Document:

Blueprint

 

EXHIBIT 4.3

 

FORM OF NON-TRANSFERABLE SUBSCRIPTION RIGHTS
CERTIFICATE

 

	

RIGHTS
CERTIFICATE # [______]

	
 

	

NUMBER
OF RIGHTS: [______]

 

THE
TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE
COMPANY’S PROSPECTUS DATED [______], 2018 (THE
“PROSPECTUS”)
AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS
ARE AVAILABLE UPON REQUEST FROM DIRECT TRANSFER, LLC, THE
INFORMATION AGENT FOR THE RIGHTS OFFERING AT (888) 301-2498 (TOLL
FREE).

 

GROWLIFE, INC.

(Incorporated under the laws of the State of Delaware)

 

SUBSCRIPTION RIGHTS CERTIFICATE

 

Evidencing
non-transferable Subscription Rights, each to purchase Units of
Growlife, Inc.,

each
Unit consisting of one share of Common Stock and two 1⁄2
Warrants to purchase Common Stock

Subscription
Price: $0.012 per Unit

 

THE SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED ON OR BEFORE
6:00 P.M., EASTERN TIME, ON NOVEMBER 12, 2018,

SUBJECT TO EXTENSION OR EARLIER TERMINATION.

 

THIS
CERTIFIES THAT the registered owner whose name is inscribed hereon
and is the owner of the number of subscription rights set forth
above. Each subscription right entitles the holder thereof to
subscribe for and purchase one unit of GrowLife, Inc., a Delaware
corporation, pursuant to the basic subscription right, on the terms
and subject to the conditions set forth in the Prospectus and the
“Instructions as to Use of Subscription Rights Certificate
Growlife, Inc.” accompanying this Rights Certificate. Each
unit consists of one share of Common Stock and two 1⁄2 Warrants,
consisting of one 1⁄2 warrant which will be exercisable for one
share of our Common Stock at an exercise price of $0.018 and one
1⁄2 warrant which with an exercise price of $0.024 per share,
exercisable from the date of issuance through the expiration three
years from the date of issuance. Holders who fully exercise their
basic subscription rights are entitled to subscribe for additional
units that remain unsubscribed, subject to proration and stock
ownership limitations, as described in the Prospectus pursuant to
the Over-Subscription Rights. The subscription rights may be
exercised by duly completing Section 1 on the reverse side hereof
and by returning the full payment of the subscription price. THE
RIGHTS EVIDENCED BY NON-TRANSFERABLE SUBSCRIPTION RIGHTS
CERTIFICATE MAY NOT BE EXERCISED UNLESS THE REVERSE SIDE HEREOF IS
PROPERLY COMPLETED AND DULY SIGNED, WITH A SIGNATURE MEDALLION
GUARANTEE, IF APPLICABLE.

 

This
Rights Certificate is not valid unless countersigned by Direct
Transfer, LLC, the Subscription Agent.

 

WITNESS
the seal of Growlife, Inc. and the signatures of its duly
authorized officers.

 

	

 

Dated:
[_______], 2018

	
 

 

	

GROWLIFE,
INC.

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Marco
Hegyi, Chief Executive Officer

	
 

	
 

	
 

 

COUNTERSIGNED
AND REGISTERED:

 

By:___________________________

 

Direct
Transfer, LLC

 

 

-1-

 

 

SECTION 1. EXERCISE OF RIGHTS TO PURCHASE

PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY.

 

You are
required initially to pay for both the units subscribed for
pursuant to the basic subscription right and the over-subscription
privilege. To subscribe for units pursuant to your basic
subscription right, please complete lines (a) and (c) below. To
subscribe for additional units pursuant to your over-subscription
privilege, please also complete line (b).

