Document:

Blueprint

 

Exhibit 10.2

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY
IS CONVERTIBLE 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 CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

	

Original Issue Date: June 20, 2018

	

Principal Amount: $4,750,000

	
 

	

Purchase Price: $4,750,000

 

SENIOR SECURED

CONVERTIBLE PROMISSORY NOTE

DUE JUNE 20, 2019

 

THIS
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE is one of a series of
duly authorized and validly issued Senior Secured Convertible
Promissory Notes of New Age Beverages Corporation, a Washington
corporation (the “Company”), having its
principal place of business at 1700 E. 68th Avenue, Denver,
Colorado 80229, designated as its Senior Secured Convertible
Promissory Note due June 20, 2019 (this “Note”, or collectively
with the other Notes of such series, the “Notes”).

 

FOR
VALUE RECEIVED, the Company promises to pay to Dominion Capital LLC
or its registered assigns (the “Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of
$4,750,000 on June 20, 2019 (the “Maturity Date”) or such
earlier date as this Note is required or permitted to be repaid as
provided hereunder, and to pay interest to the Holder on the
aggregate unconverted and then outstanding principal amount of this
Note in accordance with the provisions hereof. All payments due
under this Note shall rank pari
passu with all other Notes. Following the full conversion or
redemption of the Series B Notes (as defined in the Purchase
Agreement) on or prior to the fifteenth (15) Trading Day
immediately following the Closing Date, the Notes shall be senior
to all indebtedness for borrowed money of any kind (including all
Indebtedness (as defined in the Purchase Agreement)) of the Company
and its Subsidiaries (other than Permitted Indebtedness),
including, without limitation any guarantee, on or with respect to
any of their respective properties or assets owned or hereafter
acquired or any interest therein or any income or profits
therefrom.

 

 

1

 

 

This
Note is subject to the following additional
provisions:

 

Section
1. Definitions. For the purposes
hereof, in addition to the terms defined elsewhere in this Note,
(a) capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement (as defined below) and
(b) the following terms shall have the following
meanings:

 

“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.

 

“Alternate
Consideration” shall have
the meaning set forth in Section 5(f).

 

“Bankruptcy
Event” means any of the
following events: (a) the Company or any Significant Subsidiary (as
such term is defined in Rule 1-02(w) of Regulation S-X for purposes
of this definition) thereof commences a case or other proceeding
under any bankruptcy, reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction relating to the Company or any
Significant Subsidiary thereof, (b) there is commenced against the
Company or any Significant Subsidiary thereof any such case or
proceeding that is not dismissed within sixty (60) days after
commencement, (c) the Company or any Significant Subsidiary thereof
is adjudicated insolvent or bankrupt or any order of relief or
other order approving any such case or proceeding is entered, (d)
the Company or any Significant Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial
part of its property that is not discharged or stayed within sixty
(60) calendar days after such appointment, (e) the Company or any
Significant Subsidiary thereof makes a general assignment for the
benefit of creditors, (f) the Company or any Significant Subsidiary
thereof calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts or (g) the
Company or any Significant Subsidiary thereof, by any act or
failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the
foregoing.

 

“Beneficial Ownership
Limitation” shall have
the meaning set forth in Section 4(d).

 

“Buy-In”
shall have the meaning set forth in Section
4(b)(v).

 

“Change of
Control” means any
Fundamental Transaction other than (i) any merger of the Company or
any of its, direct or indirect, wholly-owned Subsidiaries with or
into any of the foregoing Persons, (ii) any reorganization,
recapitalization or reclassification of the shares of Common Stock
in which holders of the Company’s voting power immediately
prior to such reorganization, recapitalization or reclassification
continue after such reorganization, recapitalization or
reclassification to hold publicly traded securities and, directly
or indirectly, are, in all material respects, the holders of at
least 50.1% of the voting power of the surviving entity (or
entities with the authority or voting power to elect the
members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities) after such
reorganization, recapitalization or reclassification, or (iii)
pursuant to a migratory merger effected solely for the purpose of
changing the jurisdiction of incorporation of the Company or any of
its Subsidiaries.

 

 

2

 

 

“Commission”
means the United States Securities and Exchange
Commission.

 

“Common
Stock” means the common
stock of the Company, par value $0.001 per share, and any other
class of securities into which such securities may hereafter be
reclassified or changed.

 

“Common Stock
Equivalents” means any
securities of the Company or any subsidiary which would entitle the
holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, right, option,
warrant, unit, or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.

 

“Company Optional
Redemption” shall have
the meaning set forth in Section 7(a).

 

“Company Optional
Redemption Amount” means,
with respect to an Company Optional Redemption pursuant to Section
7(a) and (b) herein, the sum of: (a) (i) 105% of the principal
amount of this Note that is subject to such Company Optional
Redemption, if the applicable Company Optional Redemption Date for
such Company Optional Redemption occurs on or prior to the date
that is the 120th
calendar day immediately following the
Original Issue Date, (ii) 108% of the principal amount of this Note
that is subject to such Company Optional Redemption, if the
applicable Company Optional Redemption Date for such Company
Optional Redemption occurs on or after the date that is the
121st
calendar day immediately following the
Original Issue Date and prior to the date that is the
151st
calendar day immediately following the
Original Issue Date, (iii) 112% of the principal amount of this
Note that is subject to such Company Optional Redemption, if the
applicable Company Optional Redemption Date for such Company
Optional Redemption occurs on or after the date that is the
151st
calendar day immediately following the
Original Issue Date and prior to the date that is the
181st
calendar day immediately following the
Original Issue Date, or (iv) 116% of the principal amount of this
Note that is subject to such Company Optional Redemption, if the
applicable Company Optional Redemption Date for such Company
Optional Redemption occurs on or after the date that is the
181st
calendar day immediately following the
Original Issue Date, (b) 100% of the accrued and unpaid interest on
the principal amount of this Note that is subject to such Company
Optional Redemption and all Late Fees (if any) due hereunder with
respect thereto, (c) 100% of the Make-Whole Amount payable in
respect of the principal amount of this Note that is subject to
such Company Optional Redemption (as applicable), and (d) all
liquidated damages, costs of collection and other amounts payable
in respect of this Note as of the applicable Company Optional
Redemption Date for such Company Optional
Redemption.

 

“Company Optional
Redemption Date” shall
have the meaning set forth in Section 7(a).

 

“Company Optional
Redemption Notice” shall
have the meaning set forth in Section 7(a).

 

“Company Optional
Redemption Notice Date”
shall have the meaning set forth in Section
7(a).

 

 

3

 

 

“Conversion”
means any conversion of any Conversion Amount under this Note into
shares of Common Stock pursuant to Section 4
herein.

 

“Conversion
Amount” means, with
respect to a Conversion pursuant to Section 4 herein, the sum of:
(a) (i) 105% of the principal amount of this Note to be converted
in such Conversion, if the applicable Conversion Date for such
Conversion occurs on or prior to the date that is the
120th
calendar day immediately following the
Original Issue Date, (ii) 108% of the principal amount of this Note
to be converted in such Conversion, if the applicable Conversion
Date for such Conversion occurs on or after the date that is the
121st
calendar day immediately following the
Original Issue Date and prior to the date that is the
151st
calendar day immediately following the
Original Issue Date, (iii) 112% of the principal amount of this
Note to be converted in such Conversion, if the applicable
Conversion Date for such Conversion occurs on or after the date
that is the 151st
calendar day immediately following the
Original Issue Date and prior to the date that is the
181st
calendar day immediately following the
Original Issue Date, or (iv) 116% of the principal amount of this
Note to be converted in such Conversion, if the applicable
Conversion Date for such Conversion occurs on or after the date
that is the 181st
calendar day immediately following the
Original Issue Date, (b) 100% of the accrued and unpaid interest on
the principal amount of this Note to be converted in such
Conversion and all Late Fees (if any) due hereunder with respect
thereto, (c) 100% of the Make-Whole Amount payable in respect of
the principal amount of this Note to be converted in such
Conversion (as applicable), and (d) all liquidated damages, costs
of collection and other amounts payable in respect of this Note as
of the applicable Conversion Date for such
Conversion.

 

“Conversion
Date” shall have the
meaning set forth in Section 4(a).

 

“Conversion
Schedule” means the
Conversion Schedule in the form of Schedule 1
attached hereto.

 

“Conversion
Shares” means,
collectively, the shares of Common Stock issuable upon Conversion
of this Note pursuant to Section 4 hereof in accordance with the
terms of this Note.

 

“DTC” means the Depository Trust
Company.

 

“Equity
Conditions” means: (i) on
each day during the period beginning twenty (20) Trading Days prior
to the applicable date of determination and ending on and including
the applicable date of determination (the
“Equity
Conditions Measuring Period”), all of the Conversion Shares issuable
upon conversion of all the Notes (assuming for purposes hereof that
the Notes are convertible at the applicable Conversion Price, and
disregarding any limitation on conversion of the Notes) shall be
eligible for sale pursuant to Rule 144 without the need for
registration under any applicable federal or state securities laws;
(ii) on each day during the Equity Conditions Measuring Period, the
Common Stock is listed or designated for quotation (as applicable)
on a Trading Market and shall not have been suspended from trading
on an Trading Market (other than suspensions of not more than two
(2) days and occurring prior to the applicable date of
determination due to business announcements by the Company) nor
shall delisting or suspension by an Trading Market have been
threatened (with a reasonable prospect of delisting occurring) or
pending either (A) in writing by such Trading Market or (B) by
falling below the minimum listing maintenance requirements of the
Trading Market on which the Common Stock is then listed or
designated for quotation (as applicable); (iii) on each day during
the Equity Conditions Measuring Period, the Company shall have
delivered all shares of Common Stock issuable upon conversion of
this Note on a timely basis as set forth in Section 4 hereof and
all other shares of capital stock required to be delivered by the
Company on a timely basis as set forth in the other Transaction
Documents; (iv) any shares of Common Stock to be issued in
connection with the event requiring determination may be issued in
full without violating Section 4(d) hereof; (v) any shares of
Common Stock to be issued in connection with the event requiring
determination may be issued in full without violating the rules or
regulations of the Trading Market on which the Common Stock is then
listed or designated for quotation (as applicable); (vi) on each
day during the Equity Conditions Measuring Period, no public
announcement of a pending, proposed or intended Fundamental
Transaction shall have occurred which has not been abandoned,
terminated or consummated; (vii) the Company shall have no
knowledge of any fact that would reasonably be expected to cause
any Conversion Shares to not be eligible for sale pursuant to Rule
144 without the need for registration under any applicable federal
or state securities laws; (viii) the Holder shall not be in
possession of any material, non-public information provided to any
of them by the Company, any of its Subsidiaries or any of their
respective affiliates, employees, officers, representatives, agents
or the like; (ix) on each day during the Equity Conditions
Measuring Period, the Company otherwise shall have been in
compliance with each, and shall not have breached any provision,
covenant, representation or warranty of any Transaction Document;
and (x) on each day during the Equity Conditions Measuring Period,
there shall not have occurred an Event of Default or an event that
with the passage of time or giving of notice would constitute an
Event of Default.

 

 

4

 

 

“Equity Conditions
Failure” means that on
any day during the period commencing ten (10) Trading Days prior to
the applicable Company Optional Redemption Notice Date through the
applicable Company Optional Redemption Date, the Equity Conditions
have not been satisfied (or waived in writing by the
Holder).

 

“Event of
Default” shall have the
meaning set forth in Section 6(a).

 

“Event of Default
Notice” shall have the
meaning set forth in Section 6(b).

 

“Event of Default
Notice Date” shall have
the meaning set forth in Section 6(b).

 

“Event of Default
Redemption” shall have
the meaning set forth in Section 6(b).

 

“Event of Default
Redemption Amount” means,
with respect to an Event of Default Redemption pursuant to Section
6(b) herein, the sum of: (a) (i) 105% of the principal amount of
this Note that is subject to such Event of Default Redemption, if
the applicable Event of Default Redemption Date for such Event of
Default Redemption occurs on or prior to the date that is the
120th
calendar day immediately following the
Original Issue Date, (ii) 108% of the principal amount of this Note
that is subject to such Event of Default Redemption, if the
applicable Event of Default Redemption Date for such Event of
Default Redemption occurs on or after the date that is the
121st
calendar day immediately following the
Original Issue Date and prior to the date that is the
151st
calendar day immediately following the
Original Issue Date, (iii) 112% of the principal amount of this
Note that is subject to such Event of Default Redemption, if the
applicable Event of Default Redemption Date for such Event of
Default Redemption occurs on or after the date that is the
151st
calendar day immediately following the
Original Issue Date and prior to the date that is the
181st
calendar day immediately following the
Original Issue Date, or (iv) 116% of the principal amount of this
Note that is subject to such Event of Default Redemption, if the
applicable Event of Default Redemption Date for such Event of
Default Redemption occurs on or after the date that is the
181st
calendar day immediately following the
Original Issue Date, (b) 100% of the accrued and unpaid interest on
the principal amount of this Note that is subject to such Event of
Default Redemption and all Late Fees (if any) due hereunder with
respect thereto, (c) 100% of the Make-Whole Amount payable in
respect of the principal amount of this Note that is subject to
such Event of Default Redemption (as applicable), and (d) all
liquidated damages, costs of collection and other amounts payable
in respect of this Note as of the applicable Event of Default
Redemption Date for such Event of Default
Redemption.

 

“Event of Default Redemption
Date” shall have the
meaning set forth in Section 6(b).

 

“Event of Default Redemption
Notice” shall have the
meaning set forth in Section 6(b).

 

“Event of Default Redemption Notice
Date” shall have the
meaning set forth in Section 6(b).

