Document:

exhibit_10-5.htm

Exhibit 10.5

 

THIS CONVERTIBLE PROMISSORY NOTE AND ANY SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

 

 

 

FORM OF SUBORDINATED CONVERTIBLE PROMISSORY NOTE

 

	
Note No. 2015 

	
November __, 2015

	
$_____ 

	
Seattle, Washington

FOR VALUE RECEIVED, Visualant incorporated, a Nevada corporation (the “Company” or “Borrower”) promises to pay to _______________________Holder”), or Holder’s permitted assigns, the principal sum of _______________ Thousand and no/100 Dollars (USD $___________), together with simple interest thereon from the date of this Note until paid in full, at a rate of eight percent (8%) per annum based on a 365-day year.  Interest payments of the accrued interest on the unpaid principal amount shall be due and payable annually on each anniversary date of this Note, or accrued until maturity at the Borrowers discretion, but, in any event, interest due shall be calculated and communicated to the Holder quarterly.

 

This Subordinated Convertible Promissory Note (this “Note”) is one of a series of Convertible Promissory Notes (together with this Note, the “Notes”) having serial numbers “2015 A-1” et seq., with an aggregate principal amount not to exceed $1,000,000, issued by the Company in accordance with the terms of that certain Note and Warrant Purchase Agreement dated ________, 2015 (the “Purchase Agreement”), by and among the Company, Holder and the other parties named therein.  The Notes shall rank equally without preference or priority of any kind over one another, and all payments on account of principal and interest with respect to any of the Notes shall be applied ratably and proportionately on all outstanding Notes on the basis of the principal amount of outstanding indebtedness represented thereby.

 

This Note, the indebtedness evidenced by this Note, and all payments or rights under this Note, are expressly subordinate to all senior indebtedness of the Company, whether such senior indebtedness is outstanding as of the date of this Note or incurred after the date of this Note, and all such senior indebtedness shall be senior in right of payment to this Note.  As used in this Note, “senior indebtedness” means all indebtedness or other monetary obligations of the Company (i) that are secured by assets of the Company; (ii) that are expressly designated as senior to this Note; or (iii) to banks, commercial finance lenders, insurance companies, leasing or equipment financing institutions or other lending institutions regularly engaged in the business of lending money (excluding venture capital, investment banking or similar institutions which sometimes engage in lending activities but which are primarily engaged in investments in equity securities), which is for money borrowed, or purchase or leasing of equipment in the case of lease or other equipment financing, whether or not secured.

 

 

 

  

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 1.           Due Date.  All unpaid principal, together with all accrued and unpaid interest on this Note, shall be due and payable in full on November __, 2016 (the “Maturity Date”), provided that all principal and accrued and unpaid interest owing under this Note has not been converted into equity securities of the Company pursuant to Section 2 below prior to the Maturity Date.

 

 2.           Conversion.

 

(a)           Conversion at Maturity.  In the event Holder has not mandatorily converted this Note prior to the Maturity Date pursuant to Section 2(c) below all principal owing under this Note and any accrued and unpaid interest thereon may be converted at the Maturity Date, at the option of either the Company or the Holder, into an aggregate number of shares of Common Stock of the Company determined by dividing (i) the sum of any outstanding principal amount due under this Note and all accrued and unpaid interest thereon by the thirty day average closing price of the Company’s common shares.

 

(b)           Conversion upon Merger, Consolidation, Reorganization.  The entire principal amount of this Note, together with all accrued and unpaid interest thereon, shall be automatically converted into shares of Common Stock of the Company at the Merger Conversion Price (as defined below) immediately prior to the closing date of any merger or consolidation of the Company with or into another entity, or any other corporate reorganization in which the Company shall not be the continuing or surviving entity of such merger, consolidation or reorganization, or any transaction or series of related transactions by the Company in which more than fifty percent (50%) of the Company's voting power is transferred, or a sale of all or substantially all of the assets of the Company.  In the event of the conversion of this Note into shares of Common Stock pursuant to this Section 2(c), this Note shall convert into that number of fully paid and non-assessable shares of Common Stock of the Company determined by dividing all of the unpaid principal and accrued interest due on this Note as of the date of merger by the thirty day average closing price of the Company’s common shares.or the designated price per share of the Company’s Common Stock as determined in the definitive merger or share exchange agreement (the “Merger Conversion Price”) whichever is the greater.