 

	

(a)

	

EXERCISE OF BASIC SUBSCRIPTION RIGHT:

 

	
 

	

Basic
Subscription Right:

	
 

	

X

	

$0.012

	

=

	

$

	
 

	
 

	

Number
of Units

	
 

	

Subscription
Price

	
 

	

Payment
Enclosed

 

	

(b)

	

EXERCISE OF OVER-SUBSCRIPTION PRIVILEGE: If you have
exercised your basic subscription right in full, you may subscribe
for additional units pursuant to your over-subscription
privilege

 

	
 

	

Over
Subscription Privilege:

	
 

	

X

	

$0.012

	

=

	

$

	
 

	
 

	

Number
of Units

	
 

	

Subscription
Price

	
 

	

Payment
Enclosed

 

	

(c)

	

TOTAL AMOUNT OF PAYMENT ENCLOSED $______________

 

	

METHOD
OF PAYMENT (CHECK ONE):

	

☐

	

 Cashier’s
check, drawn on a [_____________(BANK NAME)______] payable to
“Issuer Direct Corporation, FBO Growlife”;
or

	
 

	
 

	
 

	
 

	

☐

	

Wire transfer of immediately available funds directly to the
account maintained by Direct Transfer, LLC, as subscription agent,
for purposes of accepting subscriptions in this Rights Offering at
Regions Bank, Direct Transfer, LLC, 500 Perimeter Park Drive Suite
D, Morrisville NC 27560, Tel: (888) 301-2498 as subscription agent
for Growlife Inc. Rights Offering, ABA, #
062005690,
Account # 0183141022, SWIFT
Number: UPNBUS44XXX, for further credit to Growlife, Inc., and name
of the subscription rights holder.

 

 

-2-

 

 

SECTION 2. SIGNATURE(S)

 

IMPORTANT:
THE SIGNATURE(S) MUST CORRESPOND IN EVERY PARTICULAR, WITHOUT
ALTERATION, WITH THE NAME(S) AS PRINTED ON THE FRONT OF THIS
NON-TRANSFERABLE SUBSCRIPTION RIGHTS CERTIFICATE. IF YOU ARE
SIGNING ON BEHALF OF A REGISTERED STOCKHOLDER OR ENTITY YOU MUST
SIGN IN YOUR LEGAL CAPACITY WITH YOUR SIGNATURE MEDALLION
GUARANTEED. YOUR GUARANTOR (BANK/BROKER) WILL REQUIRE PROOF OF YOUR
AUTHORITY TO ACT. CONSULT YOUR GUARANTOR FOR THEIR SPECIFIC
REQUIREMENTS. YOU OR YOUR GUARANTOR MAY ACCESS THE SECURITIES
TRANSFER ASSOCIATION (STA) RECOMMENDED REQUIREMENTS ON-LINE AT
WWW.STAI.ORG.

 

	
 

	
 

	

APPLY
MEDALLION GUARANTEE STAMP HERE

	
 

	
 

	
 

	

Signature(s)
of Subscriber(s)

	
 

	
 

	
 

	
 

	
 

	

Names(s):

	
 

	
 

	
 

	
 

	
 

	
 

	

Capacity

 

(Full
Title):

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

OVERNIGHT
DELIVERY TO THE STREET ADDRESS BELOW BEST ENSURES RECEIPT BY THE
EXPIRATION DATE.

 

Return
this statement to:

 

Direct Transfer, LLC.

Attn: Rights Offering

500 Perimeter Park Drive Suite D,

Morrisville NC 27560

Tel: (888) 301-2498 

 

 

-3-Blueprint

 

EXHIBIT 4.4

 

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

 

THIS
WARRANT TO PURCHASE COMMON STOCK WILL BE VOID AND OF NO VALUE
UNLESS EXERCISED BY 11:59 P.M. (EASTERN TIME), ON NOVEMBER 12, 2021
OR SUCH EARLIER DATE AS PROVIDED HEREIN, INCLUDING THE EXERCISE OF
THE RIGHT OF GROWLIFE INC. TO ACCELERATE THE EXPIRATION DATE (AS
HEREINAFTER DEFINED), AFTER WHICH TIME THE WARRANTS EVIDENCED
HEREBY SHALL BE NULL AND VOID AND OF NO FURTHER FORCE AND
EFFECT

 

 

GROWLIFE, INC.

 

Warrant To Purchase Common Stock

 

 

Warrant
No.: [     ]

Number
of Shares of Common Stock:
[     ]

Date of
Issuance:
[                         ],
2018 (“Issuance
Date”)

 

 

Growlife,
Inc., a Delaware corporation (the “Company”), certifies that, for
good and valuable consideration, the receipt and sufficiency of
which are
acknowledged,                    
, the registered holder hereof or its permitted assigns (the
“Holder”), is
entitled, subject to the terms set forth below, to purchase from
the Company, at the Exercise Price (as defined below) then in
effect, upon surrender of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “Warrant”), at any time or times on
or after the date hereof (the “Exercise Date”), and on or prior
to the close of business on the third year anniversary of the
Issuance Date (the “Expiration Date”) unless
accelerated in accordance with Section 1(e),
[     ] fully paid and nonassessable
shares of Common Stock (the “Warrant Shares”). This Warrant was
issued as part of a unit, each unit consisting of one share of
Common Stock and two 1⁄2 Warrants. The purchase price of one
share of Common Stock under this Warrant shall be equal to
$0.018.

