation and the number of shares of
Common Stock actually issued to such Holder upon such
Holder’s conversion in full of such Notes shall be allocated
to the respective Exchange Cap Allocations of the remaining Holders
of Notes on a pro
rata basis in proportion to the
shares of Common Stock underlying the Notes then held by each such
Holder. In the event that the Company is prohibited from issuing
shares of Common Stock pursuant to this Section 5(a)(iv) (the
“Exchange Cap
Shares”), the Company
shall pay cash in lieu of issuing such Exchange Cap Shares at a
price equal to the sum of: (i) the product of (x) such number of
Exchange Cap Shares and (y) the average closing price of the Common
Stock for the five Trading Days preceding the date the Holder
delivers the applicable Conversion Notice with respect to such
Exchange Cap Shares to the Company; and (ii) to the extent the
Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of Exchange Cap Shares, any brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

 

(v) Effect
of Conversion. Upon conversion of this Note in full in the manner
provided by Section 5(c) below, this Note shall be deemed fully
satisfied and cancelled.

 

a. Authorized
Shares. The Company covenants that during the period the
conversion right exists, the Company will reserve from its
authorized and unissued Common Stock, free from preemptive rights,
to provide for the issuance of 110% of the number of shares of
Common Stock upon the full conversion of the Holder’s Note
and the other Notes issued pursuant to the Note Purchase Agreement
(the “Reserved
Amount”). If the Company
shall issue any securities or make any change to its capital
structure which would change the number of shares of Common Stock
into which the Notes shall be convertible at the then current
Conversion Price, the Company shall at the same time make proper
provision so that thereafter there shall be a sufficient number of
shares of Common Stock authorized and reserved, free from
preemptive rights, for conversion of the outstanding Notes. The
Company: (i) acknowledges that it has irrevocably authorized by its
Board of Directors to issue certificates for the Common Stock
issuable upon conversion of the Holder’s Note; and (ii)
agrees that its issuance of the Holder’s Note shall
constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock in
accordance with the terms and conditions of the Holder’s
Note.

 

 

 

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b. Method
of Conversion.

 

(i) Mechanics
of Conversion. Subject to Section 5(a), the Holder’s Note
may be converted by the Holder in whole or in part, by: (i)
submitting to the Company a conversion notice (by facsimile or
other reasonable means of communication dispatched on the
Conversion Date prior to 6:00 p.m., New York, New York time); and
(ii) subject to Section 5(d)(ii), surrendering the Holder’s
Note at the principal office of the Company.

 

(ii) Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth
herein, upon conversion of the Holder’s Note in accordance
with the terms hereof, the Holder shall not be required to
physically surrender the Holder’s Note to the Company unless
the entire unpaid principal amount of the Holder’s Note is so
converted. The Holder and the Company shall maintain records
showing the principal amount so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory
to the Holder and the Company, so as not to require physical
surrender of the Holder’s Note upon each such conversion. In
the event of any dispute or discrepancy, such records of the
Company shall be controlling and determinative in the absence of
manifest error. Notwithstanding the foregoing, if any portion of
the Holder’s Note is converted as aforesaid, the Holder may
not transfer the Holder’s Note unless the Holder first
physically surrenders the Holder’s Note to the Company,
whereupon the Company will forthwith issue and deliver upon the
order of the Holder a new Note of like tenor, registered as the
Holder (upon payment by the Holder of any applicable transfer
taxes) may request, representing in the aggregate the remaining
unpaid principal amount of the Holder’s Note. The Holder and
any assignee, by acceptance of the Holder’s Note, acknowledge
and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of the Holder’s Note, the
unpaid and unconverted principal amount of the Holder’s Note
represented by the Holder’s Note may be less than the amount
stated on the face hereof.

 

(iii) Delivery
of Common Stock Upon Conversion. Upon receipt by the Company from the Holder of a
facsimile or electronic transmission (or other reasonable means of
communication) of a conversion notice meeting the requirements for
conversion as provided in this
Section 5(d), the Company shall issue and deliver or cause to be
issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion
within three (3) Business Days (such third Business Day being
hereinafter referred to as the “Deadline”) in accordance with the terms hereof and
the Note Purchase Agreement.

 

(iv) Obligation
of Company to Deliver Common Stock. Upon delivery by the Holder to the Company of a
conversion notice, the Holder shall be deemed to be the Holder of
record of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid
interest on that portion of the Holder’s Note being converted
shall be reduced to reflect such conversion, and, unless the
Company defaults on its obligations under this Section 5, all
rights with respect to the portion of the Holder’s Note being
so converted shall forthwith terminate except the right to receive
the Common Stock or other securities, cash or other assets, as
herein provided, on such conversion. If the Holder shall have given
a conversion notice as provided herein, the Company’s
obligation to issue and deliver the certificates for Common Stock
shall be absolute and unconditional, irrespective of the absence of
any action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, the recovery of any judgment
against any Person or any action to enforce the same, any failure
or delay in the enforcement of any other obligation of the Company
to the Holder of record, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Company, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to the Holder in connection with such conversion. The
Conversion Date specified in the conversion notice shall be the
Conversion Date so long as the conversion notice is received by the
Company before 6:00 p.m., New York, New York time, on such
date.

 

 

 

-4-

 

 

(v) Company’s
Failure to Timely Convert. If the Company shall fail, for any
reason or for no reason, to issue to the Holder by the Deadline, a
certificate for the number of shares of Common Stock to which the
Holder is entitled and register such shares of Common Stock on the
Company’s share register or to credit the Holder’s or
its designee’s balance account with DTC for such number of
shares of Common Stock to which the Holder is entitled upon the
Holder’s conversion of any Conversion Amount (as the case may
be) (a “Conversion
Failure”), then, in addition to all other remedies
available to the Holder, (1) the Company shall pay in cash to the
Holder on each Trading Day after such third (3rd) Trading Day that
the issuance of such shares of Common Stock is not timely effected
an amount equal to one percent (1%) of the product of (A) the sum
of the number of shares of Common Stock not issued to the Holder on
a timely basis and to which the Holder is entitled multiplied by
(B) the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the last possible date which the Company
could have issued such shares of Common Stock to the Holder without
violating Section 5 and (2) the Holder, upon written notice to the
Company, may void its Conversion Notice with respect to, and retain
or have returned (as the case may be) any portion of this Note that
has not been converted pursuant to such Conversion Notice,
provided that the
voiding of a Conversion Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the
date of such notice pursuant to this Section (c)(v) or otherwise.
For purposes of this Note, “Closing Sale Price” means, for any
security as of any date, the last closing bid price and last trade
price, respectively, for such security on the Trading Market, or if
the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter
market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade
price, respectively, is reported for such security by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the “pink
sheets” by OTC Markets Group, Inc. (formerly 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, as the case may be, of such security on such date shall
be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon
the fair market value of such security, then such dispute shall be
resolved pursuant to Section 19. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable
calculation period.

 

(vi)   
Pro
Rata Conversion; Disputes. In the event that the Company
receives a Conversion Notice from more than one holder of Notes for
the same Conversion Date and the Company can convert some, but not
all, of such portions of the Notes submitted for conversion, the
Company, subject to Section 5(a)(iv), shall convert from each
holder of Notes electing to have Notes converted on such date a pro
rata amount of such holder’s portion of its Notes submitted
for conversion based on the principal amount of Notes submitted for
conversion on such date by such holder relative to the aggregate
principal amount of all Notes submitted for conversion on such
date. In the event of a dispute as to the number of shares of
Common Stock issuable to the Holder in connection with a conversion
of this Note, the Company shall issue to the Holder the number of
shares of Common Stock not in dispute and resolve such dispute in
accordance with Section 19.

 

c. Adjustments
on Conversion Amount. The number of shares of Common Stock to be issued
upon each conversion of the Holder’s Note shall be subject to
adjustments as follows:

 

(i) Subdivision
or Combination of Common Stock. If the Company at any time subdivides (by any
stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after
the date of record for effecting such subdivision, the Conversion
Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time combines (by
any reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after
the date of record for effecting such combination, the Conversion
Price in effect immediately prior to such combination will be
proportionately increased.

 

 

 

-5-

 

 

(ii) Reclassification,
Exchange, and Substitution.  If at any time or from time to time
after the date upon which this Note was issued by the Company (the
“Original Issue
Date”), the shares of
Common Stock issuable upon the conversion of this Note shall be
changed into the same or a different number of shares of any class
or classes of stock, whether by recapitalization, reclassification,
reorganization, merger, exchange, consolidation, sale of assets or
otherwise, then, in any such event, each holder of the Notes shall
have the right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable upon
such recapitalization, reclassification, reorganization, merger,
exchange, consolidation, sale of assets, distribution of assets or
other change by a holder of the number of shares of Common Stock
into which such shares of this Note could have been converted
immediately prior to such recapitalization, reclassification,
reorganization, merger, exchange, consolidation, sale of assets,
distribution of assets or other change, or with respect to such
other securities or property by the terms
thereof.

