Document:

Common Stock Purchase Warrant

Exhibit 4.1

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (AS DEFINED BELOW) TO ANYONE OTHER THAN (I) THE BENCHMARK COMPANY LLC OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING (AS DEFINED BELOW) IN CONNECTION WITH WHICH THIS PURCHASE WARRANT WAS ISSUED TO THE UNDERWRITER AS CONSIDERATION, OR (II) A BONA FIDE OFFICER OR PARTNER OF BENCHMARK COMPANY LLC. 

 

THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO [          ], 2020. VOID AFTER 5:00 P.M., EASTERN TIME, [          ], 2025.

 

 

COMMON STOCK PURCHASE WARRANT

 

 

For the Purchase of [ ] Shares of Common Stock

of

NuZee, Inc.

 

1.Purchase Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of [] (“Holder”), as registered owner of this common stock purchase warrant (this “Purchase Warrant”), to NuZee, Inc., a Nevada corporation (the “Company”), Holder is entitled, at any time or from time to time beginning [ ], 2020 (the “Commencement Date”), and terminating at or before 5:00 p.m., Eastern time, [ ], 2025, which will be the five-year anniversary of the effective date (the “Effective Date”) of the Company’s registration statement on Form S-1 (File No. 333-234643) (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [  ] shares of common stock of the Company, par value $0.00001 per share (the “Shares”), subject to adjustment as provided in Section 6 hereof. If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Warrant. This Purchase Warrant is initially exercisable at $[ ] per Share; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context. This Purchase Warrant is being issued pursuant to that certain Underwriting Agreement, dated [ ], 2020 (the “Agreement”), between the Company and, on behalf of the Underwriters named on Schedule 1 thereto, The Benchmark Company LLC (“Benchmark”). The Company’s offering contemplated by the Agreement is referred to herein as the “Offering.”  

 

2.Exercise. 

 

2.1Exercise Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire. Each exercise hereof shall be irrevocable. 

 

2.2Cashless Exercise. In lieu of exercising this Purchase Warrant by payment of cash or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant  

to the Company, together with the exercise form attached hereto, in which event the Company will issue to Holder Shares in accordance with the following formula:

 

 

	X

	=

	Y(A-B)

	 

	A

	 

	Where,

	 

	 

	 

	 

	X

	=

	The number of Shares to be issued to Holder;

	 

	Y

	=

	The number of Shares for which the Purchase Warrant is being exercised;

	 

	A

	=

	The fair market value of one Share; and

	 

	B

	=

	The Exercise Price.

	 

	 

	 

	 

	 

	 

For purposes of this Section 2.2, the fair market value of a Share is defined as follows: 

(i)if the Company’s common stock is traded on a national securities exchange, the value shall be deemed to be the closing price on such exchange on the Business Day immediately preceding the date that the exercise form is delivered pursuant to Section 8.4 in connection with the exercise of the Purchase Warrant; or 

(ii)if the Company’s common stock is not then traded on a securities exchange and if the Company’s common stock is actively traded over-the-counter on any tier of the OTC Markets or any successor over-the-counter market, the value shall be deemed to be the closing bid on the Business Day immediately preceding the date that the exercise form is submitted in connection with the exercise of the Purchase Warrant; provided, however, if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Company’s Board of Directors. 

2.3 Legend. Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities have been registered under the Securities Act of 1933, as amended (the “Act”):  

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law which, in the opinion of counsel to the Company, is available.”

 