 

“Event of Default
Redemption Price”
means, with respect to any portion of this Note subject to
redemption pursuant to an Event of Default Redemption under Section
6(b) herein, a price equal to the product of (i) the applicable
Event of Default Redemption Amount subject to such Event of Default
Redemption, multiplied by (ii) 110%.

 

 

5

 

 

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

 

“Exempt Issuance” means
the issuance of the Securities (as defined in the Purchase
Agreement) by the Company pursuant to the terms and conditions of
the Purchase Agreement and upon conversion of the Notes in
accordance with the terms of the Notes, as applicable.

 

“Fixed Conversion
Price” shall have the
meaning set forth in Section 4(b).

 

“Fundamental
Transaction” shall have
the meaning set forth in Section 5(e).

 

“Holder Optional
Redemption” shall have
the meaning set forth in Section 7(e).

 

“Holder Optional
Redemption Amount” means,
with respect to a Holder Optional Redemption pursuant to Section
7(e) and (f) herein, the sum of: (a) (i) 105% of the principal
amount of this Note that is subject to such Holder Optional
Redemption, if the applicable Holder Optional Redemption Date for
such Holder Optional Redemption occurs on or prior to the date that
is the 120th
calendar day immediately following the
Original Issue Date, (ii) 108% of the principal amount of this Note
that is subject to such Holder Optional Redemption, if the
applicable Holder Optional Redemption Date for such Holder Optional
Redemption occurs on or after the date that is the
121st
calendar day immediately following the
Original Issue Date and prior to the date that is the
151st
calendar day immediately following the
Original Issue Date, (iii) 112% of the principal amount of this
Note that is subject to such Holder Optional Redemption, if the
applicable Holder Optional Redemption Date for such Holder Optional
Redemption occurs on or after the date that is the
151st
calendar day immediately following the
Original Issue Date and prior to the date that is the
181st
calendar day immediately following the
Original Issue Date, or (iv) 116% of the principal amount of this
Note that is subject to such Holder Optional Redemption, if the
applicable Holder Optional Redemption Date for such Holder Optional
Redemption occurs on or after the date that is the
181st
calendar day immediately following the
Original Issue Date, (b) 100% of the accrued and unpaid interest on
the principal amount of this Note that is subject to such Holder
Optional Redemption and all Late Fees (if any) due hereunder with
respect thereto, (c) 100% of the Make-Whole Amount payable in
respect of the principal amount of this Note that is subject to
such Holder Optional Redemption (as applicable), and (d) all
liquidated damages, costs of collection and other amounts payable
in respect of this Note as of the applicable Holder Optional
Redemption Date for such Holder Optional
Redemption.

 

“Holder Optional
Redemption Date” shall
have the meaning set forth in Section 7(e).

 

“Holder Optional
Redemption Notice” shall
have the meaning set forth in Section 7(e).

 

“Holder Optional
Redemption Notice Date”
shall have the meaning set forth in Section
7(e).

 

“Holder Optional
Redemption Trigger Date”
shall have the meaning set forth in Section
7(e).

 

“Interest Payment
Date” shall have the
meaning set forth in Section 2(a).

 

 

6

 

 

“Late
Fees” shall have the
meaning set forth in Section 2(c).

 

“Make-Whole
Amount” shall have the
meaning set forth in Section 2(a).

 

“Make-Whole Trigger
Date” shall have the
meaning set forth in Section 2(a).

 

“Mandatory
Redemption” shall have
the meaning set forth in Section 7(c).

 

“Mandatory Redemption
Amount” means, with
respect to a Mandatory Redemption pursuant to Section 7(c) and (d)
herein, the sum of: (a) (i) 105% of the principal amount of this
Note that is subject to such Mandatory Redemption, if the
applicable Mandatory Redemption Date for such Mandatory Redemption
occurs on or prior to the date that is the 120th
calendar day immediately following the
Original Issue Date, (ii) 108% of the principal amount of this Note
that is subject to such Mandatory Redemption, if the applicable
Mandatory Redemption Date for such Mandatory Redemption occurs on
or after the date that is the 121st
calendar day immediately following the
Original Issue Date and prior to the date that is the
151st
calendar day immediately following the
Original Issue Date, (iii) 112% of the principal amount of this
Note that is subject to such Mandatory Redemption, if the
applicable Mandatory Redemption Date for such Mandatory Redemption
occurs on or after the date that is the 151st
calendar day immediately following the
Original Issue Date and prior to the date that is the
181st
calendar day immediately following the
Original Issue Date, or (iv) 116% of the principal amount of this
Note that is subject to such Mandatory Redemption, if the
applicable Mandatory Redemption Date for such Mandatory Redemption
occurs on or after the date that is the 181st
calendar day immediately following the
Original Issue Date, (b) 100% of the accrued and unpaid interest on
the principal amount of this Note that is subject to such Mandatory
Redemption and all Late Fees (if any) due hereunder with respect
thereto, (c) 100% of the Make-Whole Amount payable in respect of
the principal amount of this Note that is subject to such Mandatory
Redemption (as applicable), and (d) all liquidated damages, costs
of collection and other amounts payable in respect of this Note as
of the applicable Mandatory Redemption Date for such Mandatory
Redemption.

 

“Mandatory Redemption
Date” shall have the
meaning set forth in Section 7(c).

 

“Mandatory Redemption
Notice” shall have the
meaning set forth in Section 7(c).

 

“Maturity Date” shall mean
June 20, 2019; provided, however, the Maturity Date may be extended
at the option of the Holder (i) in the event that, and for so long
as, an Event of Default shall have occurred and be continuing or
any event shall have occurred and be continuing that with the
passage of time and the failure to cure would result in an Event of
Default or (ii) through the date that is twenty (20) Trading Days
after the consummation of a Fundamental Transaction in the event
that a Fundamental Transaction is publicly announced or a
Fundamental Transaction Notice is delivered prior to the Maturity
Date, provided further that if a Holder elects to convert some or
all of this Note pursuant to Section 4 hereof, and the Conversion
Amount would be limited pursuant to Section 4(d) hereunder, the
Maturity Date shall automatically be extended until such time as
such provision shall not limit the conversion of this
Note.

 

“New York
Courts” shall have the
meaning set forth in Section 8(d).

 

 

7

 

 

 

“Note
Register” shall have the
meaning set forth in Section 2(b).

 

“Notice of
Conversion” shall have
the meaning set forth in Section 4(a).

 

“Original Issue
Date” means the date of
the first issuance of this Note, regardless of any transfers of any
Note and regardless of the number of instruments which may be
issued to evidence such Note.

 

“Qualified Subsequent
Financing” means a
Subsequent Financing resulting in cash Qualified Subsequent
Financing Net Proceeds (excluding any amounts paid or payable for
any shares upon the exercise or conversion of any Common Stock
Equivalents issued in such Qualified Subsequent Financing) to the
Company in an amount equal to or greater than the minimum amount of
cash necessary for the Company to effect a Mandatory Redemption of
all, but not less than all, of the entire aggregate then
outstanding principal amount of the Notes, plus accrued but unpaid
interest thereon, Make-Whole Amount, Late Fees, liquidated damages
and other amounts owing in respect thereof through the Mandatory
Redemption Date under the Notes and the other Transaction
Documents, at a cash redemption price equal to the Mandatory
Redemption Amount on the Mandatory Redemption Date, such that all
of the Notes may be so redeemed in full by the Company in
accordance with their terms, including, without limitation, payment
in full of the Mandatory Redemption Amount to the holders of the
Notes.

 

“Qualified Subsequent Financing Net
Proceeds” means, with respect to any Qualified
Subsequent Financing, an amount equal to the difference of (A) the
aggregate gross cash proceeds to the Company from such Qualified
Subsequent Financing, (i) prior to deducting any underwriting
discounts or commissions, any placement agent or other fees and
commissions, and any other offering fees or expenses payable by the
Company in connection with such Qualified Subsequent Financing and
(ii) excluding any amounts paid or payable for any shares of Common
Stock that may be acquired pursuant to the exercise or conversion
of any Common Stock Equivalents sold to the investors in such
Qualified Subsequent Financing, minus (B) all underwriting
discounts and commissions, all placement agent and other fees and
commissions, and all other offering fees or expenses payable by the
Company in connection with such Qualified Subsequent Financing,
including, without limitation, all direct out-of-pocket actual and
estimated professional fees, disbursements and other costs or
expenses incurred by the Company in connection with such Qualified
Subsequent Financing.

 

“Permitted
Indebtedness” means the
indebtedness evidenced by the Notes.

 

”Permitted
Lien” means the
individual and collective reference to the following: (a) Liens for
taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges
or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment
of the management of the Company) have been established in
accordance with GAAP, (b) Liens imposed by law which were incurred
in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of the Company’s business, and which
(x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien, and (c) Liens incurred in
connection with Permitted Indebtedness.

 

 

8

 

 

“Person”
means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any
kind.

 

“Pre-Notice”
shall have the meaning set forth in Section
7(c).

 

“Purchase
Agreement” means that
certain Securities Purchase Agreement, dated June 20, 2018 between
the Company and the Holder.

 

“Registration Rights
Agreement” means that
certain Registration Rights Agreement between the Company and the
Holder, dated June 20, 2018.

 

“Required Minimum” means,
as of any date, the maximum aggregate number of Conversion Shares
issuable upon Conversion in full of this Note, ignoring any
Conversion limits set forth in Section 4(d), and assuming that the
Fixed Conversion Price is at all times on and after the date of
determination 100% of the Fixed Conversion Price on the Trading Day
immediately prior to the date of determination.

 

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

 

“Share Delivery
Date” shall have the
meaning set forth in Section 4(c)(ii).

 

“Subsequent
Financing” means any
issuance by the Company or any of its Subsidiaries of Common Stock
or Common Stock Equivalents for cash consideration, Indebtedness or
a combination of units thereof.

 

“Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1 of the Purchase
Agreement and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the
date hereof.

 

“Successor
Entity” shall have the
meaning set forth in Section 5(e).

 

“Trading
Day” means a day on which
the principal Trading Market is open for
trading.

 

“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American; the Nasdaq Capital Market; the Nasdaq Global Market; the
Nasdaq Global Select Market; the New York Stock Exchange; any level
of the OTC Markets operated by OTC Markets Group, Inc. or the OTC
Bulletin Board (or any successors to any of the
foregoing).

 

 

9

 

 

Section
2. Interest.

 

a) Payment of Interest in Cash.
The Company shall pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Note at
the rate of 8% per annum, payable monthly, beginning on the first
such date after the Original Issue Date, on each Conversion Date
(as to that principal amount then being converted), on each Company
Optional Redemption Date (as to that principal amount then being
redeemed), on each Holder Optional Redemption Date (as to that
principal amount then being redeemed), on each Event of Default
Redemption Date (as to that principal amount then being redeemed),
on each Mandatory Redemption Date (as to that principal amount then
being redeemed) and on the Maturity Date (each such date, an
“Interest Payment
Date”) (if any Interest Payment Date is not a Business
Day, then the applicable payment shall be due on the next
succeeding Business Day), in cash. If all or any portion of this
Note remains outstanding on or after October 18, 2018 (the
“Make-Whole Trigger
Date”), then, with respect to any principal amount of
this Note being converted or redeemed hereunder on any Conversion
Date, Company Optional Redemption Date, Holder Optional Redemption
Date, Event of Default Redemption Date or Mandatory Redemption Date
(as applicable) that occurs on or after the Make-Whole Trigger Date
and prior to the Maturity Date, and in addition to the amount of
interest payable to the Holder in accordance with the immediately
preceding sentence of this Section 2(a) on such Conversion Date,
Company Optional Redemption Date, Holder Optional Redemption Date,
Event of Default Redemption Date or Mandatory Redemption Date (as
applicable), the amount of interest that would have accrued with
respect to such principal amount of this Note being converted or
redeemed hereunder at the applicable interest rate hereunder for
the period from such applicable Conversion Date, Company Optional
Redemption Date, Holder Optional Redemption Date, Event of Default
Redemption Date or Mandatory Redemption Date through the earlier of
(i) the date that is the six (6) month anniversary of such
applicable Conversion Date, Company Optional Redemption Date,
Holder Optional Redemption Date, Event of Default Redemption Date
or Mandatory Redemption Date and (ii) the Maturity Date (such
additional interest amount, the “Make-Whole Amount”),
shall be guaranteed and shall be accelerated and payable to the
Holder in connection with the conversion or redemption of this Note
on such applicable Conversion Date, Company Optional Redemption
Date, Holder Optional Redemption Date, Event of Default Redemption
Date or Mandatory Redemption Date.

 

b) Interest Calculations. Interest
shall be calculated on the basis of a 360-day year, consisting of
twelve (12) thirty (30) calendar day periods, and shall accrue
daily commencing on the Original Issue Date until payment in full
of the outstanding principal, together with all accrued and unpaid
interest, liquidated damages and other amounts which may become due
hereunder, has been made. Interest hereunder will be paid to the
Person in whose name this Note is registered on the records of the
Company regarding registration and transfers of this Note (the
“Note
Register”).

 

c) Late Fee. All overdue accrued
and unpaid interest to be paid hereunder shall entail a late fee at
an interest rate equal to the lesser of eighteen percent (18%) per
annum or the maximum rate permitted by applicable law (the
“Late
Fees”) which shall accrue daily from the date such
interest is due hereunder through and including the date of actual
payment in full.

 

 

 

10

 

 

Section
3. Registration of Transfers and
Exchanges.

 

a) Different Denominations. This
Note is exchangeable for an equal aggregate principal amount of
Note of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be payable for
such registration of transfer or exchange.