 

(iii) Adjustment
Upon Issuance of Shares of Common Stock. If and
whenever during the nine (9) month period commencing on the Issue
Date, the Company issues or sells, or in accordance with this
Section 5 is deemed to have issued or sold, any shares of Common
Stock (including the issuance or sale of shares of Common Stock
owned or held by or for the account of the Company, but excluding
any Excluded Securities issued or sold or deemed to have been
issued or sold) for a consideration per share (the
“Dilutive Issuance
Price”) that is less than a price
equal to the Conversion Price in effect immediately prior to such
issue or sale or deemed issuance or sale (the “Applicable Conversion Price”) (the
foregoing, a “Dilutive Issuance”), then
immediately following such Dilutive Issuance, the Applicable
Conversion Price then in effect shall be reduced to the Dilutive
Issuance Price. Following the date which is nine (9) months after
the Issuance Date, if the Company is deemed to have issued or sold
any securities that result in a Dilutive Issuance, then immediately
following such Dilutive Issuance, the Applicable Conversion Price
then in effect shall be reduced to the Adjusted Conversion Price
(as hereinafter defined). For purposes of this Note, the term
“Adjusted Conversion
Price” means the price determined by multiplying the
Applicable Conversion Price in effect immediately prior to the
Dilutive Issuance by a fraction, (A) the numerator of which is an
amount equal to the sum of (x) the number of shares of Common Stock
actually outstanding immediately prior to the Dilutive Issuance,
plus (y) the quotient of the aggregate consideration, calculated as
set forth in Section 5(d)(iii)(4) hereof, received by the Company
upon such Dilutive Issuance divided by the Applicable Conversion
Price in effect immediately prior to the Dilutive Issuance, and (B)
the denominator of which is the Common Stock Deemed Outstanding (as
defined below) immediately after the Dilutive Issuance; provided
that only one adjustment will be made for each Dilutive Issuance.
The term “Common Stock Deemed
Outstanding” shall mean the number of shares of Common
Stock actually outstanding (not including shares of Common Stock
held in the treasury of the Company), plus (i) pursuant to Section
5(d)(iii)(4) hereof, the maximum total number of shares of Common
Stock issuable upon the exercise of Options, as of the date of such
issuance or grant of such Options, if any, and (ii) pursuant to
Section 5(d)(iii)(4) hereof, the maximum total number of shares of
Common Stock issuable upon conversion or exchange of Common Stock
Equivalents, as of the date of issuance of such Common Stock
Equivalents, if any. No adjustment to the Applicable Conversion
Price shall have the effect of increasing the Applicable Conversion
Price above the Applicable Conversion Price in effect immediately
prior to such adjustment.

 

1. Issuance of Options. If the
Company in any manner grants any Options and the lowest price per
share for which one share of Common Stock is issuable upon the
exercise of any such Option or upon conversion, exercise or
exchange of any Common Stock Equivalents issuable upon exercise of
any such Option is less than the Applicable Exercise Price, then
such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For
purposes of this Section 6(b)(i), the “lowest price per share
for which one share of Common Stock is issuable upon exercise of
such Options or upon conversion, exercise or exchange of such
Common Stock Equivalents issuable upon exercise of any such
Option” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the granting or sale
of the Option, upon exercise of the Option and upon conversion,
exercise or exchange of any convertible security
(“Convertible
Security”) issuable upon exercise of such Option less
any consideration paid or payable by the Company with respect to
such one share of Common Stock upon the granting or sale of such
Option, upon exercise of such Option and upon conversion exercise
or exchange of any Convertible Security issuable upon exercise of
such Option. No further adjustment of the Conversion Price or
number of Note Shares shall be made upon the actual issuance of
such shares of Common Stock or of such Common Stock Equivalents
upon the exercise of such Options or upon the actual issuance of
such shares of Common Stock upon conversion, exercise or exchange
of such Common Stock Equivalents.

 

 

 

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2. Issuance of Common Stock
Equivalents. If the Company in any manner issues or sells
any Common Stock Equivalents and the lowest price per share for
which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof is less than the Applicable Conversion
Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the
time of the issuance or sale of such Common Stock Equivalents for
such price per share. For the purposes of this Section 5(d)(iii),
the “lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange
thereof” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of
the Convertible Security and upon conversion, exercise or exchange
of such Convertible Security less any consideration paid or payable
by the Company with respect to such one share of Common Stock upon
the issuance or sale of such Convertible Security and upon
conversion, exercise or exchange of such Convertible Security. No
further adjustment of the Conversion Price or number of Note Shares
shall be made upon the actual issuance of such shares of Common
Stock upon conversion, exercise or exchange of such Common Stock
Equivalents, and if any such issue or sale of such Common Stock
Equivalents is made upon exercise of any Options for which
adjustment of this Note has been or is to be made pursuant to other
provisions of this Section 5(d)(iii), no further adjustment of the
Conversion Price or number of Note Shares shall be made by reason
of such issue or sale.

 

3. Change in Option Price or Rate of
Conversion. If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the
issue, conversion, exercise or exchange of any Common Stock
Equivalents, or the rate at which any Common Stock Equivalents are
convertible into or exercisable or exchangeable for shares of
Common Stock increases or decreases at any time, the Conversion
Price and the number of Note Shares in effect at the time of such
increase or decrease shall be adjusted to the Conversion Price and
the number of Note Shares which would have been in effect at such
time had such Options or Common Stock Equivalents provided for such
increased or decreased purchase price, additional consideration or
increased or decreased conversion rate, as the case may be, at the
time initially granted, issued or sold. For purposes of this
Section 5(d)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the date of issuance of this
Note are increased or decreased in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 5(d) shall be made if such
adjustment would result in an increase of the Conversion Price then
in effect or a decrease in the number of Note Shares.

 

4. Calculation of Consideration
Received. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together
comprising one integrated transaction, (x) the Options will be
deemed to have been issued for the exercise price of such Options
and (y) the other securities issued or sold in such integrated
transaction shall be deemed to have been issued for the aggregate
consideration received by the Company. If any shares of Common
Stock, Options or Common Stock Equivalents are issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by
the Company therefor. If any shares of Common Stock, Options or
Common Stock Equivalents are issued or sold for a consideration
other than cash, the amount of such consideration received by the
Company will be the fair value of such consideration, except where
such consideration consists of securities, in which case the amount
of consideration received by the Company will be the Closing Sale
Price of such security on the date of receipt. If any shares of
Common Stock, Options or Common Stock Equivalents are issued to the
owners of the non-surviving entity in connection with any merger in
which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity
as is attributable to such shares of Common Stock, Options or
Common Stock Equivalents, as the case may be. The fair value of any
consideration other than cash or securities will be determined
jointly by the Company and the Required Holders. If such parties
are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the “Valuation Event”), the fair value
of such consideration will be determined within five (5) Trading
Days after the tenth (10th) day following the
Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holders. The determination
of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser
shall be borne by the Company.

 

 

 

-7-

 

 

5. Record Date. If the Company
takes a record of the holders of shares of Common Stock for the
purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in
Common Stock Equivalents or (B) to subscribe for or purchase shares
of Common Stock, Options or Common Stock Equivalents, then such
record date will be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.

 

6. Exceptions to Adjustment of Conversion
Price.  No adjustment to the Conversion
Price will be made (i) upon the issuance of shares of Common Stock
or options or warrants to purchase Common Stock to directors,
officers, consultants or employees of the Company in their capacity
as such pursuant to any stock or option plan duly adopted by the
Board of Directors of the Company (an “Approved Stock Plan”), provided
that the exercise price of any such options is not lowered, none of
such options are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such options
are otherwise materially changed in any manner that adversely
affects the Warrant Holder or, any of the holders of the
Company’s warrants (the “Other Holders”); (ii) upon
issuance of shares of Common Stock upon the conversion or exercise
of Common Stock Equivalents (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) issued prior to the Issue
Date, provided that the conversion or exercise (as the case may be)
of any such Convertible Security is made solely pursuant to the
conversion or exercise (as the case may be) provisions of such
Convertible Security that were in effect on the date immediately
prior to the Issue Date, the conversion or exercise price of any
such Common Stock Equivalents (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) is not lowered other than by
the operation of provisions of such Convertible Security that were
in effect on the date immediately prior to the Issue Date, none of
such Common Stock Equivalents are (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) (nor is any provision of any
such Common Stock Equivalents) amended or waived in any manner
(whether by the Company or the holder thereof) to increase the
number of shares issuable thereunder and none of the terms or
conditions of any such Common Stock Equivalents (other than
standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are
otherwise materially changed or waived (whether by the Company or
the holder thereof) in any manner that adversely affects the Note
Holder or any of the Other Holders; (iii) upon the issuance of the
Notes; (iv) upon the issuance of the Note Shares; (v) upon the
issuance of Warrant Shares issued pursuant to the Purchase
Agreement; (vi) upon the issuance of any warrants to the Placement
Agent and the underlying shares; (vii) upon the issuance of Common
Stock upon conversion or exercise of any currently outstanding
securities; (viii) upon the issuance
of securities pursuant to any equipment loan or leasing
arrangement, real property leasing arrangement or debt financing
from a bank or similar financial institution; (ix) upon the
issuance of securities pursuant to a
stock dividend or stock split; and (x) upon the issuance of
shares of Common Stock in connection with mergers, acquisitions,
strategic licensing arrangements, strategic business partnerships
or joint ventures, in each case with non-affiliated third parties
and otherwise on an arm’s-length basis, the purpose of which
is not to raise additional capital. Notwithstanding the foregoing,
(I) any Common Stock issued or issuable to raise capital for the
Company or its Subsidiaries, directly or indirectly, in connection
with any transaction contemplated by clause (x) above, including,
without limitation, securities issued in one or more related
transactions or that result in similar economic consequences, shall
not constitute Excluded Securities.

