Document:

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights
Agreement (the “Agreement”) is made and entered into as of this 24th day of May, 2012 by and among Luxeyard, Inc.,
a Delaware corporation (the “Company”), and the “Investors” named in that certain Securities Purchase Agreement
by and among the Company and the Investors (the “Purchase Agreement”). Capitalized terms used herein have the respective
meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein.

 

The parties hereby
agree as follows:

 

1.          Certain
Definitions.

 

As used in this Agreement,
the following terms shall have the following meanings:

 

“Common Stock”
means the Company’s common stock, par value $0.0001 per share, and any securities into which such shares may hereinafter
be reclassified.

 

“Investors”
means the Investors identified in the Purchase Agreement and any Affiliate or permitted transferee of any Investor who is a subsequent
holder of any Warrants (as defined below), Preferred Stock or Registrable Securities.

 

“Preferred
Shares” means the shares of Common Stock issuable upon conversion of the Preferred Stock issued to the Investors pursuant
to the Purchase Agreement.

 

“Preferred
Stock” means the Company’s 8% Convertible Preferred Stock, par value $0.0001 per share.

 

“Prospectus”
means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by
all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference
in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the 1933 Act.

 

“Register,”
“registered” and “registration” refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness
of such Registration Statement or document.

 

“Registrable
Securities” means (i) the Preferred Shares, (ii) the Warrant Shares, (iii) shares of Common Stock issuable as issued
as payment for any dividends due and owing on the Preferred Stock in accordance with its terms, and (iv) any other securities issued
or issuable with respect to or in exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided,
that, a security shall cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under
the 1933 Act, or (B) such security becoming eligible for sale without restriction by the Investors pursuant to Rule 144.

 

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“Registration
Statement” means any registration statement of the Company filed under the 1933 Act that covers the resale of any of
the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“Required
Investors” means the Investors holding a majority of the Registrable Securities.

 

“SEC”
means the U.S. Securities and Exchange Commission.

 

“Series C
Warrants” means the Series C warrants to purchase shares of Common Stock issued to the Investors pursuant to the Purchase
Agreement.

 

“Series D
Warrants” means the Series D warrants to purchase shares of Common Stock issued to the Investors pursuant to the Purchase
Agreement.

 

“Series E
Warrants” means the Series E warrants to purchase shares of Common Stock issued to the Investors pursuant to the Purchase
Agreement.

 

“1933 Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“1934 Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Warrants”
means the Series C Warrants, the Series D Warrants and the Series E Warrants.

 

“Warrant Shares”
means the shares of Common Stock issuable upon the exercise of the Series C Warrants, the Series D Warrants and the Series E Warrants.

 

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2.          Registration.

 

(a)          Registration
Statements.

 

(i)          Promptly
following the closing of the purchase and sale of the securities contemplated by the Purchase Agreement (the “Closing Date”)
but no later than fifteen (15) days after the Closing Date (the “Filing Deadline”), the Company shall prepare and file
with the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration
statement as is then available to effect a registration for resale of the Registrable Securities), covering the resale of the Registrable
Securities. Subject to any SEC comments, such Registration Statement shall include the plan of distribution attached hereto as
Exhibit A; provided, however, that no Investor shall be named as an “underwriter” in the Registration Statement
without the Investor’s prior written consent. Such Registration Statement also shall cover, to the extent allowable under
the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. Such Registration
Statement shall not include any shares of Common Stock or other securities for the account of any other holder without the prior
written consent of the Required Investors. The Registration Statement (and each amendment or supplement thereto, and each request
for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors and their counsel
prior to its filing or other submission. If a Registration Statement covering the Registrable Securities is not filed with the
SEC on or prior to the Filing Deadline, the Company will make pro rata payments to each Investor, as liquidated damages and not
as a penalty, in an amount equal to 1% of the aggregate amount invested by such Investor for each 30-day period or pro rata for
any portion thereof following the Filing Deadline for which no Registration Statement is filed with respect to the Registrable
Securities; provided, however, such damages shall cease to accrue on the 180th day following the Closing Date. Such
payments shall constitute the Investors’ exclusive monetary remedy for such events, but shall not affect the right of the
Investors to seek injunctive relief. Such payments shall be made to each Investor in cash no later than two (2) Business Days after
the first day of each 30-day period (in other words, the Company will pay to each Investor, in advance, the full amount of damages
due and owing for such 30-day period).

