Document:

Blueprint

 

Exhibit
4.2

 

Warrant
Certificate No. ______

 

NEITHER THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS
AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE
COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.

 

	
Effective Date: _________,
2018 

	
 Expiration
Date: __________, 2020

Warrant
No. [ ]

 

WRAP TECHNOLOGIES, INC.

 

WARRANT
TO PURCHASE COMMON STOCK

 

Wrap Technologies, Inc., a Delaware corporation (the
“Company”), for
value received on the Effective Date, hereby issues to (the
“Holder”) this
Warrant (the “Warrant”) to purchase
______________ shares (as from time to time
adjusted as hereinafter provided) (each such share a
“Warrant Share”
and all such shares being the “Warrant Shares”) of the
Company’s Common Stock (as defined below), at the Exercise
Price (as defined below), as adjusted from time to time as provided
herein, on or before the Expiration Date, all subject to the
following terms and conditions.

 

This
Warrant is one of a series of Warrants of like tenor being issued
to Subscribers in the Company’s private offering (the
“Offering”) of
units of its securities (the “Units”) in accordance with, and
subject to, the terms and conditions described in the Subscription
Agreement entered into by and between the Company and each
Subscriber set forth on the signature pages affixed thereto (the
“Subscription
Agreement”). Each Unit consist of one (1) share of
Common Stock and a warrant representing the right to purchase one
(1) shares of Common Stock. Capitalized terms used herein without
definition have the meanings ascribed to them in the Subscription
Agreement.

 

As used
in this Warrant, (i) “Business Day” means any day other
than Saturday, Sunday or any other day on which commercial banks in
the City of New York, New York, are authorized or required by law
or executive order to close; (ii) “Common Stock” means the common
stock of the Company, $0.0001 par value per share, including any
securities issued or issuable with respect thereto or into which or
for which such shares may be exchanged for, or converted into,
pursuant to any stock dividend, stock split, stock combination,
recapitalization, reclassification, reorganization or other similar
event; (iii) “Exercise
Price” means $[3.00] per share of Common Stock,
subject to adjustment as provided herein; (iv) “Trading Day” means any day on
which the primary national or regional stock exchange on which the
Common Stock is listed, or if not so listed, the OTC Bulletin Board
or the OTC Markets, if quoted thereon, is open
for the transaction of business; and (v) “Affiliate” means any person that, directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, a person, as such
terms are used and construed in Rule 144 promulgated under the
Securities Act of 1933, as amended (the “Securities
Act”).

 

 
-1-

 

1. 

DURATION
AND EXERCISE OF WARRANTS

 

(a)           Exercise
Period. The Holder may exercise
this Warrant in whole or in part on any Business Day on or before
5:00 P.M., Eastern Time, on the Expiration Date, at which time this
Warrant shall become void and of no value.

 

(b) 

Exercise
Procedures.

 

(i)           Cash.
While this Warrant remains outstanding and exercisable in
accordance with Section 1(a), the Holder may exercise this Warrant in whole or
in part at any time and from time to time by:

 

(A)           delivery
to the Company of a duly completed and executed copy of the notice
of exercise attached hereto as Exhibit A (the “Notice of
Exercise”), with the
“CASH” payment option indicated;

 

(B)           surrender
of this Warrant to the Secretary of the Company at its principal
offices or at such other office or agency as the Company may
specify in writing to the Holder; and

 

(C)           payment
of the then-applicable Exercise Price per share multiplied by the
number of Warrant Shares being purchased upon exercise of the
Warrant (such amount, the “Aggregate Exercise
Price”) made in the form
of cash, or by wire transfer of immediately available funds,
certified check or bank draft payable in lawful money of the United
States of America.

 

(ii)           Cashless.
In addition to the manner set forth in Section 1(b)(i), while this
Warrant remains outstanding and exercisable in accordance with
Section 1(a), (i) if a Registration Event occurs and is continuing
(as such term is defined in the Registration Rights Agreement dated
as of the date hereof), during such time as such Registration Event
is not cured by the Company, or (ii) during the period that the
Company’s registration obligations under the Registration
Rights Agreement have ceased and the registration statement
registering the resale of the Warrant Shares is no longer
effective, the Holder may, in its sole discretion, exercise all or
any part of the Warrant in a “cashless” or
“net-issue” exercise (a “Cashless Exercise”)
by:

 

(A)           delivery
to the Company of a duly completed and executed Notice of Exercise,
with the “CASHLESS” payment option
indicated;

 

(B)           surrender
of this Warrant to the Secretary of the Company at its principal
offices or at such other office or agency as the Company may
specify in writing to the Holder;

 

whereupon the
Holder shall be entitled to receive a number of Warrant Shares
calculated using the following formula:

 

X            

=            

Y * (A - B)

       A

 

where:

 

X =            

the number of
Warrant Shares to be issued to the Holder

 

Y = 

the number of
Warrant Shares with respect to which the Warrant is being exercised
as specified in the Notice of Exercise

 

A = 

the fair value per
share of Common Stock on the date of exercise of this
Warrant

 

B =            

the then-current
Exercise Price of the Warrant

 

 

 

-2-

 

 

Solely
for the purposes of this Section 1(b), “fair value” per
share of Common Stock shall mean the average Closing Price (as
defined below) per share of Common Stock for the twenty (20)
Trading Days immediately preceding the date on which the Notice of
Exercise is deemed to have been sent to the Company.
“Closing Price”
means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then
listed on a national securities exchange, the closing price per
share of the Common Stock for such date (or the nearest preceding
date) on the primary exchange on which the Common Stock is then
listed; (b) if prices for the Common Stock are then quoted on the
OTC Bulletin Board or any tier of the OTC Markets, the closing bid
price per share of the Common Stock for such date (or the nearest
preceding date) so quoted; or (c) if prices for the Common Stock
are then reported in the “Pink Sheets” published by
the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting
prices), the most recent closing bid price per share of the Common
Stock so reported. If the Common Stock is not publicly traded as
set forth above, the “fair value” per share of
Common Stock shall be reasonably and in good faith determined by
the Board of Directors of the Company as of the date which the
Notice of Exercise is deemed to have been sent to the
Company.

 

For
purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares
issued in a Cashless Exercise transaction shall be deemed to have
been acquired by the Holder, and the holding period for such shares
shall be deemed to have commenced, on the date this Warrant was
originally issued.

 

(iii)           Upon
the exercise of this Warrant in compliance with the provisions of
this Section 1(b), and except as limited pursuant to Section
1(b)(iv), the Company shall promptly issue and cause to be
delivered to the Holder a certificate for the Warrant Shares for
which this Warrant was exercised. Each exercise of this Warrant
shall be effective immediately prior to the close of business on
the date (the “Date of
Exercise”) that the
conditions set forth in Section 1(b)(i) or (ii) have been
satisfied, as the case may be. On or before the third
(3rd)
Business Day following the date on which the Company has received
each of the items specified in Section 1(b)(i) or 1(b)(ii), as
applicable (the “Exercise
Deliverables”), the Company shall transmit an
acknowledgment of receipt of the Exercise Deliverables to the
Company’s transfer agent (the “Transfer Agent”). On or before the
fifth (5th) Business Day
following the date on which the Company has received all of the
Exercise Deliverables (the “Share Delivery Date”), the Company
shall (X) provided that the Warrant Shares have been registered or
that the Warrant Shares are eligible for sale under Rule 144
without restriction and that the Transfer Agent is participating in
The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Holder and to
the extent applicable, Holder’s supplying the Company with
required Rule 144 documentation, cause the Transfer Agent to credit
such aggregate number of shares of Common Stock to which the Holder
is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system, or (Y) if the Warrant Shares
have not been registered and are not eligible for sale under Rule
144 without restriction or if Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, cause the
Transfer Agent to issue and dispatch by overnight courier to the
address as specified in the Notice of Exercise, a certificate,
registered in the Company’s share register in the name of the
Holder or its designee, for the number of shares of Common Stock to
which the Holder is entitled pursuant to such
exercise.

 

Upon
delivery of the Exercise Deliverables, the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective
of the date of delivery of the certificates evidencing such Warrant
Shares.

 

 

-3-

 

 

(iv)           If
the Company shall fail for any reason or for no reason to issue or
cause to be issued to the Holder, within five (5) Business Days of
receipt of the Exercise Deliverables, a certificate for the number
of shares of Common Stock to which the Holder is entitled and
register or cause to be registered such shares of Common Stock on
the Company’s share register or to credit or cause to be
credited the Holder’s balance account with DTC for such
number of shares of Common Stock to which the Holder is entitled
upon the Holder’s exercise of this Warrant (in each case as
provided above), and if on or after such fifth (5th) Business Day the
Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company (a
“Buy-In”), then
the Company shall, within three (3) Business Days after the
Holder’s request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the Holder’s
total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver a certificate for the shares
of Common Stock to which the Holder would have been entitled and
register or cause to be registered such shares of Common Stock on
the Company’s share register, or to credit or cause to be
credited the Holder’s balance account with DTC for such
number of shares of Common Stock to which the Holder would have
been entitled, shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates
representing such shares of Common Stock and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock, times (B)
the fair value of the Common Stock on the date of
exercise.

 

(v)           Notwithstanding
the foregoing provisions of this Section 1(b), the Holder may not
exercise this Warrant if and to the extent that such exercise would
require the Company to issue a number of shares of Common Stock in
excess of its authorized but unissued shares of Common Stock, less
all amounts of Common Stock that have been reserved for issue upon
the conversion of all outstanding securities convertible into
shares of Common Stock and the exercise of all outstanding options,
warrants and other rights exercisable for shares of Common Stock.
If the Company does not have the requisite number of authorized but
unissued shares of Common Stock to permit the Holder to exercise
this Warrant, then the Company shall use commercially reasonable
efforts to obtain the necessary stockholder consent to increase the
authorized number of shares of Common Stock to permit such Holder
to exercise this Warrant pursuant to Section 1(b)(i) or Section
1(b)(ii).

 

(vi)         
The delivery by (or on behalf of) the
Holder of the Notice of Exercise and the applicable Exercise Price
as provided above shall constitute the Holder’s certification
to the Company that its representations and warranties contained in
Section 5 of the Subscription Agreement, including without
limitation the representation and warranty that the Holder is an
“accredited investor,” are true and correct as of the
exercise date as if remade in their entirety (or, in the case of
any transferee Holder that is not a party to the Subscription
Agreement, such transferee Holder’s certification to the
Company that such representations are true and correct as to such
assignee Holder as of the exercise date).

 

(c)           Partial
Exercise. This Warrant shall be
exercisable, either in its entirety or, from time to time, for part
only of the number of Warrant Shares referenced by this Warrant;
provided, that any such partial exercise must be for an integral
number of Warrant Shares. If this Warrant is exercised in part, the
Company shall issue, at its expense, a new Warrant, in
substantially the form of this Warrant, referencing such reduced
number of Warrant Shares that remain subject to this
Warrant.

 

(d)           Disputes.
In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant
Shares that are not disputed and resolve such dispute in accordance
with Section 15.

 

 

 

-4-

 

2. 

ISSUANCE
OF WARRANT SHARES

 

(a)           The
Company covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be (i) duly authorized,
fully paid and non-assessable, and (ii) free from all liens,
charges and security interests, with the exception of claims
arising through the acts or omissions of any Holder and except as
arising from applicable Federal and state securities
laws.

 

(b)           The
Company shall register this Warrant upon records to be maintained
by the Company for that purpose in the name of the record holder of
such Warrant from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner thereof for
the purpose of any exercise thereof, any distribution to the Holder
thereof and for all other purposes.

 

(c)           The
Company will not, by amendment of its articles of incorporation,
by-laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant
and in the taking of all action necessary or appropriate in order
to protect the rights of the Holder to exercise this Warrant, or
against impairment of such rights.

 

3. 

ADJUSTMENTS
OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES

 

(a)           General.
The Exercise Price and the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of certain events described in this
Section 3(a); provided,
that notwithstanding the provisions of this Section 3, the Company
shall not be required to make any adjustment if and to the extent
that such adjustment would require the Company to issue a number of
shares of Common Stock in excess of its authorized but unissued
shares of Common Stock, less all amounts of Common Stock that have
been reserved for issue upon the conversion of all outstanding
securities convertible into shares of Common Stock and the exercise
of all outstanding options, warrants and other rights exercisable
for shares of Common Stock. If the Company does not have the
requisite number of authorized but unissued shares of Common Stock
to make any adjustment, the Company shall use its commercially
reasonable efforts to obtain the necessary stockholder consent to
increase the authorized number of shares of Common Stock to make
such an adjustment pursuant to this Section
3(a).

 

(i)           Subdivision
or Combination of Stock. In
case the Company shall at any time subdivide (whether by way of
stock dividend, stock split or otherwise) its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares shall be
proportionately increased, and conversely, in case the outstanding
shares of Common Stock of the Company shall be combined (whether by
way of stock combination, reverse stock split or otherwise) into a
smaller number of shares, the Exercise Price in effect immediately
prior to such combination shall be proportionately increased and
the number of Warrant Shares shall be proportionately decreased.
The Exercise Price and the Warrant Shares, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive
event or events described in this Section
3(a)(i).

 

(ii)           Dividends
in Stock, Property, Reclassification. If at any time, or from time to time, the
holders of Common Stock (or any shares of stock or other securities
at the time receivable upon the exercise of this Warrant) shall
have received or become entitled to receive, without payment
therefor:

 

(A)           any
shares of stock or other securities that are at any time directly
or indirectly convertible into or exchangeable for Common Stock, or
any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other
distribution, or

 

(B)           additional
stock or other securities or property (including cash) by way of
spin-off, split-up, reclassification, combination of shares or
similar corporate rearrangement (other than shares of Common Stock
issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3(a)(i) above),

 

 

 

-5-

 

then and in each such case, the Exercise Price and the number of
Warrant Shares to be obtained upon exercise of this Warrant shall
be adjusted proportionately, and the Holder hereof shall, upon the
exercise of this Warrant, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and
without payment of any additional consideration therefor, the
amount of stock and other securities and property (including cash
in the cases referred to above) that such Holder would hold on the
date of such exercise had such Holder been the holder of record of
such Common Stock as of the date on which holders of Common Stock
received or became entitled to receive such shares or all other
additional stock and other securities and property. The Exercise
Price and the Warrant Shares, as so adjusted, shall be readjusted
in the same manner upon the happening of any successive event or
events described in this Section 3(a)(ii).