 

 

-1-

 

 

1.

EXERCISE OF
WARRANT.

 

a. Mechanics of Exercise. Subject
to the terms and conditions hereof (including, without limitation,
the limitations set forth in Section 1(f)), this Warrant may be
exercised by the Holder at any time or times on or after the
Issuance Date, in whole or in part, by delivery (whether via
facsimile, electronic mail or otherwise) of a written notice, in
the form attached hereto as Exhibit A (the
“Exercise
Notice”), of the Holder’s election to exercise
this Warrant. Within one (1) Trading Day following the delivery of
the Exercise Notice, the Holder shall make payment to the Company
of an amount equal to the applicable Exercise Price (as defined
below) multiplied by the number of Warrant Shares as to which this
Warrant is being exercised (the “Aggregate Exercise Price”) in cash
by wire transfer of immediately available funds or if the
provisions of Section 1(d) are applicable, by notifying the Company
that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 1(d)). The Holder shall not be
required to deliver the original Warrant in order to effect an
exercise hereunder, nor shall any ink-original signature or
medallion guarantee (or other type of guarantee or notarization)
with respect to any Exercise Notice be required. Execution and
delivery of the Exercise Notice with respect to less than all of
the Warrant Shares shall have the same effect as cancellation of
the original Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. On or
before the first (1st) Trading Day
following the date on which the Company has received the applicable
Exercise Notice, the Company shall transmit by facsimile or
electronic mail an acknowledgment of confirmation of receipt of the
Exercise Notice to the Holder and the Company’s transfer
agent (the “Transfer
Agent”). So long as the Holder delivers the Aggregate
Exercise Price (or notice of a Cashless Exercise) on or prior to
the first (1st) Trading Day following the date on which the
Exercise Notice has been delivered to the Company, then on or prior
to the second (2nd) Trading Day following the date on which the
Exercise Notice has been delivered to the Company, or, if the
Holder does not deliver the Aggregate Exercise Price (or notice of
a Cashless Exercise) on or prior to the first (1st) Trading Day
following the date on which the Exercise Notice has been delivered
to the Company, then on or prior to the first (1st) Trading Day
following the date on which the Aggregate Exercise Price (or notice
of a Cashless Exercise) is delivered (the “Share Delivery Date”), the Company
shall (X) provided that the Transfer Agent is participating in DTC
Fast Automated Securities Transfer Program and the Holder may sell
the Warrant Shares either (I) pursuant to Rule 144 of the 1933 Act
without volume or manner of sale limitations or (II) pursuant to an
effective registration statement registering the Warrant Shares for
issuance or resale, credit such aggregate number of Warrant Shares
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, or if the Holder may not sell the
Warrant Shares (I) pursuant to Rule 144 of the 1933 Act without
volume or manner of sale limitations or (II) pursuant to an
effective registration statement registering the Warrant Shares for
issuance or resale, issue and dispatch by overnight courier to the
address as specified in the Exercise Notice, a certificate,
registered in the Company’s share register in the name of the
Holder or its designee, for the number of Warrant Shares 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 Warrant
Shares via DTC, if any, including without limitation for same day
processing. Upon delivery of the 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; provided that payment of the aggregate Exercise Price (other
than in the case of a Cashless Exercise) is received within two
(2) Trading Days following delivery of the Notice of Exercise.
If this Warrant is physically delivered to the Company in
connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for
exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as
practicable and in no event later than two (2) Trading 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
7(d)) representing the right to purchase the number of Warrant
Shares issuable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised. No fractional Warrant Shares are to be
issued upon the exercise of this Warrant, but rather the number of
Warrant Shares to be issued shall be rounded up to the nearest
whole number. The Company shall pay any and all taxes (other than
the Holder’s income taxes) and costs and expenses (including,
without limitation, fees and expenses of the Transfer Agent but
excluding those of the Holder) which may be payable with respect to
the issuance and delivery of Warrant Shares upon exercise of this
Warrant. The Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms and subject to the
conditions hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination; provided, however, that the Company shall
not be required to deliver Warrant Shares with respect to an
exercise prior to the Holder’s delivery of the Aggregate
Exercise Price (or notice of a Cashless Exercise) with respect to
such exercise. For purposes of clarity, if the Holder exercises
this Warrant (other than by Cashless Exercise) at a time when the
Holder may not sell the Warrant Shares either (I) pursuant to Rule
144 of the 1933 Act without volume or manner of sale limitations or
(II) pursuant to an effective registration statement registering
the Warrant Shares for issuance, the Company may satisfy the
delivery of Warrant Shares under this Section 1(a) by issue and
dispatch by overnight courier to the address as specified in the
Exercise Notice, a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the
number of Warrant Shares to which the Holder is entitled pursuant
to such exercise, which certificate may contain a restrictive
legend. If the Company fails for any reason to deliver to the
Holder the Warrant Shares subject to a Notice of Exercise by the
Warrant Share Delivery Date as required by this subsection, the
Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the
applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated
damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or
Holder rescinds such exercise.