 

(ii)         Additional
Registrable Securities. Upon the written demand of any Investor following any change in the Conversion Price (as defined in
the Certificate of Designations for the Preferred Stock) or Exercise Price (as defined in the Warrants) such that additional shares
of Common Stock become issuable upon conversion of the Preferred Stock or upon exercise of the Warrants (the “Additional
Shares”), the Company shall prepare and file with the SEC one or more Registration Statements on Form S-3 or amend the Registration
Statement filed pursuant to clause (i) above, if such Registration Statement has not previously been declared effective (or, if
Form S-3 is not then available to the Company, on such form of registration statement as is then available to effect a registration
for resale of the Additional Shares) covering the resale of the Additional Shares, but only to the extent the Additional Shares
are not at the time covered by an effective Registration Statement. Subject to any SEC comments, such Registration Statement shall
include the plan of distribution attached hereto as Exhibit A; provided, however, that no Investor shall be named as an
“underwriter” in the Registration Statement without the Investor’s prior written consent. Such Registration Statement
also shall cover, to the extent allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate
number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to
the Additional Shares. Such Registration Statement shall not include any shares of Common Stock or other securities for the account
of any other holder without the prior written consent of the Required Investors. The Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section
3(c) to the Investors and their counsel prior to its filing or other submission. If a Registration Statement covering the Additional
Shares is required to be filed under this Section 2(a)(ii) and is not filed with the SEC within five (5) Business Days upon the
request of any Investor (the “Additional Shares Filing Deadline”), the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to 1% of the aggregate amount invested by such Investor
for each 30-day period or pro rata for any portion thereof following the Additional Shares Filing Deadline for which no Registration
Statement is filed with respect to the Additional Shares; provided, however, such damages shall cease to accrue on the 180th
day following the Closing Date. Such payments shall constitute the Investors’ exclusive monetary remedy for such events,
but shall not affect the right of the Investors to seek injunctive relief. Such payments shall be made to each Investor in cash
no later than two (2) Business Days after the first day of each 30-day period (in other words, the Company will pay to each Investor,
in advance, the full amount of damages due and owing for such 30-day period).

 

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(b)          Expenses.
The Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel
and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities
laws, listing fees, fees and expenses of one counsel to the Investors and the Investors’ reasonable expenses in connection
with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable Securities being sold.

 

(c)          Effectiveness.

 

(i)          The
Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable.
The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within twenty-four
(24) hours, after any Registration Statement is declared effective and shall simultaneously provide the Investors with copies of
any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby. If (A)(x)
a Registration Statement covering the Registrable Securities is not declared effective by the SEC prior to the earlier of (i) five
(5) Business Days after the SEC shall have informed the Company that no review of the Registration Statement will be made or that
the SEC has no further comments on the Registration Statement or (ii) the 75th day after the Closing Date (subject to
extension to the 105th day after the Closing Date if the Registration Statement is subject to review by the SEC), or
(y) a Registration Statement covering Additional Shares is not declared effective by the SEC prior to the earlier of (i) five (5)
Business Days after the SEC shall have informed the Company that no review of the Registration Statement will be made or that the
SEC has no further comments on the Registration Statement or (ii) the 75th day after the Additional Shares Filing Deadline
(subject to extension to the 105th day after the Additional Shares Filing Deadline if the Registration Statement is
subject to review by the SEC), or (B) after a Registration Statement has been declared effective
by the SEC, sales cannot be made pursuant to such Registration Statement for any reason (including without limitation by reason
of a stop order, or the Company’s failure to update the Registration Statement), but excluding any Allowed Delay (as defined
below) or the inability of any Investor to sell the Registrable Securities covered thereby due to market conditions, then
the Company will make pro rata payments to each Investor, as liquidated damages and not as a penalty, in an amount equal to 1%
of the aggregate amount invested by such Investor for each 30- day period or pro rata for any portion thereof following the date
by which such Registration Statement should have been effective (the “Blackout Period”); provided, however, such damages
shall cease to accrue pursuant to clause (A) above on the 180th day following the Closing Date. Such payments shall
constitute the Investors’ exclusive monetary remedy for such events, but shall not affect the right of the Investors to seek
injunctive relief. The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within two (2) Business
Days after the first day of each 30-day period (in other words, the Company will pay to each Investor, in advance, the full amount
of damages due and owing for each such 30-day Blackout Period) until the termination of the Blackout Period. Such payments shall
be made to each Investor in cash.