 

(iii)           Reorganization,
Reclassification, Consolidation, Merger or Sale. If any recapitalization, reclassification or
reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation or
any other entity, or the sale of all or substantially all of its
assets or other transaction shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock,
securities or other assets or property (an
“Organic
Change”), then, as
a condition of such Organic Change, lawful and adequate provisions shall be made by
the Company whereby the Holder hereof shall thereafter have the
right to purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented by this
Warrant) such shares of stock, securities or other assets or
property as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to
the number of shares of such stock immediately theretofore
purchasable and receivable assuming the full exercise of the rights
represented by this Warrant. In the event of any Organic Change,
appropriate provision shall be made by the Company with respect to
the rights and interests of the Holder of this Warrant to the end
that the provisions hereof (including, without limitation,
provisions for adjustments of the Exercise Price and of the number
of shares purchasable and receivable upon the exercise of this
Warrant and registration rights substantially the same as
those provided for in the Registration Rights Agreement) shall thereafter be applicable, in relation to
any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof. The Company shall not effect any
such Organic Change unless, prior to the consummation
thereof, the successor corporation or
entity (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets
shall assume by written instrument reasonably satisfactory in form
and substance to the Holder executed and mailed or delivered to the
registered Holder hereof at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to
such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be
entitled to purchase. If there is an Organic Change, then the
Company shall cause to be mailed to the Holder at its last address
as it shall appear on the books and records of the Company, at
least ten (10) calendar days before the effective date of the
Organic Change, a notice stating the date on which such Organic
Change 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 for securities, cash, or
other property delivered upon such Organic Change;
provided,
that the failure to mail such notice or any defect therein or in
the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder is
entitled to exercise this Warrant during the 10-day period
commencing on the date of such notice to the effective date of the
event triggering such notice. In any event, the successor
corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets
shall be deemed to assume such obligation to deliver to such Holder
such shares of stock, securities or assets even in the absence of a
written instrument assuming such obligation to the extent such
assumption occurs by operation of law.

 

(b)           Certificate
as to Adjustments. Upon the
occurrence of each adjustment or readjustment pursuant to this
Section 3, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and
furnish to each Holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company
shall promptly furnish or cause to be furnished to such Holder a
like certificate setting forth: (i) such adjustments and
readjustments; and (ii) the number of shares and the amount, if
any, of other property which at the time would be received upon the
exercise of the Warrant.

 

 

 

-6-

 

(c)           Certain
Events. If any event occurs as
to which the other provisions of this Section 3 are not strictly
applicable but the lack of any adjustment would not fairly protect
the purchase rights of the Holder under this Warrant in accordance
with the basic intent and principles of such provisions, or if
strictly applicable would not fairly protect the purchase rights of
the Holder under this Warrant in accordance with the basic intent
and principles of such provisions, then the Company's Board of
Directors will, in good faith and subject to applicable law, make
an appropriate adjustment to protect the rights of the
Holder; provided,
that no such adjustment pursuant to this Section 3(d) will increase
the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section
3.

 

4. 

TRANSFERS
AND EXCHANGES OF WARRANT AND WARRANT SHARES

 

(a)           Registration
of Transfers and Exchanges.
Subject to Section 4(c), upon the Holder’s surrender of this
Warrant, with a duly executed copy of the Form of Assignment
attached as Exhibit B, to the Secretary of the Company at its principal
offices or at such other office or agency as the Company may
specify in writing to the Holder, the Company shall register the
transfer of all or any portion of this Warrant. Upon such
registration of transfer, the Company shall issue a new Warrant, in
substantially the form of this Warrant, evidencing the acquisition
rights transferred to the transferee and a new Warrant, in similar
form, evidencing the remaining acquisition rights not transferred,
to the Holder requesting the transfer.

 

(b)           Warrant
Exchangeable for Different Denominations. The Holder may exchange this Warrant for a new
Warrant or Warrants, in substantially the form of this Warrant,
evidencing in the aggregate the right to purchase the number of
Warrant Shares, which may then be purchased hereunder, each of such
new Warrants to be dated the date of such exchange and to represent
the right to purchase such number of Warrant Shares as shall be
designated by the Holder. The Holder shall surrender this Warrant
with duly executed instructions regarding such re-certification of
this Warrant to the Secretary of the Company at its principal
offices or at such other office or agency as the Company may
specify in writing to the Holder.

 

(c)           Restrictions
on Transfers. This Warrant may
not be transferred at any time without (i) registration under the
Securities Act or (ii) an exemption from such registration
and, if requested by the
Company, a written opinion of legal counsel addressed to the
Company that the proposed transfer of the Warrant may be effected
without registration under the Securities Act, which opinion will
be in form and from counsel reasonably satisfactory to the
Company.

 

(d)           Permitted
Transfers and Assignments.
Notwithstanding any provision to the contrary in this Section 4,
the Holder may transfer, with or without consideration, this
Warrant or any of the Warrant Shares (or a portion thereof) to the
Holder’s Affiliates (as such term is defined under Rule 144
of the Securities Act) without obtaining the opinion from counsel
that may be required by Section 4(c)(ii), provided,
that the Holder delivers to the
Company and its counsel certification, documentation, and other
assurances reasonably required by the Company’s counsel to
enable the Company’s counsel to render an opinion to the
Company’s Transfer Agent that such transfer does not violate
applicable securities laws.

 

5. 

MUTILATED
OR MISSING WARRANT CERTIFICATE

 

If this Warrant is mutilated, lost, stolen or
destroyed, upon request by the Holder, the Company will, at its
expense, issue, in exchange for and upon cancellation of the
mutilated Warrant, or in substitution for the lost, stolen or
destroyed Warrant, a new Warrant, in substantially the form of this
Warrant, representing the right to acquire the equivalent number of
Warrant Shares; provided,
that, as a prerequisite to the issuance of a substitute Warrant,
the Company may require satisfactory evidence of loss, theft or
destruction as well as an indemnity from the Holder of a lost,
stolen or destroyed Warrant.

 

6. 

PAYMENT
OF TAXES

 

The Company will pay all transfer and stock
issuance taxes attributable to the preparation, issuance and
delivery of this Warrant and the Warrant Shares (and replacement
Warrants) including, without limitation, all documentary and stamp
taxes; provided,
however,
that the Company shall not be required to pay any tax in respect of
the transfer of this Warrant, or the issuance or delivery of
certificates for Warrant Shares or other securities in respect of
the Warrant Shares to any person or entity other than to the
Holder.

 

 

 

-7-

 

7.            

FRACTIONAL
SHARES

 

No
fractional Warrant Shares shall be issued upon exercise of this
Warrant. Upon the full exercise of this Warrant, the Company, in
lieu of issuing any fractional Warrant Share, shall round up the
number of Warrant Shares issuable to nearest whole
share.

 

8. 

NO
STOCK RIGHTS AND LEGEND

 

No
holder of this Warrant, as such, shall be entitled to vote or be
deemed the holder of any other securities of the Company that may
at any time be issuable on the exercise hereof, nor shall anything
contained herein be construed to confer upon the holder of this
Warrant, as such, the rights of a stockholder of the Company or the
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or give or
withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as
provided herein), or to receive dividends or subscription rights or
otherwise (except as provide herein).

 

Each
certificate for Warrant Shares initially issued upon the exercise
of this Warrant, and each certificate for Warrant Shares issued to
any subsequent transferee of any such certificate, shall be stamped
or otherwise imprinted with a legend in substantially the following
form:

 

THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION
FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION
OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY
BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR APPLICABLE STATE SECURITIES
LAWS. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.

 

9.            

REGISTRATION
RIGHTS

 

The
Holder shall be entitled to the registration rights with respect to
the Warrant Shares set forth in, and subject to the conditions of,
the Registration Rights Agreement.

 

 

 

-8-

 

10. 

NOTICES

 

All
notices, consents, waivers, and other communications under this
Warrant must be in writing and will be deemed given to a party (a)
on the date of delivery, if delivered to the appropriate address by
hand or by nationally recognized overnight courier service (costs
prepaid); (b) the date of transmission if sent by facsimile or
e-mail with confirmation of transmission by the transmitting
equipment if such notice or communication is delivered prior to
5:00 P.M., New York City time, on a Trading Day, or the next
Trading Day after the date of transmission, if such notice or
communication is delivered on a day that is not a Trading Day or
later than 5:00 P.M., New York City time, on any Trading Day; (c)
the date received or rejected by the addressee, if sent by
certified mail, return receipt requested, if to the registered
Holder hereof; or (d) seven days after the placement of the notice
into the mails (first class postage prepaid), to the Holder at the
address, facsimile number, or e-mail address furnished by the
registered Holder to the Company in accordance with the
Subscription Agreement by and between the Company and the Holder
or, if the registered Holder is not the original purchaser of this
Warrant, then as provided in the Form of Assignment delivered to
the Company pursuant to Section 4(a) in connection with the
assignment of this Warrant to such Holder, or if to the Company, to
it at:

 

Wrap
Technologies, Inc.

4620
Arville Street, Ste E

Las
Vegas, NV 89103

Attention: David
Norris, President

Facsimile:

Email:
david@wraptechnologies.com

 (or to such other address, facsimile number, or e-mail
address as the Holder or the Company as a party may designate by
notice to the other party in accordance with this Section 10) with
a copy to

 

Disclosure Law
Group

600
West Broadway, Suite 700

San
Diego, CA 92101

Attention: Daniel
W. Rumsey

Facsimile:
619-330-2101

Email:
drumsey@disclosurelawgroup.com

11. 

SEVERABILITY

 

If
a court of competent jurisdiction holds any provision of this
Warrant invalid or unenforceable, the other provisions of this
Warrant will remain in full force and effect. Any provision of this
Warrant held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable.

 

12. 

BINDING
EFFECT

 

This
Warrant shall be binding upon and inure to the sole and exclusive
benefit of the Company, its successors and assigns, the registered
Holder or Holders from time to time of this Warrant and the Warrant
Shares.

 

13. 

SURVIVAL
OF RIGHTS AND DUTIES

 

This
Warrant shall terminate and be of no further force and effect on
the earlier of 5:00 P.M., Eastern Time, on the Expiration Date or
the date on which this Warrant has been exercised in
full.

 

14. 

GOVERNING
LAW

 

This
Warrant will be governed by and construed under the laws of the
State of Delaware without regard to conflicts of laws principles
that would require the application of any other law.

 

 

 

-9-

 

15. 

DISPUTE
RESOLUTION

 

In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within five (5)
Business Days of receipt of the Notice
of Exercise giving rise to such dispute, as the case may be, to the
Holder. If the Holder and the Company are unable to agree upon such
determination or calculation of the Exercise Price or the Warrant
Shares within three Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the
Company shall, at its sole discretion, within five (5) Business
Days, submit via facsimile (a) the disputed determination of the
Exercise Price to an independent, reputable investment bank
selected by the Company and approved by the Holder, or (b) the
disputed arithmetic calculation of the Warrant Shares to the
Company’s independent, outside accountant. The Company shall
cause at its expense the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and
notify the Company and the Holder of the results no later than ten
(10) Business Days from the time it receives the disputed
determinations or calculations; provided that, if such disputed
determination or arithmetic calculation being submitted by the
Holder is determined to be incorrect, then the expense of the
investment bank or the accountant shall be the responsibility of
the Holder. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be
final, binding and conclusive upon the parties thereto.

 

16. 

NOTICES
OF RECORD DATE

 

Upon
(a) any establishment by the Company of a record date of the
holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or
other distribution, or right or option to acquire securities of the
Company, or any other right, or (b) any capital reorganization,
reclassification, recapitalization, merger or consolidation of the
Company with or into any other corporation or other entity, any
transfer of all or substantially all the assets of the Company, or
any voluntary or involuntary dissolution, liquidation or winding up
of the Company, or the sale, in a single transaction, of a majority
of the Company’s voting stock (whether newly issued, or from
treasury, or previously issued and then outstanding, or any
combination thereof), the Company shall mail to the Holder at least
ten (10) Business Days, or such longer period as may be required by
law, prior to the record date specified therein, a notice
specifying (i) the date established as the record date for the
purpose of such dividend, distribution, option or right and a
description of such dividend, option or right, (ii) the date on
which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up, or
sale is expected to become effective and (iii) the date, if any,
fixed as to when the holders of record of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, transfer, consolation, merger, dissolution,
liquidation or winding up.

 

17. 

RESERVATION
OF SHARES

 

The
Company shall reserve and keep available out of its authorized but
unissued shares of Common Stock for issuance upon the exercise of
this Warrant, free from pre-emptive rights, such number of shares
of Common Stock for which this Warrant shall from time to time be
exercisable. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be issued
as provided herein without violation of any applicable law or
regulation. Without limiting the generality of the foregoing, the
Company covenants that it will use commercially reasonable efforts
to take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and
non-assessable Warrant Shares upon the exercise of this Warrant and
use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents, including but not limited
to consents from the Company’s stockholders or Board of
Directors or any public regulatory body, as may be necessary to
enable the Company to perform its obligations under this
Warrant.

 

18. 

HEADINGS

 

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

 

 

 

-10-

 

19. 

AMENDMENT
AND WAIVERS

 

Any
term of this Warrant may be amended and the observance of any term
of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively),
with the written consent of the Company and the Holders of a
majority of the Warrant Shares issuable upon exercise of the
Warrants.

 

20. 

NO
THIRD PARTY RIGHTS

 

This
Warrant is not intended, and will not be construed, to create any
rights in any parties other than the Company and the Holder, and no
person or entity may assert any rights as third-party beneficiary
hereunder.

 

[Signature Page Follows]

 

 

-11-

 

 

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the date first set forth above.

 

WRAP
TECHNOLOGIES, INC.

 

By:                                                       

Name:  David
Norris

Title:  President

 

 

 

 

-12-

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

(To be executed by Holder of Warrant if Holder desires to exercise
Warrant)

 

To Wrap Technologies, Inc.:

 

The undersigned hereby irrevocably elects to exercise this Warrant
with respect to ___________________ shares of Common Stock (as
defined in the Warrant) as follows:

 

Check applicable box

 

☐ 

CASH: Number of
shares of Common Stock exercised X $____ per share = $_________ (to be paid as provided in Section
1(b)(i) of the Warrant) plus any applicable taxes payable by the
undersigned pursuant to the Warrant; or

 

☐ 

CASHLESS (if
eligible in accordance with Section 1(b)(ii) of the
Warrant).