(c)           Conversion upon Public Offering.  The entire principal amount of this Note, together with all accrued and unpaid interest thereon, shall be mandatorially and automatically converted into shares of Common Stock and Warrants of the Company at the Public Offering Conversion Price (as defined below) immediately with the date of the first sale of Common Stock of the Company to the public effected pursuant to a registration statement filed with, and declared effective by, the United States Securities and Exchange Commission under the Securities Act of 1933, as amended.  In the event of the conversion of this Note into shares of Common Stock pursuant to this Section 2(d), this Note shall convert into that number of fully paid and non-assessable shares of Common Stock and Warrants of the Company determined by dividing all of the unpaid principal and accrued interest due on this Note as of the date of the public offering by the per-share price of the Common Stock and Warrants in the public offering, (the “Public Offering Conversion Price”).

 

 

 

  

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 3.           Mechanics of Conversion.

 

(a)           Delivery of Note; Issuance of Certificates. The Company shall not be obligated to issue certificates evidencing the shares of the securities issuable upon conversion of this Note in accordance with Section 2 hereof unless the Note is either delivered to the Company or its transfer agent, or the Holder notifies the Company or its transfer agent that such Note has been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such Note.  The Company shall, as soon as practicable after such delivery, or such agreement and indemnification, issue and deliver at the Company’s office to such Holder of such Note, a certificate or certificates for the number of fully paid and non-assessable shares of the Company to which the Holder shall be entitled on such conversion, together with a check payable to the Holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of any securities and for any unpaid principal or accrued interest on the Note, if applicable.  Such conversion shall be deemed to have been made immediately prior to the close of business on the Maturity Date, in the event of a conversion under Section 2(a), or the closing date of the merger or consolidation, in the event of a conversion under Section 2(b), or the effective date of the registration statement in the event of a conversion under Section 2(c).  The person or persons entitled to receive securities issuable upon such conversion shall be treated for all purposes as the record holder or holders of such securities on such date.

 

(b)           Capital Adjustments.  If this Note is converted, as provided in Section 2 or Section 6 hereof, subsequent to any share dividend, forward or reverse stock split, recapitalization, combination or exchange of shares (“Capital Adjustments”) occurring after the date hereof, as a result of which shares of any class shall be issued in respect of outstanding Common Stock, or Common Stock shall be changed into the same or a different number of shares of the same or another class or classes, the Holder shall be entitled to receive the aggregate number and class of shares which, if this Note had been converted at the date hereof (“Deemed Conversion”) and Common Stock received upon the Deemed Conversion had not been disposed of, the Holder would be holding, at the time of actual conversion, as a result of the Deemed Conversion and such Capital Adjustments.

 

 4.           Manner of Payment.  Principal and interest shall be payable in lawful money of the United States unless converted as described above.

 

 5.           Governing Law.  THIS NOTE AND ALL ACTIONS ARISING OUT OF OR IN CONNECTION WITH THIS NOTE SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEVADA AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN WASHINGTON RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF WASHINGTON.

 

 6.           Prepayment.  This Note may be prepaid by the Company, in whole or in part and at any time, without the consent of the Holder and without prepayment penalty of any kind; provided that all payments will be made in lawful tender of the United States and will be applied: (a) first, to any costs, expenses or charges then owed to Holder by the Company; (b) second, to the payment of accrued interest; and (c) third, (to the extent that the amount of such payment exceeds the amount of all such expenses and accrued interest), to the payment of principal; and provided further, that the Company shall provide the Holder with written notice at least fifteen (15) days prior to any such prepayment, during which 15-day notice period the Holder may elect to convert the unpaid principal amount and all accrued and unpaid interest due on this Note into shares of Common Stock at the conversion price set forth in Section 2(a).