 

 

(iv) Notice
of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price as a result of the events
described in this Section 5(d), the Company, at its expense, shall
promptly compute such adjustment or readjustment and prepare and
furnish to the Holder of this Note a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. Failure to give
such notice or any defect therein shall not affect the legality or
validity of the subject adjustment.

 

 

-8-

 

 

d. Concerning
the Shares.

 

(i)     
Legend.
The shares of Common Stock issuable upon conversion of the Note may
not be sold or transferred unless: (A) such shares are sold
pursuant to an effective registration statement under the
Securities Act; or (B) the Company or its transfer agent shall have
been furnished with an opinion of counsel (which opinion shall be
in form, substance and scope customary for opinions of counsel in
comparable transactions and from an attorney that regularly
practices securities law) to the effect that the shares to be sold
or transferred may be sold or transferred pursuant to an exemption
from such registration; or (C) such shares are sold or transferred
pursuant to Rule 144 under the Securities Act (or a successor rule)
(“Rule 144”); or
(D) such shares are sold or transferred outside the United States
in accordance with Rule 904 of Regulation S under the Securities
Act; or (E) such shares are transferred to an
“affiliate” (as defined in Rule 144) of the Company who
agrees to sell or otherwise transfer the shares only in accordance
with this Section 5(e). Except as otherwise provided in this
Agreement (and subject to the removal provisions set forth below),
until such time as the shares of Common Stock issuable upon
conversion of the Note have been registered under the Securities
Act as contemplated by the Registration Rights Agreement, otherwise
may be sold pursuant to Rule 144 without any restriction as to the
number of securities as of a particular date that can then be
immediately sold, each certificate for shares of Common Stock
issuable upon conversion of the Note that has not been so included
in an effective registration statement or that has not been sold
pursuant to an effective registration statement or an exemption
that permits removal of the legend, shall bear a legend
substantially in the following form, as appropriate:

 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S.
SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT, (C) WITHIN THE UNITED
STATES AFTER REGISTRATION OR IN ACCORDANCE WITH THE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, OR (D) WITHIN THE UNITED
STATES IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER
THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND
THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO THE CORPORATION AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION.

 

(ii)     
Removal
of Legend. The legend
set forth above shall be removed and the Company shall issue to the
Holder a new certificate therefor free of any transfer legend if:
(A) the Company or its transfer agent shall have received an
opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that
a public sale or transfer of such Common Stock may be made without
registration under the Act and the shares are so sold or
transferred; or (B) in the case of the Common Stock issuable upon
conversion of the Holder’s Note, such security is registered
for sale by the Holder under an effective registration statement
filed under the Securities Act or otherwise may be sold pursuant to
Rule 144 without any restriction as to the number of securities as
of a particular date that can then be immediately sold. The Company
shall cause its counsel to issue a legal opinion to the
Company’s transfer agent promptly after the effective date of
any registration statement under the Securities Act registering the
resale of the Common Stock issuable upon conversion of the Note if
required by the Company’s transfer agent to effect the
removal of the legend hereunder. Nothing in the Note shall (x)
limit the Company’s obligation under the Registration Rights
Agreement or (y) affect in any way the Holder’s obligations
to comply with applicable prospectus delivery requirements upon the
resale of the securities referred to herein.

 

 

 

-9-

 

 

6.            

Status
as Shareholder. Upon submission of a conversion notice by the
Holder of this Note: (i) the shares covered thereby (other than the
shares, if any, which cannot be issued because their issuance would
exceed such Holder’s allocated portion of the Reserved
Amount) shall be deemed converted into shares of Common Stock; and
(ii) the Holder’s rights as a Holder of such converted
portion of the Holder’s Note shall cease and terminate,
excepting only the right to receive certificates for such shares of
Common Stock and to any remedies provided herein or otherwise
available at law or in equity to such Holder because of a failure
by the Company to comply with the terms of the Holder’s Note.
Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the third
(3rd)
Business Day after the Deadline, Holder may elect at such
Holder’s option to regain the rights of a Holder of the
Holder’s Note with respect to such attempted converted
portions of the Holder’s Note and the Company shall, as soon
as practicable, return such attempted converted Note to the Holder
or, if the Note has not been surrendered, adjust its records to
reflect that such portion of the Holder’s Note has not been
converted. In all cases, the Holder shall retain all of its rights
and remedies for the Company’s failure to convert the
Holder’s Note.

 

7.            

Governing
Law; Consent to Jurisdiction; Waiver of Jury
Trial.

 

a.

This Note shall be
governed by, and construed in accordance with, the internal laws of
the State of New York without regard to the choice of law
principles thereof. Each of the parties of the Note hereto
irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this
Note. Service of process in connection
with any such suit, action or proceeding may be served on each
party hereto anywhere in the
world by the same methods as are specified for the giving of
notices under this Note. Each
of the parties of this
Note irrevocably consents to
the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any
objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS
BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

b.

Each party shall bear its own expenses in any
litigation conducted under this section.

 

c.

The
Company consents to accept service of process by the certified
mail, return receipt requested in the event of litigation. The
Company further consents to accept service of process via
recognized international courier in the case that the Company is
not able to accept service by the certified mail provided a receipt
of delivery is available.

 

8.            

Facsimile
Signatures. This Note may be executed by facsimile signature
which shall, for all purposes be deemed to be as legally valid and
binding upon the Company as an original
signature.

 

9.            

Event
of Default. An “Event of Default” shall exist if
any of the following conditions or events shall occur and be
continuing:

 

a. Following
the Holder’s written demand for payment, the Company shall
fail to pay in full the entire outstanding principal amount of this
Note and all interest accrued hereon within thirty (30) Days after
such written demand for payment is given to Holder; or

 

b. Subject
to Section 5(a)(iv), the Company’s: (A) failure to cure a
Conversion Failure by delivery of the required number of shares of
Common Stock within ten (10) Business Days after the applicable
Conversion Date; or (B) notice, written or oral, to any holder of
the Notes, including by way of public announcement or through any
of its agents, at any time, of its intention not to comply with a
request for conversion of any Notes into shares of Common Stock
that is tendered in accordance with the provisions of the Notes;
or

 

c. At
any time following the tenth (10th) consecutive
Business Day that the Reserved Amount is less than the number of
shares of Common Stock that the Holder would be entitled to receive
upon a conversion of the full Conversion Amount of this Note
(without regard to any limitations on conversion set forth in
Section 5(a)(iv) or otherwise); or

 

 

 

-10-

 

 

d. The
Company defaults in the performance of or compliance with its
obligations under any of this Note, the Note Purchase Agreement or
any of the Transaction Documents and such default has not been
cured for thirty (30) days after written notice of default is given
to the Company; or

 

e. Any
representation or warranty made by or on behalf of the Company or
the Holder in this Note, the Note Purchase Agreement or any of the
Transaction Documents proves to have been false or incorrect in any
material respect on the date as of which made, and such condition
has not been cured for sixty (60) Business Days after written
notice of default is given to the other party; or

 

f. The
Company (i) admits in writing its inability to pay, its debts as
they become due; (ii) files, or consents by answer or otherwise to
the filing against it of a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or
to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction; (iii) makes an
assignment for the benefit of its creditors; (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any
substantial part of its property; (v) is adjudicated as insolvent
or to be liquidated; or (vi) takes corporate action for the purpose
of any of the foregoing; or

 

g. A
court or governmental authority of competent jurisdiction enters an
order appointing, without consent by the Company, a custodian,
receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company, or any such petition shall be filed
against such party and such petition shall not be dismissed within
six (6) months; or

 

h. A
final judgment or judgments for the payment of money in excess of
(U.S.) $600,000 are rendered against the Company, which judgments
are not, within six (6) months after entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within
six (6) months after the expiration of such stay.

 

10.

Remedies
Following An Event Of Default. Upon occurrence of an Event of Default defined in
subsection (a) to (h) of Section 9, this Note and all
accrued Interest to the date of such default shall, at the option
of the Holder, immediately become due and payable without
presentment, protest or notice of any kind, all of which are waived
by the Company.

 

11.            

Vote To Issue, Or
Change The Terms Of, Notes. The written consent of a majority of
the Holders shall be required for any change or amendment to any of
the Notes, unless the change shall only effect the Holder and the
Company shall have offered such change to all other Holders of
Notes, in which case only the consent of the Holder is
required.

 

12.            