 

The undersigned requests that certificates for such shares be
issued in the name of:

 

_________________________________________

_________________________________________

_________________________________________

 

(Please print name, address and social security or federal employer
identification number (if applicable))*

 

If
the shares issuable upon this exercise of the Warrant are not all
of the Warrant Shares which the Holder is entitled to acquire upon
the exercise of the Warrant, the undersigned requests that a new
Warrant evidencing the rights not so exercised be issued in the
name of and delivered to:

_________________________________________

_________________________________________

_________________________________________

 

(Please print name, address and social security or federal employer
identification number (if applicable))*

 

Name of Holder
(print):                                                                                        

(Signature):                                                                                        

(By:)                                                                                        

(Title:)                                                                                        

Dated:                                                                                        

 

 

 

*            

If
Warrant Shares are to be issued in any name other than that of the
registered Holder of the Warrant, then the Holder must include an
opinion of counsel, reasonably satisfactory to the Company, to the
effect that such issuance complies with all applicable securities
laws.

 

-13-

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR
VALUE RECEIVED, ___________________________________ hereby sells,
assigns and transfers to each assignee set forth below all of the
rights of the undersigned under the Warrant (as defined in and
evidenced by the attached Warrant) to acquire the number of Warrant
Shares set opposite the name of such assignee below and in and to
the foregoing Warrant with respect to said acquisition rights and
the shares issuable upon exercise of the Warrant:

 

	

Name of Assignee (and social security or federal employer
identification number (if applicable))

 

	

Address

 

	

Number of Shares

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

If
the total of the Warrant Shares are not all of the Warrant Shares
evidenced by the foregoing Warrant, the undersigned requests that a
new Warrant evidencing the right to acquire the Warrant Shares not
so assigned be issued in the name of and delivered to the
undersigned.

 

Name of Holder
(print):                                                                                        

(Signature):                                                                                        

(By:)                                                                                        

(Title:)                                                                                        

Dated:                                                                                        

 

 

-14-Blueprint

 

Exhibit 10.1

 

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (this “Agreement”)
has been executed by the purchaser set forth on the signature page
hereof (the “Purchaser”)
in connection with the private placement offering (the
“Offering”)
by Wrap Technologies, Inc., a Delaware corporation (the
“Company”).

 

R E C I T A L S

 

A. The Company is
offering units to purchase (i) one (1) share of common stock, par
value $0.0001 (the “Common
Stock”), and (ii) a warrant to purchase one (1) share
of Common Stock (the “Warrant” and together with the
Common Stock, a “Unit”)
at a purchase price of $3.00 per unit (the “Purchase
Price”), for a minimum aggregate purchase price of
$5.0 million (the “Minimum Offering
Amount”), and a maximum aggregate purchase price of
$16.0 million (the “Maximum Offering
Amount”).

 

 

B.           The
Units, including the Common Stock and Warrant, subscribed for
pursuant to this Agreement have not been registered under the
Securities Act of 1933, as amended (the “Securities
Act”). The Offering is being made on a reasonable best
efforts basis to “accredited investors,” as defined in
Regulation D under the Securities Act in reliance upon the
exemption from securities registration afforded by Section 4(a)(2)
of the Securities Act and/or Rule 506 of Regulation D.

 

AGREEMENT

 

The
Company and the Purchaser hereby agree as follows:

 

1. Subscription.

 

(a) Purchase
and Sale of the Units.

 

(i) Subject
to the terms and conditions of this Agreement, the undersigned
Purchaser agrees to purchase, and the Company agrees to sell and
issue to such Purchaser, that number of Units set forth on such
Purchaser’s Omnibus Signature Page attached hereto at the
Purchase Price per Unit, for a total aggregate Purchase Price as
set forth on such Omnibus Signature Page. The minimum subscription
amount for each Purchaser in the Offering is $30,000. The Company
may accept subscriptions for less than $30,000 from any Purchaser
in its sole discretion.

 

For
the purposes of this Agreement:

 

 “Shares”
means the shares of Common Stock issued in the Offering at
the Initial Closing (as defined
below) or at any Subsequent Closing (as defined
below).

 

“Warrant
Shares” means the shares of Common Stock issuable upon
exercise of the Warrants.

 

“Securities”
means each of the Shares, the Warrants and when issued, the Warrant
Shares.

 

(ii) This
Agreement is one of a series of subscription agreements issued (and
to be issued) by the Company to
purchasers of Units in connection with the Offering with
substantially the same terms and conditions set forth in this
Agreement (each, a “Subscription
Agreement”, and
collectively, the “Subscription
Agreements”).

 

(b) Subscription
Procedure; Closing.

 

(i) Initial
Closing. The initial
purchase and sale of the Units shall take place remotely via the
exchange of documents and signatures at 10 a.m. eastern, on October
31, 2018 (the “Initial
Closing”).

 

(ii) Subsequent
Closings. If the Maximum Offering Amount is not sold at the
Initial Closing, the Company may sell additional Units up to the
Maximum Offering Amount to such
persons as may be approved by
the Company (the “Additional
Purchasers”) (the closing
of each sale contemplated by this subsection (ii), a
“Subsequent
Closing”);
provided that
in no event shall any Subsequent
Closing occur after December 31, 2018. All such sales made at any
Subsequent Closing, shall be
made on the same terms and conditions set forth in this
Agreement.

 

 

 

-1-

 

 

(iii) Subscription
Procedure. To complete a subscription for the Units pursuant
hereto, the Purchaser must fully
comply with the subscription procedure provided in
paragraphs ‎(A)
through ‎(C) of this
Section on or before the Initial Closing or any Subsequent Closing,
as applicable:

 

(A) Subscription Documents. At or
before the Initial Closing or any
Subsequent Closing, as applicable, the Purchaser shall
review, complete and execute the Omnibus Signature Page to this
Agreement and the Registration Rights Agreement substantially in,
or providing equivalent rights to, the form of Exhibit A hereto (the “Registration Rights
Agreement”), Investor Profile, Anti-Money
Laundering Form and Investor Certification, attached hereto
following the Omnibus Signature Page (collectively, the
“Subscription
Documents”), if applicable, additional forms and
questionnaires distributed to the Purchaser and deliver the
Subscription Documents and such additional forms and questionnaires
to the party indicated thereon at the address set forth under the
caption “How to subscribe
for Units in the private offering of the Company”
below. Executed documents may be delivered to such party by
facsimile or .pdf sent by electronic mail (e-mail).

 

 

(B) Purchase
Price. At or prior to the Initial Closing or any Subsequent Closing, as
applicable, the Purchaser shall deliver to Delaware Trust
Company, in its capacity as escrow agent (the “Escrow
Agent”), under an escrow agreement among the Company,
the Placement Agent (as defined below) and the Escrow Agent (the
“Escrow
Agreement”) the full Purchase Price set forth on the
Purchaser’s Omnibus Signature Page attached hereto, by
certified or other bank check or by wire transfer of immediately
available funds, pursuant to the instructions set forth under the
caption “How to subscribe
for Units in the private offering of the Company”
below. Such funds will be held for the Purchaser’s benefit in
the escrow account established for the Offering (the
“Escrow
Account”) and will be returned promptly upon the
Purchaser’s written request to the Escrow Agent or the
Company, without interest or offset, if this Agreement is not
accepted by the Company or if the Offering is terminated pursuant
to the terms herein prior to the Initial Closing or any Subsequent Closing, as
applicable.

 

(C) Company Discretion. The Purchaser understands and
agrees that the Company in its sole discretion reserves the right
to accept or reject this or any other subscription for Units, in
whole or in part, notwithstanding prior receipt by the Purchaser of
notice of acceptance of this subscription. The Company shall have
no obligation hereunder until the Company shall execute and deliver
to the Purchaser an executed copy of this Agreement. If this
subscription is rejected by the Company in whole pursuant to the
first sentence of this Section ‎1(b)(C), or the Offering is terminated,
the Company shall immediately return, and shall cause the Escrow
Agent to immediately return, all funds paid by or on behalf of the
Purchaser pursuant to this Agreement, without interest or offset,
and this Agreement shall thereafter be of no further force or
effect. If this subscription is rejected by the Company in part,
the Company shall immediately return, and shall cause the Escrow
Agent to immediately return, all funds paid by or on behalf of the
Purchaser for the rejected portion of this subscription, without
interest or offset, and this Agreement shall continue in full force
and effect to the extent this subscription was
accepted.

 

2. Placement
Agent.

 

(a) Katalyst Securities
LLC (the “Placement
Agent”) has been engaged by the Company as placement
agent on a reasonable best efforts basis, for the
Offering.

 

(b) The Company has
entered into a separate agreement with the Placement Agent that
identifies prospective investors for whom a Placement Agent will
receive payment, and should such prospective investor participate
in the Initial Closing or any Subsequent Closing then the
applicable Placement Agent will receive (i) ten percent (10%) of
the gross proceeds from the sale to the applicable prospective
investor (the “Cash
Fee”) and (ii) warrants to purchase shares of the
Company’s Common Stock equal to 10% of the numbers of Units
sold (the “Warrant
Fee”) in such Initial Closing or any Subsequent
Closing (if any).

 

(c) The
Company will also pay certain expenses, including legal fees, in
connection with the Offering.

 

(b) Pursuant to the
terms of its agreement with the Company, the Placement Agent may
engage sub agents pursuant to an executed sub agent agreement, and
such sub agents may receive a share of the Cash Fee and/or Warrant
Fee with respect to Purchasers for whom the Placement Agent
receives payment from the Company.

 

 

 

-2-

 

 

3. Representations
and Warranties of the Company. Except as disclosed in the
SEC Reports (as defined below) filed by the Company with the U.S.
Securities and Exchange Commission (the “SEC”)
and publicly available on the SEC’s Electronic Data Gathering
Analysis and Retrieval system, the
Company hereby represents and warrants to the Purchaser, as of the
date of the Initial Closing,
the following:

 

(a) Organization
and Qualification. The Company and each of its subsidiaries
is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and has the requisite
corporate power to own its properties and to carry on its business
as now being conducted. The Company and each of its subsidiaries is
duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the assets,
business, financial condition, results of operations or future
prospects of the Company and its subsidiaries taken as a whole (a
“Material Adverse
Effect”).

 

(b) Authorization,
Enforcement, Compliance with Other Instruments. (i) the
Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement, the Warrant,
the Registration Rights Agreement and the Escrow Agreement (the
“Transaction
Documents”) and to issue the Securities, in accordance
with the terms hereof and thereof; (ii) the execution and delivery
by the Company of each of the Transaction Documents and the
consummation by it of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the
Securities, have been, or will be at the time of execution of such
Transaction Document, duly authorized by the Company’s Board
of Directors, and no further consent or authorization is, or will
be at the time of execution of such Transaction Document, required
by the Company, its Board of Directors or its stockholders; (iii)
each of the Transaction Documents will be duly executed and
delivered by the Company; and (iv) the Transaction Documents when
executed will constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors’
rights and remedies and, with respect to any rights to indemnity or
contribution contained in the Transaction Documents, as such rights
may be limited by state or federal laws or public policy underlying
such laws.

 

(c) Capitalization.
The authorized capital stock of the Company consists of 150,000,000
shares of Common Stock and 5,000,000 shares of preferred stock (the
“Preferred
Stock”). The Company has
not issued any capital stock since the date of its most recently
filed SEC Report other than upon stock option and warrant exercises
that do not, individually or in the aggregate, have a material
effect on the issued and outstanding capital stock, options and
other securities. All of the outstanding shares of Common
Stock and of the capital stock of each of the Company’s
subsidiaries have been duly authorized, validly issued and are
fully paid and non-assessable. Immediately following the Initial
Closing: (i) no shares of capital stock of the Company or any of
its subsidiaries will be subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted
by the Company; (ii) there will be no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any
of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or
may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries; (iii) there will be no
outstanding debt securities of the Company or any of its
subsidiaries; (iv) other than pursuant to the Registration Rights
Agreement , there will be no agreements or arrangements under which
the Company or any of its subsidiaries is obligated to register the
sale of any of their securities under the Securities Act; (v) there
will be no securities or instruments of the Company or any of its
subsidiaries containing anti-dilution or similar provisions,
including the right to adjust the exercise, exchange or reset price
under such securities, that will be triggered by the issuance of
the Securities as described in this Agreement; and (vi) no co-sale
right, right of first refusal or other similar right will exist
with respect to the Securities or the issuance and sale
thereof.

 

(d) Issuance
of Securities. The Securities that are being issued to the
Purchaser hereunder, when issued, sold and delivered in accordance
with the terms and for the consideration set forth in this
Agreement, will be duly and validly issued, fully paid and
non-assessable, and free of restrictions on transfer and other
liens and encumbrances other than restrictions on transfer under
the Transaction Documents, applicable state and federal securities
laws and liens or encumbrances created by or imposed by the
Purchaser.

 

 

 

-3-

 

 

(e) No
Conflicts. The execution, delivery and performance of each
of the Transaction Documents by the Company, and the consummation
by the Company of the transactions contemplated hereby and thereby
including issuance and sale of the Securities in accordance with
this Agreement will not (i) result in a violation of the
Certificate of Incorporation or the Bylaws (or equivalent
constitutive document) of the Company or any of its subsidiaries or
(ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which
the Company or any subsidiary is a party, except for those which
would not reasonably be expected to have a Material Adverse Effect,
or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities
laws and regulations) applicable to the Company or any subsidiary
or by which any property or asset of the Company or any subsidiary
is bound or affected, except for those which would not reasonably
be expected to have a Material Adverse Effect. Neither the Company
nor any subsidiary is in violation of or in default under, any
provision of its Certificate of Incorporation or Bylaws. Neither
the Company nor any subsidiary is in violation of any term of or in
default under any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or any subsidiary,
which violation or breach has had or would reasonably be expected
to have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, neither the Company
nor any of its subsidiaries is required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by
this Agreement or the other Transaction Documents in accordance
with the terms hereof or thereof. Neither the execution and
delivery by the Company of the Transaction Documents, nor the
consummation by the Company of the transactions contemplated hereby
or thereby, will require any notice, consent or waiver under any
contract or instrument to which the Company or any subsidiary is a
party or by which the Company or any subsidiary is bound or to
which any of their assets is subject, except for any notice,
consent or waiver the absence of which would not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect. All consents, authorizations, orders, filings and
registrations which the Company or any of its subsidiaries is
required to obtain pursuant to the preceding two sentences have
been or will be obtained or effected on or prior to the Initial
Closing.