 

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(ii)         For
not more than twenty (20) consecutive days or for a total of not more than forty-five (45) days in any twelve (12) month period,
the Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event
that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public
information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the
best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that
such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances
under which they were made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly (a) notify
each Investor in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of an Investor)
disclose to such Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investors in writing
to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts
to terminate an Allowed Delay as promptly as practicable.

 

(d)          Rule
415; Cutback If at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a
Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the 1933
Act or requires any Investor to be named as an “underwriter”, the Company shall use its best efforts to persuade the
SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or
on behalf of the issuer” as defined in Rule 415 and that none of the Investors is an “underwriter”. The Investors
shall have the right to participate or have their counsel participate in any meetings or discussions with the SEC regarding the
SEC’s position and to comment or have their counsel comment on any written submission made to the SEC with respect thereto.
No such written submission shall be made to the SEC to which the Investors’ counsel reasonably objects. In the event that,
despite the Company’s best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position,
the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”)
and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC
may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”);
provided, however, that the Company shall not agree to name any Investor as an “underwriter” in such Registration Statement
without the prior written consent of such Investor. Any cut-back imposed on the Investors pursuant to this Section 2(d) shall be
allocated among the Investors on a pro rata basis and shall be applied first to any Warrant Shares, unless the SEC Restrictions
otherwise require or provide or the Investors otherwise agree. No liquidated damages shall accrue as to any Cut Back Shares until
such date as the Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions (such
date, the “Restriction Termination Date” of such Cut Back Shares). From and after the Restriction Termination Date
applicable to any Cut Back Shares, all of the provisions of this Section 2 (including the liquidated damages provisions) shall
again be applicable to such Cut Back Shares; provided, however, that (i) the Filing Deadline and/or the Additional Shares Filing
Deadline, as applicable, for the Registration Statement including such Cut Back Shares shall be ten (10) Business Days after such
Restriction Termination Date, and (ii) the date by which the Company is required to obtain effectiveness with respect to such Cut
Back Shares under Section 2(c) shall be the 90th day immediately after the Restriction Termination Date; provided, further,
however, no such damages shall accrue under clauses (i) or (ii) of the immediately preceding proviso from and after the 180th
days following the Closing Date.

 

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(e)          Right
to Piggyback Registration.

 

(i)          If
at any time following the date of this Agreement that any Registrable Securities remain outstanding (A) there is not one or more
effective Registration Statements covering all of the Registrable Securities and (B) the Company proposes for any reason to register
any shares of Common Stock under the 1933 Act (other than pursuant to a registration statement on Form S-4 or Form S-8 (or a similar
or successor form)) with respect to an offering of Common Stock by the Company for its own account or for the account of any of
its stockholders, it shall at each such time promptly give written notice to the holders of the Registrable Securities of its intention
to do so (but in no event less than thirty (30) days before the anticipated filing date) and, to the extent permitted under the
provisions of Rule 415 under the 1933 Act, include in such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within fifteen (15) days after receipt of the Company’s notice (a “Piggyback
Registration”). Such notice shall offer the holders of the Registrable Securities the opportunity to register such number
of shares of Registrable Securities as each such holder may request and shall indicate the intended method of distribution of such
Registrable Securities.

 

(ii)         Notwithstanding
the foregoing, (A) if such registration involves an underwritten public offering, the Investors must sell their Registrable Securities
to, if applicable, the underwriter(s) at the same price and subject to the same underwriting discounts and commissions that apply
to the other securities sold in such offering (it being acknowledged that the Company shall be responsible for other expenses as
set forth in Section 2(b)) and subject to the Investors entering into customary underwriting documentation for selling stockholders
in an underwritten public offering, and (B) if, at any time after giving written notice of its intention to register any Registrable
Securities pursuant to Section 2(e)(i) and prior to the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to cause such registration statement to become effective under the
1933 Act, the Company shall deliver written notice to the Investors and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration; provided, however, that nothing contained in this Section 2(e)(ii)
shall limit the Company’s liabilities and/or obligations under this Agreement, including, without limitation, the obligation
to pay liquidated damages under this Section 2.