 

b) Investment Representations.
This Note has been issued subject to certain investment
representations of the original Holder and may be transferred or
exchanged only in compliance with applicable federal and state
securities laws and regulations.

 

c) Reliance on Note Register.
Prior to due presentment for transfer to the Company of this Note,
the Company and any agent of the Company may treat the Person in
whose name this Note is duly registered on the Note Register as the
owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Note is
overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

 

Section
4. Conversion.

 

a) Voluntary
Conversion. At any time after the Original Issue Date until
this Note is no longer outstanding, this Note shall be convertible,
in whole or in part, into shares of Common Stock at the option of
the Holder, at any time and from time to time (subject to the
conversion limitations set forth in Section 4(d) hereof). The
Holder shall effect Conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as
Annex A (each, a
“Notice of
Conversion”), specifying therein the Conversion Amount
to be converted and the date on which such Conversion shall be
effected (such date, the “Conversion Date”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is
deemed delivered hereunder. No ink-original Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Conversion form be
required. To effect Conversions hereunder, the Holder shall not be
required to physically surrender this Note to the Company unless
the entire principal amount of this Note, plus all accrued and
unpaid interest thereon, Late Fees (if
any), Make-Whole Amounts (as applicable) and other amounts payable
in respect of this Note, has been so converted. Conversions
hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount equal to 100%
(irrespective of any higher percentage used in calculating the
Conversion Amount hereunder as set forth in the definition of
“Conversion Amount”) of the principal amount of this Note to be
converted in such Conversion. The Holder and the Company shall
maintain a Conversion Schedule showing the principal amount(s)
converted and the date of such Conversion(s). The Company may
deliver an objection to any Notice of Conversion within one (1)
Business Day of delivery of such Notice of Conversion. 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 Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this
Note may be less than the amount stated on the face
hereof.

 

 

 

11

 

 

 

b) Conversion Price. The
conversion price in effect on any Conversion Date shall be equal to
$1.89, subject to adjustment as provided in this Note (the
“Fixed Conversion
Price”). Nothing herein shall limit a Holder’s
right to pursue actual damages or declare an Event of Default
pursuant to Section 6 hereof and the Holder shall have the right to
pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.

 

c) Mechanics of
Conversion.

 

i. Conversion Shares Issuable Upon
Conversion of Conversion Amount. The number of Conversion
Shares issuable upon a Conversion of any Conversion Amount
hereunder shall be determined by the quotient obtained by dividing
(x) such Conversion Amount by (y) the Fixed Conversion
Price.

 

ii. Delivery of Certificate Upon
Conversion. Not later than two (2) Trading Days after each
Conversion Date (the “Share Delivery Date”),
the Company shall deliver, or cause to be delivered, to the Holder
a certificate or certificates representing the Conversion Shares
which, on or after the date on which such Conversion Shares are
eligible to be sold under Rule 144 without the need for current
public information and the Company has received an opinion of
counsel to such effect, which such opinion must be acceptable to
the Holder in its sole and absolute discretion (which opinion the
Company shall be responsible for obtaining at its sole cost and
expense) shall be free of restrictive legends and trading
restrictions, representing the number of Conversion Shares being
acquired upon the conversion of this Note. All certificate or
certificates required to be delivered by the Company under this
Section 4(c) shall be delivered electronically through the DTC or
another established clearing corporation performing similar
functions. If the Conversion Date is prior to the date on which
such Conversion Shares are eligible to be sold under Rule 144
without the need for current public information, or there is no
registration statement in effect covering the Conversion Shares,
the Conversion Shares shall bear a restrictive legend in the
following form, as appropriate:

 

“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.”

 

 

 

12

 

 

Notwithstanding the
foregoing, commencing on such date that the Conversion Shares are
eligible for sale under Rule 144 subject to current public
information requirements, the Company, upon request and at the sole
cost and expense of the Company, shall obtain a legal opinion that
is acceptable to the Holder in its sole and absolute discretion, to
allow for such sales under Rule 144.

 

iii. Failure
to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date,
the Holder shall be entitled to elect by written notice to the
Company at any time on or before its receipt of such certificate or
certificates, to rescind such Conversion, in which event the
Company shall promptly return to the Holder any original Note
delivered to the Company and the Holder shall promptly return to
the Company the Common Stock certificates issued to such Holder
pursuant to the rescinded Conversion Notice.

 

iv. Obligation
Absolute; Partial Liquidated Damages. The Company’s
obligations to issue and deliver the Conversion Shares upon
conversion of this Note in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any
obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to the Holder in connection with the issuance of such
Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the event the Holder of
this Note shall elect to convert any or all of the outstanding
Conversion Amount hereof, the Company may not refuse conversion
based on any claim that the Holder or anyone associated or
affiliated with the Holder has been engaged in any violation of
law, agreement or for any other
reason, unless an injunction from a court, on notice to Holder,
restraining and or enjoining conversion of all or part of this Note
shall have been sought. If the injunction is not granted, the
Company shall promptly comply with all conversion obligations
herein. In the absence of seeking such injunction, the Company
shall issue Conversion Shares or, if applicable, cash, upon a
properly noticed Conversion. If the Company fails for any reason to
deliver to the Holder such certificate or certificates pursuant to
Section 4(c)(ii) by the Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty,
$1,000 per Trading Day for each Trading Day after such Share
Delivery Date until such certificates are delivered or Holder
rescinds such Conversion. Nothing herein shall limit a
Holder’s right to pursue actual damages or declare an Event
of Default pursuant to Section 6 hereof for the Company’s
failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.

 

 

 

13

 

 

v. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if the Company
fails for any reason to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant to Section
4(c)(ii), and if after such Share Delivery Date the Holder is
required by its brokerage firm 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 Conversion Shares which
the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder (in addition
to any other remedies available to or elected by the Holder) the
amount, if any, by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that the Holder was entitled to receive from
the conversion at issue multiplied by (2) the actual sale price at
which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the
option of the Holder, either reissue (if surrendered) this Note in
a principal amount equal to the principal amount of the attempted
conversion (in which case such conversion shall be deemed
rescinded) or deliver to the Holder the number of shares of Common
Stock that would have been issued if the Company had timely
complied with its delivery requirements under Section 4(c)(ii). 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 conversion of this Note with respect to which the actual
sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) 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
conversion of this Note as required pursuant to the terms
hereof.

 

vi. Reservation of Shares Issuable Upon
Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued
shares of Common Stock a number of shares of Common Stock at least
equal to three hundred percent (300%) of the Required Minimum (the
“Reserve
Amount”) for the sole purpose of issuance upon
conversion of this Note as herein provided, free from preemptive
rights or any other actual contingent purchase rights of Persons
other than the Holder (and the other holders of the Notes). The
Company covenants that all shares of Common Stock that shall be so
issuable shall, upon issue, be duly authorized, validly issued,
fully paid and nonassessable.

 

vii. Fractional
Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Note.
As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such conversion, 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
Fixed Conversion Price or round up to the next whole
share.

 

 

14

 

 

viii. Transfer
Taxes and Expenses. The issuance of certificates for shares
of the Common Stock on conversion of this Note shall be made
without charge to the Holder hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or
delivery of such certificates, provided that, the Company shall not
be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder
of this Note so converted and the Company shall not be required to
issue or deliver such certificates unless or until the Person or
Persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid. The
Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Conversion.

 

d) Holder’s
Conversion Limitations. The Company shall not effect any
conversion of this Note, and a Holder shall not have the right to
convert any portion of this Note, to the extent that after giving
effect to the conversion set forth on the applicable Notice of
Conversion, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with
the Holder or any of the Holder’s Affiliates (such Persons,
“Attribution
Parties”)) would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates and Attribution
Parties shall include the number of shares of Common Stock issuable
upon conversion of this Note with respect to which such
determination is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (i) conversion of the
remaining, unconverted principal amount of this Note beneficially
owned by the Holder or any of its Affiliates or Attribution Parties
and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation
contained herein (including, without limitation, any other Notes)
beneficially owned by the Holder or any of its Affiliates or
Attribution Parties. Except as set forth in the preceding sentence,
for purposes of this Section 4(d), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. To the extent
that the limitation contained in this Section 4(d) applies, the
determination of whether this Note is convertible (in relation to
other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which principal amount of this Note
is convertible shall be in the sole discretion of the Holder, and
the submission of a Notice of Conversion shall be deemed to be the
Holder’s determination of whether this Note may be converted
(in relation to other securities owned by the Holder together with
any Affiliates or Attribution Parties) and which principal amount
of this Note is convertible, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction,
the Holder will be deemed to represent to the Company each time it
delivers a Notice of Conversion that such Notice of Conversion has
not violated the restrictions set forth in this paragraph 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 4(d), in
determining the number of outstanding shares of Common Stock, the
Holder may rely on the number of outstanding shares of Common Stock
as stated in the most recent of the following: (i) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (ii) a more recent public
announcement by the Company, or (iii) a more recent written 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 one Trading
Day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Note, by the 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 4.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable
upon conversion of this Note held by the Holder. The Holder, upon
notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 4(d), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock upon conversion of this Note held by the
Holder and the Beneficial Ownership Limitation provisions of this
Section 4(d) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the
61st
day after such notice is delivered to
the Company. The Beneficial Ownership Limitation provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 4(d) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein 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 Note.

 

 

 

15

 

 

Section
5. Certain
Adjustments.

 

a) Stock Dividends and Stock
Splits. If the Company, at any time while this Note is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any Common Stock Equivalents (which, for
avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon conversion of, or payment of interest
on, this Note), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of
a reverse stock split) outstanding shares of Common Stock into a
smaller number of shares or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Company, then the Fixed Conversion Price shall
be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of
the Company) outstanding immediately before such event, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section shall become effective immediately after
the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.

 

b) [Reserved]

 

c) [Reserved]

 

d) Subsequent Rights Offerings. In
addition to any adjustments pursuant to Section 5(a) above, if at
any time the Company grants, issues or sells any Common Stock
Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
shares of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of
shares of Common Stock acquirable upon complete conversion of this
Note (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).

 

 

 

16

 

 

e) Pro Rata Distributions. While
this Note is outstanding, the Company shall not declare or make any
dividend or other distribution of its assets (or rights to acquire
its assets) to holders of shares of Common Stock, by way of return
of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”). In the
event that the Note is repaid at the time of such Distribution, the
Holder shall not be entitled to participate in such Distribution.
If the Holder and the Company mutually agree, and the Note is not
repaid at the time of such Distribution, then the Holder shall be
entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete
exercise of this Note (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record
is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are
to be determined for the participation in such Distribution
(provided,
however, to the
extent that the Holder’s right to participate in any such
Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of
such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership
Limitation).

 

f) Fundamental
Transaction. If, at any time while this Note is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders
of fifty percent (50%) or more of the outstanding Common Stock,
(iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
(v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires
more than fifty percent (50%) of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other
Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or
share purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon
any subsequent conversion of this Note, the Holder shall have the
right to receive, for each Conversion Share that would have been
issuable upon such conversion immediately prior to the occurrence
of such Fundamental Transaction (without regard to any limitation
in Section 4(d) on the conversion of this Note), the number of
shares of Common Stock of the successor or acquiring corporation or
of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate
Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Note is
convertible immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 4(d) on the conversion
of this Note). For purposes of any such conversion, the
determination of the Fixed Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1)
share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Fixed Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Note following such Fundamental Transaction. The Company shall
cause any successor entity in a Fundamental Transaction in which
the Company is not the survivor (the “Successor
Entity”) to assume in
writing all of the obligations of the Company under this Note and
any document ancillary hereto, in accordance with the provisions of
this Section 5(f) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the
Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the holder of this Note,
deliver to the Holder in exchange for this Note a security of the
Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Note which is convertible for
a corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon conversion of this Note
(without regard to any limitations on the conversion of this Note)
prior to such Fundamental Transaction, and with a conversion price
which applies the conversion price hereunder to such shares of
capital stock (but taking into account the relative value of the
shares of Common Stock pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such number of shares of
capital stock and such conversion price being for the purpose of
protecting the economic value of this Note immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Note and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Note and
the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company
herein.

 

 

 

17

 

 

g) Calculations. All calculations
under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 5, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of
the Company) issued and outstanding.

 

h) Notice to the
Holder.

 

i. Adjustment to Fixed Conversion
Price. Whenever the Fixed Conversion Price is adjusted
pursuant to any provision of Section 5(a), the Company shall
promptly deliver to each Holder a notice setting forth the Fixed
Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.

 

ii. Notice to Allow Conversion by
Holder. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock of rights or warrants
to subscribe for or purchase any shares of capital stock of any
class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash
or property or (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of
conversion of this Note, and shall cause to be delivered to the
Holder at its last address as it shall appear upon the Note
Register, at least twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
convert this Note during the 20-day period commencing on the date
of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth
herein.

 

 

 

18

 

 

 

i) Subsequent Equity Sales; Variable Rate
Transactions; Other.

 

(1) So long as this
Note remains outstanding, neither the Company nor any Subsidiary
shall, directly or indirectly, issue, enter into any agreement to
issue or publicly announce the issuance or proposed issuance of any
shares of Common Stock or Common Stock Equivalents (or a
combination of units thereof), or recommend to its stockholders the
approval or adoption thereof by such stockholders, without the
prior written consent of the Holder (which consent may be withheld,
delayed or conditioned in the sole discretion of such Holder). The
restrictions contained in this Section 5(i)(1) shall not apply to
(i) an Exempt Issuance or (ii) a Qualified Subsequent Financing,
provided that all Qualified Subsequent Financing Net Proceeds from
such Qualified Subsequent Financing are utilized solely to effect a
Mandatory Redemption of the Notes in accordance with Sections 7(c)
and 7(d) of the Notes, until all of the Notes are so redeemed in
full in accordance with their terms, including, without limitation,
payment in full of the Mandatory Redemption Amount to the holders
of the Notes, and are no longer outstanding.