 

 

-2-

 

 

Notwithstanding the
foregoing in this Section 1(a), a Holder whose interest in this
Warrant is a beneficial interest in certificate(s) representing
this Warrant held in book-entry form through DTC (or another
established clearing corporation performing similar functions),
shall effect exercises made pursuant to this Section 1(a) by
delivering to DTC (or such other clearing corporation, as
applicable) the appropriate instruction form for exercise,
complying with the procedures to effect exercise that are required
by DTC (or such other clearing corporation, as applicable), subject
to a Holder’s right to elect to receive a Warrant in
certificated form pursuant to the terms of the Warrant Agency
Agreement, in which case this sentence shall not
apply.

 

b. Exercise Price. For purposes of
this Warrant, the exercise price per whole share of the Common
Stock under this Warrant shall be equal to $0.018, subject to
adjustment hereunder (the “Exercise Price”). Exercise under
this Warrant must be made only in increments of at least one (1)
whole share of the Common Stock, subject to adjustment as provided
herein.

 

c. Company’s Failure to Timely
Deliver Securities. If the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares or to credit the
Holder’s balance account with DTC for such number of Warrant
Shares to which the Holder is entitled upon the Holder’s
exercise pursuant to an exercise on or before the Share Delivery
Date, and if after such date the Holder purchases (in an open
market transaction or otherwise) or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a
“Buy-In”), then
the Company shall within three (3) Trading Days after the
Holder’s request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
(the “Buy-In
Price”), at which point the Company’s obligation
to deliver such certificate (and to issue such Warrant Shares or
credit such Holder’s balance account with DTC) shall
terminate, or (ii) promptly honor its obligation to deliver to
the Holder a certificate or certificates representing such Warrant
Shares or credit such Holder’s balance account with DTC and
pay cash to the Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares
of Common Stock, times (B) the Weighted Average Price of a
share of Common Stock on the date of exercise

 

d. Cashless Exercise.
Notwithstanding anything contained herein to the contrary, if the
issuance or resale of the Warrant Shares is not registered on an
effective registration statement under the 1933 Act, the Holder
may, after the Exercisability Date, upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net
Number” of shares of Common Stock determined according
to the following formula (a “Cashless Exercise”):

 

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

D

 

For
purposes of the foregoing formula:

 

A=

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

 

B=

the
arithmetic average of the Closing Sale Prices of the Common Stock
for the five (5) consecutive Trading Days ending on the date
immediately preceding the date of the Exercise Notice.

 

C=

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

 

 

-3-

 

 

D=

as applicable: (i)
the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the date of the applicable Exercise Notice if
such Exercise Notice is (1) both executed and delivered pursuant to
Section 1(d) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 1(d) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) the Bid Price of
the Common Stock as of the time of the Holder’s execution of
the applicable Exercise Notice if such Exercise Notice is executed
during “regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter pursuant to Section 1(d)
hereof, or (iii) the Closing Sale Price of the Common Stock on the
date of the applicable Exercise Notice if the date of such Exercise
Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(d) hereof after the close of
“regular trading hours” on such Trading
Day.