 

3.          Company
Obligations. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities
in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

 

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(a)          use
commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for
a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration
Statement may be sold without restriction pursuant to Rule 144 (the “Effectiveness Period”) and advise the Investors
in writing when the Effectiveness Period has expired;

 

(b)          prepare
and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c)          provide
copies to and permit counsel designated by the Investors to review each Registration Statement and all amendments and supplements
thereto no fewer than seven (7) days prior to their filing with the SEC and not file any document to which such counsel reasonably
objects;

 

(d)          furnish
to the Investors and their legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC,
or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the
case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and
each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC,
and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other
than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such
number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other
documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by
such Investor that are covered by the related Registration Statement;

 

(e)          use
commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if
such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

(f)          prior
to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with
the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that
the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction
where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in
any such jurisdiction;

 

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(g)          use
commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h)          immediately
notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any
event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(i)          otherwise
use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act, including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at any time during
the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors
are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as
may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement
covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose
of this subsection 3(i), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter); and

 

(j)          With
a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of
the SEC that may at any time permit the Investors to sell shares of Common Stock to the public without registration, the Company
covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) twelve (12) months after such date as all of the Registrable Securities may be sold without restriction
by the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities
shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under
the 1934 Act; and (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a
written statement by the Company that it has complied with the reporting requirements of the 1934 Act, (B) a copy of the Company’s
most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested
in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities
without registration.

 

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4.          Due
Diligence Review; Information. The Company shall make available, during normal business hours, for inspection and review by
the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are
reasonably acceptable to the Company), all financial and other records, all SEC Filings (as defined in the Purchase Agreement)
and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable time period,
to supply all such information reasonably requested by the Investors or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made
or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for
the sole purpose of enabling the Investors and such representatives, advisors and underwriters and their respective accountants
and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement.

 

The Company shall not
disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to
disclosure of such information the Company identifies such information as being material nonpublic information and provides the
Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information
for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company
with respect thereto.

 

5.          Obligations
of the Investors.

 

(a)          Each
Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably
request. At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires from such Investor if such Investor elects to have any of the
Registrable Securities included in the Registration Statement. An Investor shall provide such information to the Company at least
two (2) Business Days prior to the first anticipated filing date of such Registration Statement if such Investor elects to have
any of the Registrable Securities included in the Registration Statement.

 

(b)          Each
Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

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(c)          Each
Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to
Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor
is advised by the Company that such dispositions may again be made.

 

6.          Indemnification.

 

(a)          Indemnification
by the Company. The Company will indemnify and hold harmless each Investor and its officers, directors, members, employees
and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any
untrue statement or alleged untrue statement or omission or alleged omission of any material fact contained in any Registration
Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof; (ii) any blue sky application
or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company
filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws
thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission
or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements
therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act
applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration;
or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where
the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or
qualification on an Investor’s behalf and will reimburse such Investor, and each such officer, director or member and each
such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any
such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or
any such controlling person in writing specifically for use in such Registration Statement or Prospectus.

 

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(b)          Indemnification
by the Investors. Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted
by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning
of the 1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from
any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement
or Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing
by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement
thereto. In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all
expenses paid by such Investor in connection with any claim relating to this Section 6 and the amount of any damages such Investor
has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor upon the sale of the
Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

 

(c)          Conduct
of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses
of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses,
or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory
to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest
exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further,
that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the
defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding
in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified
parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect of such claim or litigation.

 

(d)          Contribution.
If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act
shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution
obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon
the sale of the Registrable Securities giving rise to such contribution obligation.

 

    	-11-

    	 

    

 

7.          Miscellaneous.

 

(a)          Amendments
and Waivers. This Agreement may be amended only by a writing signed by the Company and the Required Investors. 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 shall
have obtained the written consent to such amendment, action or omission to act, of the Required Investors.

 

(b)          Notices.
All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.

 

(c)          Assignments
and Transfers by Investors. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors
and their respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one
or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person,
provided that such Investor complies with all laws applicable thereto and provides written notice of assignment to the Company
promptly after such assignment is effected.

 

(d)          Assignments
and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise)
without the prior written consent of the Required Investors, provided, however, that in the event that the Company is a party to
a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into
the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of
such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed
to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by
the Investors in connection with such transaction unless such securities are otherwise freely tradable by the Investors after giving
effect to such transaction.

 

(e)          Benefits
of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(f)          Counterparts;
Faxes. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed
an original.

 

    	-12-

    	 

    

 

(g)          Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

 

(h)          Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted
as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable
in any respect.

 

(i)          Further
Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions
as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements
herein contained.

