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EXHIBIT 10.3

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE
TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR
SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH
SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.

 

PURSUANT TO THE TERMS OF SECTION 1 OF THIS WARRANT, ALL OR A
PORTION OF THIS WARRANT MAY HAVE BEEN EXERCISED, AND THEREFORE THE
ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT MAY BE
LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.

 

VISUALANT, INCORPORATED

 

Series F Warrant To Purchase Common Stock

 

Warrant No.:
[_____________]

Number
of Shares of Common Stock: [___________]

Date of
Issuance: [__________, 2017] (“Issuance
Date”)

Registered
Holder: [______________________]

 

Visualant, Incorporated, a corporation organized under the laws of
the State of Nevada (the “Company”), hereby certifies
that, for value received, [●], with an address at
[●], or its assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from
the Company at any time after the Issuance Date until 5:00 p.m.,
E.D.T. on the [five (5) year anniversary] of the Issue Date (the
“Expiration Date”), up to [●] fully paid and
non-assessable shares of the Company’s common stock, par
value $0.001 per share (the “Common Stock”) at a per
share purchase price of $0.70. The aforedescribed purchase price
per share, as adjusted from time to time as herein provided, is
referred to herein as the “Purchase Price.” The number
and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that
certain Subscription Agreement (the “Subscription Agreement”), of even date
herewith, entered into by the Company and Holder. This
Warrant is one of a series of warrants (collectively, the
“Warrants”)
containing substantially identical terms and conditions issued
pursuant to the Preferred Stock and Warrant Purchase Agreement
(collectively, the “Subscription
Agreement”).

 

1. EXERCISE
OF WARRANT.

 

 

1

 

 

(a) Mechanics of Exercise. Subject
to the terms and conditions hereof, this Warrant may be exercised
by the Holder on any day on or after the Issuance Date, in whole or
in part (but not as to fractional shares), by (i) delivery of a
written notice, in the form attached hereto as Exhibit A (the
“Exercise
Notice”), of the Holder’s election to exercise
this Warrant and (ii) if both (A) the Holder is not electing a
Cashless Exercise (as defined below) pursuant to Section 1(d) of
this Warrant and (B) a registration statement registering the
issuance of the Warrant Shares under the Securities Act of 1933, as
amended (the “Securities
Act”), is effective and available for the issuance of
the Warrant Shares, or an exemption from registration under the
Securities Act is available for the issuance of the Warrant Shares,
payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash
or wire transfer of immediately available funds (a
“Cash Exercise”)
(the items under (i) and (ii) above, the “Exercise Delivery Documents”). The
Holder shall not be required to surrender this Warrant in order to
effect an exercise hereunder; provided, however, that in the event
that this Warrant is exercised in full or for the remaining
unexercised portion hereof, the Holder shall deliver this Warrant
to the Company for cancellation within a reasonable time after such
exercise. On or before the first Trading Day following the date on
which the Company has received the Exercise Delivery Documents (the
date upon which the Company has received all of the Exercise
Delivery Documents, the “Exercise Date”), the Company shall
transmit by facsimile or e-mail transmission an acknowledgment of
confirmation of receipt of the Exercise Delivery Documents to the
Holder and the Company’s transfer agent for the Common Stock
(the “Transfer
Agent”). The Company shall deliver any objection to
the Exercise Delivery Documents on or before the second Trading Day
following the date on which the Company has received all of the
Exercise Delivery Documents. On or before the second Trading Day
following the date on which the Company has received all of the
Exercise Delivery Documents (the “Share Delivery Date”), the Company
shall, (X) provided
that the Transfer Agent is participating in The Depository Trust
Company (“DTC”)
Fast Automated Securities Transfer Program (the “FAST Program”) and so long as the
certificates therefor are not required to bear a legend regarding
restriction on transferability, 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 Agent Commission system, or (Y), if the Transfer
Agent is not participating in the FAST Program or if the
certificates are required to bear a legend regarding restriction on
transferability, 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 shares of Common Stock to
which the Holder is entitled pursuant to such exercise. Upon
delivery of the Exercise Delivery Documents, 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 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
three Trading Days after any such submission and at its own
expense, issue a new Warrant (in accordance with Section 7(e))
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 has been and/or is exercised. The Company shall pay any and
all taxes and other expenses of the Company (including overnight
delivery charges) that may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant;
provided,
however, that the
Company shall not be required to pay any tax which may be payable
in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than
that of the Holder or an affiliate thereof. The Holder shall be
responsible for all other tax liability that may arise as a result
of holding or transferring this Warrant or receiving Warrant Shares
upon exercise hereof.

 

 

2

 

 

(b) Exercise Price. For purposes of
this Warrant, “Exercise
Price” means $0.70 subject to adjustment as provided
herein.

 

(c) Company’s Failure to Timely
Deliver Securities. If the Company shall fail for any reason
or for no reason to issue to the Holder within three (3) Business
Days of the Exercise Date 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 balance account with DTC for such number
of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise of this Warrant, and if on or after such
Trading Day the Holder purchases, or another Person purchasers on
the Holder’s behalf or for the Holder’s account (in an
open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of shares of Common
Stock issuable upon such exercise that the Holder anticipated
receiving from the Company (a “Buy-In”), then the Company
shall, within three (3) Business Days after the Holder’s
written 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)
shall terminate, or (ii) promptly honor its obligation to deliver
to the Holder a certificate or certificates representing such
Warrant Shares 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 Closing Bid Price
on the date of exercise.

 

(d) Cashless Exercise.
Notwithstanding anything contained herein to the contrary, if at
any time after the Issuance Date a registration statement covering
the Warrant Shares that are the subject of the Exercise Notice (the
“Unavailable Warrant
Shares”) is not available for the resale of such
Unavailable Warrant Shares, the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company
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)

B

For
purposes of the foregoing formula:

 

A=

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

 

B=

the
volume weighted average price of the Closing Sale Prices of the
shares of Common Stock the date immediately preceding the date of
the Exercise Notice.

 

 

3

 

 

C=

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

 

(e) Rule 144. For purposes of Rule
144(d) promulgated under the Securities Act, as in effect on the
date hereof, assuming the Holder is not an affiliate of the
Company, it is intended that the Warrant Shares issued in a
Cashless Exercise shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was originally
issued pursuant to the Subscription Agreement.

 

(f) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the volume
weighted average price of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed.