 

 

 

  

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 7.           Default.  The Company will be deemed to be in default under this Note upon the occurrence of any one or more of the following events (each an “Event of Default”): (a) the Company fails to meet any of its payment obligations hereunder; (b) the Company fails to substantially perform its obligations under that certain Note and Warrant Purchase Agreement dated as of the date hereof by and between the Holder and the Company, and such failure continues uncured for a period of thirty (30) days following the date written notice of such failure is received by the Company from any Holder of a Note; or (c) the occurrence of any act by, against, or relating to the Company, or its property or assets, which act constitutes either the filing of an application for, or the entry of an order for, any relief under the U.S. Bankruptcy Act or any other federal bankruptcy statute, or the initiation of any other judicial or non-judicial proceeding or agreement by or against the Company that seeks to accomplish any form of reorganization, composition, or extension of the Company's debts, which proceeding is not discharged or released within thirty (30) days.  Upon the occurrence of any Event of Default, the Company shall pay upon demand all reasonable attorney's fees and expenses incurred by Holder in the administration or exercise of Holder's rights hereunder.

 

 8.           Remedies on Default; Acceleration.  In the event of any Event of Default under this Note, the Holder may pursue, in addition to rights and remedies under this Note, any legal or equitable remedies that are available to the Holder, and may declare the entire unpaid principal amount of this Note and all unpaid accrued interest under this Note to be immediately due and payable in full.

 

 9.           Usury.  All agreements between the Company and the Holder of this Note, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever, whether by acceleration of the maturity of this Note or otherwise, shall the amount paid, or agreed to be paid, to the Holder hereof for the use, forbearance or detention of the money to be loaned hereunder or otherwise, exceed the maximum amount permissible under applicable law.  If, from any circumstances whatsoever, fulfillment of any provision of this Note or of any other document evidencing, securing or pertaining to the indebtedness evidenced hereby, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstances the Holder of this Note shall ever receive anything of value as interest or deemed interest by applicable law under this Note or any other document evidencing, securing or pertaining to the indebtedness evidenced hereby or otherwise an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing under this Note or on account of any other indebtedness of the Company to the Holder hereof relating to this Note, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of this Note and such other indebtedness, such excess shall be refunded to the Company.  In determining whether or not the interest paid or payable with respect to any indebtedness of the Company to the Holder hereof, under any specific contingency, exceeds the highest lawful rate, the Company and the Holder hereof shall, to the maximum extent permitted by applicable law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such indebtedness so that the actual rate of interest on account of such indebtedness is uniform throughout the term thereof, and/or (iii) allocate interest between portions of such indebtedness, to the end that no such portion shall bear interest at a rate greater than that permitted by law.  The terms and provisions of this Section 9 shall control and supersede every other conflicting provision of all agreements between the Company and the Holder hereof.

 

 

 

 

  

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10.           Waivers.  The Company waives demand, presentment, and notice of protest, notice of demand, dishonor, and diligence in collection and notice of intention to accelerate maturity.  The Company shall automatically effectuate any such acceleration by making an entry to such effect in its records, in which event the unpaid balance on this Note shall become immediately due and payable without demand or notice.

 

11.           Transfer of Note.  Subject to the restrictions on transfer described below, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.  With respect to any offer, sale or other disposition of this Note or securities into which such Note may be converted, the Holder shall give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of Holder's counsel acceptable to the Company, to the effect that such offer, sale or other distribution may be effected without registration or qualification (under any federal or state law then in effect).  Promptly upon receiving such written notice and satisfactory opinion, if so requested, the Company, as promptly as practicable, shall notify the Holder that Holder may sell or otherwise dispose of this Note or such securities, all in accordance with the terms of the notice delivered to Company.  If a determination has been made pursuant to this Section 11 that the opinion of counsel for Holder is not satisfactory to the Company, the Company shall so notify the Holder promptly after such determination has been made.  The Note thus transferred and each certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act of 1933, as amended (the "Act"), unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Act.  The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.  Subject to the foregoing, any transfer of this Note shall be registered upon the registration books maintained for such purpose by or on behalf of Company as provided in the Purchase Agreement.  Prior to presentation of this Note for registration of transfer, the Company shall treat the registered Holder hereof as the owner and Holder of this Note for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatsoever, whether or not this Note shall be overdue, and the Company shall not be affected by notice to the contrary.