 

(f) Absence
of Litigation. There is no action, suit, claim, inquiry,
notice of violation, proceeding (including any partial proceeding
such as a deposition) or investigation before or by any court,
public board, governmental or administrative agency,
self-regulatory organization, arbitrator, regulatory authority,
stock market, stock exchange or trading facility (an
“Action”)
now pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries or any of their
respective officers or directors, which would be reasonably likely
to (i) adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations
under, this Agreement or any of the other Transaction Documents, or
(ii) except as specifically disclosed in the SEC Reports, have a
Material Adverse Effect. For the purpose of this Agreement, the
knowledge of the Company means the knowledge of the officers of the
Company (both actual or constructive knowledge that they would have
had upon reasonable inquiry of the personnel of the Company
responsible for the applicable subject matter). Neither the Company
nor any of its subsidiaries is subject to any judgment, decree, or
order which has had, or would reasonably be expected to have a
Material Adverse Effect.

 

(g) No
General Solicitation. Neither the Company, nor any of its
Affiliates, nor, to the knowledge of the Company, any person acting
on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the
Securities. “Affiliate”
means, with respect to any person, any other person that, directly
or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such person, as such
terms are used in and construed under Rule 144 under the Securities
Act (“Rule
144”). With respect to a Purchaser, any investment
fund or managed account that is managed on a discretionary basis by
the same investment manager as such Purchaser will be deemed to be
an Affiliate of such Purchaser.

 

(h) No
Integrated Offering. Neither the Company, nor any of its
Affiliates, nor to the knowledge of the Company, any person acting
on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of
the Securities under the Securities Act or cause this offering of
the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act.

 

 

 

-4-

 

 

(i) Employee
Relations. Neither Company nor any subsidiary is involved in
any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened. Neither the Company nor any subsidiary is party
to any collective bargaining agreement. The Company’s and/or
its subsidiaries’ employees are not members of any union, and
the Company believes that its and its subsidiaries’
relationship with their respective employees is good.

 

(j) Intellectual
Property Rights. The Company and its subsidiaries own,
possess, and have all right, title, and interest in and to, free
and clear of all liens and encumbrances, or (if disclosed to be
licensed by the Company in the SEC Reports) have the valid and
enforceable right to use pursuant to a license, sublicense,
agreement or permission, all Intellectual Property disclosed to be
owned, licensed or used by the Company or its subsidiaries in the
SEC Reports, except such failure(s) to own, possess or have such
rights as would not reasonably be expected to, individually or in
the aggregate, result in a Material Adverse Effect, and to the
Company’s knowledge, there are no unreleased liens or
security interests which have been filed, or which the Company has
received notice of, against any of the patents owned by the
Company. Furthermore, (A) to the Company’s knowledge, there
is no infringement, misappropriation or violation by third parties
of any such Intellectual Property, except as such infringement,
misappropriation or violation would not result in a Material
Adverse Effect; (B) to the Company’s knowledge, there is no
pending or threatened, Action by others challenging the
Company’s or any of its subsidiaries’ rights in or to
any such Intellectual Property, and to the Company’s
knowledge, there are no facts which would form a reasonable basis
for any such Action; (C) to the Company’s knowledge, the
Intellectual Property owned by the Company and its subsidiaries,
and the Intellectual Property licensed to the Company and its
subsidiaries, has not been adjudged invalid or unenforceable, in
whole or in part, and there is no pending or, to the
Company’s knowledge, threatened Action by others challenging
the validity, enforceability or scope of any such Intellectual
Property, and, to the Company’s knowledge, there are no facts
which would form a reasonable basis for any such Action; (D) to the
Company’s knowledge, there is no pending or threatened Action
by others that the Company or any of its subsidiaries infringes,
misappropriates or otherwise violates any Intellectual Property or
other proprietary rights of others, neither the Company nor any of
its subsidiaries has received any written notice of such Action,
and, to the Company’s knowledge, there are no other facts
which would form a reasonable basis for any such Action, except in
each case for any Action as would not be reasonably expected to
have a Material Adverse Effect; and (E) to the Company’s
knowledge, no employee of the Company or any of its subsidiaries is
in violation of any term of any employment contract, patent
disclosure agreement, invention assignment agreement,
non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such
employee’s employment with the Company or any of its
subsidiaries or actions undertaken by the employee while employed
with the Company or any of its subsidiaries, except such violation
as would not reasonably be expected to have a Material Adverse
Effect. Except as would not reasonably be expected to have a
Material Adverse Effect, (1) to the Company’s knowledge, the
Company and its subsidiaries have disclosed to the U.S. Patent and
Trademark Office (USPTO) all information known to the Company to be
relevant to the patentability of its inventions in accordance with
37 C.F.R. Section 1.56, and (2) to the Company’s knowledge,
neither the Company nor any of its subsidiaries made any
misrepresentation or concealed any information from the USPTO in
any of the patents or patent applications owned or licensed to the
Company, or in connection with the prosecution thereof, in
violation of 37 C.F.R. Section 1.56. Except as would not reasonably
be expected to have a Material Adverse Effect and to the
Company’s knowledge, (x) there are no facts that are
reasonably likely to provide a basis for a finding that the Company
or any of its subsidiaries does not have clear title to the patents
or patent applications owned or licensed to the Company or other
proprietary information rights as being owned by the Company or any
of its subsidiaries, (y) no valid issued U.S. patent would be
infringed by the activities of the Company or any of its
subsidiaries relating to products currently or proposed to be
manufactured, used or sold by the Company or any of its
subsidiaries and (z) there are no facts with respect to any issued
patent owned that would cause any claim of any such patent not to
be valid and enforceable with applicable regulations.
“Intellectual
Property” shall mean all patents, patent applications,
trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets,
domain names, technology and know-how.

 

 

 

-5-

 

 

(k) Environmental
Laws.

 

(i) The
Company and each subsidiary has complied with all applicable
Environmental Laws (as defined below), except for violations of
Environmental Laws that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse
Effect. There is no pending or, to the knowledge of the Company,
threatened civil or criminal litigation, notice of violation,
formal administrative proceeding, or investigation, inquiry or
information request, relating to any Environmental Law involving
the Company or any subsidiary, except for litigation, notices of
violations, formal administrative proceedings or investigations,
inquiries or information requests that, individually or in the
aggregate, have not had and would not reasonably be expected to
have a Material Adverse Effect. For purposes of this Agreement,
“Environmental
Law” means any national, state, provincial or local
law, statute, rule or regulation or the common law relating to the
environment or occupational health and safety, including without
limitation any statute, regulation, administrative decision or
order pertaining to (i) treatment, storage, disposal, generation
and transportation of industrial, toxic or hazardous materials or
substances or solid or hazardous waste; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; (iv) the
release or threatened release into the environment of industrial,
toxic or hazardous materials or substances, or solid or hazardous
waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants
or chemicals; (v) the protection of wild life, marine life and
wetlands, including without limitation all endangered and
threatened species; (vi) storage tanks, vessels, containers,
abandoned or discarded barrels, and other closed receptacles; (vii)
health and safety of employees and other persons; and (viii)
manufacturing, processing, using, distributing, treating, storing,
disposing, transporting or handling of materials regulated under
any law as pollutants, contaminants, toxic or hazardous materials
or substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms “release” and
“environment” shall have the meaning set forth in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended.

 

(ii) To
the knowledge of the Company there is no material environmental
liability with respect to any solid or hazardous waste transporter
or treatment, storage or disposal facility that has been used by
the Company or any subsidiary.

 

(l) Authorizations;
Regulatory Compliance. The Company and each of its
subsidiaries holds, and is operating in compliance with, all
authorizations, licenses, permits, approvals, clearances,
registrations, exemptions, consents, certificates and orders of any
governmental authority and supplements and amendments thereto
(collectively, “Authorizations”)
required for the conduct of its business as currently conducted in
all applicable jurisdictions and all such Authorizations are valid
and in full force and effect, except for Authorizations the absence
of which would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries is
in material violation of any terms of any such Authorizations,
except, in each case, such as would not reasonably be expected to
have a Material Adverse Effect; and neither the Company nor any of
its subsidiaries has received written notice of any revocation or
modification of any such Authorization, or written notice that such
revocation or modification is being considered, except to the
extent that any such revocation or modification would not be
reasonably expected to have a Material Adverse Effect. The Company
and each of its subsidiaries is in compliance with all applicable
federal, state, local and foreign laws, regulations, orders and
decrees, including such laws and regulations applicable to the
manufacture, distribution, import and export of regulated products
and component parts and ingredients, except as would not reasonably
be expected to have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries is a party to any corporate integrity
agreement, deferred prosecution agreement, monitoring agreement,
consent decree, settlement order, or similar agreements, or has any
reporting obligations pursuant to any such agreement, plan or
correction or other remedial measure entered into with any any
other federal, state, local or foreign governmental or regulatory
authority (each a “Governmental
Authority”)..

 

(m) Title.
Neither the Company nor any of its subsidiaries owns any real
property. Each of the Company and its subsidiaries has good and
marketable title to all of its personal property and assets, free
and clear of any restriction, mortgage, deed of trust, pledge,
lien, security interest or other charge, claim or encumbrance which
would have a Material Adverse Effect. With respect to properties
and assets it leases, each of the Company and its subsidiaries is
in compliance with such leases and holds a valid leasehold interest
free of any liens, claims or encumbrances which would have a
Material Adverse Effect.

 

 

 

-6-

 

 

(n) Tax
Status. The Company and each subsidiary has made and filed
(taking into account any valid extensions) all federal and state
income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject and (unless and only to
the extent that the Company or such subsidiary has set aside on its
books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its
books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns,
reports or declarations apply. To the knowledge of the Company,
there are no unpaid taxes in any material amount claimed to be due
from the Company or any subsidiary by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for
any such claim.

 

(a) Certain Transactions.
Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to
the Company’s knowledge, none of the employees of the Company
is presently a party to any transaction with the Company or any
subsidiary (other than for services as employees, officers and
directors), that would be required to be disclosed pursuant to Item
404 of Regulation S-K promulgated under the Securities
Act.

 

(o) Rights
of First Refusal. The Company is not obligated to offer the
securities offered hereunder on a right of first refusal basis or
otherwise to any third parties including, but not limited to,
current or former stockholders of the Company, underwriters,
brokers, agents or other third parties.

 

(p) Insurance.
The Company and its subsidiaries have insurance policies of the
type and in amounts customarily carried by organizations conducting
businesses or owning assets similar to those of the Company and its
subsidiaries. There is no material claim pending under any such
policy as to which coverage has been questioned, denied or disputed
by the underwriter of such policy.

 

(q) SEC
Reports. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the
Company under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”) for the two (2) years preceding the date hereof
(or such shorter period since the Company was first required by law
or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the
“SEC
Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension, except where the failure to file on a timely basis
would not have or reasonably be expected to result in a Material
Adverse Effect. The SEC Reports at the time they were filed,
or to the extent corrected by a subsequent restatement, complied,
in all material respects with the Securities Act or the Exchange
Act, as applicable, and the applicable rules and regulations of the
SEC thereunder. There are no contracts, agreements or other
documents that are required to be described in the SEC Reports
and/or to be filed as exhibits thereto that are not described, in
all material respects, and/or filed as required. There has not been
any material change or amendment to, or any waiver of any material
right under, any such contract or agreement that has not been
described in and/or filed as an exhibit to the SEC
Reports.

 

(r) Financial
Statements. The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC
with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved, except
as may be otherwise specified in such financial statements or the
notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its
consolidated subsidiaries taken as a whole as of and for the dates
thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements,
to normal, year-end audit adjustments.

 

 

 

-7-

 

 

(s) Material
Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report
filed prior to the date hereof, (i) there have been no
events, occurrences or developments that have had or would
reasonably be expected to have a Material Adverse Effect with
respect to the Company, (ii) there have not been any changes in the
authorized capital, assets, financial condition, business or
operations of the Company from that reflected in the financial
statements contained within the SEC Reports except changes in the
ordinary course of business which have not been, either
individually or in the aggregate, materially adverse to the
business, properties, financial condition, results of operations or
future prospects of the Company, (iii) neither the Company nor any
subsidiary has incurred any material liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to
be reflected in the financial statements of the Company, pursuant
to GAAP or to be disclosed in the SEC Reports, (iv) neither the
Company nor any subsidiary has materially altered its method of
accounting or the manner in which it keeps its accounting books and
records, and (v) neither the Company nor any subsidiary has
declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock
(other than in connection with repurchases of unvested stock issued
to employees of the Company).

 

(t) Disclosure
Controls. The Company has established and maintains
disclosure controls and procedures (as defined in Rules 13a-14 and
15d-15 under the Exchange Act) and such controls and procedures are
effective in ensuring that material information relating to the
Company, including its subsidiaries, is made known to the principal
executive officer and the principal financial officer.

 

(u) Sarbanes-Oxley.
The Company is in compliance in all material respects with all of
the provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it as of the Initial Closing.

 

(v) Off-Balance
Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company or any subsidiary and an
unconsolidated or other off-balance sheet entity that is required
to be disclosed by the Company in its SEC Reports (including, for
purposes hereof, any that are required to be disclosed in a Form
10) and is not so disclosed or that otherwise would have a Material
Adverse Effect.

 

(w) Foreign
Corrupt Practices. Neither the Company and its subsidiaries,
nor to the Company’s knowledge, any agent or other person
acting on behalf of the Company or its subsidiaries, has: (i)
directly or indirectly, used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign
or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the
Company (or made by any person acting on its behalf of which the
Company is aware) which is in violation of law or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.

 

(x) Brokers’
Fees. Neither of the Company nor any of its subsidiaries has
any liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions
contemplated by this Agreement, except for the payment of fees to
the Placement Agent as described in Section 2 above.

 

(y) Disclosure
Materials. The SEC Reports taken as a whole do not 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 the light of the circumstances under which
they were made, not misleading.

 

(z) Investment
Company. The Company is not required to be registered as,
and is not an Affiliate of, and immediately following the Initial
Closing will not be required to register as, an “investment
company” within the meaning of the Investment Company Act of
1940, as amended.