2.4 Resale of Shares. Holder and the Company acknowledge that as of the date hereof the Staff of the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) has published Compliance & Disclosure Interpretation 528.04 in the Securities Act Rules section thereof, stating that the holder of securities issued in connection with a public offering may not rely upon Rule 144 promulgated under the Act to establish an exemption from registration requirements under Section 4(a)(1) under the Act, but may nonetheless apply Rule 144 constructively for the resale of such shares in the following manner: (a) provided that six months has elapsed since the last sale under the registration statement, an underwriter or finder may resell the securities in accordance with the provisions of Rule 144(c), (e), and (f), except for the notice requirement; (b) a purchaser of the shares from an underwriter receives restricted securities unless the sale is made with an appropriate, current prospectus, or unless the sale is made pursuant to the conditions contained in (a) above; (c) a purchaser of the shares from an underwriter who receives restricted securities may include the underwriter’s holding period, provided that the underwriter or finder is not an affiliate of the issuer; and (d) if an underwriter transfers the shares to its employees, the employees may tack the firm’s holding period for purposes of Rule 144(d), but they must aggregate sales of the distributed shares with those of other employees, as well as those of the underwriter or finder, for a six-month period from the date of the transfer to the employees. In the event that following a reasonably-timed written request by Holder to transfer the Shares in accordance with Compliance & Disclosure Interpretation 528.04 counsel for the Company in good faith concludes that Compliance & Disclosure Interpretation 528.04 no longer may be relied upon as a result of changes in applicable laws, regulations, or interpretations of the Staff of the Division of Corporation Finance of the SEC, or as a  

result of judicial interpretations not known by the Company or its counsel on the date hereof, then the Company shall promptly, and in any event within five (5) business days following the request, provide written notice to Holder of such determination. In the absence of such conclusion by counsel for the Company, the Company shall, upon such a request of Holder given no earlier than six months after the final closing of the Offering, instruct its transfer agent to permit the transfer of such shares in accordance with Compliance & Disclosure Interpretation 528.04, provided that Holder has provided such documentation as shall be reasonably be requested by the Company to establish compliance with the conditions of Compliance & Disclosure Interpretation 528.04.  

 

3.Transfer. 

 

3.1General Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof that such Holder will not: (a) sell, transfer, assign, pledge or  hypothecate this Purchase Warrant for a period of one hundred eighty (180) days following the Effective Date to anyone other than: (i) Benchmark or an underwriter, placement agent, or a selected dealer participating in the Offering, or (ii) a bona fide officer or partner of Benchmark or of any such underwriter, placement agent or selected dealer, in each case in accordance with Conduct Rule 5110(g)(1) of the Financial Industry Regulatory Authority (“FINRA”), and (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(g)(2). After 180 days after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. Subject to applicable securities laws, the Company shall within five (5) Business Days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.  

 

3.2 Restrictions Imposed by the Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) the Company has received the opinion of counsel for the Holder, in a form reasonably acceptable to the Company, that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the SEC and compliance with applicable state securities law has been established.  

 

4.Registration Rights.  

 

4.1Grant of Right.  The Holder shall have the right for a period of no more than five (5) years from the Effective Date to include the Shares underlying the Purchase Warrant (collectively, the “Registrable Securities”) as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Securities Act or pursuant to Form S-8 or any equivalent form); provided, however, that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing underwriter(s) thereof shall, in its reasonable discretion, impose a limitation on the number of shares of common stock of the Company which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which the Holder requested inclusion hereunder as the underwriter shall reasonably permit. Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in proportion to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities. 

 

4.2Terms.  The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to this Section 4 hereof, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable  

Securities. In the event of such a proposed registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than ten (10) days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities have been registered for resale under the Act or sold by the Holder. The Holders of the Registrable Securities shall exercise the “piggy-back” rights provided for herein by giving written notice within ten (10) days of the receipt of the Company’s notice of its intention to file a registration statement. Except as otherwise provided in this Purchase Warrant, there shall be no limit on the number of times the Holder may request registration under this section; provided, however, that such “piggy-back” registration rights shall terminate on the fifth (5th) anniversary of the Effective Date as provided in Section 4.1.

 

4.3Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other out-of-pocket expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the  Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify Benchmark contained in the Underwriting Agreement. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in the Underwriting Agreement pursuant to which Benchmark has agreed to indemnify the Company.  

 

4.4 Exercise of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holder(s) to exercise their Purchase Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.  

 

4.5 Documents Delivered to Holders. The Company shall deliver promptly to each Holder participating in the offering who so requests the correspondence and memoranda described below, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times, during normal business hours, as any such Holder shall reasonably request.  

 

4.6 Underwriting Agreement. The Holders shall be parties to any underwriting agreement relating to the Registrable Securities. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to such Holders, their Registrable Securities and the amount and nature of their ownership thereof and their intended methods of distribution.  