 

(g) Beneficial Ownership. The
Company shall not effect the exercise of this Warrant, and the
Holder shall not have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, such Person
(together with such Person’s affiliates) would beneficially
own in excess of 4.99% (the “Maximum Percentage”) of the shares
of Common Stock outstanding immediately after giving effect to such
exercise. For purposes of the foregoing sentence, the aggregate
number of shares of Common Stock beneficially owned by such Person
and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (i) exercise of
the remaining, unexercised portion of this Warrant beneficially
owned by such Person and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other
securities of the Company beneficially owned by such Person and its
affiliates (including, without limitation, any convertible notes or
convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). For purposes of
this Warrant, in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in the most recent of (1) the
Company’s most recent Form 10-K, Form 10-Q, Current Report on
Form 8-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or
oral request of the Holder, the Company shall within two (2)
Business Days confirm to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. By written notice to the Company, the Holder may from
time to time increase or decrease the Maximum Percentage to any
other percentage not in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the
Company, and (ii) any such increase or decrease will apply only to
the Holder. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this Section 1(g) 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.

 

 

4

 

 

2. Adjustment
for Reorganization, Consolidation, Merger, etc.

 

(a) Adjustment upon Issuance of shares of
Common Stock. Until the
Expiration Date, if the Company shall issue any Common Stock,
except for Excepted Issuances, prior to the complete exercise of
this Warrant for a consideration less than the Purchase Price that
would be in effect at the time of such issuance, then, and
thereafter successively upon each such issuance, the Purchase Price
shall be reduced to such other lower price for then outstanding
Warrants. For purposes of this adjustment, the issuance of any
security or debt instrument of the Company carrying the right to
convert such security or debt instrument into Common Stock or of
any warrant to purchase Common Stock shall result in an adjustment
to the Purchase Price upon the issuance of the of the
above-described security, debt instrument, warrant, right, or
option if such security or debt instrument may be converted or
exercised at a price lower than the Purchase Price in effect upon
such issuance and again at any time upon any actual, permitted,
optional, or allowed issuances of shares of Common Stock upon any
actual, permitted, optional, or allowed exercise of such conversion
or purchase rights if such issuance is at a price lower than the
Purchase Price in effect upon any actual, permitted, optional, or
allowed such issuance. Common Stock issued or issuable by the
Company for no consideration will be deemed issuable or to have
been issued for $0.001 per share of Common
Stock.

 

(b) 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.

 

(c) Adjustment upon Subdivision or
Combination of Common Stock. If the Company at any time on
or after the Subscription Date subdivides (by any stock split,
stock dividend, recapitalization, reorganization, scheme,
arrangement 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 Subscription Date combines (by any stock split, stock dividend,
recapitalization, reorganization, scheme, arrangement 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(c) shall become
effective at the close of business on the date the subdivision or
combination becomes effective.

 

(d) Other Events. If any event
occurs of the type contemplated by the provisions of this Section 2
but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights or
phantom stock rights), then the Company’s Board of Directors
will make an appropriate adjustment in the Exercise Price and the
number of Warrant Shares so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 2(d) will
increase the Exercise Price or decrease the number of Warrant
Shares as otherwise determined pursuant to this Section
2.

 

 

5

 

 

3. RIGHTS UPON DISTRIBUTION OF
ASSETS.

 

(a) If the Company, at
any time while this Warrant is outstanding, shall distribute to all
holders of Common Stock (and not to the Holders) evidences of its
indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security other
than the Common Stock (including, without limitation, any
distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction),
then in each such case the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator
shall be the Weighted Average Price determined as of the record
date mentioned above, and of which the numerator shall be such
Weighted Average Price on such record date less the then per share
fair market value at such record date of the portion of such assets
or evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be
described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned
above.

 

4. PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.

 

(a) Purchase Rights.  In
addition to any adjustments pursuant to Section 2 above, if at any
time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class 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.

 

 

 

 

6

 

 

(b) Fundamental Transactions. The
Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing (unless
the Company is the Successor Entity) all of the obligations of the
Company under this Warrant and the other Transaction Documents in
accordance with the provisions of this Section (4)(b) pursuant to
written agreements in form and substance reasonably satisfactory to
the Required Holders and approved by the Required Holders prior to
such Fundamental Transaction, including agreements to deliver to
each holder of the Warrants in exchange for such Warrants a
security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant,
including, without limitation, an adjusted exercise price equal to
the value for the shares of Common Stock reflected by the terms of
such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of
Common Stock acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this
Warrant) prior to such Fundamental Transaction, and reasonably
satisfactory to the Required Holders. 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 Common Stock (or other
securities, cash, assets or other property) issuable upon the
exercise of the Warrant prior to such Fundamental Transaction, such
shares of the publicly traded common stock or common shares (or its
equivalent) of the Successor Entity (including its Parent Entity)
which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had this Warrant been
converted 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 insure that the Holder will
thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the Corporate Event
but prior to the Expiration Date, in lieu of shares of Common Stock
(or other securities, cash, assets or other property) purchasable
upon the exercise of this Warrant prior to such Corporate Event,
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 Corporate Event had this Warrant
been exercised immediately prior to such Corporate Event. Provision
made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Required Holders. The
provisions of this Section 4(b) shall apply similarly and equally
to successive Fundamental Transactions and Corporate Events and
shall be applied without regard to any limitations on the exercise
of this Warrant.

 

(c) Black Scholes Value.
Notwithstanding the foregoing and the provisions of Section 4(b)
above, in the event of the consummation of a Fundamental
Transaction that is (1) an all-cash transaction, (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the
Exchange Act or (3) a Fundamental Transaction involving a person or
entity not traded on an Eligible Market, at the request of the
Holder delivered at any time commencing on the earliest to occur of
(x) the public disclosure of the Fundamental Transaction or (y) the
consummation of the Fundamental Transaction, through the date that
is ninety (90) days after the public disclosure of the consummation
of such Fundamental Transaction by the Company pursuant to a
Current Report on Form 8-K filed with the SEC, the Company or the
Successor Entity (as the case may be) shall purchase this Warrant
from the Holder on the later of (i) the date of consummation of the
Fundamental Transaction and (ii) the fifth Trading Day following
the date of such request, in each case by paying to the Holder cash
in an amount equal to the Black Scholes Value.