 

(aa) Reliance.
The Company acknowledges that the Purchaser is relying on the
representations and warranties (as modified by the disclosures in
the SEC Reports made by the Company hereunder and that such
representations and warranties (as modified by the disclosures in
the SEC Reports) are a material inducement to the Purchaser
purchasing the Securities.

 

 

 

-8-

 

 

(bb) Use
of Proceeds. The Company presently intends to use the net
proceeds from the Offering to fund (i) product development and
manufacturing, (ii) sales and marketing and (iii) working capital
and other general corporate purposes; provided, that the Company
may pay placement agent fees of up to ten percent (10%) of the
proceeds of the Offering.

 

(cc) Bad
Actor Disqualification. No “bad actor”
disqualifying event described in Rule 506(d)(1)(i)-(viii) of the
Securities Act (a “Disqualification
Event”) is applicable to the Company or, to the
Company’s knowledge, any Company Covered Person, except for a
Disqualification Event as to which Rule 506(d)(2)(ii–iv) or
(d)(3), is applicable. “Company Covered Person” means,
with respect to the Company as an “issuer” for purposes
of Rule 506 promulgated under the Securities Act, any person listed
in the first paragraph of Rule 506(d)(1).

 

4. Representations,
Warranties and Agreements of the Purchaser. The Purchaser
represents and warrants to the Company, as of the date hereof and
as of the Initial Closing date or any
Subsequent Closing date, as applicable, the
following:

 

(a) The
Purchaser has the knowledge and experience in financial and
business matters necessary to evaluate the merits and risks of its
prospective investment in the Company, and has carefully reviewed
and understands the risks of, and other considerations relating to,
the purchase of Securities and the tax consequences of the
investment, and has the ability to bear the economic risks of the
investment. The Purchaser can afford the loss of his, her or its
entire investment.

 

(b) The
Purchaser is acquiring the Securities for investment for his, her
or its own account and not with the view to, or for resale in
connection with, any distribution thereof. The Purchaser
understands and acknowledges that the Offering and sale of the
Securities, have not been registered under the Securities Act or
any state securities laws, by reason of a specific exemption from
the registration provisions of the Securities Act and applicable
state securities laws, which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein. The
Purchaser further represents that he, she or it does not have any
contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to any third person with
respect to any of the Securities. The Purchaser understands and
acknowledges that the Offering of the Securities will not be
registered under the Securities Act nor under the state securities
laws on the ground that the sale of the Securities to the Purchaser
as provided for in this Agreement and the issuance of securities
hereunder is exempt from the registration requirements of the
Securities Act and any applicable state securities laws. The
Purchaser is an “accredited investor” as defined in
Rule 501 of Regulation D as promulgated by the SEC under the
Securities Act, for the reason(s) specified on the Accredited Investor
Certification attached hereto as completed by Purchaser, and
Purchaser shall submit to the Company such further assurances of
such status as may be reasonably requested by the Company. The
Purchaser resides in the jurisdiction set forth on the
Purchaser’s Omnibus Signature Page affixed hereto. The
Purchaser has not taken any of the actions set forth in, and is not
subject to, the disqualification provisions of Rule 506(d)(1) of
the Securities Act.

 

(c) The
Purchaser (i) if a natural person, represents that he or she is the
greater of (A) 21 years of age or (B) the age of legal majority in
his or her jurisdiction of residence, and has full power and
authority to execute and deliver this Agreement and all other
related agreements or certificates and to carry out the provisions
hereof and thereof; (ii) if a corporation, partnership, limited
liability company, association, joint stock company, trust,
unincorporated organization or other entity, represents that such
entity was not formed for the specific purpose of acquiring the
Securities, such entity is duly organized, validly existing and in
good standing under the laws of the state or jurisdiction of its
organization, the consummation of the transactions contemplated
hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this
Agreement and all other related agreements or certificates and to
carry out the provisions hereof and thereof and to purchase and
hold the Securities, the execution and delivery of this Agreement
has been duly authorized by all necessary action, this Agreement
has been duly executed and delivered on behalf of such entity and
is a legal, valid and binding obligation of such entity; or (iii)
if executing this Agreement in a representative or fiduciary
capacity, represents that he, she or it has full power and
authority to execute and deliver this Agreement in such capacity
and on behalf of the subscribing individual, ward, partnership,
trust, estate, corporation, or limited liability company or
partnership, or other entity for whom the Purchaser is executing
this Agreement, and such individual, partnership, ward, trust,
estate, corporation, or limited liability company or partnership,
or other entity has full right and power to perform pursuant to
this Agreement and make an investment in the Company, and
represents that this Agreement constitutes a legal, valid and
binding obligation of such entity. The execution and delivery of
this Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which
the Purchaser is a party or by which it is bound.

 

 

 

-9-

 

 

(d) The
Purchaser understands that the Securities are being offered and
sold to him, her or it in reliance on specific exemptions from the
registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser’s compliance with,
the representations, warranties, agreements, acknowledgments and
understandings of such Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility
of such Purchaser to acquire such securities. The Purchaser further
acknowledges and understands that the Company is relying on the
representations and warranties made by the Purchaser hereunder and
that such representations and warranties are a material inducement
to the Company to sell the Securities to the Purchaser. The
Purchaser further acknowledges that without such representations
and warranties of the Purchaser made hereunder, the Company would
not enter into this Agreement with the Purchaser.

 

(e) The
Purchaser understands that, other than pursuant to the Registration
Rights Agreement, the Company does not currently intend to register
the Securities under the Securities Act at any time in the future;
and the undersigned will not immediately be entitled to the
benefits of Rule 144 with respect to the Securities. The Common
Stock is quoted on OTC Markets QB tier; however, the Company makes
no representation, warranty or covenant with respect to the
continued quotation of the Common Stock on the OTC Markets
quotation or listing on any other market or exchange.

 

(f) The
Purchaser has received, reviewed and understood the information
about the Company, including the SEC Reports, and has had an
opportunity to discuss the Company’s business, management and
financial affairs with the Company’s management. The
Purchaser understands that such discussions, as well as the SEC
Reports, were intended to describe the aspects of the
Company’s business and prospects and the Offering which the
Company believes to be material, but were not necessarily a
thorough or exhaustive description, and except as expressly set
forth in this Agreement, the Company makes no representation or
warranty with respect to the completeness of such information and
makes no representation or warranty of any kind with respect to any
information provided by any entity other than the Company. Some of
such information may include projections as to the future
performance of the Company, which projections may not be realized,
may be based on assumptions which may not be correct and may be
subject to numerous factors beyond the Company’s control. The
Purchaser acknowledges that he, she or it is not relying upon any
person or entity, other than the Company and its officers and
directors, in making its investment or decision to invest in the
Company. Additionally, the Purchaser understands and represents
that he, she or it is purchasing the Securities notwithstanding the
fact that the Company may disclose in the future certain material
information the Purchaser has not received, including (without
limitation) financial statements of the Company for the current or
prior fiscal periods, and any subsequent period financial
statements that will be filed with the SEC. Each Purchaser has
sought such accounting, legal and tax advice as the Purchaser has
considered necessary to make an informed investment decision with
respect to his, her or its acquisition of the
Securities.

 

(g) The
Purchaser acknowledges that neither the Company nor the Placement
Agent is acting as a financial advisor or fiduciary of the
Purchaser (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and
thereby, and no investment advice has been given by the Company,
the Placement Agent or any of their respective representatives or
agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby. The Purchaser further
represents to the Company that the Purchaser’s decision to
enter into the Transaction Documents has been based solely on the
independent evaluation by the Purchaser and the Purchaser’s
representatives.

 

(h) As
of the Initial Closing or any Subsequent Closing, as applicable,
all actions on the part of Purchaser, and its officers, directors
and partners, if applicable, necessary for the authorization,
execution and delivery of this Agreement and the Registration
Rights Agreement and the performance of all obligations of the
Purchaser hereunder and thereunder shall have been taken, and this
Agreement and the Registration Rights Agreement, assuming due
execution by the parties hereto and thereto, constitute valid and
legally binding obligations of the Purchaser, enforceable in
accordance with their respective terms, subject to: (i) judicial
principles limiting the availability of specific performance,
injunctive relief, and other equitable remedies and (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect generally relating to or affecting
creditors’ rights.

 

 

 

-10-

 

 

(i) Purchaser
represents that neither it nor, to its knowledge, any person or
entity controlling, controlled by or under common control with it,
nor any person having a beneficial interest in the Purchaser, nor
any person on whose behalf the Purchaser is acting: (i) is a person
listed in the Annex to Executive Order No. 13224 (2001) issued by
the President of the United States (Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism); (ii) is named on the
List of Specially Designated Nationals and Blocked Persons
maintained by the U.S. Office of Foreign Assets Control; (iii) is a
non-U.S. shell bank or is providing banking services indirectly to
a non-U.S. shell bank; (iv) is a senior non-U.S. political figure
or an immediate family member or close associate of such figure; or
(v) is otherwise prohibited from investing in the Company pursuant
to applicable U.S. anti-money laundering, anti-terrorist and asset
control laws, regulations, rules or orders (categories (i) through
(v), each a “Prohibited
Purchaser”). The Purchaser agrees to provide the
Company, promptly upon request, all information that the Company
reasonably deems necessary or appropriate to comply with applicable
U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules and orders. The Purchaser consents to the
disclosure to U.S. regulators and law enforcement authorities by
the Company and its Affiliates and agents of such information about
the Purchaser as the Company reasonably deems necessary or
appropriate to comply with applicable U.S. anti-money laundering,
anti-terrorist and asset control laws, regulations, rules and
orders. If the Purchaser is a financial institution that is subject
to the USA Patriot Act, the Purchaser represents that it has met
all of its obligations under the USA Patriot Act. The Purchaser
acknowledges that if, following its investment in the Company, the
Company reasonably believes that the Purchaser is a Prohibited
Purchaser or is otherwise engaged in suspicious activity or refuses
to promptly provide information that the Company requests, the
Company has the right or may be obligated to prohibit additional
investments, segregate the assets constituting the investment in
accordance with applicable regulations or immediately require the
Purchaser to transfer the Securities. The Purchaser further
acknowledges that neither the Purchaser nor any of the
Purchaser’s Affiliates or agents will have any claim against
the Company for any form of damages as a result of any of the
foregoing actions.

 

(j) If
the Purchaser is Affiliated with a non-U.S. banking institution (a
“Foreign
Bank”), or if the Purchaser receives deposits from,
makes payments on behalf of, or handles other financial
transactions related to a Foreign Bank, the Purchaser represents
and warrants to the Company that: (1) the Foreign Bank has a fixed
address, other than solely an electronic address, in a country in
which the Foreign Bank is authorized to conduct banking activities;
(2) the Foreign Bank maintains operating records related to its
banking activities; (3) the Foreign Bank is subject to inspection
by the banking authority that licensed the Foreign Bank to conduct
banking activities; and (4) the Foreign Bank does not provide
banking services to any other Foreign Bank that does not have a
physical presence in any country and that is not a regulated
Affiliate.

 

(k) The
Purchaser or its duly authorized representative realizes that
because of the inherently speculative nature of businesses of the
kind conducted and contemplated by the Company, the Company’s
financial results may be expected to fluctuate from month to month
and from period to period and will, generally, involve a high
degree of financial and market risk that could result in
substantial or, at times, even total losses for investors in
securities of the Company. The Purchaser has carefully read the
risk factors and other information (including the financial
statements of the Company) included in the SEC Reports. The
Purchaser has carefully considered such risk factors before
deciding to invest in the Securities.

 

(l) The
Purchaser has adequate means of providing for its current and
anticipated financial needs and contingencies, is able to bear the
economic risk for an indefinite period of time and has no need for
liquidity of the investment in the Securities and could afford
complete loss of such investment.

 

(m) The
Purchaser is not subscribing for Securities as a result of or
subsequent to any advertisement, article, notice or other
communication, published in any newspaper, magazine or similar
media or broadcast over television, radio, or the internet, or
presented at any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the Purchaser in
connection with investments in securities generally.

 

(n) The
Purchaser acknowledges that no U.S. federal or state agency or any
other government or governmental agency has passed upon the
Securities or made any finding or determination as to the fairness,
suitability or wisdom of any investments therein.

 

 

 

-11-

 

 

(o) Other
than consummating the transactions contemplated hereunder, the
Purchaser has not directly or indirectly, nor has any individual or
entity acting on behalf of or pursuant to any understanding with
such Purchaser, executed any purchases or sales, including Short
Sales (as defined below), of the securities of the Company during
the period commencing as of the time that such Purchaser first
received a term sheet (written or oral) from the Company or any
other individual or entity representing the Company setting forth
the material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above
shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other
individuals or entities party to this Agreement, such Purchaser has
maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms
of this transaction). Notwithstanding the foregoing, for avoidance
of doubt, nothing contained herein shall constitute a
representation or warranty, or preclude any actions, with respect
to the identification of the availability of, or securing of,
available shares to borrow in order to effect Short Sales or
similar transactions in the future. For purposes of this Agreement,
“Short
Sales” means all “short sales” as defined
in Rule 200 of Regulation SHO under the Exchange Act (but shall not
be deemed to include the location and/or reservation of borrowable
shares of Common Stock).

 

(p) The
Purchaser agrees to be bound by all of the terms and conditions of
the Registration Rights Agreement and to perform all obligations
thereby imposed upon it.

 

(q) The
Purchaser is aware that the anti-manipulation rules of Regulation M
under the Exchange Act may apply to sales of the Securities and
other activities with respect to the Securities by the
Purchaser.

 

(r) All
of the information concerning the Purchaser set forth herein, and
any other information furnished by the Purchaser in writing to the
Company or a Placement Agent for use in connection with the
transactions contemplated by this Agreement, is true and correct in
all material respects as of the date of this Agreement, and, if
there should be any material change in such information prior to
the Purchaser’s purchase of the Securities, the Purchaser
will promptly furnish revised or corrected information to the
Company.

 

(s) The
Purchaser has reviewed with its own tax advisors the U.S. federal,
state, local and foreign tax consequences of this investment and
the transactions contemplated by the Transaction Documents. With
respect to such matters, such Purchaser relies solely on such
advisors and not on any statements or representations of the
Company or any of its agents, written or oral. The Purchaser
understands that it (and not the Company) shall be responsible for
its own tax liability that may arise as a result of this investment
or the transactions contemplated by the Transaction
Documents.