 

4.7 Documents to be Delivered by Holder(s). Each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.  

 

5.New Purchase Warrants to be Issued. 

 

5.1Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to Section 2.1 hereto, the Company  

shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned. 

 

5.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, determined in the sole discretion of the Company, the Company shall execute and deliver a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.  

 

6.Adjustments. 

 

6.1Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth:  

 

6.1.1Share Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and the Exercise Price shall be proportionately decreased.  

 

6.1.2 Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the Exercise Price shall be proportionately increased.  

 

6.1.3 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation or merger of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.   

 

6.1.4 Changes in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.  

 

6.2 Substitute Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation or merger of the Company with or into, another corporation (other than a consolidation  

or share reconstruction or amalgamation or merger which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation or merger, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations or mergers.

 

6.3 Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Shares or other securities, properties or rights.  

 

7. Reservation. The Company shall at all times reserve and keep available out of its authorized and unissued Shares, solely for the purpose of issuance upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder.  

 

8.Certain Notice Requirements. 

 

8.1Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a stockholder for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall deliver to each Holder a copy of each notice relating to such events given to the other stockholders of the Company at the same time and in the same manner that such notice is given to the stockholders.  

 

8.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, or (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor.  

 

8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same.  

 

8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service: (i) if to the registered Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to the following address or to such other address as the Company may designate by notice to the Holders:  

If to the Holder:

Benchmark Company LLC

150 E. 58th Street, 17th floor

New York, NY 10155

Attention: President

with a copy (which shall not constitute notice) to:

Schiff Hardin LLP

901 K Street, NW, Suite 700

Washington, DC 20001

Attn: Ralph V. De Martino, Esq.

Fax No.:  (202) 778-6460

 

If to the Company:

 

NuZee, Inc.

1700 Capital Avenue, Suite 100

Plano, Texas 75074

Attn: Masateru Higashida, Chief Executive Officer

 

With a copy (which shall not constitute notice) to:

 

Polsinelli PC

2049 Century Park East, Suite 2900

Los Angeles, California 90067

Attention: Alan A. Lanis, Jr.

Fax No: (310) 556-1802

9.Miscellaneous. 

 

9.1Amendments. The Company and Benchmark may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Benchmark may deem necessary or desirable and that the Company and Benchmark deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.  

 

9.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.  

 

9.3. Entire Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.  

 

9.4 Binding Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.  

 

9.5 Governing Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed  

by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. Each of the Company and the Holder hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in the courts located in New York, New York, or in the United States District Court located in New York, New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the Company and the Holder hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company or the Holder may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company and the Holder in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor.  The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 

 

9.6 Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.  

 

9.7 Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Benchmark enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.  

 

 [Signature Page Follows]

IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the [          ] day of [          ], 2020. 

 

 

NuZee, Inc.

 

 

By: _________________________________

Name:  

Title:  

[Form to be used to exercise Purchase Warrant]

 

 

 

Date:  __________, 20___

 

 

 

The undersigned hereby elects irrevocably to exercise the Purchase Warrant for ______ shares of common stock, par value $0.00001 per share (the “Shares”), of NuZee, Inc., a Nevada corporation (the “Company”), and hereby makes payment of $____ (at the rate of $____ per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been exercised. 

 

or

 

The undersigned hereby elects irrevocably to convert its right to purchase ___ Shares of the Company under the Purchase Warrant for ______ Shares, as determined in accordance with the following formula:  

 

	 

	X

	=

	Y(A-B)

	A

	Where,

	 

	 

	 

	 

	X

	=

	The number of Shares to be issued to Holder;

	 

	Y

	=

	The number of Shares for which the Purchase Warrant is being exercised;

	 

	A

	=

	The fair market value of one Share which is equal to $_____; and

	 

	B

	=

	The Exercise Price which is equal to $______ per share

 

The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.  

 

Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted. 