 

(2) So long as this
Note remains outstanding or the Holder holds any Securities (as
defined in the Purchase Agreement), the Company shall not, directly
or indirectly, amend, modify, waive or alter any terms or
conditions of any Common Stock Equivalents outstanding as of the
date of the Purchase Agreement to decrease the exercise, conversion
and/or exchange price, as applicable, thereunder or otherwise
increase the aggregate number of shares of Common Stock issuable in
connection therewith (other than in connection with stock splits or
combinations).

 

(3) So long as this
Note remains outstanding or the Holder holds any Securities, the
Company and each of its Subsidiaries shall be prohibited from
effecting or entering into (or publicly announcing or recommending
to its stockholders the approval or adoption thereof by such
stockholders) any agreement, plan, arrangement or transaction to
effect, directly or indirectly, any issuance by the Company or any
of its Subsidiaries of Common Stock or Common Stock Equivalents (or
a combination of units thereof) involving a Variable Rate
Transaction, without the prior written consent of the Holder (which
consent may be withheld, delayed or conditioned in the sole
discretion of such Holder). “Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into,
or effects a transaction under, any agreement, including, but not
limited to, an equity line of credit, an at-the-market offering (as
defined in SEC Rule 415) or a similarly structured transaction,
whereby the Company may issue securities at a future determined
price. Notwithstanding the foregoing, the restrictions contained in
this Section 5(i)(3) shall not apply to (i) an Exempt Issuance or
(ii) a Qualified Subsequent Financing, provided that all Qualified
Subsequent Financing Net Proceeds from such Qualified Subsequent
Financing are utilized solely to effect a Mandatory Redemption of
the Notes in accordance with Sections 7(c) and 7(d) of the Notes,
until all of the Notes are so redeemed in full in accordance with
their terms, including, without limitation, payment in full of the
Mandatory Redemption Amount to the holders of the Notes, and are no
longer outstanding.

 

 

 

19

 

 

 

(4) So long as this
Note remains outstanding or the Holder holds any Securities,
neither the Company nor any Subsidiary shall, directly or
indirectly, effect or enter into (or publicly announce or recommend
to its stockholders the approval or adoption thereof by such
stockholders) any agreement, plan, arrangement or transaction
structured in accordance with, based upon, or related or pursuant
to Section 3(a)(9) or Section 3(a)(l0) of the Securities Act,
without the prior written consent of the Holder (which consent may
be withheld, delayed or conditioned in the sole discretion of such
Holder).

 

(5) So long as this
Note remains outstanding or the Holder holds any Securities, the
Company and each of its Subsidiaries shall be prohibited from,
directly or indirectly, effecting or entering into (or publicly
announcing or recommending to its stockholders the approval or
adoption thereof by such stockholders) any agreement, plan,
arrangement or transaction, including, without limitation, any
Subsequent Placement, that would or would reasonably be expected to
restrict, delay, conflict with or impair the ability or right of
the Company to timely perform its obligations under the Purchase
Agreement or the Notes, including, without limitation, the
obligation of the Company to timely (i) deliver shares of Common
Stock to any holder of the Notes (or a designee thereof, if
applicable) in accordance with the Purchase Agreement or the Notes
and/or (ii) repay in cash all outstanding principal amount of this
Note, plus accrued but unpaid interest thereon, Make-Whole Amount,
Late Fees, liquidated damages and other amounts outstanding under
the Notes at maturity or at any other times when payments are
required to be made in cash pursuant to the terms of the
Notes.

 

(6) The Holder shall be
entitled to obtain injunctive relief against the Company to
preclude any such issuance in this Section 5(i) (without the need
for the posting of any bond or similar item, which the Company
hereby expressly and irrevocably waives the requirement for), which
remedy shall be in addition to any right to collect
damages.

 

Section
6. Events of Default.

 

a) “Event
of Default” means, wherever used herein, any of the
following events (whatever the reason for such event and
whether such event shall be voluntary
or involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental
body):

 

i. the Company shall
fail to pay any amount of principal, interest, Make-Whole Amount,
Late Fees, liquidated damages or other amounts as and when the same
shall become due and payable under any of the Notes (whether on a
Conversion Date, Company Optional Redemption Date, Holder Optional
Redemption Date, Event of Default Redemption Date, Mandatory
Redemption Date or the Maturity Date or by acceleration or
otherwise), including, without limitation, any failure to pay any
redemption payments or amounts thereunder, or under any other
Transaction Document (as defined in the Purchase Agreement) or any
other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated hereby
and thereby, except, in the case of a failure to pay interest,
Make-Whole Amount and Late Fees when and as due, in which case only
if such failure is not cured within three (3) Trading
Days;

 

 

 

20

 

 

 

ii. the Company shall
fail to observe or perform any covenant, provision, or agreement
contained in (A) any of the Notes that is not addressed in clause
(i) above (and other than a breach by the Company of its
obligations to deliver Conversion Shares to the Holder upon
conversion of this Note, which breaches are addressed in clause
(ix) below) or (B) the Purchase Agreement, which failure is not
cured, if possible to cure, within the earlier to occur of (A)
seven (7) Trading Days after notice of such failure sent by the
Holder or by any other Holder to the Company and (B) fifteen (15)
Trading Days after the Company has become or should have become
aware of such failure;

 

iii. (A)
the Company shall fail to observe or perform any covenant,
provision, or agreement contained in, or any default or any event
of default shall occur under, either of the Security Agreement (as
defined in the Purchase Agreement) or the IP Security Agreement (as
defined in the Purchase Agreement) (subject to any grace or cure
period provided in the applicable agreement, document or
instrument), (B) (1) any of the issued and outstanding Series B
Notes shall not have
been (X) fully converted by the holders thereof into shares of
Common Stock that are issued and outstanding on or prior to the
fifteenth (15th) Trading Day
immediately following the Closing Date or (Y) redeemed in full in
cash (all of which has been paid by the Company) and surrendered to
the Company for cancellation, and cancelled by the Company on or
prior to the fifteenth (15th) Trading Day
immediately following the Closing Date, in each case pursuant to
and in accordance with Section 4.25 of the Purchase Agreement, (2)
any amount of principal, interest, late fees or any other amounts
thereunder shall remain outstanding or otherwise payable by the
Company under the terms of the Series B Notes or otherwise after the fifteenth
(15th)
Trading Day immediately following the Closing Date or (3) the
Company of any of its Subsidiaries or Affiliates has any
liabilities or obligations under or with respect to any such Series
B Notes (including any obligation to issue and additional shares of
Common Stock or Common Stock Equivalents thereunder or in respect
thereof), (C) any Person (1) contests
the validity or enforceability of either of the Security Agreement
or the IP Security Agreement, the security interests created
thereunder or the perfection or priority thereof (including,
without limitation, the status of the Notes as senior first lien
secured indebtedness of the Company) or (2) following the
conversion or redemption of the Series B Notes on or prior to the
fifteenth (15) Trading Day immediately following the Closing Date,
makes any claim that such Person has a security interest senior to,
or with priority over, the security interests of the Notes created
under either of the Security Agreement or the IP Security Agreement
or any of the other Transaction Documents, or (D) any
default or event of default occurs with respect to any of the
Transaction Documents, other than this Note, the Security Agreement
and the IP Security Agreement, including, without limitation, any
“Event of Default” (as defined in the other Notes)
under the terms of the other Notes;

 

iv. (A) any
representation or warranty made by the Company or any of its
Subsidiaries in (x) any of the Notes, the Purchase Agreement, the
Security Agreement, the IP Security Agreement, any of the other
Notes or any of the other Transaction Documents, or any written
statement pursuant hereto or thereto, (y) any other mortgage,
credit agreement or other facility, indenture agreement, factoring
agreement or other instrument to which the Company or any of its
Subsidiaries is a party or under which the Company or any of its
Subsidiaries is obligated covered by clause (vi) below, or (z) any
other report, financial statement or certificate made or delivered
to the Holder or any other holder of the Notes shall be untrue or
incorrect in any material respect (except with respect to any
representation or warranty qualified by materiality or material
adverse effect, in which case they shall be untrue or incorrect in
any respect) as of the date when made or deemed made, or (B) any
false or inaccurate certification or statement made or delivered to
the Holder or any other holder of the Notes by or on behalf of the
Company that (x) the Equity Conditions are satisfied or that there
has been no Equity Conditions Failure, (y) as to whether any
Qualified Subsequent Financing has occurred or is expected to
occur, or (z) as to whether any Event of Default has
occurred;

 

 

 

21

 

 

v. the Company or any
Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) shall be subject to a Bankruptcy
Event;

 

vi. the Company or any
Subsidiary shall default on any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced, any
indebtedness for borrowed money or money due under any long term
leasing or factoring arrangement that (a) involves an obligation
greater than $50,000 whether such indebtedness now exists or shall
hereafter be created, and (b) results in such indebtedness becoming
or being declared due and payable prior to the date on which it
would otherwise become due and payable;

 

vii. the
suspension from trading or quotation of the Common Stock, or the
failure of the Common Stock to be eligible for listing or quotation
on a Trading Market for a period of five (5) consecutive Trading
Days;

 

viii. the
Company does not meet the current public information requirements
under Rule 144(c) under the Securities Act, which failure is not
cured, if possible to cure, within five (5) Trading Days after the
expiration of the applicable grace period permitted under Rule
12b-25 of the Exchange Act, further provided that the Company files
a Form 12b-25 for the relevant report required to meet the current
public information requirements under Rule 144;

 

ix. the Company shall
fail for any reason to deliver certificates to a Holder prior to
the fifth (5th) Trading Day after
a Conversion Date pursuant to Section 4(c), or the Company shall
provide at any time notice to the Holder, including by way of
public announcement, of the Company’s intention to not honor
requests for conversions of this Note in accordance with the terms
hereof;

 

x. the Company shall
fail to remove any restrictive legend on any certificate or any
shares of Common Stock issued to the Holder (or its designee) via
DTC for transfer to a transferee in connection with the resale of
such shares of Common Stock to a transferee following the
conversion of this Note as and when required by this Note or the
Purchase Agreement, unless otherwise then prohibited by applicable
federal securities laws, and any such failure remains uncured for
at least three (3) days;

 

xi. the Company fails
to file with the Commission any required reports under Section 13
or 15(d) of the Exchange Act such that it is not in compliance with
Rule 144(c)(1) (or Rule 144(i)(2), if applicable), which failure is
not cured, if possible to cure, within five (5) Trading Days after
the expiration of the applicable grace period permitted under Rule
12b-25 of the Exchange Act, further provided that the Company files
a Form 12b-25 for such report;

 

xii. the
occurrence of any levy upon or seizure or attachment of, or any
uninsured loss of or damage to, any property of the Company or any
Subsidiary having an aggregate fair value or repair cost (as the
case may be) in excess of $50,000 individually or in the aggregate,
and any such levy, seizure or attachment shall not be set aside,
bonded or discharged within thirty (30) days after the date
thereof;

 

 

 

22

 

 

 

xiii. the
Company shall fail to maintain the Reserve Amount and such failure
is not cured within five (5) Trading Days;

 

xiv. any
monetary judgment, writ or similar final process shall be entered
or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $50,000, and such
judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of forty-five (45) calendar
days;

 

xv. the Company shall
fail to obtain all necessary approvals of the sale and issuance of
the Conversion Shares, the Exit Shares (as defined in the Purchase
Agreement) and the Commitment Shares consistent with the rules and
regulations of the principal Trading Market prior to the Closing
Date;

 

xvi. the
electronic transfer by the Company of shares of Common Stock
through the Depository Trust Company or another established
clearing corporation is no longer available or is subject to a
“chill”;

 

xvii. (A)
the Company shall fail to file the Initial Registration Statement
or any additional Registration Statement required under the
Registration Rights Agreement on or prior to the applicable Filing
Date (as defined in the Registration Rights Agreement) therefor in
accordance with the terms of the Registration Rights Agreement, or
(B) the Company shall fail to register all of the Registrable
Securities (as defined in the Registration Rights Agreement) on the
Initial Registration Statement declared effective by the Commission
under the Securities Act on or prior to the Effectiveness Date (as
defined in the Registration Rights Agreement) in accordance with
the terms of the Registration Rights Agreement;

 

xviii. If,
from and after the Effectiveness Date, a Registration Statement (or
the prospectus contained therein) registering all of the
Holder’s Registrable Securities is unavailable to the Holder
for the resale of all of the Holder's Registrable Securities in
accordance with the terms of the Registration Rights Agreement, and
such lapse or unavailability continues for a period of five (5)
consecutive Trading Days or for more than an aggregate of twenty
(20) Trading Days in any 365-day period;

 

xix. any
Material Adverse Effect (as defined in the Purchase Agreement)
occurs; or

 

xx. any Change of
Control occurs other than in compliance with Section 5 of the Notes
and Section 4.17 of the Purchase Agreement.