Transfer.
This Note and any shares of Common Stock issued upon conversion of
this Note may not be offered, sold, assigned or transferred by the
Holder without the consent of the Company.

 

13.            

Noncircumvention.
The Company hereby covenants and agrees that the Company will not,
by amendment of its certificate of incorporation, bylaws or through
any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Note, and will at all
times in good faith carry out all of the provisions of this Note
and take all action as may be required to protect the rights of the
Holder of this Note.

 

14.            

Intentionally
Left Blank.

 

15.            

Reissuance Of This
Note.

 

a.   
Lost,
Stolen or Mutilated Note.  Upon receipt by the Company
of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note, and, in the case of
loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of
mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in
accordance with Section 15(c) representing the outstanding
Principal.

 

 

 

-11-

 

 

b.   
Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the
Company, for a new Note or Notes (in accordance with Section 15(c)
and in principal amounts of at least $10,000) representing in the
aggregate the outstanding Principal of this Note, and each such new
Note will represent such portion of such outstanding Principal as
is designated by the Holder at the time of such
surrender.

 

c.    
Issuance of New
Notes.  Whenever the Company is
required to issue a new Note pursuant to the terms of this Note,
such new Note: (i) shall be of like tenor with this Note; (ii)
shall represent, as indicated on the face of such new Note, the
Principal remaining outstanding (or in the case of a new Note being
issued pursuant to Section 15(b), the Principal designated by the
Holder which, when added to the principal represented by the other
new Notes issued in connection with such issuance, does not exceed
the Principal remaining outstanding under this Note immediately
prior to such issuance of new Notes); (iii) shall have an issuance
date, as indicated on the face of such new Note, which is the same
as the Issuance Date of this Note; (iv) shall have the same rights
and conditions as this Note; and (v) shall represent accrued and
unpaid Interest, if any, on the Principal of this Note, from the
Issuance Date.

 

16.            

Payment Of
Collection, Enforcement And Other Costs. If (a) this Note is placed in the
hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the Holder otherwise
takes action to collect amounts due under this Note or to enforce
the provisions of this Note; or (b) there occurs any bankruptcy,
reorganization, receivership of the Company or other proceedings
affecting Company creditors’ rights and involving a claim
under this Note, then the Company shall pay the costs incurred by
the Holder for such collection, enforcement or action or in
connection with such bankruptcy, reorganization, receivership or
other proceeding, including, but not limited to, attorneys’
fees and disbursements.

 

17.            

Construction;
Headings.  This Note shall be deemed
to be jointly drafted by the Company and the Holder and shall not
be construed against any Person as the drafter
hereof.  The headings of this Note are for convenience of
reference and shall not form part of, or affect the interpretation
of, this Note.

 

18.            

Failure Or
Indulgence Not Waiver.  No failure or delay on the
part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or
privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving
party.

 

19.            

Dispute
Resolution.  In the case of a dispute as
to the arithmetic calculation of the Conversion Price or Conversion
Amount, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within one (1) Business Day
of receipt, or deemed receipt, of the Conversion Notice or other
event giving rise to such dispute, as the case may be, to the
Holder.  If the Holder and the Company are unable to
agree upon such determination or calculation within one (1)
Business Day of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall,
within one Business Day submit via facsimile the disputed
arithmetic calculation of the Conversion Price or Conversion Amount
to the Company’s independent, outside
accountant.  The Company shall cause the accountant to
perform the determinations or calculations and notify the Company
and the Holder of the results no later than five (5) Business Days
from the time it receives the disputed determinations or
calculations. Such accountant’s determination or calculation
shall be binding upon all parties absent demonstrable
error.  The party whose calculation is furthest from the
accountant’s determination or calculation, shall be obligated
to pay the fees and expenses of such accountant.

 

20.            

Notices;
Payments.

 

a.    
Notices.  Whenever
notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be given in accordance with
Section 7.4 of the Note Purchase Agreement.

 

b.    
Payments.  Except
as otherwise provided in this Note, whenever any payment of cash is
to be made by the Company to any Person pursuant to this Note, such
payment shall be made in lawful money of the United States of
America by a check drawn on the account of the Company and sent via
overnight courier service to such Person at such address as
previously provided to the Company in writing; provided that the Holder may
elect to receive a payment of cash via wire transfer of immediately
available funds by providing the Company with prior written notice
setting out such request and the Holder’s wire transfer
instructions.  Whenever any amount expressed to be due by
the terms of this Note is due on any day which is not a Business
Day, the same shall instead be due on the next succeeding day which
is a Business Day.  

 

 

 

-12-

 

 

21.            

Cancellation.  After
all Principal and other amounts at any time owed on this Note have
been paid in full, this Note shall automatically be deemed
canceled, shall be surrendered to the Company for cancellation and
shall not be reissued.

 

22.            

Waiver Of
Notice.  To
the extent permitted by law, the Company hereby waives demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement
of this Note and the Note Purchase Agreement.

 

23.            

Currency.
All principal, interest and other amounts owing under this Note or
any Transaction Document that, in accordance with their terms, are
paid in cash shall be paid in U.S. dollars. All amounts denominated
in other currencies shall be converted in the U.S. dollar
equivalent amount in accordance with the Exchange Rate on the date
of calculation. “Exchange
Rate” means, in relation to any amount of currency to
be converted into U.S. dollars pursuant to this Note, the U.S.
dollar exchange rate as published in the Wall Street Journal on the
relevant date of calculation (it being understood and agreed that
where an amount is calculated with reference to, or over, a period
of time, the date of calculation shall be the final date of such
period of time).

 

24.            

Severability.
The provisions of this Note are severable and, in the event that
any court of competent jurisdiction shall determine that any one or
more of the provisions or part of the provisions contained in this
Note shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a
provision of this Note and such provision shall be reformed and
construed as if such invalid or illegal or unenforceable provision,
or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the
maximum extent possible.

 

25.            

Amendments.
No provision of this Note may be waived or amended other than by a
written instrument signed by the Company and the holders of at
least fifty percent (50%) of the principal amount of the Notes then
outstanding (the “Majority
Holders”), and no provision hereof may be waived other
than by a written instrument signed by the consenting parties. No
such amendment shall be effective to the extent that it applies to
less than all of the holders of the Notes then
outstanding.

 

[Signature
Page Follows]

 

 

 

-13-

 

 

IN WITNESS WHEREOF, the Company has executed and delivered this Note
the date and year first above written.

 

                                            

YOUNGEVITY INTERNATIONAL, INC.

 

 

 

 

By:
_______________________________

 

Name:
Stephan Wallach

 

Title:
CEO

 

 

 

 

 

 

 

 

 

 

-14-Blueprint

 

Exhibit 4.3

 

THE SECURITIES REPRESENTED HEREBY, INCLUDING THE SHARES ISSUABLE
UPON EXERCISE HEREOF, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE ISSUER, IS
AVAILABLE.

 

SERIES D WARRANT AGREEMENT

No. 2017-[ ]

 

YOUNGEVITY INTERNATIONAL, INC.

 

This
Warrant Agreement (this “Agreement”) is dated as
of July , 2017 (the “Issue Date”) and entered
into by and between Youngevity International, Inc., a company
organized under the laws of State of Delaware and _____________
(together with his, her or its successors and assigns, the
“Warrant
Holder”).

 

WHEREAS, the
Company and the Warrant Holder entered into that certain Note
Purchase Agreement of even date herewith (the “Purchase Agreement”),
pursuant to which, the Warrant Holder, together with the other
Purchasers agreed to purchase certain Securities of the Company,
including the Warrants evidenced by this Agreement;

 

WHEREAS, all of the
terms and conditions of such Purchase Agreement are incorporated
herein by this reference, and all capitalized terms not separately
defined in this Warrant, shall have the same meanings as defined in
the Purchase Agreement;

 

NOW,
THEREFORE, in consideration of the mutual covenants set forth in
this Agreement and for other good and valuable consideration, the
parties agree as follows:

 

1. Grant
of Warrant. The Company hereby, upon the terms and subject
to the conditions of this Agreement, issues to the Warrant Holder a
warrant (the “Warrant”) evidenced by
this Agreement to purchase up to _________ shares of Common Stock
(the shares of Common Stock issuable to the Warrant Holder
hereunder (as such amount may be adjusted pursuant to the terms
hereof), the “Warrant Shares”) at an
exercise price equal to $[ ] per share (as such amount may be
adjusted pursuant to the terms hereof, the “Exercise Price”). The
Exercise Price and the number of Warrant Shares for which the
Warrant are exercisable shall be subject to adjustment as described
in Section
6.

 

2. Term
and Termination of Warrant. The Warrant shall terminate on
the third (3rd) anniversary of the Issue Date (the
“Expiration
Date”).