 

12.           Warrant Coverage.  Upon execution of this Note, the Company shall execute and deliver to Holder a warrant entitling Holder to purchase shares of Common Stock of the Company.  The number of warrant shares shall be equal to one hundred percent (100%) of the principal amount of this Note divided by the public offering share price rounded to the nearest whole share.  The warrants shall have a term of three (3) years with an exercise price of the greater of 120% of share at this note closing or the offering price.

 

 

 

 

 

 

 

  

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13.           Amendments and Waivers.  Any provision of this Note may be amended or modified (either retroactively or prospectively), and the observance of any term of this Note may be waived (either retroactively or prospectively), upon the written consent of the Company and the Holders of Notes representing at least a majority of the then-outstanding aggregate principal amount of all Notes.  Any amendment or waiver effected in accordance with this Section 13 shall be binding upon each Holder of Notes, each future Holder of Notes, and the Company.

 

	 	
Visualant Incorporated

A Nevada Corporation

	 
	 	 	 
	 	 	 
	 	 	 
	
 

	 	 
	 	By: Ronald P. Erickson	 
	 	Its:  Chief Executive Officer	 
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6exhibit_10-6.htm

Exhibit 10.6

 

 

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED.

 

Void after

 

November ____, 2018

 

_____________________________

 

FORM OF WARRANT TO PURCHASE SHARES

 

This Warrant is issued to ___________ by VISUALANT, INCORPORATED, a Nevada corporation (the “Company”), pursuant to the terms of that certain Note and Warrant Purchase Agreement (the “Note and Warrant Purchase Agreement”) of even date herewith, in connection with the Company’s issuance to the holder of this Warrant of a Convertible Promissory Note (the “Note”).

 

1.           Purchase of Shares.  Subject to the terms and conditions hereinafter set forth and set forth in the Note and Warrant Purchase Agreement, the holder of this Warrant is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the holder hereof in writing), to purchase from the Company up to the number of fully paid and nonassessable Shares (as defined below), that equals the quotient obtained by dividing (a) the Warrant Coverage Amount (as defined below) by (b) the Exercise Price (as defined below).

 

2.           Definitions

 

Exercise Price.  The exercise price for the Shares shall be the price of the common shares in the up list offering by an investment banker.

 

Exercise Period.  This Warrant shall be exercisable, in whole or in part, at any time starting at the execution of the Note and Warrant Purchase Agreement and ending on the expiration of this Warrant pursuant to Section 14 hereof.

 

(a)           Warrant Coverage Amount.  The term “Warrant Coverage Amount” shall mean that amount which equals 100% of the principal amount of the Note.

 

(b)           The Shares.  The term “Shares” shall mean shares of Common Stock.

  

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3.           Method of Exercise.  While this Warrant remains outstanding and exercisable in accordance with Section 2 above, the holder may exercise, in whole or in part, the purchase rights evidenced hereby.  Such exercise shall be effected by:

 

(i)      the surrender of the Warrant, together with a notice of exercise to the Secretary of the Company at its principal offices; and

 

(ii)      the payment to the Company of an amount equal to the aggregate Exercise Price for the number of Shares being purchased.

 

4.           Net Exercise.                      In lieu of cash exercising this Warrant, the holder of this Warrant may elect to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to the holder hereof a number of Shares computed using the following formula:

 

Y (A - B)

X =                  A

 

Where

 

	
  

	
X --

	
The number of Shares to be issued to the holder of this Warrant.

 

	
  

	
Y --

	
The number of Shares purchasable under this Warrant.

 

	
  

	
A --

	
The Fair Market Value of one Share.

 

	
  

	
B --

	
The Exercise Price (as adjusted to the date of such calculations).

 

For purposes of this Warrant, the “Fair Market Value” of a Share shall mean the average of the closing bid and asked prices of Shares quoted in the over-the-counter market in which the Shares are traded or the closing price quoted on any exchange on which the Shares are listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal (or, if not so published, in another recognized public source of financial information such as Bloomberg) for the ten (10) trading days prior to the date of determination of fair market value (or such shorter period of time during which such stock was traded over-the-counter or on such exchange).  If the Shares are not regularly traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment.