 

 

 

23

 

 

b) Remedies Upon Event of Default.
If an Event of Default occurs with respect to this Note, then, at
the Holder’s election, all or any portion of the outstanding
principal amount of this Note, plus accrued but unpaid interest
thereon, Make-Whole Amount, Late Fees, liquidated damages and other
amounts owing in respect thereof through the Event of Default
Redemption Notice Date, shall accelerate and become immediately due
and payable in cash and shall be redeemed by the Company pursuant
to this Section 6(b) at the applicable Event of Default Redemption
Price. Within three (3) Trading Days of the Company or any of its
Subsidiaries, including any of their respective officers or
directors, becoming aware of the occurrence of an Event of Default
with respect to this Note, the Company shall deliver a written
notice thereof by facsimile or electronic mail to all, but not less
than all, of the holders of Notes (the “Event of Default
Notice”). With respect to an Event of Default with
respect to this Note, at any time after the earlier of (i) the date
on which the Holder received an Event of Default Notice with
respect to such Event of Default (the “Event of Default Notice
Date”) and (ii) the date on which the Holder first
became aware of such Event of Default, the Holder may require the
Company to redeem, on any Trading Day during the period commencing
on the date the Holder first becomes aware of such Event of Default
through and including the sixtieth (60th) Trading Day after
the later of (x) the Event of Default Notice Date and (y) the date
such Event of Default has been cured (the “Event of Default Redemption
Date”), all or any portion of this Note by delivering
written notice thereof (the “Event of Default Redemption
Notice” and the date such Event of Default Redemption
Notice is deemed delivered hereunder, the “Event of Default Redemption Notice
Date”) to the Company, which Event of Default
Redemption Notice shall state (i) the portion of this Note the
Holder is electing to redeem in such Event of Default Redemption
and the total Event of Default Redemption Price to be paid by the
Company to the Holder in cash in such Event of Default Redemption
pursuant to this Section 6(b), (ii) the Event of Default Redemption
Date the Company is required to pay such Event of Default
Redemption Price to the Holder in cash, and (iii) the allocation of
such Event of Default Redemption Price between this Note and any
other Notes held by the
Holder. To the extent redemptions required by this Section 6(b) are
deemed or determined by a court of competent jurisdiction to be
prepayments of this Note by the Company, such redemptions shall be
deemed to be voluntary prepayments. Notwithstanding anything to the
contrary in this Section 6, but subject to Section 4(d), at any
time prior to the date the Event of Default Redemption Price
(together with any Late Charges thereon) is paid in full, the Event
of Default Redemption Price to be paid to the Holder in an Event of
Default Redemption under this Section 6(b) (together with any Late
Charges thereon) may be converted, in whole or in part, by the
Holder, at its option and in its sole discretion, into Common Stock
pursuant to and in accordance with the conversion procedures set
forth in Section 4 hereunder, mutatis mutandis. The Company covenants and agrees that it will
honor all Notices of Conversion tendered from the Event of Default
Redemption Notice Date through the date all amounts owing thereon
are due and paid in full. The portion of the Event of
Default Redemption Price converted by the Holder after the Event of
Default Notice Date shall reduce the Event of Default Redemption
Price required to be paid by the Company to the Holder on the
applicable Event of Default Redemption Date. In the event of the
Company’s redemption of any portion of this Note under this
Section 6(b), the Holder’s damages would be uncertain and
difficult to estimate because of the parties’ inability to
predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for
the Holder. Accordingly, any redemption premium due under this
Section 6(b) is intended by the parties to be, and shall be deemed,
a reasonable estimate of the Holder’s actual loss of its
investment opportunity and not as a penalty. Upon the redemption of
this Note in full by the Holder and the receipt by the Holder of
the total Event of Default Redemption Price therefor, the Holder
shall promptly surrender this Note to or as directed by the
Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any
presentment, demand, protest or other notice of any kind (other
than the Holder’s election to declare such acceleration), and
the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such
acceleration may be rescinded and annulled by Holder at any time
prior to payment of the Event of Default Redemption Price hereunder
and the Holder shall have all rights as a holder of the Note until
such time, if any, as the Holder receives full payment of the Event
of Default Redemption Price pursuant to this Section 6(b). Any
redemption upon an Event of Default shall not constitute an
election of remedies by the Holder, and all other rights and
remedies of the Holder shall be preserved. No such rescission or
annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

 

 

 

24

 

 

Section
7. Company Optional Redemption; Mandatory
Redemption; Holder Optional Redemption.

 

(a) Company Optional Redemption.
Subject to the provisions of this Section 7(a), at any time after
the Original Issuance Date and provided no Equity Conditions
Failure then exists, the Company shall have the right to redeem
all, but not less than all, of the then outstanding principal
amount of this Note, plus accrued but unpaid interest thereon,
Make-Whole Amount, Late Fees, liquidated damages and other amounts
owing in respect thereof through the Company Optional Redemption
Date (provided, however, that with the prior written consent of the
Holder, which consent may be withheld, delayed or conditioned in
the sole discretion of such Holder, the Company shall have the
right to redeem any portion (which may be less than all) of the
then outstanding principal amount of this Note, plus accrued but
unpaid interest thereon, Make-Whole Amount, Late Fees, liquidated
damages and other amounts owing in respect thereof through the
Company Optional Redemption Date), for
a cash redemption price equal to the Company Optional
Redemption Amount on the
Company Optional Redemption Date (the “Company Optional
Redemption”). The Company may exercise its right to
require redemption under this Section 7(a) by delivering a written
notice thereof by facsimile or electronic mail to all, but not less
than all, of the holders of Notes (the “Company Optional Redemption
Notice” and the date all of the holders of Notes
received such notice is referred to as the “Company Optional Redemption Notice
Date”). The Company may deliver one or more Company
Optional Redemption Notices hereunder and each such Company
Optional Redemption Notice shall be irrevocable. Each such Company
Optional Redemption Notice shall (x) state the date on which the
Company Optional Redemption shall occur (the “Company Optional Redemption
Date”), which date shall not be less than five (5)
Trading Days nor more than twenty (20) Trading Days following the
Company Optional Redemption Notice Date, (y) certify that there has
been no Equity Conditions Failure and (z) state the aggregate
amount of the Notes which are being redeemed in such Company
Optional Redemption from the Holder and all of the other holders of
the Notes pursuant to this Section 7(a) and the total Company
Optional Redemption Amount to be paid by the Company in cash to the
Holder and all of the other holders of the Notes in such Company
Optional Redemption pursuant to this Section 7(a). Notwithstanding
anything herein to the contrary, (i) if no Equity Conditions
Failure has occurred as of the Company Optional Redemption Notice
Date but an Equity Conditions Failure occurs at any time prior to
the Company Optional Redemption Date, (A) the Company shall provide
the Holder a subsequent notice to that effect and (B) unless the
Holder waives the Equity Conditions Failure, the Company Optional
Redemption shall be cancelled and the applicable Company Optional
Redemption Notice shall be null and void and (ii) at any time prior
to the date the Company Optional Redemption Amount (together with
any Late Charges thereon) is paid in full, but subject to Section
4(d), the Company Optional Redemption Amount (together with any
Late Charges thereon) may be converted, in whole or in part, by the
Holder, at its option and in its sole discretion, into Common Stock
pursuant to and in accordance with the conversion procedures set
forth in Section 4 hereunder, mutatis mutandis. The portion of the
Company Optional Redemption Amount converted by the Holder after
the Company Optional Redemption Notice Date shall reduce the
Company Optional Redemption Amount to be paid by the Company to the
Holder on the applicable Company Optional Redemption Date.
The Company covenants and agrees that
it will honor all Notices of Conversion tendered from the time of
delivery of the Company Optional Redemption Notice through the date
all amounts owing thereon are due and paid in full. If the
Company elects to cause an Company Optional Redemption of this Note
pursuant to this Section 7(a), then it must simultaneously take the
same action with respect to all of the other Notes.

 

 

 

25

 

 

(b) Company Optional Redemption
Procedure. The applicable Company Optional Redemption Amount
payable to the Holder pursuant to a Company Optional Redemption
shall be paid by the Company to the Holder in full and in cash on
the applicable Company Optional Redemption Date. Notwithstanding
anything herein contained to the contrary, if any portion of the
applicable Company Optional Redemption Amount (together with any
Late Charges thereon) remains unpaid after the applicable Company
Optional Redemption Date, the Holder may elect, by written notice
to the Company given at any time thereafter, to invalidate such
Company Optional Redemption, ab
initio, and, with respect to the Company’s failure to
honor the Company Optional Redemption, the Company shall have no
further right to exercise such Company Optional
Redemption.

 

(c) Mandatory Redemption. Subject
to the provisions of this Section 7(c), if, at any time after the
Original Issuance Date, the Company proposes to effect a Qualified
Subsequent Financing, then, simultaneously with the closing of such
Qualified Subsequent Financing, all of the outstanding principal
amount of this Note, plus accrued but unpaid interest thereon,
Make-Whole Amount, Late Fees, liquidated damages and other amounts
owing in respect thereof through the Mandatory Redemption Date,
shall accelerate and become immediately due and payable in cash and
shall be redeemed by the Company for a
cash redemption price equal to the Mandatory Redemption
Amount on the Mandatory
Redemption Date (the “Mandatory Redemption”).
At least five (5) Trading Days prior to the closing date of a
Qualified Subsequent Financing, the Company shall deliver a written
notice by facsimile or electronic mail to all, but not less than
all, of the holders of Notes (the “Pre-Notice”), which shall
state (A) that the Company may effect a Subsequent Financing that
would, if consummated, constitute a Qualified Subsequent Financing
as defined in the Purchase Agreement and the Notes, (B) the process
by which any holder of Notes that wishes to receive any additional
information regarding such contemplated transaction may request and
receive such information and (C) certify that the information
contained in such Pre-Notice does not constitute material
non-public information regarding the Company or any of its
Subsidiaries or any of the Company’s securities. After 4:00
p.m, Eastern Time, but prior to 5:00 p.m., Eastern Time, on the
Trading Day immediately preceding the closing date of a Qualified
Subsequent Financing (the “Mandatory Redemption Notice
Date”), the Company shall deliver a written notice by
facsimile or electronic mail to all, but not less than all, of the
holders of Notes (the “Mandatory Redemption
Notice”), which shall state (A) that the Company
intends to complete a Qualified Subsequent Financing as defined in
the Purchase Agreement and the Notes on the Trading Day immediately
following the Mandatory Redemption Notice Date, (B) the gross
proceeds from such Qualified Subsequent Financing, (C) the amount
of Qualified Subsequent Financing Net Proceeds to be received by
the Company at the closing of such Qualified Subsequent Financing,
(D) that the Company shall effect the Mandatory Redemption of all
outstanding Notes pursuant to and in accordance with this Section
7(c) and Section 7(d), (E) the total aggregate Mandatory Redemption
Amount to be paid by the Company in cash in the Mandatory
Redemption to all holders of Notes, (F) the total Mandatory
Redemption Amount to be paid by the Company in cash in the
Mandatory Redemption to the Holder of this Note (which information
shall not be shared with any other holders of Notes), and (F) the
date on which the Mandatory Redemption shall occur, which shall be
no later than one (1) Trading Day following the closing date of
such Qualified Subsequent Financing (the “Mandatory Redemption
Date”). Notwithstanding anything herein to the
contrary, at any time prior to the date the Mandatory Redemption
Amount (together with any Late Charges thereon) is paid in full,
but subject to Section 4(d), the Mandatory Redemption Amount
(together with any Late Charges thereon) may be converted, in whole
or in part, by the Holder, at its option and in its sole
discretion, into Common Stock pursuant to and in accordance with
the conversion procedures set forth in Section 4 hereunder,
mutatis mutandis. The
Company covenants and agrees that it will honor all Notices of
Conversion tendered from the date of delivery of the Mandatory
Redemption Notice through the date all amounts owing thereon are
due and paid in full. The portion of the Mandatory Redemption
Amount converted by the Holder after the Mandatory Redemption
Notice Date shall reduce the Mandatory Redemption Amount to be paid
by the Company to the Holder on the Mandatory Redemption Date.
The Company covenants and agrees that
it will honor all Notices of Conversion tendered from the time of
delivery of the Mandatory Redemption Notice Date through the date
all amounts owing thereon are due and paid in full. To the
extent redemptions required by this Section 7(c) are deemed or
determined by a court of competent jurisdiction to be prepayments
of the Note by the Company, such redemptions shall be deemed to be
voluntary prepayments.

 

 

26

 

 

(d) Mandatory Redemption Procedure.
The applicable Mandatory Redemption Amount payable to the Holder
pursuant to a Mandatory Redemption shall be paid by the Company to
the Holder in full and in cash on the applicable Mandatory
Redemption Date. Notwithstanding anything herein contained to the
contrary, if any portion of the applicable Mandatory Redemption
Amount (together with any Late Charges thereon) remains unpaid
after the applicable Mandatory Redemption Date, the Holder may
elect, by written notice to the Company given at any time
thereafter, to invalidate such Mandatory Redemption, ab initio.