 

(j)          Entire
Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.
This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

(k)          Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement 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 Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action
or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.  EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST
A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS
TO THIS WAIVER.

 

    	-13-

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first
above written.

 

	The Company:	LUXEYARD, INC.
	 	 
	 	By:	/s/ Braden Richter	 
	 	Name: Braden Richter
	 	Title:   Chief Executive Officer

 

    	-14-

    	 

    

 

	 	 	 
	 	 	 	 
	 	By:	 	 
	 	Name:
	 	Title:

 

    	-15-

    	 

    

 

Exhibit A

 

Plan of Distribution

 

The selling stockholders,
which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests
in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common
stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

 

The selling stockholders
may use any one or more of the following methods when disposing of shares or interests therein:

 

		-	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

		-	block trades in which the broker-dealer will attempt to sell the shares as agent, but may position
and resell a portion of the block as principal to facilitate the transaction;

 

		-	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

		-	an exchange distribution in accordance with the rules of the applicable exchange;

 

		-	privately negotiated transactions;

 

		-	short sales effected after the date the registration statement of which this Prospectus is a part
is declared effective by the SEC;

 

		-	through the writing or settlement of options or other hedging transactions, whether through an
options exchange or otherwise;

 

		-	broker-dealers may agree with the selling stockholders to sell a specified number of such shares
at a stipulated price per share;

 

		-	a combination of any such methods of sale; and

 

		-	any other method permitted by applicable law.

 

    	-16-

    	 

    

 

The selling stockholders
may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of
common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of
common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.

 

In connection with
the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions
they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out
their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).

 

The aggregate proceeds
to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.
We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will
receive the exercise price of the warrants.

 

The selling stockholders
also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of that rule.

 

The selling stockholders
and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale
of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are "underwriters"
within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities
Act.

 

To the extent required,
the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering
prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement
that includes this prospectus.

 

In order to comply
with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered
or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified
for sale or an exemption from registration or qualification requirements is available and is complied with.

 

    	-17-

    	 

    

 

We have advised the
selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable we will make
copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the
purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under
the Securities Act.

 

We have agreed to indemnify
the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating
to the registration of the shares offered by this prospectus.

 

We have agreed with
the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier
of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration
statement or (2) the date on which all of the shares may be sold without restriction pursuant to Rule 144 of the Securities Act.

 

    	-18-NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS EXERCISABLE HAVE 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 (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

LUXEYARD, INC.

 

	Warrant Shares: ________	Initial Exercise Date: __________, 2012

 

THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, MAXIM PARTNERS LLC (the “Holder”),
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on
or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the fifth
anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase
from Luxeyard, Inc., a Delaware corporation (the “Company”), up to ______ shares (the “Warrant Shares”)
of common stock, $0.0001 par value per share (the “Common Stock”), of the Company. The purchase price of one
share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section
1. Definitions.

 

(a)          Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to them in that certain Securities Purchase Agreement
dated the date hereof among the Company and the investors named therein (the “Purchase Agreement”).

 

(b)          “Trading
Day” shall mean any day other than a Saturday, Sunday or a day on which banks in New York City or the New York Stock
Exchange are authorized or obligated by applicable law or executive order to close or are otherwise generally closed.

 

    	 

    	 

    

 

Section
2. Exercise.

 

(a)          Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice
in writing to the registered Holder at the address of such Holder appearing on the books of the Company); and, within three (3)
Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the
Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the
Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice
of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number
of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder
in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of
Exercise Form within one (1) Trading Day of receipt of such notice. In the event of any dispute or discrepancy, the records of
the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.

 

(b)          Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $________, subject to adjustment hereunder
(the “Exercise Price”).

 

(c)          Cashless
Exercise. If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement
registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also
be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate
for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

		(A) =	the volume weighted average price (“VWAP”)
on the Trading Day immediately preceding the date of such election;

 

		(B) =	the Exercise Price of this Warrant, as adjusted; and

 

		(X) =	the number of Warrant Shares issuable upon exercise of
this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

 

Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).

 

    	-2-

    	 

    

 

Notwithstanding
anything herein to the contrary, the Holder shall not be entitled in any circumstance whatsoever to receive a net cash settlement
in lieu of physical settlement in shares of Common Stock and this Warrant shall not be redeemed by the Company in whole or in part
for cash under any circumstances whatsoever.