 

If
Warrant Shares are issued in a Cashless Exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of
the 1933 Act, the Warrant Shares shall take on the registered
characteristics of the Warrant being exercised. The Company agrees
not to take any position contrary to this Section
1(d).

 

e. Acceleration of Expiration
Date. If at any time after the Issuance Date, the closing
trading price of the Company’s Common Stock on the OTCQB or
its then principal trading market is greater than $0.0325 per
Common Stock share for a period of ten (10) consecutive Trading
Days, then the Company may give notice thereof in the form attached
as Exhibit B hereto
to the Holder in accordance with Section 8 and, in such case, the
Expiration Date shall be 5:00 p.m. Eastern Time on the
30th day
after the date on which such notice is deemed to have been given by
the Company to the Holder pursuant to Section 8.

 

f. Holder’s Limitation on
Exercises. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two (2) Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon notice to the Company,
may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

 

 

-4-

 

 

g. Reserved.

 

h. Authorized Shares. The Company
covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are
charged with the duty of issuing the necessary Warrant Shares upon
the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any
requirements of the Eligible Market upon which the Common Stock may
be listed. The Company covenants that all Warrant Shares which may
be issued upon the exercise of the purchase rights represented by
this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such
issue). Before taking any action which would result in an
adjustment in the number of Warrant Shares for which this Warrant
is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.

 

i. Right of Redemption. The
Company may redeem not less than all of the outstanding Warrants
for which a Notice of Exercise has not yet been delivered (such
right, a “Redemption
Right”) for consideration equal to $0.0001 per Warrant
(subject to adjustment for forward and reverse stock splits,
recapitalizations, stock dividends and the like after the
Exercisability Date, the “Redemption Price”) provided
that: (i) the VWAP for each of ten consecutive Trading Days (the
“Measurement Period,” which ten consecutive Trading Day
period shall not have commenced until six (6) months after the
Exercisability Date) exceeds $0.03 per share (subject to adjustment
for forward and reverse stock splits, recapitalizations, stock
dividends and the like after the Exercisability Date) and (ii) the
Holder is not in possession of any information that reasonably
constitutes material non-public information which was provided to
Holder by the Company, any of its subsidiaries, or any of their
officers, directors, employees, agents or Affiliates. To exercise
the Redemption Right, the Company must deliver to all of the
Holders an irrevocable written notice (a “Redemption Notice”) indicating
therein the Company’s election to redeem all of the Warrants
and setting forth a date for the redemption of such Warrants, which
date shall be at least thirty (30) days after the date of the
Redemption Notice (the “Redemption Date”). The Redemption
Notice shall be mailed by first class mail, postage prepaid, by the
Company to the Holders of the Warrants at their last addresses as
they shall appear on the Warrant Register. Any Redemption Notice
mailed in the manner herein provided shall be conclusively presumed
to have been duly given on the date sent whether or not the Holder
received such notice. The Warrants may be exercised for cash in
accordance with the terms therein at any time after the Redemption
Notice shall have been given by the Company pursuant to this
Section 1(i) hereof and prior to the Redemption Date. Following the
Redemption Date, the Holders of the Warrants shall have no further
rights except to receive the Redemption Price upon surrender of the
Warrants. Notwithstanding anything to the contrary set forth in
this Warrant, the Company may not deliver a Redemption Notice or
require the redemption of this Warrant (and any such Redemption
Notice shall be void), unless, from the beginning of the
Measurement Period through the Redemption Date, (1) the Company
shall have honored in accordance with the terms of this Warrant all
Notices of Exercise delivered by 6:30 p.m. Eastern Time on the
Redemption Date, (2) a registration statement shall be effective as
to all Warrant Shares and the prospectus thereunder available for
use by the Company for the sale of all such Warrant Shares to the
Holder, and (3) the Common Stock shall be listed or quoted for
trading on an Eligible Market. Notwithstanding Section 1(f), in the
event that the exercise of this Warrant after a Redemption Notice
would otherwise cause the Holder to exceed the Beneficial Ownership
Limitation set forth in Section 1(f), the Company shall only issue
such number of Warrant Shares to the Holder that would not cause
the Holder to exceed the maximum number of Warrant Shares permitted
under Section 1(f) with the balance to be held in abeyance until
notice from the Holder that the balance (or portion thereof) may be
issued in compliance with such limitations. For clarity, the
foregoing sentence will not limit the Holder's obligation to pay
the Exercise Price in accordance with this Warrant for any Warrant
Shares that will be held in abeyance. 