 

(e) Holder Optional Redemption.
Subject to the provisions of this Section 7(e), at any time and
from time to time on or after December 17, 2018 (the
“Holder Optional
Redemption Trigger Date”), the Holder may, at its sole
option and in its sole discretion, require the Company to redeem
all or any portion of the outstanding principal amount of this
Note, plus accrued but unpaid interest thereon, Make-Whole Amount,
Late Fees, liquidated damages and other amounts owing in respect
thereof through the applicable Holder Optional Redemption Date
(each as defined below), for a cash
redemption price equal to the Holder Optional Redemption
Amount on such applicable
Holder Optional Redemption Date (each, a “Holder Optional
Redemption”). The Holder may exercise its right to
require redemption of this Note under this Section 7(e) in whole or
in part at any single time or at multiple times from and after the
Holder Optional Redemption Trigger Date, at its sole option and in
its sole discretion, by delivering (with respect to each such
election by the Holder to require redemption by the Company
hereunder) a written notice by facsimile or electronic mail to the
Company (each, a “Holder Optional Redemption
Notice” and the date such Holder Optional Redemption
Notice is deemed delivered hereunder, each a “Holder Optional Redemption Notice
Date”). Each such Holder Optional Redemption Notice
shall state (i) the portion of this Note the Holder is electing to
require the Company to redeem in such Holder Optional Redemption
and the total Holder Optional Redemption Amount to be paid by the
Company to the Holder in cash in such Holder Optional Redemption
pursuant to this Section 7(e), (ii) the date on which such Holder
Optional Redemption shall occur, which date shall not be less than
five (5) Trading Days following the applicable Optional Redemption
Notice Date (each, a “Holder Optional Redemption
Date”), and (iii) the allocation of such Holder
Optional Redemption Amount between this Note and any other
Notes held by the
Holder. Each portion of this Note subject to redemption pursuant to
this Section 7(e) shall be redeemed by the Company at a price equal
to the Holder Optional Redemption Amount. To the extent redemptions
required by this Section 7(e) are deemed or determined by a court
of competent jurisdiction to be prepayments of this Note by the
Company, such redemptions shall be deemed to be voluntary
prepayments. Notwithstanding anything to the contrary in this
Section 7(e), but subject to Section 4(d), at any time prior to the
date the Holder Optional Redemption Amount (together with any Late
Charges thereon) is paid in full, the Holder Optional Redemption
Amount submitted for redemption under this Section 7(e) (together
with any Late Charges thereon) may be converted, in whole or in
part, by the Holder, at its option and in its sole discretion, into
Common Stock pursuant to and in accordance with the conversion
procedures set forth in Section 4 hereunder, mutatis mutandis. The Company covenants and agrees that it will
honor all Notices of Conversion tendered from the Holder
Optional Redemption Notice Date
through the date all amounts owing thereon are due and paid in
full. The portion of the Holder Optional Redemption Amount
converted by the Holder after the Holder Optional Redemption Notice
Date shall reduce the Holder Optional Redemption Amount required to
be paid by the Company to the Holder on the applicable Holder
Optional Redemption Date.

 

 

 

27

 

 

(f) Holder Optional Redemption
Procedure. The applicable Holder Optional Redemption Amount
payable to the Holder pursuant to a Holder Optional Redemption
shall be paid by the Company to the Holder in full and in cash on
the applicable Holder Optional Redemption Date. Notwithstanding
anything herein contained to the contrary, if any portion of the
applicable Holder Optional Redemption Amount (together with any
Late Charges thereon) remains unpaid after the applicable Holder
Optional Redemption Date, the Holder may elect, by written notice
to the Company given at any time thereafter, to rescind the
applicable Holder Optional Redemption, ab initio.

 

(g) Redemption by Other Holders.
Upon the Company’s receipt of notice from any of the holders
of the other Notes for redemption or repayment as a result of an
event or occurrence substantially similar to the events or
occurrences described in Section 6(b) or Section 7(e) (each, an
“Other Redemption
Notice”), the Company shall immediately, but no later
than one (1) Business Day of its receipt thereof, forward to the
Holder by facsimile a copy of such notice. If the Company receives
an Event of Default Redemption Notice or a Holder Optional
Redemption Notice and one or more Other Redemption Notices, during
the seven (7) Business Day period beginning on and including the
date which is three (3) Business Days prior to the Company’s
receipt of the Holder’s applicable Event of Default
Redemption Notice or applicable Holder Optional Redemption Notice
and ending on and including the date which is three (3) Business
Days after the Company’s receipt of the Holder’s
applicable Event of Default Redemption Notice or applicable Holder
Optional Redemption Notice and the Company is unable to redeem all
principal, interest, Make-Whole Amounts, Late Fees and other
amounts designated in such Event of Default Redemption Notice or
Holder Optional Redemption Notice and such Other Redemption Notices
received during such seven (7) Business Day period, then the
Company shall redeem a pro
rata amount from each holder of the Notes (including the
Holder) based on the principal amount of the Notes submitted for
redemption pursuant to such Event of Default Redemption Notice or
Holder Optional Redemption Notice and such Other Redemption Notices
received by the Company during such seven (7) Business Day
period.

 

Section
8. Negative Covenants. As long as
any portion of this Note remains outstanding, unless the Holder
shall have otherwise given prior written consent (which consent may
be withheld, delayed or conditioned in the sole discretion of such
Holder), the Company shall not, and shall not permit any of the
Subsidiaries to, directly or indirectly:

 

(a) other than
Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of
any kind, including, but not limited to, a guarantee, on or with
respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits
therefrom;

 

(b) other than
Permitted Liens, enter into, create, incur, assume or suffer to
exist any Liens of any kind, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom;

 

(c) amend its charter
documents, including, without limitation, its certificate of
incorporation and bylaws, in any manner that materially and
adversely affects any rights of the Holder;

 

 

28

 

 

(d) repay, repurchase
or offer to repay, repurchase or otherwise acquire more than a
de minimis number of shares
of its Common Stock or Common Stock Equivalents other than as to
(i) the Conversion Shares, Commitment Shares or Exit Shares as
permitted or required under the Transaction Documents and (ii)
repurchases of Common Stock or Common Stock Equivalents of
departing officers and directors of the Company, provided that such
repurchases shall not exceed an aggregate of $50,000 for all
officers and directors during the term of this Note;

 

(e) repay, repurchase
or offer to repay, repurchase or otherwise acquire any
Indebtedness, other than the Notes if on a pro-rata basis, other
than regularly scheduled principal and interest payments as such
terms are in effect as of the Original Issue Date, provided that
such payments shall not be permitted if, at such time, or after
giving effect to such payment, any Event of Default exist or
occur;

 

(f) pay cash dividends
or distributions on any equity securities of the
Company;

 

(g) enter into any
transaction with any Affiliate of the Company which would be
required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and
expressly approved by a majority of the disinterested directors of
the Company (even if less than a quorum otherwise required for
board approval); or

 

(h) enter into any
agreement with respect to any of the foregoing.

 

Section
9. Miscellaneous.

 

(a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holder
hereunder, including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by email or
facsimile, or sent by a nationally recognized overnight courier
service, addressed to the Company at 1700 E. 68th Avenue, Denver,
Colorado 80229, or such other address, facsimile number, or email
address as the Company may specify for such purposes by notice to
the Holder delivered in accordance with this Section 9(a), with a
copy in writing and delivered personally, by email or facsimile, or
sent by a nationally recognized overnight courier service,
addressed to Sichenzia, Ross, Ference & Kesner, Attn: Gregory
Sichenzia, 1185 Avenue of the Americas, 37th Floor, New York,
New York 10036. Any and all notices or other communications or
deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by email or facsimile, or sent by
a nationally recognized overnight courier service addressed to each
Holder at the email address, facsimile number, or address of the
Holder appearing on the books of the Company, or if no such email
address, facsimile number, or address appears on the books of the
Company, at the principal place of business of such Holder. Any
notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest (i) the date of
transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address set
forth on the signature pages attached hereto prior to 12:00 p.m.
(New York City time) on any date, (ii) the next Trading Day after
the date of transmission, if such notice or communication is
delivered via facsimile or email at the facsimile number or email
address set forth on the signature pages attached hereto on a day
that is not a Trading Day or later than 12:00 p.m. (New York City
time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (iv) upon actual receipt by the party
to whom such notice is required to be given.

 

 

 

29

 

 

(b) Absolute Obligation. Except as
expressly provided herein, no provision of this Note shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, liquidated damages and
accrued interest, as applicable, on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed. This Note
is a direct debt obligation of the Company.

 

(c) Lost or Mutilated Note. If this
Note shall be mutilated, lost, stolen or destroyed, the Company
shall execute and deliver, in exchange and substitution for and
upon cancellation of a mutilated Note, or in lieu of or in
substitution for a lost, stolen or destroyed Note, a new Note for
the principal amount of this Note so mutilated, lost, stolen or
destroyed, but only upon receipt of evidence of such loss, theft or
destruction of such Note, and of the ownership hereof, reasonably
satisfactory to the Company.

 

(d) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Note shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflict of laws thereof.
Each party agrees that all legal proceedings concerning the
interpretation, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought
against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in
the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that
such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by applicable law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Note or the transactions
contemplated hereby. If any party shall commence an action or
proceeding to enforce any provisions of this Note, then the
prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs
and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.

 

(e) Waiver. Any waiver by the
Company or the Holder of a breach of any provision of this Note
shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon
strict adherence to any term of this Note on one or more occasions
shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any
other term of this Note on any other occasion. Any waiver by the
Company or the Holder must be in writing.

 

 

 

30

 

 

(f) Amendments. The prior written
consent of the Holder (which consent may be withheld, delayed or
conditioned in the sole discretion of such Holder) shall be
required for any change or amendment to this Note.

 

(g) Severability. If any provision
of this Note is invalid, illegal or unenforceable, the balance of
this Note shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of
the principal of or interest on this Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which
may affect the covenants or the performance of this Note, and the
Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no
such law has been enacted.

 

(h) Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief.  The remedies provided in
this Note shall be cumulative and in addition to all other remedies
available under this Note and any of the other Transaction
Documents at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein
shall limit the Holder’s right to pursue actual and
consequential damages for any failure by the Company to comply with
the terms of this Note. The Company covenants to the Holder that
there shall be no characterization concerning this instrument other
than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and
the computation thereof) shall be the amounts to be received by the
Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any such
breach or any such threatened breach, without the necessity of
showing economic loss and without any bond or other security being
required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Note.

 

(i) Next Business Day. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.

 

 

 

31

 

 

(j) Payment of Collection, Enforcement and
Other Costs. If (i) this Note is placed in the hands of an
attorney for collection or enforcement or is collected or enforced
through any legal proceeding or the Holder otherwise takes action
to collect amounts due under this Note or to enforce the provisions
of this Note or (ii) there occurs any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company
creditors’ rights and involving a claim under this Note, then
the Company shall pay the reasonable and documented out-of-pocket
costs incurred by the Holder for such collection, enforcement or
action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to,
reasonable attorneys’ fees and disbursements.

 

(k) Headings. The headings
contained herein are for convenience only, do not constitute a part
of this Note and shall not be deemed to limit or affect any of the
provisions hereof.

 

[Signature Pages Follow]

 

 

32

 

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

 

NEW AGE BEVERAGES CORPORATION

 

By: /s/
Brent Willis

 

Name: Brent Willis

 

Title: Chief Executive Officer

 

Facsimile No. for delivery of Notices:

 

 

 

33

 

 

ANNEX A

 

NOTICE OF CONVERSION

 

The
undersigned hereby elects to convert principal under the Senior
Secured Convertible Promissory Note, due June 20, 2019 of New Age
Beverages Corporation, a Washington corporation (the
“Company”), into shares of
common stock of the Company (the “Common Stock”), according
to the conditions hereof, as of the date written below. If shares
of Common Stock are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in
accordance therewith. No fee will be charged to the holder for any
conversion, except for such transfer taxes, if any.

 

By the
delivery of this Notice of Conversion, the undersigned represents
and warrants to the Company that its ownership of the Common Stock
does not exceed the amounts specified under Section 4 of this Note,
as determined in accordance with Section 13(d) of the Exchange
Act.

 

The
undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection
with any transfer of the aforesaid shares of Common
Stock.

 

Conversion calculations:

 

Date
to Effect Conversion:

 

Principal
Amount of Note to be Converted:

 

Payment
of Interest in Common Stock __ Yes __ No

 

If
Yes, $_____ of Interest Accrued on Account of Conversion at Issue
and Accrued and Unpaid Late Charges.

 

If
Yes, $_____ of Make-Whole Amount on Account of Conversion at
Issue

 

Number
of Shares of Common Stock to be Issued:

 

Signature:                                                      

 

           
           
           
           
           
           
        Name:

 

                                                                               
Delivery Instructions:

 

 

 

34

 

Schedule 1

 

CONVERSION SCHEDULE

 

This Senior Secured Convertible Promissory Note, due June 20, 2019,
in the original principal amount of $4,750,000 is issued by New Age
Beverages Corporation, a Washington corporation. This Conversion
Schedule reflects conversions made under Section 4 of the above
referenced Note.

 

Dated:

 

	

Date of Conversion(or for first entry,Original Issue
Date)

	

Amount ofConversion

	

AggregatePrincipalAmountRemainingSubsequent toConversion(or
originalPrincipalAmount)

	

Company Attest

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

35Blueprint

 

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This
REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made and
entered into as of June 20, 2018, between New Age Beverages
Corporation, a Washington corporation (the “Company”), and the
purchasers signatory hereto (the “Purchasers”).

 

This
Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof, between the Company and each of the
purchasers signatory thereto (the “Purchase
Agreement”).

 

The
Company and the Purchasers hereby agree as follows:

 

1. Definitions.

 

Capitalized terms
used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:

 

“Advice” shall have the
meaning set forth in Section 6(d).

 

“Effectiveness
Date” means, with respect
to the Initial Registration Statement required to be filed
hereunder, the one hundredth twentieth (120th)
calendar day following the Closing Date; provided, however, that in the event the Company is notified by the
Commission that the Registration Statement will not be reviewed or
is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the
fifth (5th) Trading Day following the date on which the Company is
so notified if such date precedes the dates otherwise required
above; provided, further, if such Effectiveness Date falls on a day that
is not a Trading Day, then the Effectiveness Date shall be the next
succeeding Trading Day; provided, further, that upon an Event of Default under the Security
Agreement, the Effectiveness Date shall mean with respect to the
Initial Registration Statement Required hereunder, the thirtieth
(30) day after the earlier of (i) the date on which the Holder
received a notice of an event of default with respect to such Event
of Default and (ii) the date on which the Holder first became aware
of such Event of Default.