 

(d)          Holder’s
Restrictions. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, such Holder (together with such Holder’s Affiliates, and any
other person or entity acting as a group together with such Holder or any of such Holder’s Affiliates), as set forth on the
applicable Notice of Exercise, would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall
include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by such Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations
promulgated thereunder, it being acknowledged by Holder that the Company does not represent to Holder that such calculation is
in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether
this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which a
portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise
shall be deemed to be each Holder’s determination of whether this Warrant is exercisable (in relation to other securities
owned by such Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to
such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected
in the most recently published of (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a public
announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to such 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 such Holder or its Affiliates since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

    	-3-

    	 

    

 

(e)          Mechanics
of Exercise.

 

i.            Authorization
of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

ii.         Delivery
of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent (or by
the Company in the event the Company has no transfer agent and, in such event certificates must be transmitted by physical delivery
to the Holder) of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such
system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within three (3) Trading
Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be deemed to
have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been
issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance
of such shares, have been paid.

 

iii.         Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

    	-4-

    	 

    

 

 

iv.         Rescission
Rights. If the Company fails to cause its Corporation’s transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to this Section 2(e)(iv) by the third Trading Day following the Warrant Share Delivery
Date, then the Holder will have the right to rescind such exercise.

 

v.           Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to transmit or to cause its transfer agent to transmit to the Holder a certificate or certificates representing
the Warrant Shares pursuant to an exercise on or before the third Trading Day following the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares
which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash
to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company
was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving
rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant
and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to
it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.

 

vi.         No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company
shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.

 

    	-5-

    	 

    

 

vii.         Charges,
Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued
in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto.

 

viii.         Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.

 

Section
3. Certain Adjustments.

 

(a)          Mergers
or Consolidations. If at any time after the date hereof there shall be a capital reorganization (other than a combination or
subdivision of the Common Shares otherwise provided for herein) resulting in a reclassification to or change in the terms of securities
issuable upon exercise of this Warrant (a “Reorganization”), or a merger or consolidation of the Company with
another corporation, association, partnership, organization, business, individual, government or political subdivision thereof
or a governmental agency (a “Person” or the “Persons”) (other than a merger with another
Person in which the Company is a continuing corporation and which does not result in any reclassification or change in the terms
of securities issuable upon exercise of this Warrant or a merger effected exclusively for the purpose of changing the domicile
of the Company) (a “Merger”), then, as a part of such Reorganization or Merger, lawful provision and adjustment
shall be made so that the Holder shall thereafter be entitled to receive, upon exercise of this Warrant, the number of shares of
stock or any other equity or debt securities or property receivable upon such Reorganization or Merger by a holder of the number
of Warrant Shares which might have been purchased upon exercise of this Warrant immediately prior to such Reorganization or Merger.
In any such case, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the
rights and interests of the Holder after the Reorganization or Merger to the end that the provisions of this Warrant (including
adjustment of the Exercise Price then in effect and the number of Warrant Shares) shall be applicable after that event, as near
as reasonably may be, in relation to any shares of stock, securities, property or other assets thereafter deliverable upon exercise
of this Warrant. The provisions of this Section 4.1 shall similarly apply to successive Reorganizations and Mergers.

 

    	-6-

    	 

    

 

(b)          Splits
and Subdivisions; Dividends. In the event the Company should at any time or from time to time effectuate a split or subdivision
of the outstanding Common Stock or pay a dividend in or make a distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to receive, directly or indirectly, additional shares of
Common Stock (hereinafter referred to as the “Common Share Equivalents”) without payment of any consideration
by such holder for the additional shares of Common Stock or Common Shares Equivalents (including the additional shares of Common
Stock issuable upon conversion or exercise thereof), then, as of the applicable record date (or the date of such distribution,
split or subdivision if no record date is fixed), the per share Exercise Price shall be appropriately decreased and the number
of Warrant Shares shall be appropriately increased in proportion to such increase (or potential increase) of outstanding shares;
provided, however, that no adjustment shall be made in the event the split, subdivision, dividend or distribution is not effectuated.
Notwithstanding the foregoing or anything else to the contrary herein, in no event shall the per share Exercise Price be reduced
below the par value of one share of Common Stock or of such other securities as may be issued upon exercise of the Warrant.