 

 

Signature  

 

 

 

Signature Guaranteed  

INSTRUCTIONS FOR REGISTRATION OF SECURITIES

 

Name:  

(Print in Block Letters) 

 

Address:                                                                                   

 

                                                                                

 

                                                                                

 

 

 

 

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

[Form to be used to assign Purchase Warrant]

ASSIGNMENT

 

(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant): 

 

 

 

FOR VALUE RECEIVED, __________________ does hereby sell, assign and transfer unto the right to purchase shares of Common Stock, par value $0.00001 per share, of NuZee, Inc., a Nevada corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to transfer such right on the books of the Company. 

 

 

 

Dated: __________, 20__

 

 

 

 

Signature  

 

 

 

Signature Guaranteed  

 

 

 

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.EXHIBIT 4.1

 

DESCRIPTION OF CAPITAL STOCK

 

The following summarizes the material terms
of the capital stock of KULR Technology Group, Inc. (“KULR,” “our Company,” “we” or “us”).
KULR is a corporation incorporated under the laws of the State of Delaware, and accordingly its internal corporate affairs are
governed by Delaware law and by its certificate of incorporation, as amended (our “certificate of incorporation”) and
its by-laws, which are filed as exhibits to our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission
and available at www.sec.gov. The following summary is qualified in its entirety by reference to the applicable provisions
of Delaware law and our certificate of incorporation and by-laws, which are subject to future amendment in accordance with the
provisions thereof. Our common stock is the only class of our securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).

 

Authorized Capital Stock

 

Our authorized capital stock consists of
500,000,000 shares of common stock, par value $0.0001 per share, and 20,000,000 shares of preferred stock, par value $0.0001 per
share. The number of shares of our common stock issued and outstanding as of a recent date is set forth on the cover page of our
most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. As of the same date, we had preferred
stock designated as follows: 1,000,000 shares designated as Series A Preferred Stock (of which none were outstanding), 31,000 shares
designated as Series B Convertible Preferred Stock (of which 14,487 shares were outstanding) and 400 shares designated as Series
C Convertible Preferred Stock (of which 24.01 shares were outstanding).

 

Common Stock

 

Voting Rights. Each holder
of our common stock is entitled to one vote per share on all matters on which stockholders are generally entitled to vote. Our
certificate of incorporation does not provide for cumulative voting in the election of directors.

 

Dividends.  Subject to the
preferential rights, if any, of the holders of any outstanding series of our preferred stock, holders of shares of our common stock
are entitled to receive dividends out of any of our funds legally available when, as and if declared by our Board of Directors
(our “Board”). The timing, declaration, amount and payment of future dividends depend upon our financial condition,
earnings, capital requirements and debt service obligations, as well as legal requirements, regulatory constraints, industry practice
and other factors that our Board deems relevant.

 

Liquidation.  If we liquidate,
dissolve or wind up our affairs, holders of our common stock will be entitled to share proportionately in our assets available
for distribution to stockholders, subject to the preferential liquidation rights, if any, of the holders of any outstanding series
of our preferred stock.

 

Other Rights.  The holders
of our common stock have no preemptive rights and no rights to convert their common stock into any other securities, and our common
stock is not subject to any redemption or sinking fund provisions.

 

Preferred Stock

 

Under our certificate of incorporation
and subject to the limitations prescribed by law, our Board, without stockholder approval, may issue our preferred stock in one
or more series, and may establish from time to time the number of shares to be included in such series and may fix the designation,
powers, privileges, preferences and relative participating, optional or other rights, if any, of the shares of each such series
and any qualifications, limitations or restrictions thereof.

 

When and if we issue additional shares
of preferred stock, we will establish the applicable preemptive rights, dividend rights, voting rights, conversion privileges,
redemption rights, sinking fund rights, rights upon voluntary or involuntary liquidation, dissolution or winding up and any other
relative rights, preferences and limitations for the particular preferred stock series.