 

(d) Applicability to Successive
Transactions. The provisions of this Section shall apply
similarly and equally to successive Fundamental Transactions and
Corporate Events and shall be applied without regard to any
limitations on the exercise of this Warrant.

 

 

7

 

 

5. 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 comply with all the provisions of this Warrant
and take all actions consistent with effectuating the purposes of
this Warrant. 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 nonassessable
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, 100% of the number of
shares of Common Stock issuable upon exercise of this Warrant then
outstanding (without regard to any limitations on
exercise).

 

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. REISSUANCE OF
WARRANTS.

 

(a) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company and deliver the completed and executed
Assignment Form, in the form attached hereto as Exhibit B, whereupon the
Company will forthwith issue and deliver upon the order of the
Holder a new Warrant (in accordance with Section 7(d)), registered
as the Holder may request, representing the right to purchase the
number of Warrant Shares being transferred by the 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 7(d)) to the 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 undertaking by the 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 Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares
then underlying this Warrant.

 

 

8

 

 

(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(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 Holder at the time of such
surrender; provided, however, that no Warrants for fractional
shares of Common Stock shall be given.

 

(d) Issuance of New Warrants.
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 7(a) 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) 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.

 

8. Stock to be Reserved. The
Corporation will at all times reserve and keep available out of its
authorized but unissued Common Stock solely for the purpose of
issuance upon exercise of this Warrant as herein provided, such
number of shares of Common Stock equal to two hundred percent
(200%) of the amount of Common Stock as shall then be issuable upon
the exercise of this Warrant. All shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid
and nonassessable and free from all liens, duties and charges
arising out of or by reason of the issue thereof (including,
without limitation, in respect of taxes) and, without limiting the
generality of the foregoing, the Corporation covenants that it will
from time to time take all such action as may be requisite to
assure that the par value per share of the Common Stock is at all
times equal to or less than the effective Exercise Price. The
Corporation will take all such action within its control as may be
necessary on its part to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or
regulation, or of any requirements of any national securities
exchange upon which the Common Stock of the Corporation may be
listed.

 

9. NOTICES. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with
Section 9.4 of the Subscription Agreement.

 

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 Required
Holders. Any such amendment shall apply to all Warrants and be
binding upon all registered holders of such Warrants.

 

 

9

 

 

11. GOVERNING
LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. This
Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the
choice of law provisions thereof. The Company and, by accepting
this Warrant, the Holder, each 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 Warrant
and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served
on each party hereto anywhere in the world by the same methods as
are specified for the giving of notices under this Warrant. The
Company and, by accepting this Warrant, the Holder, each
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. The Company and, by accepting this Warrant, the Holder, each
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 COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A
TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

 

12. 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.

 

13. 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
facsimile within two (2) Business 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 three Business Days of such disputed determination or
arithmetic calculation being submitted to the 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 Holder, which approval shall not be unreasonably
withheld, 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
Business Days from the time it receives the disputed determinations
or calculations. The prevailing party in any dispute resolved
pursuant to this Section 12 shall be entitled to the full amount of
all reasonable expenses, including all costs and fees paid or
incurred in good faith, in relation to the resolution of such
dispute. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

 

14. 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.

 

 

10

 

 

15. TRANSFER. Subject to applicable
laws, this Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company

 

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

 

(a) “Affiliate”, as applied to any
Person, means any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person. For the
purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”,
“controlled by” and “under common control
with”), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or
otherwise.

 

(b) “Approved Stock Plan” means any
employee benefit plan or other issuance, employment agreement or
option grant or similar agreement which has been approved by the
Board of Directors of the Company, pursuant to which the
Company’s securities may be issued to any employee,
consultant, officer or director for services provided to the
Company.

 

(c) “Black Scholes Value” means the
value of the unexercised portion of this Warrant remaining on the
date of the Holder’s request pursuant to Section 4(c), which
value is calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing
(i) an underlying price per share equal to the greater of (1) the
highest Closing Sale Price of the Common Stock during the period
beginning on the Trading Day immediately preceding the earlier to
occur of (x) the public disclosure of the applicable Fundamental
Transaction or (y) the consummation of the applicable Fundamental
Transaction and ending on the Trading Day of the consummation of
the Fundamental Transaction and (2) the sum of the price per share
being offered in cash in the applicable Fundamental Transaction (if
any) plus the value of the non-cash consideration being offered in
the applicable Fundamental Transaction (if any), (ii) a strike
price equal to the Exercise Price in effect on the date of the
Holder’s request pursuant to Section 4(c), (iii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the greater of (1) the remaining term of this Warrant as
of the date of the Holder’s request pursuant to Section 4(c)
and (2) the remaining term of this Warrant as of the date of
consummation of the applicable Fundamental Transaction or as of the
date of the Holder’s request pursuant to Section 4(c) if such
request is prior to the date of the consummation of the applicable
Fundamental Transaction and (iv) an expected volatility equal to
the greater of 100% and the 100 day volatility obtained from the
HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following
the public disclosure of the applicable Fundamental
Transaction.

 

(d) “Bloomberg” means Bloomberg
Financial Markets.

 

 

11

 

 

(e) “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.

 

(f) “Closing Bid Price” and
“Closing Sale
Price” means, for any security as of any date, the
last closing bid price and last closing 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 Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). 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. All such determinations to be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.

 

(g) “Common Stock” means
(i) the Company’s shares of Common Stock, par value
$0.001 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.

 

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

 

(i) “Eligible Market” means the
Principal Market, The New York Stock Exchange, Inc., The NYSE MKT,
The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ
Global Select Market.

 

(j)  “Excepted Issuance” means:
Excepted Issuances means: (i) the
Company’s issuance of Common Stock in full or partial
consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or
assets of a corporation or other entity, so long as such issuances
are not for the purpose of raising capital and which holders of
such securities or debt are not at any time granted registration
rights, (ii) the Company’s issuance of Common Stock or the
issuances or grants of Options to purchase Common Stock to
employees, directors, and consultants, pursuant to Approved Stock
Plans at or above Fair Market Value, (iii) securities upon the
exercise or exchange of or conversion of any securities exercisable
or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Warrant and pursuant to
terms and conditions that have not been amended since the date
hereof, and (iv) issuance of Common Stock as a result of the
exercise of this Warrant.

 

 

12

 

 

(k) “Fundamental Transaction”
means that 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 (but excluding a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the
Company), 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 to
make a purchase, tender or exchange offer that is accepted by the
holders of more than the 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), (v) reorganize, recapitalize or
reclassify its Common Stock, or (vi) 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.