 

 

-5-

 

 

2.

ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES.

 

The
Exercise Price and the number of Warrant Shares shall be adjusted
from time to time as follows:

 

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

 

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

 

3. RIGHTS UPON DISTRIBUTION OF
ASSETS. In addition to any adjustments pursuant to Section 2
above, if, on or after the Effectiveness Date and on or prior to
the Expiration Date, the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its
assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any
distribution of cash, stock (not including shares of Common Stock
of the Company) or other securities, property, options, evidence of
indebtedness or any other assets by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the
date on which a record is taken for such Distribution, or, if no
such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the participation
in such Distribution (provided, however, that to the extent that
the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall only be
entitled to participate in such Distribution to the extent of the
Maximum Percentage (and shall not be entitled to beneficial
ownership of such shares of Common Stock as a result of such
Distribution (and beneficial ownership) to the extent of any such
excess) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times, if
ever, as its right thereto would not result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, at
which time or times the Holder shall be granted such Distribution
(and any Distributions declared or made on such initial
Distribution or on any subsequent Distribution held similarly in
abeyance) to the same extent as if there had been no such
limitation).

 

 

-6-

 

 

4.

PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

a. Purchase Rights. In addition to
any adjustments pursuant to Section 2 above, if at any time prior
to the Expiration Date the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to all of the
record holders of any class of shares of Common Stock (the
“Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) immediately before the
date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase
Rights.

 

b. Fundamental Transactions. Upon
the occurrence of any Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after
the date of such Fundamental Transaction, the provisions of this
Warrant referring to the “Company” shall refer instead
to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company
under this Warrant with the same effect as if such Successor Entity
had been named as the Company herein. Upon consummation of the
Fundamental Transaction, the Successor Entity shall deliver to the
Holder confirmation that there shall be issued upon exercise of
this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property purchasable upon the
exercise of the Warrant prior to such Fundamental Transaction),
such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or
subscription rights), if any, that the Holder would have been
entitled to receive upon the happening of such Fundamental
Transaction had this Warrant been exercised immediately prior to
such Fundamental Transaction, as adjusted in accordance with the
provisions of this Warrant. In addition to and not in substitution
for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a
“Corporate
Event”), the Company shall make appropriate provision
to ensure that the Holder will thereafter have the right to receive
upon exercise of this Warrant within 90 days after the consummation
of the Fundamental Transaction but, in any event, prior to the
Expiration Date, in lieu of the shares of the Common Stock (or
other securities, cash, assets or other property) purchasable upon
the exercise of the Warrant prior to such Fundamental Transaction,
such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or
subscription rights) which the Holder would have been entitled to
receive upon the happening of such Fundamental Transaction had the
Warrant been exercised immediately prior to such Fundamental
Transaction.

 

5. 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, issuance 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 of 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, (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 non-assessable shares of
Common Stock upon the exercise of this Warrant, and (iii) shall, so
long as this Warrant is outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the
exercise of this Warrant, the Required Reserve Amount to effect the
exercise of this Warrant then outstanding (without regard to any
limitations on exercise).

 

 

-7-

 

 

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

 

7. REGISTRATION
AND REISSUANCE OF WARRANTS.

 

a. Registration of Warrant. The
Company or its Transfer Agent shall register this Warrant, upon the
records to be maintained by the Company or its Transfer Agent for
that purpose (the “Warrant
Register”), in the name of the record Holder hereof
from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the
contrary.

 

b. Transfer of Warrant. Subject to
compliance with any applicable securities laws, this Warrant and
all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant
to the Company unless the Holder has assigned this Warrant in full,
in which case, the Holder shall surrender this Warrant to the
Company within three (3) Trading Days of the date the Holder
delivers an assignment form to the Company assigning this Warrant
full. The Warrant, if properly assigned in accordance herewith, may
be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued. If, at the time of the
surrender of this Warrant in connection with any transfer of this
Warrant, the transfer of this Warrant shall not be either (i)
registered pursuant to an effective registration statement under
the Securities Act and under applicable state securities or blue
sky laws or (ii) eligible for resale without volume or
manner-of-sale restrictions or current public information
requirements pursuant to Rule 144, the Company may require, as a
condition of allowing such transfer, that the Holder or transferee
of this Warrant, as the case may be, compliance with applicable
securities laws, as determined by the Company’s
counsel.