 

5.           Certificates for Shares.  Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Shares so purchased shall be issued as soon as practicable thereafter, and in any event within thirty (30) days of the delivery of the subscription notice.

  

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6.           Issuance of Shares.  The Company covenants that the Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issuance thereof.

 

7.           Adjustment of Exercise Price and Number of Shares.  The number of and kind of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

 

(a)           Subdivisions, Combinations and Other Issuances.  If the Company shall at any time prior to the expiration of this Warrant subdivide the Shares, by split-up or otherwise, or combine its Shares, or issue additional shares of its Shares as a dividend, the number of Shares issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination.  Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as adjusted) shall remain the same.  Any adjustment under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

 

(b)           Reclassification, Reorganization and Consolidation.  In case of any reclassification, capital reorganization, or change in the capital stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section 7(a) above), then the Company shall make appropriate provision so that the holder of this Warrant shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization, or change by a holder of the same number of Shares as were purchasable by the holder of this Warrant immediately prior to such reclassification, reorganization, or change.  In any such case appropriate provisions shall be made with respect to the rights and interest of the holder of this Warrant so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per share payable hereunder, provided the aggregate purchase price shall remain the same.

 

(c)           Notice of Adjustment.  When any adjustment is required to be made in the number or kind of shares purchasable upon exercise of the Warrant, or in the Exercise Price, the Company shall promptly notify the holder of such event and of the number of Shares or other securities or property thereafter purchasable upon exercise of this Warrant.

 

8.           No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor on the basis of the Exercise Price then in effect.

 

 

  

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9.           Representations of the Company.  The Company represents that all corporate actions on the part of the Company, its officers, directors and stockholders necessary for the sale and issuance of this Warrant have been taken.

 

10.           Representations and Warranties by the Holder.  The Holder represents and warrants to the Company as follows:

 

(a)           This Warrant and the Shares issuable upon exercise thereof are being acquired for its own account, for investment and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the "Act").  Upon exercise of this Warrant, the Holder shall, if so requested by the Company, confirm in writing, in a form satisfactory to the Company, that the securities issuable upon exercise of this Warrant are being acquired for investment and not with a view toward distribution or resale.

 

(b)           The Holder understands that the Warrant and the Shares have not been registered under the Act by reason of their issuance in a transaction exempt from the registration and prospectus delivery requirements of the Act pursuant to Section 4(2) thereof, and that they must be held by the Holder indefinitely, and that the Holder must therefore bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the Act or is exempted from such registration.  The Holder further understands that the Warrant Shares have not been registered under any state securities laws.

 

(c)           The Holder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of this Warrant and the Shares purchasable pursuant to the terms of this Warrant and of protecting its interests in connection therewith.

 

(d)           The Holder is able to bear the economic risk of the purchase of the Shares pursuant to the terms of this Warrant.

 

(e)           The Holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Act.

 

 

  

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11.           Restrictive Legend

 

The Shares (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.  COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

 

12.           Warrants Transferable.  Subject to compliance with the terms and conditions of this Section 12, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes), upon surrender of this Warrant properly endorsed or accompanied by written instructions of transfer.  With respect to any offer, sale or other disposition of this Warrant or any Shares acquired pursuant to the exercise of this Warrant prior to registration of such Warrant or Shares, the holder hereof agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of such holder's counsel, or other evidence, if requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state securities law then in effect) of this Warrant or the Shares and indicating whether or not under the Act certificates for this Warrant or the Shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such law.  Upon receiving such written notice and reasonably satisfactory opinion or other evidence, if so requested, the Company, as promptly as practicable, shall notify such holder that such holder may sell or otherwise dispose of this Warrant or such Shares, all in accordance with the terms of the notice delivered to the Company.  If a determination has been made pursuant to this Section 12 that the opinion of counsel for the holder or other evidence is not reasonably satisfactory to the Company, the Company shall so notify the holder promptly with details thereof after such determination has been made.  Each certificate representing this Warrant or the Shares transferred in accordance with this Section 12 shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with such laws, unless in the aforesaid opinion of counsel for the holder, such legend is not required in order to ensure compliance with such laws.  The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

13.           Rights of Stockholders.  No holder of this Warrant shall be entitled, as a Warrant holder, to vote or receive dividends or be deemed the holder of the Shares or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

 

 

  

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14.           Expiration of Warrant; Notice of Certain Events Terminating This Warrant

 

(a)           This Warrant shall expire and shall no longer be exercisable upon the earlier to occur of:

 

(i)      5:00 p.m., New York local time, on ______ 2018;

 

(ii)      Any Change of Control; or

 

(b)           The Company shall provide at least ten (10) days prior written notice of any event set forth in Section 14(a)(ii).