 

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

 

(m) “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.

 

(n) “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.

 

(o) “Principal Market” means the
OTCQB.

 

(p) “Registration Rights
Agreement” means the Registration Rights Agreement, in
the form of Exhibit
C to the Subscription Agreement, entered into by the Company
and the original Holders pursuant to the Subscription
Agreement.

 

(q) “Required Holders” means, as
of any date, the holders of at least a 85% of the Warrants
outstanding as of such date.

 

 

13

 

 

(r) “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.

 

(s) “Trading Day” means any day
on which the Common Stock are 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 are then traded;
provided that
“Trading Day” shall not include any day on which the
Common Stock are scheduled to trade on such exchange or market for
less than 4.5 hours or any day that the Common Stock are 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).

 

(t) “Weighted Average Price”
means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market during the
period beginning at 9:30:01 a.m., New York time (or such other time
as the Principal Market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other
time as the Principal Market publicly announces is the official
close of trading), 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 time (or such other time as the Principal Market
publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York time (or such other time as the Principal
Market publicly announces is the official close of trading), 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
on the Over the Counter Marketplace. If the Weighted Average Price
cannot be calculated for a security on a particular 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 12 with the term
“Weighted Average Price” being substituted for the term
“Exercise Price.” All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable
calculation period.

 

 [Signature Page Follows]

 

 

 

 

 

 

 

 

14

 

 

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.

 

 

	

 

	
VISUALANT,
INCORPORATED

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
 

	

 

	

 

	

Name:
Ronald P. Erickson

	

 

	

 

	

Title:
President and Chief Executive Officer 

	

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

  EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS

WARRANT TO PURCHASE COMMON STOCK

 

VISUALANT, INCORPORATED

 

The
undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock (“Warrant Shares”) of
Visualant, Incorporated, a Nevada 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.
Form of Exercise
Price. The Holder intends that payment of the Exercise Price
shall be made as:

 

____________ 

a
“Cash
Exercise” with respect to _________________ Warrant
Shares; and/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 and,
after delivery of such Warrant Shares, _____________ Warrant Shares
remain subject to the Warrant.

 

Date:
_______________ __, ______

 

 

______________________________

   Name
of Registered Holder

 

 

By:        
__________________________

Name:

Title:

 

A-1

 

  EXHIBIT B

 

ASSIGNMENT FORM

 

VISUALANT, INCORPORATED

 

(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)

 

FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

 

	

Name:

	
__________________________________________

	
 

	

(Please
Print)

 

	

Address:

	
__________________________________________

	
 

	

(Please
Print)

 

	

Dated:
_______________ __, ______

 

	
 

	

Holder’s
Signature:                                                                 

 

	
 

	

Holder’s
Address:                                                                 

 

	
 

NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing
Warrant.

 

 

 

 

 

B-1Blueprint

EXHIBIT 10-4

 

AMENDED
AND RESTATED

 

CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS

 

OF

 

SERIES
D CONVERTIBLE PREFERRED STOCK

 

OF

 

VISUALANT,
INCORPORATED

 

 

(Pursuant
to Section NRS 78.1955 of the

Nevada
Corporations Code)

 

Visualant,
Incorporated, a corporation organized and existing under the laws
of the State of Nevada (the “Corporation”), hereby
certifies that, pursuant to authority vested in the Board of
Directors of the Corporation by Article 4.3 of the Certificate of
Incorporation of the Corporation, the following resolutions were
adopted on _________________, 2017 by the Board of Directors of the
Corporation (the “Board”) pursuant to Section
NRS 78.1955 of the Nevada Corporations Code:

 

“RESOLVED
that, pursuant to authority vested in the Board of Directors of the
Corporation by Article 4.3 of the Corporation’s Certificate
of Incorporation, out of the total authorized number of 5,000,000
shares of preferred stock, par value $0.001 per share (the
“Preferred Stock”), there shall be designated a series
of up to 3,906,250 shares which shall be issued in and constitute a
single series to be known as “Series D Convertible Preferred
Stock” (hereinafter called the “Series D
Preferred”). This Amended and Restated Certificate of
Designation supersedes and replaces the Certificate of Designation
filed with the Nevada Secretary of State on November 8, 2016. The
shares of Series D Preferred shall have the voting powers,
designations, preferences and other special rights, and the
qualifications, limitations and restrictions thereof, set forth
below:

 

1.        
Certain
Definitions.

 

As used
in this Amended and Restated Certificate of Designations,
Preferences and Rights of Series D Preferred of the Corporation
(the “Certification of Designations”), the following
terms shall have the respective meanings set forth
below:

 

“Affiliate”, as applied to
any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms
“controlling”, “controlled by” and
“under common control with”), as applied to any Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or
by contract or otherwise.

 

 

1

 

 

“Approved Stock Plan”
means any employee benefit plan, equity incentive plan or other
issuance, employment agreement or option grant or similar agreement
which has been approved by the Board, pursuant to which the
Corporation’s securities may be issued to any employee,
consultant, officer or director for services provided to the
Corporation.

 

“Bloomberg” means
Bloomberg Financial Markets.

 

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

 

“Common Stock” means the
common stock, par value $0.001 per share, of the Corporation,
including the stock into which the Series D Preferred Stock is
convertible, and any securities into which the Common Stock may be
reclassified.

 

“Conversion Price” means
$0.70, subject to adjustment as provided herein.

 

“Conversion Shares” means
the shares of Common Stock into which the Series D Preferred Stock
is convertible.

 

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

 

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

 

“Excepted Issuance” means:
(i) Corporation’s issuance of Common Stock in full or partial
consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or
assets of a corporation or other entity, so long as such issuances
are not for the purpose of raising capital and which holders of
such securities or debt are not at any time granted registration
rights, (ii) the Corporation’s issuance of Common Stock or
the issuances or grants of options to purchase Common Stock to
employees, directors, and consultants, pursuant to an Approved
Stock plan at or above Fair Market Value, (iii) securities upon the
exercise, exchange or
conversion of any securities exercisable, exchangeable for or convertible into
shares of Common Stock issued and outstanding as of the date hereof
and pursuant to terms and conditions that have not been amended
since the date hereof.