 

3. Exercise
of the Warrant.

 

(a) Exercise and Payment. The
purchase rights represented by the Warrant may be exercised by the
Warrant Holder, in whole or in part at any time following the Issue
Date during the period prior to the Expiration Date, by the
surrender of the Warrant (together with a duly executed notice of
exercise in the form attached hereto as Exhibit A (the
“Exercise
Notice”) at the principal office of the Company, and
by the payment to the Company, at the option of the Warrant Holder
by:

 

(i) wire transfer of
immediately available funds, of an amount equal to (A) the number
of shares of Common Stock being purchased upon exercise of the
Warrant multiplied by (B) the then current Exercise Price (the
“Warrant
Price”);

 

 

 

-1-

 

 

(ii) This
Warrant may also be exercised, in whole or in part, at such time by
means of a “cashless exercise, which shall mean an exercise
of a Warrant in accordance with the immediately following three
sentences. To effect a Cashless Exercise, the holder of a Warrant
may exercise a Warrant or Warrants without payment of the Exercise
Price in cash by surrendering such Warrant or Warrants and, in
exchange therefor, receiving such number of shares of Common Stock
equal to the product of (1) that number of shares of Common Stock
for which such Warrants are exercisable and which would be issuable
in the event of an exercise with payment in cash of the Exercise
Price and (2) the Cashless Exercise Ratio (as defined below). The
“Cashless Exercise Ratio” shall equal a fraction, the
numerator of which is the excess of the Current Market Price per
share of the Common Stock, as applicable, on the date of exercise
over the Exercise Price per share of Common Stock as of the date of
exercise and the denominator of which is the Current Market Price
per share of the Common Stock, as applicable, on the date of
exercise.; or

 

(iii) any
combination thereof.

 

For
purposes of this Agreement, “Fair Market Value” of a
share as of a particular date shall mean: (A) if the Common Stock
is traded on an exchange or the over-the-counter market or
otherwise quoted or reported on a national exchange, the average
reported closing price for the five (5) trading days prior to the
date of determination of fair market value, (B) if conversion or
exercise is simultaneous with an underwritten public offering of
Common Stock registered under the Act, then the initial public
offering price (before deducting commissions, discounts or
expenses) per share sold in such offer, and (C) otherwise that
price determined in good faith and in such reasonable manner as
prescribed by a majority of the Board.

 

(b) Intentionally Left
Blank.

 

(c) Warrant Shares. On or before
the first (1st) Trading Day
following the date on which the Company has received an Exercise
Notice, the Company shall transmit by facsimile an acknowledgment
of confirmation of receipt of such Exercise Notice to the Holder
and the Company’s transfer agent (the “Transfer Agent”). On or
before the third (3rd) Trading Day
following the date on which the Company has received such Exercise
Notice, so long as the Holder delivers the Aggregate Exercise Price
(or elects a Cashless Exercise) on or prior to the second
(2nd)
Trading Day following the date on which the Company has received
such Exercise Notice, the Company shall (X) provided that the
Transfer Agent is participating in The Depository Trust Company
(“DTC”)
Fast Automated Securities Transfer Program, upon the request of the
Holder, credit such aggregate number of shares of Common Stock to
which the Holder is entitled pursuant to such exercise to the
Holder’s or its designee’s balance account with DTC
through its Deposit/ Withdrawal at Custodian system, or (Y) if the
Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver to the Holder or, at
the Holder’s instruction pursuant to the Exercise Notice, the
Holder’s agent or designee, in each case, sent by reputable
overnight courier to the address as specified in the applicable
Exercise Notice, a certificate, registered in the Company’s
share register in the name of the Holder or its designee (as
indicated in the applicable Exercise Notice), for the number of
shares of Common Stock to which the Holder is entitled pursuant to
such exercise. The Company shall be responsible for all fees and
expenses of the Transfer Agent and all fees and expenses with
respect to the issuance of shares of Common Stock via DTC, if any.
Upon delivery of an Exercise Notice, the Holder shall be deemed for
all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date such Warrant Shares are
credited to the Holder’s DTC account or the date of delivery
of the certificates evidencing such Warrant Shares (as the case may
be). If this Warrant is submitted in connection with any exercise
pursuant to this Section 3(c) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than
the number of Warrant Shares being acquired upon an exercise, then,
at the request of the Holder, the Company shall as soon as
practicable and in no event later than three (3) Business Days
after any exercise and at its own expense, issue and deliver to the
Holder (or its designee) a new Warrant (in accordance with Section
12(d)) representing the right to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but rather the
number of shares of Common Stock to be issued shall be rounded up
to the nearest whole number. The Company shall pay any and all
taxes and fees which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant.
Following the exercise in full of this Warrant, the Holder shall
deliver this original Warrant certificate to the Company.

 

 

 

-2-

 

 

(d) Company’s Failure to Timely
Deliver Securities. If the Company shall fail for any reason
or for no reason to issue to the Warrant Holder within five (5)
Trading Days of receipt of the Exercise Notice so long as the
Warrant Holder delivers the Aggregate Exercise Price (or notice of
a Cashless Exercise) on or prior to the second (2nd) Trading Day
following the date on which the Company has received the Exercise
Notice, a certificate for the number of shares of Common Stock to
which the Warrant Holder is entitled and register such shares of
Common Stock on the Company’s share register or to credit the
Warrant Holder’s balance account with DTC for such number of
shares of Common Stock to which the Warrant Holder is entitled upon
the Warrant Holder’s exercise of this Warrant, then, in
addition to all other remedies available to the Warrant Holder, the
Company shall pay in cash to the Warrant Holder on each day after
such fifth (5th) Trading Day that
the issuance of such shares of Common Stock is not timely effected
an amount equal to 0.5% of the product of (A) the sum of the number
of shares of Common Stock not issued to the Warrant Holder on a
timely basis and to which the Warrant Holder is entitled and (B)
the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the last possible date which the Company
could have issued such shares of Common Stock to the Warrant Holder
without violating Section 3(a). In addition to the foregoing, if
within five (5) Trading Days after the Company’s receipt of
an Exercise Notice (whether via facsimile or otherwise) the Company
shall fail to issue and deliver a certificate to the Warrant Holder
and register such shares of Common Stock on the Company’s
share register or credit the Warrant Holder’s balance account
with DTC for the number of shares of Common Stock to which the
Warrant Holder is entitled upon the Warrant Holder’s exercise
hereunder or pursuant to the Company’s obligation pursuant to
clause (ii) below, and if on or after such Trading Day the Warrant
Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the
Warrant Holder of shares of Common Stock issuable upon such
exercise that the Warrant Holder anticipated receiving from the
Company, then the Company shall, within five (5) Trading Days after
the Warrant Holder’s request and in the Warrant
Holder’s discretion, either (i) pay cash to the Warrant
Holder in an amount equal to the Warrant Holder’s total
purchase price (including brokerage commissions and other
reasonable out-of-pocket expenses, if any) for the shares of Common
Stock so purchased (the “Buy-In Price”), at which
point the Company’s obligation to deliver such certificate
(and to issue such shares of Common Stock) or credit such Warrant
Holder’s balance account with DTC shall terminate, or (ii)
promptly honor its obligation to deliver to the Warrant Holder a
certificate or certificates representing such shares of Common
Stock or credit such Warrant Holder’s balance account with
DTC and pay cash to the Warrant Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) the Closing Bid Price
on the date of exercise. Nothing shall limit the Warrant
Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity, including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock (or to
electronically deliver such shares of Common Stock) upon the
exercise of this Warrant as required pursuant to the terms
hereof.

 

(e) Fractional Warrant Shares. No
fractional Warrant Shares will be issued in connection with any
exercise hereunder. In lieu of such fractional shares, the number
of shares of Common Stock to be issued shall be rounded up to the
nearest whole number.

 

 

 

-3-

 

 

(f) Ownership Limitation.
Notwithstanding the provisions of this Warrant, in no event shall
this Warrant be exercisable to the extent that the issuance of
Common Stock upon the exercise hereof, after taking into account
the Common Stock then owned by the Warrant Holder and its
affiliates, would result in the beneficial ownership by the Warrant
Holder and its affiliates of more than 9.99% of the outstanding
Common Stock of the Company. For purposes of this paragraph,
beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. In
addition, the Company shall not issue any shares of Common Stock
upon exercise of this Warrant or otherwise pursuant to the terms of
this Warrant if the issuance of such shares of Common Stock (after
taking into account the issuance of Common Stock upon conversion of
the Notes issued pursuant to the terms of the Note Purchase
Agreement) would exceed the aggregate number of shares of Common
Stock that the Company may issue upon conversion of the Notes and
exercise of the Warrants or otherwise pursuant to terms of the
Notes or Warrants without breaching the Company’s obligations
under the rules and regulations of the Trading Market (the number
of shares which may be issued without violating such rules and
regulations, the “Exchange Cap”), except
that such limitation shall not apply in the event that the Company
(A) obtains the approval of its stockholders as required by the
applicable rules of the Trading Market for issuances of shares of
Common Stock in excess of such amount or (B) obtains a written
opinion from outside counsel to the Company that such approval is
not required, which opinion shall be reasonably satisfactory to the
Warrant Holder. Until such approval or such written opinion is
obtained, the aggregate maximum number of shares of Common Stock
that all Warrant Holders may be issued in the aggregate, upon
exercise of any Warrants (after taking into account Common Stock
issuable upon conversion of the Notes issued pursuant to the terms
of the Note Purchase Agreement) or any other issuance pursuant to
the terms of the Warrants shall not exceed the Exchange Cap and the
Warrant Holder shall not be issued any shares of Common Stock
pursuant to the terms of the Warrants or Notes held by it in an
amount greater than the product of (i) the Exchange Cap as of the
Initial Closing Date multiplied by (ii) the quotient of (1) the
aggregate maximum number of shares of Common Stock issuable to the
Warrant Holder at the time of the exercise under the Notes and
Warrants issued to the Warrant Holder pursuant to the Note Purchase
Agreement divided by (2) the maximum aggregate number of shares of
Common Stock issuable to all of the Purchasers at the time of the
conversion under the Notes and Warrants (with respect to each
Purchase, the “Exchange Cap
Allocation”). In the event that any Warrant Holder
shall sell or otherwise transfer any of its Warrants, the
transferee shall be allocated a pro rata portion of
the Warrant Holder’s Exchange Cap Allocation with respect to
such portion of such Warrants so transferred, and the restrictions
of the prior sentence shall apply to such transferee with respect
to the portion of the Exchange Cap Allocation so allocated to such
transferee. In the event that the Company is prohibited from
issuing shares of Common Stock pursuant to this Section 3(f) (the
“Exchange Cap Shares”), the Company shall refund from
the Warrant Price received cash in lieu of issuing such Exchange
Cap Shares equal to the sum of: (i) the product of (x) such number
of Exchange Cap Shares and (y) the average closing price of the
Common Stock for the five Trading Days preceding the date the
Holder delivers the applicable exercise notice with respect to such
Exchange Cap Shares to the Company; and (ii) to the extent the
Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of Exchange Cap Shares, any brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in
connection therewith.