 

(t) If
the Purchaser is not a United States person (as defined by Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended), the
Purchaser hereby represents that it has satisfied itself as to the
full observance of the laws of its jurisdiction in connection with
any invitation to subscribe for the Securities or any use of this
Agreement, including (a) the legal requirements within its
jurisdiction for the purchase of the Securities; (b) any foreign
exchange restrictions applicable to such purchase; (c) any
governmental or other consents that may need to be obtained; and
(d) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, redemption, sale or transfer of
the Securities. The Purchaser’s subscription and payment for
and continued beneficial ownership of the Securities will not
violate any applicable securities or other laws of the
Purchaser’s jurisdiction.

 

(u) (For
ERISA plans only)  If the Purchaser is a fiduciary
of the Employee Retirement Income Security Act of 1974
(“ERISA”)
plan (the “Plan”),
the Purchaser represents that (i) such fiduciary has been informed
of and understands the Company’s investment objectives,
policies and strategies, and that the decision to invest
“plan assets” (as such term is defined in ERISA) in the
Company is consistent with the provisions of ERISA that require
diversification of plan assets and impose other fiduciary
responsibilities; and (ii) the Purchaser fiduciary or Plan (a) is
responsible for the decision to invest in the Company; (b) is
independent of the Company or any of its Affiliates; (c) is
qualified to make such investment decision; and (d) in making such
decision, the Purchaser fiduciary or Plan has not relied primarily
on any advice or recommendation of the Company or any of its
Affiliates.

 

 

 

-12-

 

 

(v) Neither
the Purchaser nor, to the Purchaser’s knowledge, any of its
directors, executive officers, other officers that may serve as a
director or officer of any company in which it invests, general
partners or managing members is subject to any Disqualification
Events, except for Disqualification Events covered by Rule
506(d)(2)(ii) or (iii) under the Securities Act, and disclosed in
writing in reasonable detail to the Company.

 

(w) The
Purchaser understands that there are substantial restrictions on
the transferability of the Shares and Warrants and that the
certificates representing the Shares and Warrants shall bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such
certificates or other instruments):

 

[NEITHER] THE
SECURITIES REPRESENTED BY THIS CERTIFICATE [NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION
FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION
OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
APPLICABLE STATE SECURITIES LAWS OR (3) SOLD PURSUANT TO RULE 144
UNDER THE SECURITIES ACT.

 

In
addition, if any Purchaser is an Affiliate of the Company,
certificates evidencing the Securities issued to such Purchaser may
bear a customary “Affiliates” legend.

 

The
Company shall be obligated to promptly reissue unlegended
certificates upon the request of any holder thereof (x) at such
time as the holding period under Rule 144 or another applicable
exemption from the registration requirements of the Securities Act
has been satisfied or (y) at such time as a registration statement
is available for the transfer of such Securities. The Company is
entitled to request from any holder requesting unlegended
certificates under clause (x) of the foregoing sentence an opinion
of counsel reasonably acceptable to the Company to the effect that the Securities
proposed to be disposed of may lawfully be so disposed of without
registration, qualification or legend.

 

(x) If
the Purchaser is an individual, then the Purchaser resides in the
state or province identified in the address of the Purchaser set
forth on such Purchaser’s Omnibus Signature Page to this
Agreement; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of
the Purchaser in which its principal place of business is
identified in the address or addresses of the Purchaser set forth
on such Purchaser’s Omnibus Signature Page to this
Agreement.

 

(y) The
Purchaser represents that it (1) has a
substantive, pre-existing relationship with the Company or (2) has
direct contact by the Company or its Placement Agent outside of the Offering and
(3) was not identified or contacted through the marketing of the
public offering and (4) did not independently contact the issuer as
a result of general solicitation by means of any press release or
any other public disclosure disclosing the material terms of the
Offering.

 

(z) To the extent the Company and
the Purchaser agreed in writing to rely on Regulation S as the
exemption for the sale and issuance of the Securities each
Purchaser who is a Non-U.S. person (as defined below), having been
informed by the Company of its reliance on Regulation S, hereby
represents and warrants to the Company as follows:

 

(i) This Agreement is
made by the Company with such Purchaser who is a Non-U.S. person in
reliance upon such Non-U.S. person’s representations,
warranties and covenants made in this Section ‎4(z).

 

 

 

-13-

 

 

(ii) Such
Non-U.S. person has been advised and acknowledges
that:

 

(A) the Securities have
not been, and when issued, will not be registered under the
Securities Act, the securities laws of any state of the United
States or the securities laws of any other country;

 

(B) in issuing and
selling the Securities to such Non-U.S. person pursuant hereto, the
Company is relying upon the “safe harbor” provided by
Regulation S and/or on Section 4(2) under the Securities
Act

 

(C) it is a condition
to the availability of the Regulation S “safe harbor”
that the Securities not be offered or sold in the United States or
to a U.S. person until the expiration of a period of one (1) year
following the date of the Initial Closing or any Subsequent
Closing, as applicable; and

 

(D) notwithstanding the
foregoing, prior to the expiration of one (1) year after the
Initial Closing or any Subsequent Closing, as applicable (the
“Restricted
Period”), the Securities may be offered and sold by
the holder thereof only if such offer and sale is made in
compliance with the terms of this Agreement and either: (1) if the
offer or sale is within the United States or to or for the account
of a U.S. person (as such terms are defined in Regulation S), the
Securities are offered and sold pursuant to an effective
registration statement or pursuant to Rule 144 under the
Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act; or (2) the offer and sale is
outside the United States and to other than a U.S.
person.

 

As used
herein, the term “United
States” means and includes the United States of
America, its territories and possessions, any State of the United
States, and the District of Columbia, and the term
“U.S. person”
(as defined in Regulation S) means:

 

(A) a natural person
resident in the United States;

 

(B) any partnership or
corporation organized or incorporated under the laws of the United
States;

 

(C) any estate of which
any executor or administrator is a U.S. person;

 

(D) any trust of which
any trustee is a U.S. person;

 

(E) any agency or
branch of a foreign entity located in the United
States;

 

(F) any
nondiscretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;

 

(G) any discretionary
account or similar account (other than an estate or trust) held by
a dealer or other fiduciary organized, incorporated and (if an
individual) resident in the United States; and

 

(H) a corporation or
partnership organized under the laws of any foreign jurisdiction
and formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a) under the Securities
Act) who are not natural persons, estates or trusts.

 

As used
herein, the term “Non-U.S.
person” means any person who is not a U.S. person or
is deemed not to be a U.S. person under Rule 902(k)(2) of the
Securities Act.

 

 

 

-14-

 

 

(iii) Such
Non-U.S. person agrees that with respect to the Securities until
the expiration of the Restricted Period:

 

(A) such Non-U.S.
person, its agents or its representatives have not and will not
solicit offers to buy, offer for sale or sell any of the
Securities, or any beneficial interest therein in the United States
or to or for the account of a U.S. person during the Restricted
Period; and

 

(B) notwithstanding the
foregoing, prior to the expiration of the Restricted Period, the
Securities may be offered and sold by the holder thereof only if
such offer and sale is made in compliance with the terms of this
Agreement and either: (A) if the offer or sale is within the United
States or to or for the account of a U.S. person (as such terms are
defined in Regulation S), the securities are offered and sold
pursuant to an effective registration statement or pursuant to
Rule 144 under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act; or (B)
the offer and sale is outside the United States and to other than a
U.S. person; and

 

(C) such Non-U.S.
person shall not engage in hedging transactions with regard to the
Securities unless in compliance with the Securities
Act.

 

The
foregoing restrictions are binding upon subsequent transferees of
the Securities, except for transferees pursuant to an effective
registration statement. Such Non-U.S. person agrees that after the
Restricted Period, the Securities may be offered or sold within the
United States or to or for the account of a U.S. person only
pursuant to applicable securities laws.

 

(iv) Such
Non-U.S. person has not engaged, nor is it aware that any party has
engaged, and such Non-U.S. person will not engage or cause any
third party to engage, in any directed selling efforts (as such
term is defined in Regulation S) in the United States with respect
to the Securities.

 

(v) Such Non-U.S.
person: (A) is domiciled and has its principal place of
business outside the United States; (B) certifies it is not a
U.S. person and is not acquiring the Securities for the account or
benefit of any U.S. person; and (C) at the time of the Initial
Closing or any Subsequent Closing, as applicable, the Non-U.S.
person or persons acting on Non-U.S. person’s behalf in
connection therewith will be located outside the United
States.

 

(vi) At
the time of offering to such Non-U.S. person and communication of
such Non-U.S. person’s order to purchase the Securities and
at the time of such Non-U.S. Person’s execution of this
Agreement, the Non-U.S. person or persons acting on Non-U.S.
person’s behalf in connection therewith were located outside
the United States.

 

(vii) Such
Non-U.S. person is not a “distributor” (as defined in
Regulation S) or a “dealer” (as defined in the
Securities Act).

 

(viii) Such
Non-U.S. person acknowledges that the Company shall make a notation
in its stock books regarding the restrictions on transfer set forth
in this Section ‎4(z) and shall
transfer such shares on the books of the Company only to the extent
consistent therewith.

 

(ix) In
particular, such Non-U.S. person acknowledges that the Company
shall refuse to register any transfer of the Securities not made in
accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act or pursuant to an available
exemption from registration.

 

 

 

-15-

 

 

(x) Such Purchaser
understands and agrees that each certificate held by such Non-U.S.
person representing the Securities, or any other securities issued
in respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall
bear the following legend (in addition to any legend required by
this Agreement or under applicable state securities
laws):

 

[NEITHER] THE
SECURITIES REPRESENTED HEREBY [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED
HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT. THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY
OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE,
HYPOTHECATION OR ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE.

 

5. Conditions
to Company’s Obligations. The Company’s
obligation to complete the sale and issuance of the Units and
deliver the Shares and Warrants to the Purchaser, individually, at
the Initial Closing or any Subsequent
Closing, as applicable, shall be subject to the following
conditions to the extent not waived by the Company:

 

(a) Receipt
of Payment. The Company shall have received payment, by
certified or other bank check or by wire transfer of immediately
available funds, in the full amount of the Purchase Price for the
number of Units being purchased by such Purchaser at the Initial
Closing or any Subsequent Closing, as
applicable.

 

(b) Representations
and Warranties. The representations and warranties made by
the Purchaser in Section ‎4
hereof shall be true and correct in all material respects (except
to the extent any such representation and warranty is qualified by
materiality or reference to Material Adverse Effect, in which case,
such representation and warranty shall be true and correct in all
respects as so qualified) when made, and shall be true and correct
in all material respects (except to the extent any such
representation and warranty is qualified by materiality or
reference to Material Adverse Effect, in which case, such
representation and warranty shall be true and correct in all
respects as so qualified) on the Initial Closing date or any Subsequent Closing date, as
applicable, with the same force and effect as if they had
been made on and as of said date.

 

(c) Performance.
The Purchaser shall have performed in all material respects all
obligations and covenants herein
required to be performed by it on or prior to the Initial Closing
or any Subsequent Closing, as applicable.

 

(d) Receipt
of Executed Documents. Each Purchaser participating in the
Initial Closing or any Subsequent Closing, as applicable,
shall have executed and delivered to
the Company the Omnibus Signature Page, the Purchaser Questionnaire
and the Selling Securityholder Questionnaire (as defined in the
Registration Rights Agreement). 

 

(e) Qualifications.
All authorizations, approvals or permits, of any governmental
authority or regulatory body of the
United States or of any state that are required in connection with
the lawful issuance and sale of the Securities pursuant to this
Agreement at the Initial Closing or any Subsequent Closing, as
applicable, shall be obtained and effective as of the Initial
Closing or any Subsequent Closing, as applicable, except for Blue
Sky law permits and qualifications that may be properly obtained
after the Initial Closing or any Subsequent Closing, as
applicable.

 

 

 

-16-

 

 

6. Conditions
to Purchasers’ Obligations. The Purchaser’s
obligation to accept delivery of the Shares and Warrants and to pay
for the Units at the Initial
Closing or any Subsequent Closing, as
applicable, shall be subject to the following conditions to
the extent not waived by the holders of at least a majority of
the Units issued to the Purchaser and the other
purchasers pursuant to the other Subscription Agreements of like
tenor used in the Offering (the
“Held
Shares”) to be
purchased at the Initial
Closing or any Subsequent Closing, as
applicable:

 

(a) Representations
and Warranties. The representations and warranties made by
the Company in Section 3 hereof (as modified by the disclosures in
the SEC Reports) shall be true and correct in all material respects
(except to the extent any such representation and warranty is
qualified by materiality or reference to Material Adverse Effect,
in which case, such representation and warranty shall be true and
correct in all respects as so qualified) as of, and as if made on,
the date of the Initial Closing, except to the extent any such
representation or warranty expressly speaks as of an earlier date,
in which case such representation or warranty shall be true and in
all material respects correct as of such earlier date (except in
each case to the extent any such representation and warranty is
qualified by materiality or reference to Material Adverse Effect,
in which case, such representation and warranty shall be true and
correct in all respects as so qualified).

 

(b) Performance.
The Company and the Escrow Agent shall have performed in all
material respects all obligations and covenants herein and under
the Escrow Agreement
which are required to be performed by it on or prior to the date of
the Initial Closing.

 

(c) Receipt
of Executed Transaction Documents. The Company shall have
executed and delivered to the Purchaser the Registration Rights
Agreement.

 

(d) Certificate.
In connection with the Initial Closing only, the Chief Executive
Officer of the Company shall execute and deliver to the Purchaser a
certificate addressed to the purchasers under the Subscription
Agreements participating in the Initial Closing to the effect that
the representations and warranties of the Company in Section
‎1.1(d) hereof (as modified by
the disclosures in the SEC Reports) shall be true and correct in
all material respects (except to the extent any such representation
and warranty is qualified by materiality or reference to Material
Adverse Effect, in which case, such representation and warranty
shall be true and correct in all respects as so qualified) as of,
and as if made on, the date of the Initial Closing.

 

(e) Good
Standing. The Company and each of its subsidiaries is a
corporation or other business entity duly organized, validly
existing, and in good standing under the laws of the jurisdiction
of its formation.