 

 “Fair Market
Value” means of Common
Stock or Options to purchase Common Stock on any given date means
the fair market value of such Common Stock or Options to purchase
Common Stock as determined in good faith by the committee which
serves as administrator of the Corporation’s Approved Stock
Plan, or in the absence of such committee, the Board of Directors,
based on the reasonable application of a reasonable valuation
method that is consistent with Section 409A of the Code. If the
Common Stock is admitted to trade on a national securities exchange
or quotation system such as the Over the Counter Market Place, the
determination shall be made by reference to the closing price
reported on such exchange or quotation system.  If there is no
closing price for such date, the determination shall be made by
reference to the last date preceding such date for which there is a
closing price.

 

 

2

 

 

“Holder” or
“Holders” means the holder
or holders of the Series D Preferred Stock.

 

“Junior Securities” means
the Common Stock and all other Common Stock Equivalents of the
Corporation other than those securities which are explicitly senior
or pari passu to the Series D Preferred in dividend rights or
liquidation preference.

 

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

 

“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.

 

“Principal Market” means
the OTCQB.

 

“Required Holders” means,
as of any date, the holders of at least 85% of the Series D
Preferred Stock outstanding as of such date.

 

“Senior Securities” means
the Company’s Series A Convertible Preferred Stock and Series
C Convertible Preferred Stock and any other securities which are
explicitly senior or pari passu to the Series D Preferred Stock in
dividend rights or liquidation preference.

 

“Series D Stated Value”
means $0.70.

 

“Subscription
Agreement” means any one of a series of certain
Preferred Stock and Warrant Purchase Agreements by and among the
Corporation and each of the investors party thereto.

 

“Trading Day” means any
day on which the Common Stock are 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 are then traded;
provided that “Trading Day” shall not include any day
on which the Common Stock are scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock
are 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).

 

 

3

 

 

“Weighted Average Price”
means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market during the
period beginning at 9:30:01 a.m., New York time (or such other time
as the Principal Market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other
time as the Principal Market publicly announces is the official
close of trading), 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 marketplace for such security
during the period beginning at 9:30:01 a.m., New York time (or such
other time as the Principal Market publicly announces is the
official open of trading), and ending at 4:00:00 p.m., New York
time (or such other time as the Principal Market publicly announces
is the official close of trading), 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 OTC Markets LLC. If the Weighted Average Price
cannot be calculated for a security on a particular 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 Corporation and the Holder. If the Corporation and the Holder
are unable to agree upon the fair market value of such security,
then such dispute shall be resolved by an independent nationally
recognized accounting firm chosen by mutual agreement of the
parties. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other
similar transaction during the applicable calculation
period.

 

2.       
Dividends.
Commencing on the date of the issuance of any such shares of Series
D Preferred (each respectively an “Issuance Date”),
each outstanding share of Series D Preferred will accrue cumulative
dividends (“Dividends”), at a rate equal to 8.0% per
annum, subject to adjustment as provided in this Amended and
Restated Certificate of Designations (“Dividend Rate”),
of the Series D Stated Value. Dividends will be payable with
respect to any shares of Series D Preferred Stock upon any of the
following: (a) upon conversion of such shares in accordance with
Section 4 and (b) when, as and if otherwise declared by the Board
of Directors of the Corporation. In the event that the Corporation
shall at any time pay a dividend on the Common Stock (other than a
dividend payable solely in shares of Common Stock) or any other
class or series of capital stock of the Corporation, the
Corporation shall, at the same time, pay to each holder of Series D
Preferred a dividend equal to the dividend that would have been
payable to such holder if the shares of Series D Preferred held by
such holder had been converted into Common Stock on the date of
determination of holders of Common Stock entitled to receive such
dividends without regard to the limitations set forth in Section
4(e).

 

3.         
Liquidation. Upon
any liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary (a “Liquidation”),
after the satisfaction in full of the debts of the Corporation and
the payment of any liquidation preference owed to the holders of
Senior Securities, the Holders of the Series D Preferred shall be
senior to the Common Stock in dividend rights or liquidation
preference and any class of Preferred created thereafter, unless
specifically stated otherwise (on an as-converted basis) in the net
assets of the Corporation. Neither the consolidation nor merger of
the Corporation into or with any other entity or entities nor the
consolidation or merger of any entity or entities into the
Corporation shall be deemed to be a liquidation within the meaning
of this Section 3, but the sale, lease or conveyance of all or
substantially all the Corporation’s assets shall be deemed a
liquidation within the meaning of this Section 3.

 

 

4

 

 

4.          
Conversion.

 

(a)           
Voluntary
Conversion. Subject to the terms and conditions of this
Section 4, the Holder of any shares of Series D Preferred shall
have the right, at its option at any time, to convert any such
shares of Series D Preferred into such number of fully paid and
nonassessable whole shares of Common Stock as is obtained by
multiplying the number of shares of Series D Preferred so to be
converted by the Series D Stated Value and dividing the result by
the Conversion Price then in effect. Each holder of Series D
Preferred who desires to convert the same into shares of Common
Stock shall provide notice to the Corporation, by mail, fax, or
electronic mail to the Corporation’s then principal office,
of a written notice of conversion (“Conversion
Notice”). Each Conversion Notice shall specify the number of
shares of Series D Preferred to be converted and the date on which
such conversion is to be effected, which date may not be prior to
the date the Holder delivers by facsimile such Conversion Notice to
the Corporation (the “Conversion Date”). If no
Conversion Date is specified in a Conversion Notice, the Conversion
Date shall be the date that such Conversion Notice to the
Corporation is deemed delivered hereunder. The calculations and
entries set forth in the Conversion Notice shall control in the
absence of manifest or mathematical error. To effect conversions,
as the case may be, of shares of Series D Preferred, a Holder shall
not be required to surrender the certificate(s) representing such
shares of Series D Preferred to the Corporation unless all of the
shares of Series D Preferred represented thereby are so converted,
in which case the Holder shall deliver the certificate representing
such shares of Series D Preferred promptly following the applicable
Conversion Date. Shares of Series D Preferred converted into Common
Stock in accordance with the terms hereof shall be canceled and
shall not be reissued.