 

(g) Legend. The Warrant Shares
to be acquired by the Holder pursuant
hereto, may not be sold or transferred unless (A) such
shares are sold pursuant to an effective registration statement
under the Securities Act, or (B) the Company or its transfer agent
shall have been furnished with an opinion of counsel (which opinion
shall be in form, substance and scope customary for opinions of
counsel in comparable transactions and from an attorney who
regularly practices securities law) to the effect that the shares
to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration or (C) such shares are sold or
transferred pursuant to Rule 144 under the Securities Act (or a
successor rule) (“Rule 144”) or (D) such
shares are sold or transferred outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act,
or (E) such shares are transferred to an “affiliate”
(as defined in Rule 144) of the Company who agrees to sell or
otherwise transfer the shares only in accordance with this Section
3(g). Except as otherwise provided in this Warrant (and subject to
the removal provisions set forth below), until such time as the
Warrant Shares issuable upon exercise of the Warrant have been
registered under the Act, otherwise may be sold pursuant to Rule
144 without any restriction as to the number of securities as of a
particular date that can then be immediately sold, each certificate
for Warrant Shares that has not been so included in an effective
registration statement or that has not been sold pursuant to an
effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the
following form, as appropriate:

 

 

 

 

-4-

 

 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES THAT SUCH SECURITIES
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) WITHIN
THE UNITED STATES AFTER REGISTRATION OR IN ACCORDANCE WITH THE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S.
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) WITHIN
THE UNITED STATES IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS AND THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO
THE CORPORATION AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE CORPORATION.

 

(h) Removal of Legend. The legend
set forth above shall be removed and the Company shall issue to the
Holder a new certificate therefor free of any transfer legend if
(A) the Company shall have received an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such
Securities may be made without registration under the Act and the
shares are so sold or transferred, or (B) in the case of the Common
Stock issuable upon exercise of the Warrant, such security is
registered for sale by the Holder under an effective registration
statement filed under the Act or otherwise may be sold pursuant to
Rule 144 without any restriction as to the number of securities as
of a particular date that can then be immediately sold. The Company
shall cause its counsel to issue a legal opinion promptly after the
effective date of any registration statement under the Act
registering the resale of the Common Stock issuable upon exercise
of the Warrant if required to effect the removal of the legend
hereunder.

 

4. Stock
Fully Paid; Reservation of Warrant Shares. All of the
Warrant Shares issuable upon the exercise of the Warrant will, upon
issuance and receipt of the Warrant Price for such Warrant Shares,
be duly authorized, validly issued, fully paid and nonassessable,
and will be free and clear of all taxes, liens, encumbrances and
charges with respect to the issue.

 

5. Rights
of the Warrant Holder. The Warrant Holder shall have no
voting rights as a stockholder or rights to dividends or other
distributions with respect to Warrant Shares subject to this
Agreement until payment in full of the Warrant Price for Warrant
Shares being issued.

 

6. Adjustment
of Exercise Price and Number of Warrant Shares. The Exercise
Price and the number of Warrant Shares purchasable upon any
exercise of the Warrant shall be subject to adjustment from time to
time upon the occurrence of certain events described in this
Section 6 if such events occur within
the three year period following the Issue Date.

 

(a) Subdivision or Combination of Stock;
Stock Dividend and Stock Conversion.

 

(i) In the event the
Company should at any time or from time to time fix a record date
for the effectuation of a split or subdivision of the outstanding
shares of Common Stock, or a record date for the determination of
the holders of capital stock entitled to receive a dividend or
other distribution payable in Common Stock or other securities or
rights directly or indirectly convertible into or exercisable or
exchangeable, or rights that entitle the holders of Common Stock to
purchase, Common Stock (hereinafter referred to as
“Common Stock
Equivalents”), without payment of any consideration by
such holders for the additional Common Stock or the Common Stock
Equivalents (including the additional Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if no
record date is fixed), (y) the Exercise Price of the Warrant Shares
shall be appropriately decreased (but not below the then par value
per share of Common Stock), and (z) the number of Warrant Shares
shall be increased in proportion to such increase of outstanding
Common Stock and shares of Common Stock issuable with respect to
Common Stock Equivalents.

 

 

 

-5-

 

 

(ii) If
the number of shares of Common Stock outstanding at any time after
the Issue Date is decreased by a combination of the outstanding
Common Stock, then, upon the record date of such combination, (A)
the Exercise Price shall be appropriately increased, and (B) the
number of Warrant Shares shall be decreased in proportion to such
decrease in outstanding Common Stock.

 

(iii) The
Company will not modify its certificate of incorporation or effect
any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities in
a manner that negates or avoids the rights of the Warrant Holder to
exercise its rights hereunder, but will at all times assist in the
carrying out of all the provisions of this Agreement and in the
taking of all such actions as may be necessary or appropriate in
order to protect the Warrant Holder against
impairment.

 

(b) Adjustment Upon Issuance of Shares of
Common Stock. If and whenever on or after the Issue Date,
the Company issues or sells, or in accordance with this Section 6
is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or
held by or for the account of the Company, but excluding any
Excluded Securities issued or sold or deemed to have been issued or
sold) for a consideration per share (the “Dilutive Issuance Price”)
that is less than a price
equal to the Exercise Price in effect immediately prior to such
issue or sale or deemed issuance or sale (the “Applicable Exercise
Price”) (the foregoing, a “Dilutive Issuance”), then
immediately following such Dilutive Issuance, the Applicable
Exercise Price then in effect shall be reduced to the Adjusted
Price (as hereinafter defined). For purposes of this Warrant, the
term “Adjusted
Price” means the price determined by multiplying the
Exercise Price in effect immediately prior to the Dilutive Issuance
by a fraction, (A) the numerator of which is an amount equal to the
sum of (x) the number of shares of Common Stock actually
outstanding immediately prior to the Dilutive Issuance, plus (y)
the quotient of the aggregate consideration, calculated as set
forth in Section 6(b)(iv) hereof, received by the Company upon such
Dilutive Issuance divided by the Exercise Price in effect
immediately prior to the Dilutive Issuance, and (B) the denominator
of which is the Common Stock Deemed Outstanding (as defined below)
immediately after the Dilutive Issuance; provided that only one
adjustment will be made for each Dilutive Issuance. The term
“Common Stock Deemed
Outstanding” shall mean the number of shares of Common
Stock actually outstanding (not including shares of Common Stock
held in the treasury of the Company), plus (i) pursuant to Section
6(b)(iv)(1) hereof, the maximum total number of shares of Common
Stock issuable upon the exercise of Options, as of the date of such
issuance or grant of such Options, if any, and (ii) pursuant to
Section 6(b)(iv)(2) hereof, the maximum total number of shares of
Common Stock issuable upon conversion or exchange of Common Stock
Equivalents, as of the date of issuance of such Common Stock
Equivalents, if any. No adjustment to the Conversion Price shall
have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.
For all purposes of the foregoing (including, without limitation,
determining the reduced Exercise Price and consideration per share
under this Section 6(b)), the following shall be
applicable:

 

(i) Issuance of Options. If the
Company in any manner grants any Options and the lowest price per
share for which one share of Common Stock is issuable upon the
exercise of any such Option or upon conversion, exercise or
exchange of any Common Stock Equivalents issuable upon exercise of
any such Option is less than the Applicable Exercise Price, then
such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For
purposes of this Section 6(b)(i), the “lowest price per share
for which one share of Common Stock is issuable upon exercise of
such Options or upon conversion, exercise or exchange of such
Common Stock Equivalents issuable upon exercise of any such
Option” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the granting or sale
of the Option, upon exercise of the Option and upon conversion,
exercise or exchange of any Convertible Security issuable upon
exercise of such Option less any consideration paid or payable by
the Company with respect to such one share of Common Stock upon the
granting or sale of such Option, upon exercise of such Option and
upon conversion exercise or exchange of any Convertible Security
issuable upon exercise of such Option. No further adjustment of the
Exercise Price or number of Warrant Shares shall be made upon the
actual issuance of such shares of Common Stock or of such Common
Stock Equivalents upon the exercise of such Options or upon the
actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Common Stock Equivalents.