 

“Effectiveness Period”
shall have the meaning set forth in Section 2(a).

 

“Event” shall have the
meaning set forth in Section 2(d).

 

“Event Date” shall have
the meaning set forth in Section 2(d).

 

“Event of Default” shall
have the meaning ascribed to such term in the Security
Agreement.

 

“Filing
Date” means, with respect
to the Initial Registration Statement required hereunder, the
eightieth (80th)
calendar day after the Closing, and, with respect to any additional
Registration Statements which may be required pursuant to Section
2(c) or Section 3 (c), the earliest practical date on which the
Company is permitted by SEC Guidance to file such additional
Registration Statement related to the Registrable Securities;
provided, however, that upon an Event of Default under the Security
Agreement, the Filing Date shall mean with respect to the Initial
Registration Statement Required hereunder, the fifth (5) day after
the earlier of (i) the date on which the Holder received a notice
of an event of default with respect to such Event of Default and
(ii) the date on which the Holder first became aware of such Event
of Default.

 

 

1

 

 

“Holder”
or “Holders”
means the holder or holders, as the case may be, from time to time
of Registrable Securities.

 

“Indemnified Party” shall
have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall
have the meaning set forth in Section 5(c).

 

“Initial Registration
Statement” means the
initial Registration Statement filed pursuant to this
Agreement.

 

“Losses” shall have the
meaning set forth in Section 5(a).

 

“Prospectus” means the
prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A or Rule 430B
promulgated by the Commission pursuant to the Securities Act), 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 a Registration Statement, and all other
amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such
Prospectus.

 

“Registrable Securities”
means, as of any date of determination, (a) all of the shares of
Common Stock then issued and issuable upon conversion in full of
the Notes (assuming on such date the Notes are converted in full
without regard to any conversion limitations therein), (b) all
shares of Common Stock issued and issuable as interest or principal
on the Notes assuming all permissible interest and principal
payments are made in shares of Common Stock and the Notes are held
until maturity and (c) any securities issued or then issuable upon
any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; provided, however, that any such Registrable
Securities shall cease to be Registrable Securities (and the
Company shall not be required to maintain the effectiveness of any,
or file another, Registration Statement hereunder with respect
thereto) for so long as (a) a Registration Statement with respect
to the sale of such Registrable Securities is declared effective by
the Commission under the Securities Act and such Registrable
Securities have been disposed of by the Holders in accordance with
such effective Registration Statement, (b) such Registrable
Securities have been previously sold in accordance with Rule 144,
or (c) such securities become eligible for resale without
volume or manner-of-sale restrictions and without current public
information pursuant to Rule 144 as set forth in a written opinion
letter to such effect, addressed, delivered and acceptable to the
Transfer Agent and the affected Holders (assuming that such
securities and any securities issuable upon exercise, conversion or
exchange of which, or as a dividend upon which, such securities
were issued or are issuable, were at no time held by any Affiliate
of the Company), as reasonably determined by the Company, upon the
advice of counsel to the Company.

 

“Registration Statement”
means any registration statement required to be filed hereunder
pursuant to Section 2(a) and any additional registration statements
contemplated by Section 2 or Section 3(c), including (in each case)
the Prospectus, amendments and supplements to any such registration
statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by
reference or deemed to be incorporated by reference in any such
registration statement.

 

 

2

 

 

“Rule 415” means Rule 415
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.

 

“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.

 

“SEC Guidance” means (i)
any publicly-available written or oral guidance of the Commission
staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.

 

“Security Agreement” means
the Security Agreement, by and among the Company, its subsidiaries
and the Purchasers, dated June 20, 2018.

 

“Selling Stockholder
Questionnaire” shall have the meaning set forth in
Section 3(a).

 

2. Registration.

 

(a) No later than the
Filing Date, the Company shall file with the Commission the Initial
Registration Statement relating to the resale by the Holders of all
(or such other number as the Commission will permit) of the
Registrable Securities. If Form S-3 is not available for the
registration of the resale of Registrable Securities hereunder, the
Company shall (i) register the resale of the Registrable Securities
on another appropriate form and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is
available; provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the
Commission. Subject to the terms of this Agreement, the Company
shall use its commercially reasonable efforts to cause a
Registration Statement filed under this Agreement (including,
without limitation, under Section 3(c)) to be declared effective
under the Securities Act within one hundred twenty (120) days after
the filing thereof, but in any event no later than the applicable
Effectiveness Date, and shall use its commercially reasonable
efforts to keep such Registration Statement continuously effective
under the Securities Act until all Registrable Securities covered
by such Registration Statement (i) have been sold, thereunder or
pursuant to Rule 144, or (ii) may be sold without volume or
manner-of-sale restrictions pursuant to Rule 144 and without the
requirement for the Company to be in compliance with the current
public information requirement under Rule 144, as determined by the
counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Transfer Agent and the
affected Holder (the “Effectiveness Period”).
The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. Eastern Time on a Trading
Day. The Company shall immediately notify the Holder via facsimile
or by e-mail of the effectiveness of a Registration Statement on
the same Trading Day that the Company telephonically confirms
effectiveness with the Commission, which shall be the date
requested for effectiveness of such Registration Statement. The
Company shall, by 9:30 a.m. Eastern Time on the Trading Day after
the effective date of such Registration Statement, file a final
Prospectus with the Commission as required by Rule 424. Failure to
so notify the Holders within one (1) Trading Day of such
notification of effectiveness or failure to file a final Prospectus
as foresaid shall be deemed an Event under Section
2(g).

 

 

3

 

 

(b) Notwithstanding the
registration obligations set forth in Section 2(a), if the
Commission informs the Company that all of the Registrable
Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single
registration statement, the Company agrees to promptly inform each
of the Holders thereof and use its commercially reasonable efforts
to file amendments to the Initial Registration Statement as
required by the Commission, covering the maximum number of
Registrable Securities permitted to be registered by the
Commission, on Form S-3 or such other form available to register
for resale the Registrable Securities as a secondary offering,
subject to the provisions of Section 2(e); with respect to filing
on Form S-3 or other appropriate form, and subject to the
provisions of Section 2(d) with respect to the payment of
liquidated damages; provided, however, that prior to filing such
amendment, the Company shall be obligated to use diligent efforts
to advocate with the Commission for the registration of all of the
Registrable Securities in accordance with the SEC Guidance,
including without limitation, Compliance and Disclosure
Interpretation 612.09.

 

(c) Notwithstanding any
other provision of this Agreement and subject to the payment of
liquidated damages pursuant to Section 2(d), if the Commission or
any SEC Guidance sets forth a limitation on the number of
Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding
that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of
Registrable Securities), unless otherwise directed in writing by a
Holder as to its Registrable Securities, the number of Registrable
Securities to be registered on such Registration Statement will be
reduced as follows:

 

(i) first, the Company
shall reduce or eliminate any securities to be included by any
Person other than a Holder; and

 

(ii) second,
the Company shall reduce Registrable Securities represented by
Conversion Shares (applied, in the case that some Conversion Shares
may be registered, to the Holders on a pro rata basis based on the
total number of unregistered Conversion Shares held by such
Holders).

 

In the event of a cutback hereunder, the Company shall give the
Holder at least five (5) Trading Days prior written notice along
with the calculations as to such Holder’s allotment. In the
event the Company amends the Initial Registration Statement in
accordance with the foregoing, the Company will use its
commercially reasonable efforts to file with the Commission, as
promptly as allowed by Commission or SEC Guidance provided to the
Company or to registrants of securities in general, one or more
registration statements on Form S-3 or such other form available to
register for resale those Registrable Securities that were not
registered for resale on the Initial Registration Statement, as
amended.

 

 

4

 

 

(d) Provided that no
event of default exists under the Purchase Agreement or any of the
other Transaction Documents, if: (i) the Initial Registration
Statement is not filed on or prior to the Filing Date (if the
Company files the Initial Registration Statement without providing
the Holders the opportunity to review and comment on the same as
required by Section 3(a) herein, the Company shall be deemed to
have not satisfied this clause (i)) or (ii) the Company fails to
file with the Commission a request for acceleration of a
Registration Statement in accordance with Rule 461 promulgated by
the Commission pursuant to the Securities Act, within five (5)
Trading Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that such
Registration Statement will not be “reviewed” or will
not be subject to further review, or (iii) prior to the effective
date of a Registration Statement, the Company fails to file a
pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration
Statement within ten (10) calendar days after the receipt of
comments by or notice from the Commission that such amendment is
required in order for such Registration Statement to be declared
effective, or (iv) a Registration Statement registering for resale
all of the Registrable Securities is not declared effective by the
Commission by the Effectiveness Date of the Initial Registration
Statement, or (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to
remain continuously effective as to all Registrable Securities
included in such Registration Statement, or the Holders are
otherwise not permitted to utilize the Prospectus therein to resell
such Registrable Securities, for more than ten (10) consecutive
calendar days or more than an aggregate of fifteen (15) calendar
days (which need not be consecutive calendar days) during any
12-month period (any such failure or breach being referred to as an
“Event”, and for purposes
of clause (i) thirty (30) calendar days after the date on which
such Event occurs, and for purpose of clause (ii), the date on
which such five (5) Trading Day period is exceeded, and for purpose
of clause (iii) the date which such fifteen (15) calendar day
period is exceeded, and for purpose of clause (v) the date on which
such ten (10) or fifteen (15) calendar day period, as applicable,
is exceeded being referred to as “Event Date”), then, in
addition to any other rights the Holders may have hereunder or
under applicable law, on each such Event Date and on each monthly
anniversary of each such Event Date thereafter (if the applicable
Event shall not have been cured by such date) or any pro rata
portion thereof, until the applicable Event is cured or sixty (60)
calendar days after the applicable Event Date, whichever occurs
first, the Company shall pay to each Holder an amount in cash, as
partial liquidated damages and not as a penalty, equal to the
product of one percent (1.0%) multiplied by the aggregate
Subscription Amount paid by such Holder pursuant to the Purchase
Agreement; provided that the maximum amount payable thereunder
shall not exceed four percent (4%) of the aggregate Subscription
Amount. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven (7) days after the
date payable, the Company will pay interest thereon at a rate of
eighteen percent (18%) per annum (or such lesser maximum amount
that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such partial liquidated damages are
due until such amounts, plus all such interest thereon, are paid in
full.

 

(e) Notwithstanding
anything to the contrary contained herein but subject to comments
by the Commission, in no event shall the Company be permitted to
name any Holder or affiliate of a Holder as any Underwriter without
the prior written consent of such Holder.

 

 

5

 

 

3. Registration Procedures. In
connection with the Company’s registration obligations
hereunder, the Company shall have the following
obligations:

 

(a) Not less than three
(3) Trading Days prior to the filing of each Registration Statement
and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish
to the Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of the
Holders, and (ii) cause its officers and directors, counsel and
independent registered public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of
respective counsel to the Holder, to conduct a reasonable
investigation within the meaning of the Securities Act.
Notwithstanding the above, the Company shall not be obligated to
provide the Holders advance copies of any universal registration
statement registering securities in addition to those required
hereunder, or any Prospectus prepared thereto. The Company shall
not file a Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities shall reasonably object in
good faith, provided that, the Company is notified of such
objection in writing no later than five (5) Trading Days after the
Holders have been so furnished copies of a Registration Statement
or one (1) Trading Day after the Holder has been furnished copies
of any related Prospectus or amendments or supplements thereto.
Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as
Annex A (a
“Selling Stockholder
Questionnaire”) on a date that is not less than two
(2) Trading Days prior to the Filing Date or by the end of the
fourth (4th) Trading Day
following the date on which such Holder receives draft materials in
accordance with this Section.

 

(b) (i) The Company
shall prepare and file with the Commission such amendments,
including post-effective amendments, to a Registration Statement
and the Prospectus used in connection therewith as may be necessary
to keep a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act
all of the Registrable Securities, (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus
supplement (subject to the terms of this Agreement), and, as so
supplemented or amended, to be filed pursuant to Rule 424, (iii)
respond as promptly as reasonably practicable to any comments
received from the Commission with respect to a Registration
Statement or any amendment thereto and provide as promptly as
reasonably practicable to the Holders true and complete copies of
all correspondence from and to the Commission relating to a
Registration Statement (provided that, the Company shall excise any
information contained therein which would constitute material
nonpublic information regarding the Company or any of its
Subsidiaries), and (iv) comply in all material respects with the
applicable provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the
intended methods of disposition by the Holders thereof set forth in
such Registration Statement as so amended or in such Prospectus as
so supplemented.

 

 

6

 

 

(c) If during the
Effectiveness Period, the number of Registrable Securities at any
time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file
as soon as reasonably practicable, but in any case, prior to the
applicable Filing Date, an additional Registration Statement
covering the resale by the Holders of not less than the number of
such Registrable Securities.

 

(d) The Company shall
notify the Holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (iii) through (vi) hereof, be
accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made) as promptly as
reasonably possible (and, in the case of (i)(A) below, not less
than one (1) Trading Day prior to such filing) and (if requested by
any such Person) confirm such notice in writing no later than one
(1) Trading Day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed, (B) when the Commission notifies
the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in
writing on such Registration Statement, and (C) with respect to a
Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission or
any other federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement covering
any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose, (iv) of the receipt by the Company of
any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose, (v)
of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a
Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration
Statement, Prospectus or other documents so that, in the case of a
Registration Statement or the Prospectus, as the case may be, it
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (vi) of the occurrence or
existence of any pending corporate development with respect to the
Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of
the Company to allow continued availability of a Registration
Statement or Prospectus, provided, however, in no event shall any such
notice contain any information which would constitute material,
non-public information regarding the Company or any of its
Subsidiaries.