 

(b)           
Mandatory
Conversion. The Series D Preferred will automatically
convert (“Automatic Conversion”) upon (i) the listing
of the Company’s common stock on the Nasdaq, the New York
Stock Exchange, or the NYSE MKT. Upon the triggering of Automatic
Conversion, the Company shall send written notice (the
“Automatic Conversion Notice”) to each holder of record
of Series D Preferred specifying the date (the “Effective
Date”) upon which such conversion is to become effective
(which Effective Date shall not be more than thirty (30) days after
the event which causes such Automatic Conversion). On or after the
Effective Date, each holder of Series D Preferred shall surrender
to the Company the certificate or certificates representing the
Series D Preferred owned by such holder as of the Effective Date in
the manner and place set forth in the Automatic Conversion Notice
and thereupon the Company shall, as soon as practicable thereafter,
issue and deliver to the holders of the Series D Preferred
certificate(s) for the number of shares of Common Stock issuable in
connection with such Automatic Conversion ; (ii) the Conversion
Shares are eligible to be sold without restriction pursuant to
Securities and Exchange Commission (“SEC”) Rule 144 or
a registration statement registering the Conversion Shares for
resale has been declared effective by the SEC and remains effective
at the time of conversion; and (iii) the average Weighted Average
Price of the Common Stock is at least three (3) times the
Conversion Price then in effect for 20 consecutive trading days
with average daily trading volume during such period, as reported
by Bloomberg, equal to or greater than $200,000 (the “Average
Daily Trading Volume Amount”). The Corporation shall exercise
its rights under this Section 4(b) by providing a Conversion notice
to any or all Holders consistent with Section 4(a) above.
Notwithstanding the foregoing, in no
event shall the Holder be entitled to convert the Series D in
excess of the number of shares of Common Stock issuable upon the
conversion that would result in beneficial ownership by the Holder
of more than4.99% of the outstanding shares of Common Stock at the
time of such conversion.

 

 

5

 

 

(c)           Conversion
Mechanics. Within three (3) Trading Days after the
Conversion Date, the Corporation shall pay to the Holder in cash
any accrued and unpaid dividends on the shares of Series D
Preferred so converted and shall issue and deliver, or cause to be
issued and delivered, to the Holder, registered in such name or
names (with address and tax identification number) as such Holder
may direct, subject to compliance with applicable laws to the
extent such designation shall involve a transfer, a certificate or
certificates for the number of whole shares of Common Stock
issuable upon the conversion of such share or shares, or fraction
thereof, of Series D Preferred.

 

(d)           Failure
to Convert. If the Corporation shall fail for any reason or
no reason to issue to a Holder of Series D Preferred a certificate
representing the Conversion Shares within three (3) Trading Days of
the Conversion Date and register such shares of Common Stock on the
Corporation’s share register or to credit the Holder’s
balance account with the Depository Trust Corporation for such
number of shares of Common Stock to which the Holder is entitled
upon such conversion, and if on or after such Trading Day the
Holder purchases, or another Person purchases on the Holder’s
behalf or for the Holder’s account (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such conversion that the Holder anticipated receiving
from the Corporation (a “Buy-In”), then the Corporation
shall, within three (3) Business Days after the Holder’s
written request and in the Holder’s discretion, (i) pay in
cash to the Holder the amount, if any, by which (A) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (B) the amount obtained by multiplying (x) the number of
shares of Common Stock that the Corporation was required to deliver
to the Holder in connection with the conversion at issue by (y) the
price at which the sell order giving rise to such purchase
obligation was executed or (ii) at the option of the Holder, either
reissue (if surrendered) the shares or fraction of a share of
Series D Preferred equal to the number of shares or fraction of a
share of Series D Preferred Stock submitted for conversion (in
which case such conversion shall be deemed rescinded) or deliver to
such holder the number of shares of Common Stock that would have
been issued if the Corporation had timely complied with its
delivery requires under Section 4(c). The Holder shall provide
the Corporation written notice indicating the amounts payable to
the Holder in respect of the Buy-In and, upon request of the
Corporation, evidence of the amount of such loss.

 

 

 

 

6

 

 

(e)           
Fractional Shares.
No fractional shares of Common Stock shall be issued upon
conversion of the Series D Preferred into Common Stock. In the
event a fractional share of Common Stock would be issued on
conversion, the number of shares of Common Stock to be issued shall
be rounded down to the nearest whole share.

 

(f)           
Issue Limitation.
The Corporation shall not effect a conversion of the Series D
Preferred, and the Holder of any shares of Series D Preferred shall
not have the right to voluntarily convert its shares of Series D
Preferred, to the extent that after giving effect to such exercise,
such Person (together with such Person’s Affiliates) would
beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the shares of Common Stock outstanding
immediately after giving effect to such conversion. For purposes of
the foregoing sentence, the aggregate number of shares of Common
Stock beneficially owned by such Person and its affiliates shall
include the number of shares of Common Stock issuable upon the
conversion of the shares of Series D Preferred with respect to
which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (i)
conversion of the remaining, unconverted shares of Series D
Preferred beneficially owned by such Person and its Affiliates and
(ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Corporation beneficially
owned by such Person and its Affiliates (including, without
limitation, any convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth
in the preceding sentence, for purposes of this paragraph,
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act. For purposes hereof, in determining the
number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as reflected in
the most recent of (1) the Corporation’s most recent Form
10-K, Form 10-Q, Current Report on Form 8-K or other public filing
with the Securities and Exchange Commission, as the case may be,
(2) a more recent public announcement by the Corporation or (3) any
other notice by the Corporation or the Corporation’s transfer
agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral
request of the Holder, the Corporation shall within two (2)
Business Days confirm 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 Corporation,
including shares of Series D Preferred, by the Holder and its
Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. By written notice to the
Corporation, the Holder may from time to time increase or decrease
the Maximum Percentage to any other percentage not less than 4.99%
and not in excess of 9.99% specified in such notice; provided that
(i) any such increase or decrease will not be effective until the
sixty-first (61st) day after such notice is delivered to the
Corporation, and (ii) any such increase or decrease will apply only
to the Holder. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity
with the terms of this Section 4(f) 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.

 

 

7

 

 

5.           
Adjustment of Conversion
Price. The Conversion Price and the number of Conversion
Shares shall be adjusted from time to time as follows:

 

(a)           
In case the Corporation shall at any time (A) declare any dividend
or distribution on its Common Stock or other securities of the
Corporation other than the Series D Preferred, (B) split or
subdivide the outstanding Common Stock, (C) combine the outstanding
Common Stock into a smaller number of shares, or (D) issue by
reclassification of its Common Stock any shares or other securities
of the Corporation, then in each such event the Conversion Price
shall be adjusted proportionately so that the Holders of Series D
Preferred shall be entitled to receive the kind and number of
shares or other securities of the Corporation which such Holders
would have owned or have been entitled to receive after the
happening of any of the events described above had such shares of
Series D Preferred been converted immediately prior to the
happening of such event (or any record date with respect thereto).
Such adjustment shall be made whenever any of the events listed
above shall occur. An adjustment made to the Conversion Price
pursuant to this paragraph 5(a) shall become effective immediately
after the effective date of the event.