 

15.           Notices.  All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given upon receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid or (d) one business day after the business day of facsimile transmission, if delivered by facsimile transmission with copy by first class mail, postage prepaid, and shall be addressed (i) if to the Holder, at the Holder's address as set forth on the Schedule of Investors to the Note and Warrant Purchase Agreement, and (ii) if to the Company, at the address of its principal corporate offices (attention: President), with a copy to such other address as a party may designate by ten days advance written notice to the other party pursuant to the provisions above.

 

16.           "Market Stand-Off" Agreement.  Holder hereby agrees that, during the period of duration specified by the Company and an underwriter of common stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except common stock included in such registration.

 

Holder agrees to provide to the other underwriters of any public offering such further agreements as such underwriter may reasonably request in connection with this market stand-off agreement, provided that the terms of such agreements are substantially consistent with the provisions of this Section 16.  In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

 

  

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Notwithstanding the foregoing, the obligations described in this Section 16 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated in the future, or a registration relating solely to an SEC Rule 145 transaction.

 

17.           Governing Law.  This Warrant and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflicts of law provisions of the State of Nevada or of any other state.

 

18.           Rights and Obligations Survive Exercise of Warrant.  Unless otherwise provided herein, the rights and obligations of the Company, of the holder of this Warrant and of the holder of the Shares issued upon exercise of this Warrant, shall survive the exercise of this Warrant.

 

Issued this _____th day of November, 2015.

 

 

	 	 
VISUALANT, INCORPORATED

 

 

Ronald P. Erickson

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

  

  

7

  

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

	
TO:

	
VISUALANT, INCORPORATED

	
  

	
[INSERT ADDRESS]

Attention: President

 

1.           The undersigned hereby elects to purchase __________ Shares of Series A Preferred Stock pursuant to the terms of the attached Warrant.

 

2.           Method of Exercise (Please initial the applicable blank):

 

	
  

	
___

	
The undersigned elects to exercise the attached Warrant by means of a cash payment, and tenders herewith payment in full for the purchase price of the shares being purchased, together with all applicable transfer taxes, if any.

 

	
  

	
___

	
The undersigned elects to exercise the attached Warrant by means of the net exercise provisions of Section 4 of the Warrant.

 

3.           Please issue a certificate or certificates representing said Shares in the name of the undersigned or in such other name as is specified below:

 

_________________________________

(Name)

 

_________________________________

 

_________________________________

(Address)

 

4.           The undersigned hereby represents and warrants that the aforesaid Shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale, in connection with the distribution thereof, and that the undersigned has no present intention of distributing or reselling such shares and all representations and warranties of the undersigned set forth in Section 10 of the attached Warrant (including Section 10 (e) thereof) are true and correct as of the date hereof.

 

	 	 
______________________________

(Signature)

	 	 
	 	 
______________________________

(Name)

	 	 
	
______________________________

(Date)

	
______________________________

(Title)

 

 

  

A-1

  

 

EXHIBIT B

 

FORM OF TRANSFER

(To be signed only upon transfer of Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _______________________________________________ the right represented by the attached Warrant to purchase ____________ shares of Common Stock of VISUALANT, INCORPORATED  to which the attached Warrant relates, and appoints ______________ Attorney to transfer such right on the books of __________, with full power of substitution in the premises.

 

 

	
Dated: ____________________

 

 

	 	 
_______________________________________________

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

	 	 
Address:    

	____________________________________
	 	 	 
	 	 	____________________________________
	 	 	 
	 	 	____________________________________

 

 

 

 

Signed in the presence of:

 

 

 

______________________________

 

 

 

 

B-1

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