 

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

 

d. Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company or its
Transfer Agent, as directed by the Company, together with all
applicable transfer taxes, for a new Warrant or Warrants (in
accordance with Section 7(e)) representing in the aggregate
the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to
purchase such portion of such Warrant Shares as is designated by
the Holder at the time of such surrender; provided, however, that the Company or
its Transfer Agent, as directed by the Company, shall not be
required to issue Warrants for fractional shares of Common Stock
hereunder.

 

 

-8-

 

 

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

 

8. NOTICES.
Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance
with the information set forth in the Warrant Register. The Company
shall give written notice to the Holder (i) reasonably
promptly following any adjustment of the Exercise Price, setting
forth in reasonable detail, and certifying, the calculation of such
adjustment, (ii) within 30 days of an Acceleration of Expiration
Date as set forth in Section 1(e) herein, and (iii) at least
ten (10) days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
shares of Common Stock or (C) for determining rights to vote
with respect to any Fundamental Transaction, dissolution or
liquidation; provided, that in each case,
such information shall be made known to the public prior to or in
conjunction with such notice being provided to the
Holder.

 

Notice
so mailed shall be deemed to have been given on the tenth
(10th)
business day after deposit in a post office or public letter box.
Notice transmitted by a form of recorded telecommunication or
delivered personally shall be deemed given on the day of
transmission or personal delivery, as the case may be. Any party
may from time to time notify the other in the manner provided
herein of any change of address which thereafter, until change by
like notice, shall be the address of such party for all purposes
hereof.

 

9.
NONCIRCUMVENTION.  The
Company hereby covenants and agrees that the Company will not, by
amendment of its Certificate of Incorporation, Bylaws or through
any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all
times in good faith 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, (ii) shall use all reasonable
efforts to take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this
Warrant and (iii) shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common
Stock, solely for the purpose of effecting the exercise of the
Warrants, the number of shares of Common Stock as shall from time
to time be necessary to effect the exercise of the Warrants then
outstanding (without regard to any limitations on
exercise).

 

10. AMENDMENT
AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained
the written consent of the Holder.

 

11. LIMITATION
OF LIABILITY. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or
privileges of Holder, shall give rise to any liability of Holder
for the purchase price of any Warrant Shares or as a stockholder of
the Company, whether such liability is asserted by the Company or
by creditors of the Company.

 

12. GOVERNING
LAW. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of
Delaware, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Delaware or any
other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of Delaware.

 

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

 

 

-9-

 

 

14. DISPUTE
RESOLUTION. In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall submit the disputed determinations or
arithmetic calculations via email or facsimile within two (2)
Trading Days of receipt of the Exercise Notice giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation
of the Exercise Price or the Warrant Shares within five (5) Trading
Days of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within
two (2) Trading Days submit via email or facsimile
(a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic
calculation of the Warrant Shares to the Company’s
independent, outside accountant. The Company shall cause the
investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the
Holder of the results no later than ten (10) Trading 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 expenses of the investment bank and
accountant will be borne by the Company unless the investment bank
or accountant determines that the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares by the
Holder was incorrect, in which case the expenses of the investment
bank and accountant will be borne by the Holder.

 

15. REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Warrant shall be cumulative and in
addition to all other remedies available under this Warrant, at law
or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit the right
of the Holder to pursue actual damages for any failure by the
Company to comply with the terms of this Warrant. The Company
acknowledges that a breach by it of its obligations hereunder may
cause irreparable harm to the 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 seek an injunction restraining any breach.
Notwithstanding the foregoing or anything else herein to the
contrary, if the Company is for any reason unable to issue and
deliver Warrant Shares upon exercise of this Warrant as required
pursuant to the terms hereof, the Company shall have no obligation
to pay to the Holder any cash or other consideration or otherwise
“net cash settle” this Warrant.