 

(e) The Company shall
use its commercially reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order stopping or
suspending the effectiveness of a Registration Statement, or (ii)
any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.

 

 

 

7

 

 

(f) The Company shall
furnish to each Holder, without charge, at least one conformed copy
of each such Registration Statement and each amendment thereto,
including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference to
the extent requested by such Person, and all exhibits to the extent
requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which
is available on the EDGAR system (or successor thereto) need not be
furnished in physical form.

 

(g) Subject to the
terms of this Agreement, the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment
or supplement thereto, except after the giving of any notice
pursuant to Section 3(d).

 

(h) The Company shall
cooperate with any broker-dealer through which a Holder proposes to
resell its Registrable Securities in effecting a filing with the
FINRA Corporate Financing Department pursuant to FINRA Rule 5110,
as requested by any such Holder, and the Company shall pay the
filing fee required by such filing within two (2) Business Days of
receipt of a request therefor.

 

(i) Prior to any resale
of Registrable Securities by a Holder, the Company shall use its
commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or
qualification (or exemption from the Registration or qualification)
of such Registrable Securities for the resale by the Holder under
the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder reasonably requests in writing, to keep
each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all
other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each
Registration Statement; provided, that, the Company shall not be
required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.

 

(j) If requested by a
Holder, the Company shall cooperate with such Holder to facilitate
the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to
a Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holder may
request.

 

 

 

8

 

 

 

(k) Upon the occurrence
of any event contemplated by Section 3(d), as promptly as
reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences
to the Company and its stockholders of the premature disclosure of
such event, prepare a supplement or amendment, including a
post-effective amendment, to a Registration Statement or a
supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither a
Registration Statement nor such Prospectus will contain 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 light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance
with clauses (iii) through (vi) of Section 3(d) above to suspend
the use of any Prospectus until the requisite changes to such
Prospectus have been made, then the Holders will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement and Prospectus covering the Registrable
Shares until the Company notifies the Holders that such
Registration Statement and Prospectus are effective and available
for the issuance and sale of the Registrable Securities. The
Company will use its commercially reasonable efforts to ensure that
the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right
under this Section 3(k) to suspend the availability of a
Registration Statement and Prospectus, subject to the payment of
partial liquidated damages otherwise required pursuant to Section
2(g), for a period not to exceed sixty (60) calendar days (which
need not be consecutive days) in any 12-month period.
Notwithstanding anything to the contrary, the Company shall cause
the Transfer Agent to promptly deliver the shares of Common Stock
without any restrictive legend in accordance with the terms of the
Purchase Agreement and the Notes in connection with any sale of
Registrable Securities with respect to which a Holder has entered
into a contract for sale prior to the Holder's receipt of a written
notice from the Company described above and for which the Holder
has not yet settled

 

(l) The Company shall
comply with all applicable rules and regulations of the
Commission.

 

(m) The Company shall
use its commercially reasonable efforts to maintain eligibility for
use of Form S-3 (or any successor form thereto) for the
registration of the resale of Registrable Securities.

 

(n) The Company may
require from each selling Holder a certified statement as to the
number of shares of Common Stock beneficially owned by such Holder
and the name(s) of the natural persons thereof that have voting and
dispositive control over the Common Stock underlying the Note(s).
During any periods that the Company is unable to meet its
obligations hereunder with respect to the registration of the
Registrable Securities solely because any Holder fails to furnish
such information within three Trading Days of the Company’s
request, any liquidated damages that are accruing at such time as
to such Holder only shall be tolled and any Event that may
otherwise occur solely because of such delay shall be suspended as
to all Holders until such information is delivered to the
Company.

 

 

 

9

 

 

4. Registration Expenses. All fees
and expenses incident to the performance of or compliance with,
this Agreement by the Company shall be borne by the Company whether
or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees
and expenses of the Company’s counsel and independent
registered public accountants) (A) with respect to filings made
with the Commission, (B) with respect to filings required to be
made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state
securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications
or exemptions of the Registrable Securities) and (D) if not
previously paid by the Company in connection with a Company filing,
with respect to any filing that may be required to be made by any
broker through which a Holder intends to make sales of Registrable
Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission
in connection with such sale, (ii) printing expenses (including,
without limitation, expenses of printing certificates for
Registrable Securities), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires
such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the
Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and
the fees and expenses incurred in connection with the listing of
the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any
broker or similar commissions of any Holder or, except to the
extent provided for in the Transaction Documents, any legal fees or
other costs of the Holders.

 

5. Indemnification.

 

(a) Indemnification by the Company.
The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, brokers (including brokers
who offer and sell Registrable Securities as principal as a result
of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees (and any other Persons
with a functionally equivalent role of a Person holding such
titles, notwithstanding a lack of such title or any other title) of
each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, members, stockholders,
partners, agents and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each
such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred,
arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement,
any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement
thereto, in light of the circumstances under which they were made)
not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state
securities law, or any rule or regulation thereunder, in connection
with the performance of its obligations under this Agreement,
except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a
Registration Statement, such Prospectus or in any amendment or
supplement thereto or (ii) in the case of an occurrence of an event
of the type specified in Section 3(d)(iii)-(vi), the use by such
Holder of an outdated, defective or otherwise unavailable
Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated, defective or otherwise unavailable
for use by such Holder and prior to the receipt by such Holder of
the Advice contemplated in Section 6(d), but only if and to the
extent that following the receipt of the Advice the misstatement or
omission giving rise to such Loss would have been corrected. The
Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the
Company is aware. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
indemnified person and shall survive the transfer of any
Registrable Securities by any of the Holders in accordance with
Section 6(h).

 

 

 

10

 

 

(b) Indemnification by Holders.
Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, to the extent
arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery
requirements of the Securities Act through no fault of the Company
or (y) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they
were made) not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company
expressly for inclusion in such Registration Statement or such
Prospectus, (ii) to the extent, but only to the extent, that such
information relates to such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in a
Registration Statement, such Prospectus or in any amendment or
supplement thereto or (iii) in the case of an occurrence of an
event of the type specified in Section 3(d)(iii)-(vi), to the
extent, but only to the extent, related to the use by such Holder
of an outdated, defective or otherwise unavailable Prospectus after
the Company has notified such Holder in writing that the Prospectus
is outdated, defective or otherwise unavailable for use by such
Holder and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d), but only if and to the extent that
following the receipt of the Advice the misstatement or omission
giving rise to such Loss would have been corrected. In no event
shall the liability of any selling Holder under this Section 5(b)
be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

 

(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an
“Indemnified
Party”), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall have the right to assume
the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided,
that, the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have materially and
adversely prejudiced the Indemnifying Party.

 

An
Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses; (2) the
Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and
counsel to the Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense
thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld or
delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a
party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

 

 

 

11

 

 

Subject
to the terms of this Agreement, all reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing
to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred,
within ten (10) Trading Days of written notice thereof to the
Indemnifying Party; provided, that, the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such
fees and expenses applicable to such actions for which such
Indemnified Party is finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or
further review) not to be entitled to indemnification
hereunder.

 

(d) Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party,
in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with
the actions, statements or omissions that resulted in such Losses
as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any
Losses shall be deemed to include, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other
fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for
such fees or expenses if the indemnification provided for in this
Section was available to such party in accordance with its
terms.

 

The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of
this Section 5(d), no Holder shall be required to contribute
pursuant to this Section 5(d), in the aggregate, any amount in
excess of the amount by which the net proceeds actually received by
such Holder from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Holder
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged
omission.

 

The
indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.

 

6. Miscellaneous.

 

(a) Remedies. In the event of a
breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery
of damages, shall be entitled to specific performance of its rights
under this Agreement. Each of the Company and each Holder agrees
that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such
breach, it shall not assert or shall waive the defense that a
remedy at law would be adequate.

 

 

 

12

 

 

(b) No Piggyback on Registrations;
Prohibition on Filing Other Registration Statements.
Except as required by the agreement
set forth on Schedule 6(i),
neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of
the Company in any Registration Statements other than the
Registrable Securities. Except as may be required pursuant to
existing registration rights granted by the Company pursuant to
that certain Registration Agreement by
and among the Company, Marley Beverage Company, LLC and the Initial
Holders, signatory thereto, dated as of June 13, 2017, the
Company shall not file any other registration statements until all
Registrable Securities are registered pursuant to a Registration
Statement that is declared effective by the Commission, provided
that this Section 6(b), (i) shall not prohibit the Company from
filing amendments to registration statements filed prior to the
date of this Agreement and (ii) shall not prohibit the Company from
filing a registration statement on Form S-3 for a primary offering
by the Company, provided that the Company makes no offering of
securities pursuant to such shelf registration statement prior to
the effective date of the Registration Statement required hereunder
that includes all of the Registrable Securities.

 

(c) Compliance. Each Holder
covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it
(unless an exemption therefrom is available) in connection with
sales of Registrable Securities pursuant to a Registration
Statement.

 

(d) Discontinued Disposition. By
its acquisition of Registrable Securities, the Holder agrees that,
upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(d)(iii) through (vi), such
Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in
writing (the “Advice”) by the Company
that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its
commercially reasonable efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable. The
Company agrees and acknowledges that any periods during which the
Holder is required to discontinue the disposition of the
Registrable Securities hereunder shall be subject to the provisions
of Section 2(d).

 

(e) Piggy-Back Registrations. If,
at any time during the Effectiveness Period, there is not an
effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with the Company’s stock
option or other employee benefit plans, then the Company shall
deliver to the Holder a written notice of such determination and,
if within ten (10) days after the date of the delivery of such
notice, any such Holder shall so request in writing, the Company
shall include in such registration statement all or any part of
such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to
register any Registrable Securities pursuant to this Section 6(e)
that are eligible for resale pursuant to Rule 144 (without volume
restrictions or current public information requirements)
promulgated by the Commission pursuant to the Securities Act or
that are the subject of a then effective Registration
Statement.

 

 

 

13

 

 

(f) Amendments and Waivers. The
provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers
or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the
Company and the Holders of 67% or more of the then outstanding
Registrable Securities (for purposes of clarification, this
includes any Registrable Securities issuable upon exercise or
conversion of any Security). If a Registration Statement does not
register all of the Registrable Securities pursuant to a waiver or
amendment done in compliance with the previous sentence, then the
number of Registrable Securities to be registered for each Holder
shall be reduced pro rata among all Holders and each Holder shall
have the right to designate which of its Registrable Securities
shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the
rights of a Holder or some Holders and that does not directly or
indirectly affect the rights of other Holders may be given only by
such Holder or Holders of all of the Registrable Securities to
which such waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in
accordance with the provisions of the first sentence of this
Section 6(f). No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.

 

(g) Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.

 

(h) Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties hereto and
shall inure to the benefit of each Holder. The Company may not
assign (except by merger) its rights or obligations hereunder
without the prior written consent of all of the Holders of the then
outstanding Registrable Securities. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as
permitted under Section 5.7 of the Purchase Agreement.

 

(i) No
Inconsistent Agreements.
Neither the Company nor any of its Subsidiaries has entered, as of
the date hereof, nor shall the Company or any of its Subsidiaries,
on or after the date of this Agreement, enter into any agreement
with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as set forth
on Schedule
6(i), neither the Company nor
any of its Subsidiaries has previously entered into any agreement
granting any registration rights with respect to any of its
securities to any Person that have not been satisfied in
full.

 

(j) Execution and Counterparts.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being
understood that all parties hereto need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect
as if such facsimile or “.pdf” signature page were an
original thereof.

 

 

 

14

 

 

(k) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Agreement shall be determined in accordance
with the provisions of the Purchase Agreement.

 

(l) Cumulative Remedies. The
remedies provided herein are cumulative and not exclusive of any
other remedies provided by law.

 

(m) Severability. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties hereto that they would have executed
the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.

 

(n) Headings. The headings in this
Agreement are for convenience only, do not constitute a part of the
Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 

(o) Independent Nature of Holders’
Obligations and Rights. The obligations of each Holder
hereunder are several and not joint with the obligations of any
other Holder hereunder, and no Holder shall be responsible in any
way for the performance of the obligations of any other Holder
hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any
Holder pursuant hereto or thereto, shall be deemed to constitute
the Holders as a partnership, an association, a joint venture or
any other kind of group or entity, or create a presumption that the
Holders are in any way acting in concert or as a group or entity
with respect to such obligations or the transactions contemplated
by this Agreement or any other matters, and the Company
acknowledges that the Holders are not acting in concert or as a
group, and the Company shall not assert any such claim, with
respect to such obligations or transactions. Each Holder shall be
entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall
not be necessary for any other Holder to be joined as an additional
party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained
was solely in the control of the Company, not the action or
decision of any Holder, and was done solely for the convenience of
the Company and not because it was required or requested to do so
by any Holder. It is expressly understood and agreed that each
provision contained in this Agreement is between the Company and a
Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.

 

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

 

(Signature Pages Follow)

 

 

15

 

IN
WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.

 

NEW AGE BEVERAGES CORPORATION

 

By:                                                                                                          

Name:
Brent Willis

Title:
Chief Executive Officer

 

 

 

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

 

 

16

 

 

[SIGNATURE PAGE OF HOLDERS TO RRA]

 

Name of Holder: Dominion Capital
LLC

 

Signature of Authorized Signatory of
Holder: /s/Mikhail
Gurevich

 

Name of Authorized Signatory: Mikhail
Gurevich

 

Title of Authorized Signatory: Managing
Member

 

 

 

 

17

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