 

(f) Judgments.
No judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy
court or judge, or any order of or by any Governmental Authority,
shall have been issued, and no action or proceeding shall have been
instituted by any Governmental Authority, enjoining or preventing
the consummation of the transactions contemplated
hereby.

 

(g) Legal
Opinion. In connection with the Initial Closing only, the
Company Counsel shall deliver an opinion to the Purchaser and the
Placement Agent, dated as of the
Initial Closing, in form and substance reasonably acceptable to the
Placement Agent.

 

7. Indemnification.

 

(a) The
Company agrees to indemnify and hold harmless the Purchaser, and
its directors, officers, stockholders, members, partners, employees
and agents (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), each person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or 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 such
controlling person (collectively, the “Purchaser
Indemnitees”), from and against all losses,
liabilities, claims, damages, costs, fees and expenses whatsoever
(including, but not limited to, any and all expenses incurred in
investigating, preparing or defending against any litigation
commenced or threatened) based upon or arising out of the
Company’s breach of any representation, warranty or covenant
contained herein; provided, however, that the Company will not be
liable in any such case to the extent and only to the extent that
any such loss, liability, claim, damage, cost, fee or expense
arises out of or is based upon the inaccuracy of any
representations made by such indemnified party in this Agreement,
or the failure of such indemnified party to comply with the
covenants and agreements contained herein. The liability of the
Company under this paragraph shall not exceed the total Purchase
Price paid by the Purchaser hereunder, except in the case of
fraud.

 

 

 

-17-

 

 

(b) Promptly
after receipt by an indemnified party under this Section 7 of
notice of the commencement of any Action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying
party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than
under this Section 7 except to the extent the indemnified party is
actually prejudiced by such omission. In case any such Action is
brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the
defendants in any such Action include both the indemnified party
and the indemnifying party and either (i) the indemnifying party or
parties and the indemnified party or parties mutually agree or (ii)
representation of both the indemnifying party or parties and the
indemnified party or parties by the same counsel is inappropriate
under applicable standards of professional conduct due to actual or
potential differing interests between them, the indemnified party
or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the
defense of such Action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such
Action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party
under this Section 7 for any reasonable legal or other expenses
subsequently incurred by such indemnified party in connection with
the defense thereof unless (i) the indemnified party shall have
employed counsel in connection with the assumption of legal
defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate
counsel in such circumstance), (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
notice of commencement of the Action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying
party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened Action in
respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such Action) unless such settlement,
compromise or consent requires only the payment of money damages,
does not subject the indemnified party to any continuing obligation
or require any admission of criminal or civil responsibility, and
includes an unconditional release of each indemnified party from
all liability arising out of such Action, or (ii) be liable for any
settlement of any such Action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled
with its written consent or if there be a final judgment of the
plaintiff in any such Action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against
any loss or liability by reason of such settlement or
judgment.

 

(c) Purchaser
acknowledges on behalf of itself and each Purchaser Indemnitee
that, other than for actions seeking specific performance of the
obligations under this Agreement or in the case of fraud, the sole
and exclusive remedy of the Purchaser and the Purchaser Indemnitee
with respect to any and all claims relating to this Agreement shall
be pursuant to the indemnification provisions set forth in this
Section 7.

 

8. Revocability;
Binding Effect. The subscription hereunder may be revoked
prior to the Initial Closing or
any Subsequent Closing, as applicable, thereon, provided that
written notice of revocation is sent and is received by the Company
or the Placement Agent at least one Business Day prior to the
Initial Closing or any Subsequent Closing, as applicable, on such
subscription. The Purchaser hereby acknowledges and agrees that
this Agreement shall survive the death or disability of the
Purchaser and shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors,
legal representatives and permitted assigns. If the Purchaser is
more than one person, the obligations of the Purchaser hereunder
shall be joint and several and the agreements, representations,
warranties and acknowledgments herein shall be deemed to be made by
and be binding upon each such person and such person’s heirs,
executors, administrators, successors, legal representatives and
permitted assigns. For the purposes of this Agreement,
“Business
Day” means a day, other than a Saturday or Sunday, on
which banks in New York City are open for the general transaction
of business. Notwithstanding the foregoing revocation provisions,
in no case may a Purchaser revoke its purchase of Securities after
the Purchaser’s funds have been closed upon.

 

 

 

-18-

 

 

9. Miscellaneous.

 

(a) Modification. This Agreement shall not be
amended, modified or waived except by an instrument in writing
signed by the Company and the holders of at least a majority of the
then Held Shares (as defined above). Any amendment, modification or
waiver effected in accordance with this Section ‎9(a) shall be binding upon the
Purchaser and each transferee of the Securities, each future holder
of all such Securities, and the Company.

 

(b) Immaterial
Modifications to the Registration Rights Agreement. The
Company and the Placement
Agents may, at any time prior to the Initial Closing, amend the Registration
Rights Agreement if necessary to clarify or make immaterial
modifications any provision therein, without first providing notice
or obtaining prior consent of the Purchaser.

 

(c) Third-Party Beneficiary. This
Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any
other Person, except as otherwise set forth in Section 7(a) and this Section ‎9(c).

 

(d) Notices.
Any notice, consents, waivers or other communication required or
permitted to be given hereunder shall be in writing and will be
deemed to have been delivered: (i) upon receipt, when personally
delivered; (ii) upon receipt when sent by certified mail, return
receipt requested, postage prepaid; (iii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party);
(iv) when sent, if by e-mail, (provided that such sent e-mail is
kept on file (whether electronically or otherwise) by the sending
party and the sending party does not receive an automatically
generated message from the recipient’s e-mail server that
such e-mail could not be delivered to such recipient); or (v) one
(1) Business Day after deposit with an overnight courier service
with next day delivery specified, in each case, properly addressed
to the party to receive the same. The addresses, facsimile numbers
and email addresses for such communications shall be:

 

(i) if
to the Company, at

 

Wrap
Technologies, Inc.

4620
Arville Street, Ste E

Las
Vegas, NV 89103

Attention: David
Norris, President

Email:
david@wraptechnologies.com

 

with
copies (which shall not constitute notice) to:

 

Disclosure Law
Group

600
West Broadway, Suite 700

San
Diego, CA 92101

Attention: Daniel
W. Rumsey

Facsimile:
619-330-2101

Email:
drumsey@disclosurelawgroup.com

 

(ii) if
to the Purchaser, at the address set forth on the Omnibus Signature
Page hereof (or, in either case, to such other address as the party
shall have furnished in writing in accordance with the provisions
of this Section). Any notice or other communication given by
certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party’s address which
shall be deemed given at the time of receipt thereof.

 

(e) Assignability. This
Agreement and the rights, interests and obligations hereunder are
not transferable or assignable by the Purchaser, and the transfer
or assignment of the Securities shall be made only in accordance
with all applicable laws.

 

(f) Applicable
Law. This
Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without reference to the principles
thereof relating to the conflict of laws.

 

 

 

-19-

 

 

(g) Arbitration. All
disputes arising out of or in connection with this Agreement shall
be submitted to the International Court of Arbitration of the
International Chamber of Commerce and shall be finally settled
under the Rules of Arbitration of the International Chamber of
Commerce by one or more arbitrators appointed in accordance with
the said Rules. The place of arbitration shall be New York, New
York.

 

(h) Form
D; Blue Sky Qualification. The Company agrees to timely file
a Form D with respect to the Securities and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall
take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the
Securities for, sale to the Purchaser at the Initial Closing or any Subsequent Closing,
as applicable, under applicable securities or “Blue
Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of any
Purchaser.

 

(i) Use
of Pronouns. All
pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons referred to may
require.

 

(j) Securities
Law Disclosure; Publicity. The Company shall not publicly
disclose the name of any Purchaser or an Affiliate of any
Purchaser, or include the name of any Purchaser or an Affiliate of
any Purchaser in any press release or filing with the SEC or any
regulatory agency or principal trading market, without the prior
written consent of such Purchaser, except (i) as required by
federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B)
the filing of final Transaction Documents with the SEC or (ii) to
the extent such disclosure is required by law, request of the staff
of the SEC or of any regulatory agency or principal trading market
regulations, in which case the Company shall provide the Purchasers
with prior written notice of such disclosure permitted under this
sub-clause (ii). From and after the issuance by the Company of a
press release and/Current Report on Form 8-K describing the
transactions contemplated by the Subscription Agreements (the
“Public
Disclosure”), no Purchaser shall be in possession of
any material, non-public information received from the Company or
any of its respective officers, directors, employees or agents that
is not disclosed in the Public Disclosure unless a Purchaser shall
have executed a written agreement regarding the confidentiality and
use of such information. Each Purchaser, severally and not jointly
with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company as described in this Section 9, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with
such transactions (including the existence and terms of such
transactions).

 

(k) Non-Public
Information. Except for information (including the terms of
this Agreement and the transactions contemplated hereby) disclosed
and that will be disclosed in the SEC Reports, the Company shall
not and shall cause each of its officers, directors, employees and
agents, not to, provide any Purchaser with any material, non-public
information regarding the Company without the express written
consent of such Purchaser.

 

(l) This
Agreement, together with the Registration Rights Agreement, and all
exhibits, schedules and attachments hereto and thereto and any
confidentiality agreement between the Purchaser and the Company,
constitute the entire agreement between the Purchaser and the
Company with respect to the Offering and supersede all prior oral
or written agreements and understandings, if any, relating to the
subject matter hereof. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only
by a written document executed by the party entitled to the
benefits of such terms or provisions.

 

(m) If
the Securities are certificated and any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company and
the Company’s transfer agent of such loss, theft or
destruction and the execution by the holder thereof of a customary
lost certificate affidavit of that fact and an agreement to
indemnify and hold harmless the Company and the Company’s
transfer agent for any losses in connection therewith or, if
required by the transfer agent, a bond in such form and amount as
is required by the transfer agent. The applicants for a new
certificate or instrument under such circumstances shall also pay
any reasonable third-party costs associated with the issuance of
such replacement Securities. If a replacement certificate or
instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such
mutilated certificate or instrument as a condition precedent to any
issuance of a replacement.

 

 

 

-20-

 

 

(n) Each
of the parties hereto shall pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and
the transactions contemplated hereby, whether or not the
transactions contemplated hereby are consummated.

 

(o) This
Agreement may be executed in one or more original or facsimile or
by an e-mail which contains a portable document format (.pdf) file
of an executed signature page counterpart, each of which shall be
deemed an original, but all of which shall together constitute one
and the same instrument and which shall be enforceable against the
parties actually executing such counterparts. The exchange of
copies of this Agreement and of signature pages by facsimile
transmission or in .pdf format shall constitute effective execution
and delivery of this Agreement as to the parties and may be used in
lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile or by e- mail of a document in pdf
format shall be deemed to be their original signatures for all
purposes.

 

(p) Each
provision of this Agreement shall be considered separable and, if
for any reason any provision or provisions hereof are determined to
be invalid or contrary to applicable law, such invalidity or
illegality shall not impair the operation of or affect the
remaining portions of this Agreement.

 

(q) Paragraph
titles are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the
text.

 

(r) The
Purchaser understands and acknowledges that there may be multiple
Subsequent Closings for the Offering.

 

(s) The
Purchaser hereby agrees to furnish the Company such other
information as the Company may request prior to the Initial Closing or any Subsequent Closing,
as applicable, with respect to its subscription
hereunder.

 

(t) The
representations and warranties of the Company and each Purchaser
contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement for a period of one (1)
year from the date of the Initial Closing and shall in no way be
affected by any investigation or knowledge of the subject matter
thereof made by or on behalf of the Purchasers or the
Company.

 

(u) Omnibus
Signature Page. This Agreement is intended to be read and
construed in conjunction with the Registration Rights Agreement.
Accordingly, pursuant to the terms and conditions of this Agreement
and the Registration Rights Agreement, it is hereby agreed that the
execution by the Purchaser of this Agreement, in the place set
forth on the Omnibus Signature Page below, shall constitute
agreement to be bound by the terms and conditions hereof and the
terms and conditions of the Registration Rights Agreement, with the
same effect as if each of such separate but related agreements were
separately signed.

 

(v) Public
Disclosure. Neither the Purchaser nor any officer, manager,
director, member, partner, stockholder, employee, Affiliate,
Affiliated person or entity of the Purchaser shall make or issue
any press releases or otherwise make any public statements or make
any disclosures to any third person or entity with respect to the
transactions contemplated herein and will not make or issue any
press releases or otherwise make any public statements of any
nature whatsoever with respect to the Company without the
Company’s express prior approval (which may be withheld in
the Company’s sole discretion), except to the extent such
disclosure is required by law, request of the staff of the SEC or
of any regulatory agency or principal trading market
regulations.

 

(w) Potential
Conflicts. The Placement Agents, their sub-agents, legal
counsel to the Company, or the
Placement Agent and/or their respective Affiliates,
principals, representatives or employees may now or hereafter own
shares of the Company.

 

(x) Independent
Nature of Each Purchaser’s Obligations and Rights. For
avoidance of doubt, the obligations of the Purchaser under this
Agreement are several and not joint with the obligations of any
other purchaser under any other Subscription Agreement, and the
Purchaser shall not be responsible in any way for the performance
of the obligations of any other purchaser under any other
Subscription Agreement. Nothing contained herein and no action
taken by the Purchaser shall be deemed to constitute the Purchaser
as a partnership, an association, a joint venture, or any other
kind of entity, or create a presumption that the purchasers
Subscription Agreements are in any way acting in concert or as a
group with respect to such obligations or the transactions
contemplated by this Agreement and any other Subscription
Agreements. The Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary
for any other purchaser under any other Subscription Agreement to
be joined as an additional party in any proceeding for such
purpose.

 

[Signature page follows.]

 

 

-21-

 

 

IN WITNESS WHEREOF, the Company has duly executed this Agreement as
of the ____ day of October, 2018.

 

WRAP
TECHNOLOGIES, INC.

 

 

 

By:            

            

            

            

            

 

Name:
David Norris

Title:
President

 

 

-22-

 

How to subscribe for Shares in the private offering of

 

WRAP Technologies, Inc.

 

1.

Complete, Sign and Date the Omnibus Signature
Page for the
Securities Purchase Agreement and Registration Rights Agreement.

 

2.

Initial the Accredited Investor
Certification in
the appropriate place or places.

 

3.

Complete
and sign the Investor
Profile.

 

4.