 

Pursuant
to the anti-dilution terms of this clause (b), provided that the public shareholders are proportionally affected by such split
or subdivision, dividend, distribution, or other similar event, the Holder may receive a greater number of Warrant Shares or the
per share Exercise Price may be lower than originally contemplated by this Warrant. Additionally, the Holder shall not have the
right to accrue cash dividends prior to the exercise or conversion of the Warrant.

 

(c)          Combination
of Shares. If the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination
of the outstanding shares of Common Stock, the per share Exercise Price shall be appropriately increased and the number of shares
of Warrant Shares shall be appropriately decreased in proportion to such decrease in outstanding shares.

 

(d)          Adjustments
for Other Distributions. In the event the Company shall declare a distribution payable in securities of other Persons, evidences
of indebtedness issued by the Company or other Persons, assets (excluding cash dividends or distributions to the holders of Common
Stock paid out of current or retained earnings and declared by the Company’s Board of Directors) or options or rights not
referred to in clauses (a), (b) and (c) above, then, in each such case for the purpose of this clause
(d), upon exercise of this Warrant, the Holder shall be entitled to a proportionate share of any such distribution as though the
Holder was the actual record holder of the number of Warrant Shares as of the record date fixed for the determination of the holders
of shares of Common Stock of the Company entitled to receive such distribution. 

 

    	-7-

    	 

    

 

Section
4. Transfer of Warrant.

 

(a)          Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and
all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, if any, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(b)          New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice.

 

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

 

(d)          Transfer
Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable
state securities or blue sky laws, the Company may require, as a condition of allowing such transfer, that (i) the Holder or transferee
of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration
under the Securities Act and under applicable state securities or blue sky laws, and (ii) the Holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to the Company, and (iii) the transferee be an “accredited
investor” as defined in Rule 501 promulgated under the Securities Act or a “qualified institutional buyer” as
defined in Rule 144A(a) promulgated under the Securities Act.

 

    	-8-

    	 

    

 

Section
5. Registration Rights. The Holder shall have the registration rights set forth in the Registration Rights Agreement
executed in connection with the Purchase Agreement and for purposes of the term Registrable Securities under the Registration Rights
Agreement, the Warrants shall be deemed to be Registrable Securities thereunder.

 

Section
6. Miscellaneous.

 

(a)          No
Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof as set forth in Section 2(e)(ii).

 

(b)          Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.

 

(c)          Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Trading, then such action may be taken or such right may be exercised on the next succeeding Trading
Day.

 

(d)          Authorized
Shares.

 

The Company covenants
that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty
of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the
purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the trading
market upon which the Common Stock may be listed.

 

Except and to the extent
as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets, consolidation, merger, 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, but will
at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon
such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and
(c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

 

    	-9-

    	 

    

 

Before taking any action
which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

 

(e)          Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the laws of the State of New York.

 

(f)          Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws.

 

(g)          Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

 

(h)          Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Subscription Agreement.

 

(i)          Limitation
of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for
the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

 

(j)          Remedies.
Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.

 

    	-10-

    	 

    

 

(k)          Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by
any such Holder or holder of Warrant Shares.

 

(l)          Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

(m)          Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.

 

(n)          Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.

 

************************

 

    	-11-

    	 

    

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	 	LUXEYARD, INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    	-12-

    	 

    

 

NOTICE OF EXERCISE

 

TO: __________________________

 

(1) The undersigned hereby
elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full),
and tenders herewith payment of the exercise price in full, together with. all applicable transfer taxes, if any.

 

(2) Payment shall take
the form of (check applicable box):

 

[ ] in lawful money
of the United States; or

 

[ ] [if permitted] the cancellation
of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth
in subsection 2(c).

 

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

 

_____________________________

 

The Warrant Shares shall be delivered to
the following DWAC Account Number or by physical delivery of a certificate to:

 

_____________________________

 

_____________________________

 

_____________________________

 

(4) Accredited Investor.
The undersigned is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities
Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:

_________________________________________________________

Signature of Authorized Signatory of Investing Entity:

___________________________________

Name of Authorized Signatory:

_____________________________________________________

Title of Authorized Signatory:

______________________________________________________

Date:

__________________________________________________________________________

 

    	 

    	 

    

  

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [      ]
all of or [            ] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

 

______________________________________whose
address is

 

___________________________________________________

 

Dated: ___________, _____

 

Holder’s Signature: ______________________

 

Holder’s Address: ______________________

 

Signature Guaranteed: ___________________________________

 

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 whatsoever,
and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing Warrant.

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