 

(b)           For
so long as Series D Preferred is outstanding, if the Corporation
issues shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock, except for Excepted
Issuances, for a consideration at a price per share, or having a
conversion, exchange or exercise price per share less than the
Conversion Price of the Series D Preferred immediately in effect
prior to such sale or issuance, then immediately prior to such sale
or issuance the Conversion Price of the Series D Preferred shall be
reduced to such other lower price. For purposes of this adjustment,
the issuance of any security carrying the right to convert such
security directly or indirectly into shares of Common Stock or of
any warrant, right or option to purchase Common Stock shall result
in an adjustment to the Conversion Price upon the issuance of the
above-described security and again upon the issuance of shares of
Common Stock upon exercise of such conversion or purchase rights if
such issuance is at a price lower than the then applicable
Conversion Price. Common Stock issued or issuable by the
Corporation for no consideration or for consideration that cannot
be determined at the time of issue will be deemed issuable or to
have been issued for $0.001 per share of Common Stock. The
reduction of the Conversion Price described in this paragraph is in
addition to other rights of the Holder described in this Amended
and Restated Certificate of Designations and the Subscription
Agreement.

 

6.           Rights
Upon Distribution of Assets.

 

 

 

8

 

 

(a)           If
the Corporation shall distribute to all holders of Common Stock
(and not to the Holders) evidences of its indebtedness or assets
(including cash and cash dividends) or rights or warrants to
subscribe for or purchase any security other than the Common Stock
(including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction), then in each such case
the Conversion Price shall be adjusted by multiplying the
Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the
Weighted Average Price determined as of the record date mentioned
above, and of which the numerator shall be such Weighted Average
Price on such record date less the then per share fair market value
at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of
the Common Stock as determined by the Board in good faith. In
either case the adjustments shall be described in a statement
provided to the Holder of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable
to one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

 

7.           Purchase
Rights. In addition to any adjustments pursuant to Section 5
above, if at any time the Corporation grants, issues or sells any
Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class 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 conversion of the Holder’s Series D Preferred
(without regard to any limitations on the conversion thereof)
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.

 

8.           Notices.
Upon any adjustment of the Conversion Price, then, and in each such
case the Corporation shall give written notice thereof by first
class mail, postage prepaid, addressed to each Holder of Series D
Preferred at the address of such holder as shown on the books of
the Corporation, which notice shall state the Conversion Price
resulting from such adjustment, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation
is based. In addition, in case at any time:

 

(1) the
Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the
holders of its Common Stock;

 

(2) the
Corporation shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of such stock of any class
or other rights;

 

(3)
there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger
of the Corporation with, or a sale of all or substantially all its
assets to, another corporation; or

 

(4)
there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;

 

 

9

 

 

then,
in any one or more of said cases, the Corporation shall give, by
first class mail, postage prepaid, addressed to each holder of any
shares of Series D Preferred at the address of such holder as shown
on the books of the Corporation, (a) at least fifteen (15) days
prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least fifteen (15) days
prior written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock
shall be entitled thereto, and such notice in accordance with the
foregoing clause (b) shall also specify the date on which the
holders of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may
be.

 

9.        
Stock to be
Reserved. The Corporation will at all times reserve and keep
available out of its authorized but unissued Common Stock solely
for the purpose of issuance upon the conversion of the Series D
Preferred as herein provided, such number of shares of Common Stock
equal to two hundred percent (200%) of the amount of Common Stock
as shall then be issuable upon the conversion of all outstanding
shares or fractions of shares of Series D Preferred. All shares of
Common Stock which shall be so issued shall be duly and validly
issued and fully paid and nonassessable and free from all liens,
duties and charges arising out of or by reason of the issue thereof
(including, without limitation, in respect of taxes) and, without
limiting the generality of the foregoing, the Corporation covenants
that it will from time to time take all such action as may be
requisite to assure that the par value per share of the Common
Stock is at all times equal to or less than the effective
Conversion Price. The Corporation will take all such action within
its control as may be necessary on its part to assure that all such
shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirements of any
national securities exchange upon which the Common Stock of the
Corporation may be listed. The Corporation will not take any action
which results in any adjustment of the Conversion Price if after
such action the total number of shares of Common Stock issued and
outstanding and thereafter issuable upon exercise of all Options
and conversion of Convertible Securities, including upon conversion
of the Series D Preferred, would exceed the total number of shares
of such class of Common Stock then authorized by the
Corporation’s Certificate of Incorporation.

 

10.         
Effect of Reacquisition of
Shares Upon Redemption, Repurchase, Conversion or Otherwise.
Shares of Series D Preferred that have been issued and reacquired
in any manner, whether by redemption, repurchase or otherwise or
upon any conversion of shares of Series D Preferred to Common
Stock, shall thereupon be retired and shall have the status of
authorized and unissued shares of Preferred undesignated as to
series, and may be redesignated as any series of Preferred Stock
and reissued.

 

11.         
Issue Tax. The
issuance of certificates for shares of Common Stock upon conversion
of the Series D Preferred shall be made without charge to the
holders thereof for any issuance tax, stamp tax, transfer tax, duty
or charge in respect thereof, provided that the Corporation shall
not be required to pay any tax, duty or charge which may be payable
in respect of any transfer involved in the issuance and delivery of
any certificate in a name other than that of the holder of the
Series D Preferred which is being converted.

 

 

10

 

 

12.          
Closing of Books.
The Corporation will at no time close its transfer books against
the transfer of any Series D Preferred or of any shares of Common
Stock issued or issuable upon the conversion of any shares of
Series D Preferred in any manner which interferes with the timely
conversion of such Series D Preferred; provided, however, nothing
herein shall be construed to prevent the Corporation from setting
record dates for the holders of its securities.