Review
the Anti Money Laundering Requirements summary and Complete and
sign the Anti-Money
Laundering
Information Form.

 

5.

Email all completed forms to Jennifer
Goro at jag@katalystsecurities.com
and then send all signed original documents to:

 

Katalyst Securities
LLC

630
Third Avenue, 5th Floor

New
York, NY 10017

Telephone: (212)
400-6993

Facsimile: (212)
247-1059

 

6.

If you are paying
the Purchase Price by check, a certified or other bank check
for the exact dollar amount of the Purchase Price for the number of Units you are purchasing
should be made payable to the order of “Delaware Trust Company, as
Escrow Agent for WRAP Technologies, Inc. account #79-3538”
and should be sent directly to
Delaware
Trust Company, 251 Little Falls Drive, Wilmington, DE 19808, Attn:
Alan R. Halpern, FFC 79-3538, (include
Purchaser’s Name).

 

Checks take up to 5 business
days to clear. A check must be received by
the Company
at least 6 business days before the closing
date.

 

7.

If you are paying
the Purchase Price by wire transfer, you should send a wire
transfer for the exact dollar amount
of the Purchase Price for the number of Units you are purchasing
according to the following instructions:

 

Bank: 

US
Bank

5065
Wooster Road

Cincinnati, OH
45226

ABA Routing
#:

**********

SWIFT CODE:

**********

Account
Name:                                    

Delaware
Trust Company

Account
#:       

**********

Reference: 

“FFC: WRAP
Technologies, Inc. Escrow: # 79-3538 [INSERT PURCHASER’S
NAME]”

Delaware Trust
Contact:   

Alan
R. Halpern

 

Thank you for your interest,

 

WRAP Technologies, Inc.

 

 

-23-

 

WRAP TECHNOLOGIES, INC.

 

OMNIBUS SIGNATURE PAGE TO

 

SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT

 

The undersigned, desiring to: (i) enter into the Subscription
Agreement, dated as of ____________,1 2018
(the “Subscription
Agreement”), between the
undersigned, WRAP Technologies,
Inc., a Delaware corporation
(the “Company”),
and the other parties thereto, in or substantially in the form
furnished to the undersigned, (ii) enter into the Registration
Rights Agreement (the “Registration
Rights Agreement”), among
the undersigned, the Company and the other parties thereto, in or
substantially in the form furnished to the undersigned, and (iii)
purchase the Units of the Company’s securities as set forth
in the Subscription Agreement and below, hereby agrees to purchase
such Units from the Company and further agrees to join the
Subscription Agreement and the Registration Rights Agreement as a
party thereto, with all the rights and privileges appertaining
thereto, and to be bound in all respects by the terms and
conditions thereof. The undersigned specifically acknowledges
having read the representations section in the Subscription
Agreement entitled “Representations and Warranties of the
Purchaser” and hereby represents that the statements
contained therein are complete and accurate with respect to the
undersigned as a Purchaser.

 

IN WITNESS WHEREOF, the Purchaser hereby executes this Agreement
and the Registration Rights Agreement.

 

Dated:                       

            

            

, 2018

 

	
 

	

X

	

$3.00

	

=

	

$

	

Number of Units

	
 

	

Purchase Price per Unit

	
 

	

Total Purchase Price

 

PURCHASER
(individual)                                                                                 

PURCHASER (entity)

 

 

Signature                                                                                 

Name of
Entity

 

By: 

 

Print
Name                                                                                      

Signature

 

Print
Name: 

Signature (if Joint
Tenants or Tenants in Common) Title: 

 

Address of
Principal Residence:

Address of
Executive Offices:

 

 

Social Security
Number(s):

IRS Tax
Identification Number:

 

 

Telephone
Number:

Telephone
Number:

 

 

Facsimile
Number:

Facsimile
Number:

 

 

E-mail
Address:                                                                                 

E-mail
Address:

 

1 

This should NOT be
completed by the Subscriber.

 

 

-24-

 

WRAP TECHNOLOGIES, INC.

 

ACCREDITED INVESTOR CERTIFICATION

 

For Individual Investors Only

 

(all Individual Investors must
INITIAL
where
appropriate):

 

 

Initial
_______ 

I have a net worth of at least US$1 million either
individually or through aggregating my individual holdings and
those in which I have a joint, community property or other similar
shared ownership interest with my spouse. (For
purposes of calculating your net worth under this paragraph,
(a) 
your primary residence shall not be included as an
asset; (b)
indebtedness secured by your primary residence, up to the estimated
fair market value of your primary residence at the time of your
purchase of the securities, shall not be included as a liability
(except that if the amount of such indebtedness outstanding at the
time of your purchase of the securities exceeds the amount
outstanding 60 days before such time, other than as a result of the
acquisition of your primary residence, the amount of such excess
shall be included as a liability); and (c) indebtedness that is
secured by your primary residence in excess of the estimated fair
market value of your primary residence at the time of your purchase
of the securities shall be included as a
liability.)

 

Initial
_______ 

I
have had an annual gross income for the past two years of at least
US$200,000 (or US$300,000 jointly with my spouse) and expect my
income (or joint income, as appropriate) to reach the same level in
the current year.

 

Initial
_______

 I am a director or executive officer of
WRAP Technologies,
Inc.

 

For Non-Individual Investors (Entities)

 

(all Non-Individual Investors must INITIAL where appropriate):

 

Initial
_______ 

The
investor certifies that it is a partnership, corporation, limited
liability company or business trust that is 100% owned by persons
who meet at least one of the criteria for Individual Investors set
forth above (in which case each such person must complete the
Accreditor Investor Certification for Individuals above as well the
remainder of this questionnaire) .

 

Initial
_______ 

The
investor certifies that it is a partnership, corporation, limited
liability company or business trust that has total assets of at
least US$5 million and was not formed for the purpose of investing
the Company.

 

Initial
_______ 

The
investor certifies that it is an employee benefit plan whose
investment decision is made by a plan fiduciary (as defined in
ERISA §3(21)) that is a bank, savings and loan association,
insurance company or registered investment advisor.

 

Initial
_______ 

The
investor certifies that it is an employee benefit plan whose total
assets exceed US$5,000,000 as of the date of this
Agreement.

 

Initial
_______ 

The
undersigned certifies that it is a self-directed employee benefit
plan whose investment decisions are made solely by persons who meet
at least one of the criteria for Individual Investors.

 

Initial
_______ 

The
investor certifies that it is a U.S. bank, U.S. savings and loan
association or other similar U.S. institution acting in its
individual or fiduciary capacity.

 

Initial
_______ 

The
undersigned certifies that it is a broker-dealer registered
pursuant to §15 of the Securities Exchange Act of
1934.

 

Initial
_______ 

The
investor certifies that it is an organization described in
§501(c)(3) of the Internal Revenue Code with total assets
exceeding US$5,000,000 and not formed for the specific purpose of
investing in the Company.

 

Initial
_______ 

The
investor certifies that it is a trust with total assets of at least
US$5,000,000, not formed for the specific purpose of investing in
the Company, and whose purchase is directed by a person with such
knowledge and experience in financial and business matters that
such person is capable of evaluating the merits and risks of the
prospective investment.

 

Initial
_______ 

The
investor certifies that it is a plan established and maintained by
a state or its political subdivisions, or any agency or
instrumentality thereof, for the benefit of its employees, and
which has total assets in excess of US$5,000,000.

 

Initial
_______ 

The
investor certifies that it is an insurance company as defined in
§2(13) of the Securities Act of 1933, or a registered
investment company.

 

 

-25-

 

WRAP TECHNOLOGIES, Inc.

 

Investor Profile

 

(Must be completed by Investor)

 

Section A - Personal Investor
Information                                                                            

 

Investor
Name(s):                                                                                                                                      

 

Individual executing Profile or
Trustee:                                                                                                                                      

 

Social Security Numbers / Federal I.D.
Number:                                                                                                                                      

 

Date of
Birth:                                

Marital
Status:    

Joint Party Date of
Birth:                                                           

Investment
Experience (Years):

Annual
Income:   

Liquid Net
Worth:     

 

Net Worth*:     

 

Tax
Bracket:      

_____ 15% or below 

_____ 25% - 27.5%_____ Over 27.5%

 

Home Street
Address:                                                                                                                                      

 

Home City, State & Zip
Code:                                                                                                                                      

 

Home Phone:     
Home
Fax:     Home Email:

 

Employer:                                                                                                                                      

 

Employer Street
Address:                                                                                                                                      

 

Employer City, State & Zip
Code:                                                                                                                                      

 

Bus. Phone:     
   Bus.
Fax:        Bus.
Email:

 

Type of
Business:                                                                                                                                      

 

Outside
Broker/Dealer:                                                                                                                                      

 

Section B – Certificate Delivery Instructions

 

____
Please deliver certificate to the Employer Address listed in
Section A.

 

____
Please deliver certificate to the Home Address listed in Section
A.

 

____ Please deliver certificate to the following
address:

 

Section C – Form of Payment – Check or Wire
Transfer

 

____ Check payable to Delaware Trust Company, as
Escrow Agent for WRAP Technologies, Inc.

Acct# 79-3538 Insert Purchaser’s Name

____ Wire funds from my outside account according to instructions
of the Subscription Agreement.

____ The funds for this investment are rolled over, tax deferred
from __________ within the allowed 60 day window.

 

Please check if you are a FINRA member or affiliate of a FINRA
member firm: ____

 

 

 

 

_______________________              
________________________

Investor
Signature         
                 
    Date

 

* 

For purposes of calculating
your net worth in this form, (a) your
primary residence shall not be included as an
asset;
(b) indebtedness secured by
your primary residence, up to the estimated fair market value of
your primary residence at the time of your purchase of
the securities, shall not be included as a liability (except that
if the amount of such indebtedness outstanding at the time of your
purchase of the securities exceeds the amount outstanding 60 days
before such time, other than as a result of the acquisition of your
primary residence, the amount of such excess shall be included as a
liability); and (c) indebtedness that is secured by your primary
residence in excess of the estimated fair market value of your
primary residence at the time of your purchase of the securities
shall be included as a liability.

 

 

-26-

 

ANTI MONEY LAUNDERING REQUIREMENTS

 

The USA PATRIOT Act

 

The USA PATRIOT Act is designed to detect, deter, and punish
terrorists in the United States and abroad. The Act imposes new
anti-money laundering requirements on brokerage firms and financial
institutions. Since April 24, 2002 all brokerage firms have been
required to have new, comprehensive anti-money laundering
programs.

 

To help you understand these efforts, we want to provide you with
some information about money laundering and our steps to implement
the USA PATRIOT Act.

 

What is money laundering?

 

Money laundering is the process of disguising illegally obtained
money so that the funds appear to come from legitimate sources or
activities. Money laundering occurs in connection with a wide
variety of crimes, including illegal arms sales, drug trafficking,
robbery, fraud, racketeering, and terrorism.

 

How big is the problem and why is it important?

 

The use of the U.S. financial system by criminals to facilitate
terrorism or other crimes could well taint our financial markets.
According to the U.S. State Department, one recent estimate puts
the amount of worldwide money laundering activity at $1 trillion a
year.

 

What are we required to do to eliminate money
laundering?

 

Under rules required by the USA PATRIOT Act, our anti-money
laundering program must designate a special compliance officer, set
up employee training, conduct independent audits, and establish
policies and procedures to detect and report suspicious transaction
and ensure compliance with such laws. As part of our required
program, we may ask you to provide various identification documents
or other information. Until you provide the information or
documents we need, we may not be able to effect any transactions
for you.

 

 

-27-

 

ANTI-MONEY LAUNDERING INFORMATION FORM

The following is required in accordance with the AML provision of
the USA PATRIOT ACT.

(Please fill out and return with requested
documentation.)

 

 

 

INVESTOR
NAME:                                                                                                                      

 

LEGAL
ADDRESS:                                                                                                                      

 

 

SSN# or TAX ID# OF INVESTOR:

 

 

YEARLY
INCOME:                                                                                                                        

 

NET
WORTH:                                                                                                                        

*

 

* For purposes of calculating your net worth in this form, (a)
your primary residence
shall not be included as an asset; (b) indebtedness secured
by your primary residence, up to the estimated fair market value of
your primary residence at the time of your purchase of the
securities, shall not be included as a liability (except that if
the amount of such indebtedness outstanding at the time of your
purchase of the securities exceeds the amount outstanding 60 days
before such time, other than as a result of the acquisition of your
primary residence, the amount of such excess shall be included as a
liability); and (c) indebtedness that is secured by your primary
residence in excess of the estimated fair market value of your
primary residence at the time of your purchase of the securities
shall be included as a liability.

 

INVESTMENT OBJECTIVE(S) FOR ALL
INVESTORS:                                                                                                                        

 

ADDRESS
OF BUSINESS OR OF EMPLOYER:

 

FOR
INVESTORS WHO ARE INDIVIDUALS:
AGE:   

 

FOR INVESTORS WHO ARE INDIVIDUALS:
OCCUPATION:
_____________________________________

 

FOR INVESTORS WHO ARE ENTITIES: NATURE OF BUSINESS:
____________________________________

 

IDENTIFICATION & DOCUMENTATION AND SOURCE OF
FUNDS:

 

1. 

Please submit a
copy of non-expired identification for the authorized
signatory(ies) on the investment documents, showing name, date of
birth, address and signature. The
address shown on the identification document MUST match the
Investor’s address shown on the Investor Signature
Page.

 

	

Current
Driver’s License

	

or

	

Valid
Passport

	

or

	

Identity
Card

(Circle
one or more)

 

2. 

If the Investor is
a corporation, limited liability company, trust or other type of
entity, please submit the following requisite documents: (i)
Articles of Incorporation, By-Laws, Certificate of Formation,
Operating Agreement, Trust or other similar documents for the type
of entity; and (ii) Corporate Resolution or power of attorney or
other similar document granting authority to signatory(ies) and
designating that they are permitted to make the proposed
investment.

 

3. 

Please advise where
the funds were derived from to make the proposed
investment:

 

	

Investments

	

Savings

	

Proceeds
of Sale

	

Other
____________

(Circle one or more)

 

 

Signature:                                                                              

 

Print
Name:                                                                              

 

Title (if
applicable):                                                                              

 

Date:                                                                              

 

 

-28-

 

EXHIBIT A

 

Form of Registration Rights Agreement

 

 

 

-29-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00288-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00288-of-00352.parquet"}]]