 

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

 

a. “Bloomberg” means Bloomberg
Financial Markets.

b.  “Change
of Control” means any Fundamental Transaction other
than (i) any reorganization, recapitalization or
reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after
such reorganization, recapitalization or reclassification to
hold publicly traded securities and, directly or indirectly,
the voting power of the surviving entity or entities necessary to
elect a majority of the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities,
or (ii) pursuant to a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the
Company.

c.  “Common
Stock” means (i) the Company’s shares of
Common Stock, $0.0001 par value per share, and (ii) any share
capital into which such Common Stock shall have been changed or any
share capital resulting from a reclassification of such Common
Stock.

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

e.  “Eligible
Market” means The New York Stock Exchange, Inc., the
NYSE Amex LLC, The Nasdaq Stock Market, the OTC Bulletin
Board®, or OTC Pink
Sheets.

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

 

 

-10-

 

 

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

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

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

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

k.  “Trading
Day” means any day on which the Common Stock is traded
on the OTC Bulletin Board, or, if the OTC Bulletin Board 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).

l. “Weighted Average Price” means, for
any security as of any date, the dollar volume-weighted average
price for such security on OTC Bulletin Board during the period
beginning at 9:30:01 a.m., New York City time, and ending at
4:00:00 p.m., New York City time, as reported by Bloomberg through
its “Volume at Price” function or, if the foregoing
does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30:01
a.m., New York City time, and ending at 4:00:00 p.m., New York City
time, as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such
hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink OTC Markets Inc.
If the Weighted Average Price cannot be calculated for such
security on such date on any of the foregoing bases, the Weighted
Average Price of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved
pursuant to Section 14 with the term “Weighted Average
Price” being substituted for the term “Exercise
Price.” All such determinations shall be appropriately
adjusted for any share dividend, share split or other similar
transaction during such period.

[Signature Page Follows]

 

 

-11-

 

 

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

 

	
 

	
 

	
 

	

GROWLIFE,
INC.

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Marco
Hegyi, Chief Executive Officer

	
 

	
 

	
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-12-

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS

WARRANT TO PURCHASE COMMON STOCK

 

GROWLIFE, INC.

 

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

 

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

 

☐ Cash
Exercise under Section 1(a).

 

☐ Cashless
Exercise under Section 1(c).

 

2. Cash
Exercise. If the Holder has elected a Cash Exercise, the
Holder shall pay 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.

 

4. Representations
and Warranties. By its delivery of this Exercise Notice, the
undersigned represents and warrants to the Company that in giving
effect to the exercise evidenced hereby the Holder will not
beneficially own in excess of the number of shares of Common Stock
(determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended) permitted to be owned under
Section 1(d) of this Warrant to which this notice
relates.

 

DATED:                                 

 

	
 

	
 

	
 

	

(Signature must
conform in all respects

	

to name
of the Holder as specified on

	

the
face of the Warrant)

	
 

	
 

	

Registered
Holder

	
 

	
 

	

Address:

	
 

	
 

	

 

 _________________________________________________

	

 

 

ACKNOWLEDGMENT

The
Company hereby acknowledges this Exercise Notice.

 

___________________________________

By: Marco Hegyi, Chief Executive Officer

 

 

-13-

 

 

EXPIRATION DATE ACCELERATION NOTICE

 

TO: 

All
holders of Common Stock Warrants ("Warrants") of
GrowLife Inc. (the
"Company") issued pursuant to that certain Rights Offering of 2018
($0.018 exercise price) .

 

RE:            

ACCELERATION OF EXPIRATION DATE

 

You are hereby notified that the Expiration Date of the Warrants
has been accelerated to 5:00 p.m. Eastern Time on
[●], 201[●] [Insert date that is
30 days after the date that notice of acceleration is deemed to
have been given to warrant holders pursuant to Section 8 of the
Warrant Certificate] pursuant
to section 1(e) of the Warrant certificate. If you wish to exercise
your Warrants to acquire Common Stock shares of the Company you
must do so prior to 5:00 p.m. on [●], 201[●]. After such time the Warrants will expire and be
null and void.

 

For further information regarding the acceleration of the
Expiration Date and how to exercise Warrants,

 

Contact:

GrowLife,
Inc.

5400
Carillon Point

Kirkland,
WA 98033

Attn:
Secretary

Tel:
(866) 781-5559 or 206-483-0059

Investors@growlifeinc.com

 

	
 

	
 

	
 

	

GROWLIFE, INC.

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Marco Hegyi

Chief Executive Officer

	
 

	
 

	
 

 

 

 

-14-

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