 

     

     

    

 

Anti-Takeover Effects of Provisions
of Delaware Law, Our Certificate of incorporation and By-laws

 

Delaware statutory law and our certificate
of incorporation and by-laws contain provisions that could make acquisition of our Company by means of a tender offer, a proxy
contest or otherwise more difficult. These provisions are intended to discourage certain types of coercive takeover practices and
takeover bids that our Board may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate
with our Board. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly
or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals
because, among other things, negotiation of these proposals could result in an improvement of their terms. The description of our
certificate of incorporation and by-laws set forth below is only a summary and is qualified in its entirety by reference to our
certificate of incorporation and by-laws, which have been filed as exhibits to our most recent Annual Report on Form 10-K.

 

Blank Check Preferred Stock.  Our
certificate of incorporation permits us to issue, without any further vote or action by the stockholders, up to 20,000,000 shares
of preferred stock in one or more series and, with respect to each such series, to fix the number of shares constituting the series
and the designation of the series, the voting powers (if any) of the shares of the series, and the preferences and relative, participating,
optional and other rights, if any, and any qualifications, limitations or restrictions, of the shares of such series. The ability
to issue such preferred stock could discourage potential acquisition proposals and could delay or prevent a change in control.

 

Number of Directors; Filling Vacancies;
Removal.  Our certificate of incorporation and by-laws provide that the Board will consist of not less than one member,
with the exact number of directors to be fixed exclusively by the Board. In addition, our certificate of incorporation and by-laws
provide that a board vacancy resulting from the death, resignation, disqualification or removal of a director or other cause, as
well as a vacancy resulting from an increase in the number of directors, may be filled solely by the affirmative vote of a majority
of the remaining directors then in office even though that may be less than a quorum of the Board.

 

Special Meetings.  Our
certificate of incorporation and by-laws provide that special meetings of the stockholders may only be called by our Board, certain
officers of our Company or two-thirds or more in amount, of each class or series of the capital stock of our Company entitled to
vote at such meeting on the matters that are the subject of the proposed meeting. These provisions may make it more difficult for
stockholders to take an action opposed by our Board.

 

Section 203 of the Delaware General
Corporation Law.  Section 203 of the DGCL provides that, subject to certain specified exceptions, a corporation
will not engage in any “business combination” with any “interested stockholder” for a three-year period
following the time that such stockholder becomes an interested stockholder unless (1) before that time, the board of directors
of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested
stockholder, (2) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85 percent of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares) or (3) on or after such time, both the board of directors of the corporation and at least
662/3 percent of the outstanding voting stock which is not owned by the interested stockholder approves
the business combination. Section 203 of the DGCL generally defines an "interested stockholder" to include (x) any
person that owns 15 percent or more of the outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation and owned 15 percent or more of the outstanding voting stock of the corporation at any time within three years
immediately prior to the relevant date and (y) the affiliates and associates of any such person.

 

Section 203 of the DGCL generally
defines a "business combination" to include (1) mergers and sales or other dispositions of 10 percent or more
of the corporation's assets with or to an interested stockholder, (2) certain transactions resulting in the issuance or transfer
to the interested stockholder of any stock of the corporation or its subsidiaries, (3) certain transactions which would increase
the proportionate share of the stock of the corporation or its subsidiaries owned by the interested stockholder and (4) receipt
by the interested stockholder of the benefit (except proportionately as a stockholder) of any loans, advances, guarantees, pledges,
or other financial benefits.

 

Under certain circumstances, Section 203
of the DGCL makes it more difficult for a person who would be an “interested stockholder” to effect various business
combinations with a corporation for a three-year period, although the certificate of incorporation or stockholder-adopted by-laws
may exclude a corporation from the restrictions imposed under Section 203. Neither our certificate of incorporation nor our
by-laws exclude our Company from the restrictions imposed under Section 203 of the DGCL. We anticipate that Section 203
may encourage companies interested in acquiring our Company to negotiate in advance with our Board since the statute’s supermajority
stockholder approval requirement would not be applicable if our Board approves, prior to the time the stockholder becomes an interested
stockholder, either the business combination or the transaction which results in the stockholder becoming an interested stockholder.

 

     

     

    

 

Transfer Agent and Registrar

 

The transfer agent and registrar for our
common stock is VStock Transfer LLC.

 

Market Information

 

Our common stock is quoted on the OTCQB
tier of the OTC Markets Group, Inc. under the symbol “KULR.”

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