 

 

 

-6-

 

 

(ii) Issuance
of Common Stock Equivalents. If the Company in any manner
issues or sells any Common Stock Equivalents and the lowest price
per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the
Applicable Exercise Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Common Stock
Equivalents for such price per share. For the purposes of this
Section 6(b)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or
exchange thereof” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the
Company with respect to one share of Common Stock upon the issuance
or sale of the Convertible Security and upon conversion, exercise
or exchange of such Convertible Security less any consideration
paid or payable by the Company with respect to such one share of
Common Stock upon the issuance or sale of such Convertible Security
and upon conversion, exercise or exchange of such Convertible
Security. No further adjustment of the Exercise Price or number of
Warrant Shares shall be made upon the actual issuance of such
shares of Common Stock upon conversion, exercise or exchange of
such Common Stock Equivalents, and if any such issue or sale of
such Common Stock Equivalents is made upon exercise of any Options
for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 6(b)(ii), no further
adjustment of the Exercise Price or number of Warrant Shares shall
be made by reason of such issue or sale.

 

(iii) Change
in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any,
payable upon the issue, conversion, exercise or exchange of any
Common Stock Equivalents, or the rate at which any Common Stock
Equivalents are convertible into or exercisable or exchangeable for
shares of Common Stock increases or decreases at any time, the
Exercise Price and the number of Warrant Shares in effect at the
time of such increase or decrease shall be adjusted to the Exercise
Price and the number of Warrant Shares which would have been in
effect at such time had such Options or Common Stock Equivalents
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section 6(b)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the date of
issuance of this Warrant are increased or decreased in the manner
described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or
decrease. No adjustment pursuant to this Section 6(b)(iii) shall be
made if such adjustment would result in an increase of the Exercise
Price then in effect or a decrease in the number of Warrant
Shares.

 

(iv) Calculation
of Consideration Received. In case any Option is issued in
connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction, (x) the
Options will be deemed to have been issued for the exercise price
of such Options and (y) the other securities issued or sold in such
integrated transaction shall be deemed to have been issued for the
aggregate consideration received by the Company. If any shares of
Common Stock, Options or Common Stock Equivalents are issued or
sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the net amount
received by the Company therefor. If any shares of Common Stock,
Options or Common Stock Equivalents are issued or sold for a
consideration other than cash, the amount of such consideration
received by the Company will be the fair value of such
consideration, except where such consideration consists of
securities, in which case the amount of consideration received by
the Company will be the Closing Sale Price of such security on the
date of receipt. If any shares of Common Stock, Options or Common
Stock Equivalents are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such
shares of Common Stock, Options or Common Stock Equivalents, as the
case may be. The fair value of any consideration other than cash or
securities will be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring
valuation (the “Valuation Event”), the
fair value of such consideration will be determined within five (5)
Trading Days after the tenth (10th) day following the
Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holders. The determination
of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser
shall be borne by the Company.

 

 

 

-7-

 

 

(v) Record Date. If the Company
takes a record of the holders of shares of Common Stock for the
purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in
Common Stock Equivalents or (B) to subscribe for or purchase shares
of Common Stock, Options or Common Stock Equivalents, then such
record date will be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.

 

(vi) Exceptions
to Adjustment of Conversion Price. No adjustment to the Exercise Price will be made
(A) upon the issuance of shares of Common Stock or options or
warrants to purchase Common Stock to directors, officers,
consultants or employees of the Company in their capacity as such
pursuant to any stock or option plan
duly adopted by the Board of Directors of the Company (an
“Approved Stock
Plan”), provided
that the exercise price of any such options is not lowered, none of
such options are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such options
are otherwise materially changed in any manner that adversely
affects the Warrant Holder, any of the holders of the
Company’s warrants (the “Other Holders”); (ii)
shares of Common Stock issued upon the conversion or exercise of
Common Stock Equivalents (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are
covered by clause (i) above) issued prior to the Issue Date,
provided that the conversion or exercise (as the case may be) of
any such Convertible Security is made solely pursuant to the
conversion or exercise (as the case may be) provisions of such
Convertible Security that were in effect on the date immediately
prior to the Issue Date, the conversion or exercise price of any
such Common Stock Equivalents (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) is not lowered other than by
the operation of provisions of such Convertible Security that were
in effect on the date immediately prior to the Issue Date,, none of
such Common Stock Equivalents are (other than standard options to
purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) (nor is any provision of any
such Common Stock Equivalents) amended or waived in any manner
(whether by the Company or the holder thereof) to increase the
number of shares issuable thereunder and none of the terms or
conditions of any such Common Stock Equivalents (other than
standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) are
otherwise materially changed or waived (whether by the Company or
the holder thereof) in any manner that adversely affects the
Warrant Holder or any of the Other Holders; (iii) upon the issuance
of the Notes; (iv) upon the issuance of the Note Shares; (v) upon
the issuance of Warrant Shares issued pursuant to the Purchase
Agreement; (vi) upon the issuance of any warrants to the Placement
Agent and the underlying shares; (vii) upon the issuance of Common
Stock upon conversion or exercise of any currently outstanding
securities; (viii) upon the issuance
of securities pursuant to any equipment loan or leasing
arrangement, real property leasing arrangement or debt financing
from a bank or similar financial institution; (ix) upon the
issuance of securities pursuant to a
stock dividend or stock split; and (x) upon the issuance of
shares of Common Stock in connection with mergers, acquisitions,
strategic licensing arrangements, strategic business partnerships
or joint ventures, in each case with non-affiliated third parties
and otherwise on an arm’s-length basis, the purpose of which
is not to raise additional capital. Notwithstanding the foregoing,
any Common Stock issued or issuable to raise capital for the
Company or its Subsidiaries, directly or indirectly, in connection
with any transaction contemplated by clause (xi) above, including,
without limitation, securities issued in one or more related
transactions or that result in similar economic consequences, shall
not constitute Excluded Securities.

 

(c) Notice of Adjustment. Promptly
after adjustment of the Exercise Price or any increase or decrease
in the number of shares purchasable upon the exercise of the
Warrant, the Company shall give written notice in accordance with
Section 11. The
notice shall be signed by an authorized officer of the Company and
shall state the effective date of the adjustment and the Exercise
Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares purchasable at such price upon any
exercise of the Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based.

 

 

 

-8-

 

 

(d) Other Notices. In the event
that the Company shall propose at any time: (i) to declare any
dividend or distribution upon any class or series of capital stock,
whether in cash, property, stock or other securities (including,
without limitation, pursuant to a split or subdivision of the
outstanding shares of capital stock); (ii) to effect any
reclassification or recapitalization of its capital stock
outstanding involving a change in the capital stock; or (iii) to
merge or consolidate with or into any other corporation, or to
sell, lease or convey all or substantially all of its property or
business, or to liquidate, dissolve or wind up; then, in connection
with each such event, the Company shall mail to the Warrant Holder
notice of such transaction:

 

(A) at least five (5)
business days’ prior written notice in accordance with
Section 11 of the
date on which a record shall be taken for such dividend or
distribution (and specifying the date on which the holder of the
affected class or series of capital stock shall be entitled
thereto) or for determining the rights to vote, if any, in respect
of the matters referred to in (c)(ii) and (c)(iii) above;
and

 

(B) in the case of the
matters referred to in (c)(ii) and (c)(iii) above, written notice
of such impending transaction not later than ten (10) business
days’ prior to any shareholders’ meeting called to
approve such transaction, or ten (10) business days’ prior to
the closing of such transaction, whichever is earlier, and shall
also notify the Warrant Holder in writing in accordance with
Section 11 of the
final approval of such transaction by the stockholders of the
Company (if such approval is required). The first of such notices
shall describe the terms and conditions of the impending
transaction that are material to a holder of Common Stock (as
determined by the Board of Directors of the Company (the
“Board”) in good faith)
and specify the date on which a holder of Common Stock shall be
entitled to exchange his, her or its Common Stock for securities or
other property deliverable upon the occurrence of such event) and
the Company shall thereafter give such holder prompt notice of any
changes in such terms or conditions that are material to a holder
of Common Stock (as determined by the Board in good faith). The
Company acknowledges that any record date must be set at a date
that would permit the Warrant Holder effectively to exercise its
rights hereunder.