 

13.          
Voting. In addition
to any class voting rights provided by law and this Amended and
Restated Certificate of Designation, the Holders of Series D
Preferred shall have the right to vote together with the holders of
Common Stock as a single class on any matter on which the holders
of Common Stock are entitled to vote (including the election of
directors). With respect to the voting rights of the Holders of the
Series D Preferred pursuant to the preceding sentence, each Holder
of Series D Preferred shall be entitled to cast one vote for each
share of Common Stock that would be issuable to such Holder upon
the conversion of all the shares of Series D Preferred Stock held
by such Holder (after giving effect to the restrictions of Section
4(e)) on the record date for the determination of stockholders
entitled to vote.

 

14.           
Certain
Restrictions. In addition to any other vote of the Holders
of Series D Preferred Stock required by law or by the Certificate
of Incorporation, without the prior consent of the Required Holders
holding at least 75% of the Series D Preferred Stock then
outstanding, given in person or by proxy, either in writing or at a
special meeting called for that purpose, at which meeting the
holders of the shares of such Series D Preferred Stock shall vote
together as a class, the Corporation will not:

 

(a)           authorize,
create, designate, establish or issue (whether by merger or
otherwise) (i) an increased number of shares of Series D Preferred
Stock or (ii) any other class or series of capital stock ranking
senior to or on parity with the Series D Preferred Stock as to any
preference, including not limited to dividends or upon liquidation
or reclassify any shares of Common Stock into shares having any
preference or priority as to dividends or upon liquidation superior
to or on parity with any such preference or priority of Series D
Preferred Stock or reclassify any shares of Common Stock or any
other class or series of capital stock into shares having any
preference or priority as to dividends or upon liquidation superior
to or on parity with any such preference or priority of Series D
Preferred Stock;

 

(b)           adopt
a plan for the liquidation, dissolution or winding up of the
affairs of the Corporation or any recapitalization plan (whether
occurring by merger, consolidation or otherwise), file any petition
seeking protection under any federal or state bankruptcy or
insolvency law or make a general assignment for the benefit of
creditors;

 

 

11

 

 

(c)           amend,
alter or repeal, whether by merger, consolidation or otherwise, the
Certificate of Incorporation or Bylaws of the Corporation or the
Resolutions contained in this Amended and Restated Certificate of
Designations of the Series D Preferred Stock and the powers,
preferences, privileges, relative, participating, optional and
other special rights and qualifications, limitations and
restrictions thereof, which would adversely affect any right,
preference, privilege or voting power of the Series D Preferred
Stock, or which would increase or decrease the amount of authorized
shares of the Series D Preferred Stock or of any other series of
preferred stock ranking senior to the Series D Preferred Stock,
with respect to the payment of dividends (whether or not such
series of preferred stock is cumulative or noncumulative as to
payment of dividends) or upon liquidation;

 

(d)           directly
or indirectly, declare or pay any dividend (other than dividends
permitted pursuant to Section 2 and dividends payable in shares of
Common Stock but only to the extent that such stock dividend
results in an adjustment of the Conversion Price pursuant to
Section 5 hereof) or directly or indirectly purchase, redeem,
repurchase or otherwise acquire or permit any Subsidiary to redeem,
purchase, repurchase or otherwise acquire (or make any payment to a
sinking fund for such redemption, purchase, repurchase or other
acquisition) any share of Common Stock, Option or Convertible
Security or any other class or series of the Corporation’s
capital stock (except for the shares of Series D Preferred Stock in
accordance with Section 15 hereof or for shares of Common
Stock repurchased from current of former employees, consultants, or
directors upon termination of service in accordance with plans
approved by the Board) whether in cash, securities or property or
in obligations of the Corporation or any Subsidiary;

 

(e)           
enter into a Variable Rate Transaction (as defined below), or issue
any secured or unsecured debt securities. “Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into
any agreement, including, but not limited to, an equity line of
credit, whereby the Company may sell securities at a future
determined price; or

 

(f)           agree
to do any of the foregoing.

 

15.         
Redemption. The
Series D Preferred Stock shall not be redeemable at the option of
the Corporation.

 

16.         
No Waiver. Except
as otherwise modified or provided for herein, the Holders of Series
D Preferred Stock shall also be entitled to, and shall not be
deemed to have waived, any other applicable rights granted to such
holders under the Nevada Corporations Code.

 

 

12

 

 

17.          
No Impairment. The
Corporation will not, through any reorganization, transfer of
assets, consolidation, merger scheme or 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 to
be observed or performed hereunder by the Corporation but will at
all time in good faith assist in the carrying out of all the
provisions herein and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights
and liquidation preferences granted hereunder of the holders of the
Series D Preferred Stock against impairment. Without limiting the
generality of the foregoing, the Corporation (i) shall not increase
the par value of any shares of Common Stock receivable upon
conversion of the Series D Preferred Stock above the Conversion
Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Corporation may validly
and legally issue fully paid and non-assessable shares of Common
Stock upon conversion of the Series D Preferred Stock, and (iii)
shall, so long as any shares or fraction of a share of Series D
Preferred stock remain 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
conversion of the Series D Preferred Stock, 100% of the number of
shares of Common Stock issuable upon conversion of the Series D
Preferred Stock then outstanding (without regard to any limitations
on conversion).

 

18.
           No Preemptive Rights. No Holder
of any shares of Series D Preferred Stock shall have any preemptive
right to subscribe to any issue of the same or other capital stock
of the Corporation.

 

19.          
Amendment; Waiver.
Any term of the Series D Preferred Stock may be amended or waived
(including the adjustment provisions included in Section 5 hereof)
upon the written consent of the Corporation and the Holders of at
least 85% of the Series D Preferred Stock then outstanding;
provided, however, that the number of Conversion Shares issuable
hereunder and the Conversion Price may not be amended, and the
right to convert the Series D Preferred Stock may not be altered or
waived, without the written consent of the holders of all of the
Series D Preferred Stock then outstanding.

 

20.          
Action By Holders.
Any action or consent to be taken or given by the holders of the
Series D Preferred Stock may be given either at a meeting of the
Holders of the Series D Preferred Stock called and held for such
purpose or by written consent.

 

 

 

 

 

 

 

13

 

 

IN
WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Designations, Preferences and Rights this
_________ day of _______________, 2017.

 

 

	
 

	

VISUALANT,
INCORPORATED

 

 

 

By:
_____________________

Name:
Ronald P. Erickson

Title:
President and Chief Executive Officer

  

	
 

	
 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE
PAGE TO VISUALANT, INCORPORATED CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS]

 

14

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