 

(e) Changes in Stock. In case at
any time prior to the Expiration Date, the Company shall be a party
to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the
Company’s assets or recapitalization of its capital stock) in
which the previously outstanding shares of Common Stock shall be
changed into or exchanged for different securities of the Company
or common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including
cash) or the Company shall make a distribution on its shares of
Common Stock, other than regular cash dividends on its outstanding
stock, or any combination of any of the foregoing (each such
transaction being herein called the “Transaction” and the date
of consummation of the Transaction being herein called the
“Consummation
Date”), then as a condition of the consummation of
such Transaction, lawful and adequate provisions shall be made so
that the Warrant Holder, upon the exercise hereof at any time on or
after the Consummation Date and prior to the Expiration Date, shall
be entitled to receive, and this Agreement shall thereafter
represent the right to receive, in lieu of the Warrant
Shares issuable upon
such exercise prior to the Consummation Date, the highest amount of
securities or other property to which the Warrant Holder would
actually have been entitled as a stockholder upon the consummation
of the Transaction if the Warrant Holder had exercised the Warrant
immediately prior thereto. The provisions of this Section 6(e) shall similarly apply to successive
Transactions.

 

7. Taxes.
The Warrant Holder acknowledges that upon exercise of the Warrant
the Warrant Holder may be deemed to have taxable income in respect
of the Warrant and/or the Warrant Shares. The Warrant Holder
acknowledges that any income or other taxes due from it with
respect to the Warrant or the Warrant Shares issuable pursuant to
the Warrant shall be the Warrant Holder’s
responsibility.

 

8. Reservation
of Warrant Shares. From and after the Issue Date, the
Company shall at all times reserve and keep available for issue
upon exercise of this Warrant 110% of the number of its authorized
but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of this Warrant.

 

 

 

-9-

 

 

9. Representations
and Warranties.

 

(a) Representations and Warranties by the
Company. The representations and warranties of the Company
set forth in Section 2.1 of the Purchase Agreement are true and
correct as of the Issue Date.

 

(b) Representations and Warranties by the
Warrant Holder. The representations and warranties of the
Warrant Holder set forth in Section 2.2 of the Purchase Agreement
are true and correct as of the Issue Date.

 

10. Registration
Rights. The
Company acknowledges that the Warrant Shares are subject to the
Registration Rights Agreement.

 

11. Noncircumvention.
The Company hereby covenants and agrees that the Company will not,
by amendment of its certificate of incorporation or bylaws, or
through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all the provisions of
this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect and (ii) shall take all
such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this
Warrant.

 

12. Reissuance
Of Warrants.

 

(a) Transfer of
Warrant. If this Warrant
is to be transferred, the Warrant Holder shall surrender this
Warrant to the Company and an opinion of counsel from an attorney
regularly engaged in the practice of securities law, whereupon the
Company will forthwith issue and deliver upon the order of the
Warrant Holder a new Warrant (in accordance with Section 12(d)),
registered as the Warrant Holder may request, representing the
right to purchase the number of Warrant Shares being transferred by
the Warrant Holder and, if less than the total number of Warrant
Shares then underlying this Warrant is being transferred, a new
Warrant (in accordance with Section 11(d)) to the Warrant Holder
representing the right to purchase the number of Warrant Shares not
being transferred.

 

(b) Lost,
Stolen or Mutilated Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and, in
the case of loss, theft or destruction, of any indemnification and
payment of any required bond undertaking by the Warrant Holder to
the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Warrant Holder a new Warrant (in
accordance with Section 12(d)) representing the right to purchase
the Warrant Shares then underlying this Warrant.

 

(c) Exchangeable for Multiple
Warrants. This Warrant is
exchangeable, upon the surrender hereof by the Warrant Holder at
the principal office of the Company, for a new Warrant or Warrants
(in accordance with Section 12(d)) representing in the aggregate
the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to
purchase such portion of such Warrant Shares as is designated by
the Warrant Holder at the time of such surrender; provided,
however, that no Warrants for fractional shares of Common Stock
shall be given.

 

 

 

 

 

-10-

 

 

(d) Issuance
of New Warrants

 

13.
Whenever the
Company is required to issue a new Warrant pursuant to the terms of
this Warrant, such new Warrant (i) shall be of like tenor with this
Warrant, (ii) shall represent, as indicated on the face of such new
Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant
to Section 12(a) or Section 12(c), the Warrant Shares designated by the
Warrant Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with
such issuance, does not exceed the number of Warrant Shares then
underlying this Warrant), (iii) shall have an issuance date, as
indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions
as this Warrant.

 

14. Amendment
And Waiver. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained
the written consent of the holders of a majority of the Warrant
Shares underlying the outstanding Warrants.

 

15. Dispute
Resolution. In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant
Shares issuable pursuant hereto, the Company shall promptly issue
to the Warrant Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with this Section
15. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares
issuable pursuant hereto, the Company shall submit the disputed
determinations or arithmetic calculations via facsimile within two
(2) Business Days of receipt of the Exercise Notice giving rise to
such dispute, as the case may be, to the Warrant Holder. If the
Warrant Holder and the Company are unable to agree upon such
determination or calculation of the Exercise Price or the Warrant
Shares within three (3) Business Days of such disputed
determination or arithmetic calculation being submitted to the
Warrant Holder, then the Company shall, within two (2) Business
Days submit via facsimile (a) the disputed determination of the
Exercise Price to an independent, reputable investment bank
selected by the Company and approved by the Warrant Holder or (b)
the disputed arithmetic calculation of the Warrant Shares to the
Company’s independent, outside accountant. The Company shall
cause the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company
and the Warrant Holder of the results no later than ten (10)
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. The party whose
calculation is furthest from the investment bank’s or
accountant’s determination or calculation, as the case may
be, shall be obligated to pay the fees and expenses of such
investment bank or accountant.

 

16. Remedies,
Other Obligations, Breaches And Injunctive Relief. The
remedies provided in this Warrant shall be cumulative and in
addition to all other remedies available under this Warrant and the
other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the right of the Warrant Holder to
pursue actual damages for any failure by the Company to comply with
the terms of this Warrant. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to
the Warrant Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event
of any such breach or threatened breach, the holder of this Warrant
shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being
required. The Company shall provide all information and
documentation to the Warrant Holder that is requested by the Holder
to enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Warrant (including, without
limitation, compliance with Section 6 hereof).

 

17. Transfer. 
This Warrant may be offered for sale, sold, transferred or assigned
without the consent of the Company.

 

 

 

-11-

 

 

18. Severability.
If any provision of this Warrant is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as
this Warrant as so modified continues to express, without material
change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The
parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable
provision(s).

 

19. Certain
Definitions. For purposes of this Warrant, the following
terms shall have the following meanings:

 

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

 

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

 

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

 

(d) “Principal Market” means OTCQX US
Exchange until such time as the Company effects its proposed
up-listing to the Nasdaq Capital Market, and shall thereafter mean
the Nasdaq Capital Market or any successor exchange on which the
Common Stock is traded.

 

(e) “Trading Day” means, as applicable,
(x) with respect to all price determinations relating to the
Common

 

 

 

-12-

 

 

(f)  Stock, any
day on which the Common Stock is traded on the Principal Market,
or, if the Principal Market is not the principal trading market for
the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day
on which the Common Stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange
or market, then during the hour ending at 4:00:00 p.m., New York
time) unless such day is otherwise designated as a Trading Day in
writing by the Holder or (y) with respect to all determinations
other than price determinations relating to the Common Stock, any
day on which The New York Stock Exchange (or any successor thereto)
is open for trading of securities.

 

20. Assignability.
Notwithstanding anything contained herein to the contrary, subject
to the transfer and securities law restrictions set forth in this
Agreement, the Warrant Holder may assign, convey or transfer, in
whole or in part, its rights under this Agreement and provide
written notice to Company of any such assignment, conveyance or
transfer. Upon any transfer, assignment, pledge, hypothecation or
other disposition of the Warrant or of any rights granted hereunder
in accordance with the terms of this Section 20, the Company shall
if necessary issue or re-issue warrant agreements reflecting the
appropriate rights and entitlements of the Warrant Holder and any
transferee, assignee or pledgee after giving effect to such
transfer, assignment or pledge.

 

[signatures on following page]

 

 

-13-

 

 

IN
WITNESS WHEREOF, the undersigned hereby execute this Agreement as
of the day and year first above written.

 

COMPANY:

 

YOUNGEVITY
INTERNATIONAL, INC.

 

 

By:___________________________

Name:
Steven Wallach

Title:           Chairman
and CEO

 

 

WARRANT HOLDER:

 

 

 

___________________________

 

 

 

 

[Signature
Page – Warrant Agreement]

-14-

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

 

 

The
undersigned holder hereby exercises the right to purchase
_________________ shares of Common Stock (“Warrant Shares”) of
Youngevity International, Inc., a Delaware corporation (the
“Company”), evidenced by
the attached Series D Warrant No. ___ (the “Warrant”). Capitalized
terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.

 

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

 

____________ 

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

 

____________ 

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

 

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

 

3.
Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the
Warrant.

 

Date:
_______________ __, ______

 

 

 

   Name
of Registered Holder

 

 

By:           

Name:

Title:

 

 

 

 

-15-

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