Document:

knwn_ex105

 

Exhibit 10.5

 

KNOW
LABS, INC.

 

FORM
OF SUBORDINATION AGREEMENT

 

 

THIS
SUBORDINATION AGREEMENT (this "Agreement") dated
__________________________ , is between
___________________________________ (the "Subordinated Creditor"), and Clayton
Struve ("Senior
Creditor").

 

Recitals

 

 

A. Subordinated
Creditor is purchasing a certain Subordinated Convertible Note of
even date hereof (the “Note”) from Know Labs, Inc., a
Nevada corporation (the "Company") pursuant to that certain
Securities Purchase Agreement dated as of the date hereof between
the Company and Subordinated Creditor (the “Securities Purchase Agreement”).
All capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned to them in the Securities Purchase
Agreement.

 

B. Senior Creditor has
previously provided loans to the Company in the aggregate amount of
$1,071,000 (the “Senior
Loan”).

 

C. As a condition to
purchasing the Note, Subordinated Creditor has agreed to
subordinate the Note and related obligations to Subordinated
Creditor (the "Subordinated
Debt") to all of the Company’s indebtedness and
obligations to Senior Creditor (the "Senior Debt").

 

THE
PARTIES AGREE AS FOLLOWS:

 

1. All Subordinated
Debt payments are subordinated to Senior Creditor's right to full
payment and performance of the Senior Debt and all of the Company's
other obligations to Senior Creditor existing now or later,
together with collection costs, including attorneys' fees, and
including any interest accruing after any Bankruptcy
Event.

 

2.

Subordinated
Creditor will not:

 

a) demand or receive
from the Company (and the Company will not pay) any part of the
Subordinated Debt, by payment, prepayment, or otherwise, which may
now or hereafter be owing by the Company to Subordinated Creditor,
or

 

b) accelerate the
Subordinated Debt, or begin to or participate in any action against
the Company with respect to such Subordinated Debt, until all the
Senior Debt is paid, or

 

c) assign any of the
Subordinated Debt or any collateral security therefore without
notice to or consent of Senior Creditor and unless assigned
pursuant to an assignment made expressly subject to this
Agreement.

 

This
does not prohibit each such Subordinated Creditor from converting
any Subordinated Debt into equity securities of the Company or
exercising any rights as a stockholder of the Company.

 

3. Subordinated
Creditor must deliver to Senior Creditor, in the form received, any
payment, distribution, security, or proceeds it receives on the
Subordinated Debt other than according to this
Agreement.

 

 

 

 

4. These provisions
remain in full force and effect, despite any Bankruptcy Event, and
Senior Creditor's claims against the Company and the Company's
estate will be fully paid before any payment is made to any
Subordinated Creditor with respect to the Subordinated
Debt.

 

5. Until the Senior
Debt is paid, Subordinated Creditor irrevocably appoints Senior
Creditor as its attorney-in-fact, with power of attorney with power
of substitution, in each such Subordinated Creditor's name or in
Senior Creditor's name, for Senior Creditor's use and benefit
without notice to each such Subordinated Creditor, to do the
following in the case of any Bankruptcy Event involving the
Company:

 

a) file any claims for
the Subordinated Debt for Subordinated Creditor if such
Subordinated Creditor does not do so at least thirty (30) days
before the time to file claims expires; and

 

b) accept or reject
any plan of reorganization or arrangement for Subordinated Creditor
and vote Subordinated Creditor's claims in respect of the
Subordinated Debt in any way it chooses.

 

6. Subordinated
Creditor will immediately place a legend on the Subordinated Debt
instruments that the instruments are subject to this Agreement. No
amendment of the Subordinated Debt documents will modify this
Agreement in any way that terminates or impairs the subordination
of the Subordinated Debt or the subordination of the security
interest or lien that Senior Creditor has in the Company's
property.

 

7. This Agreement
shall be binding upon Subordinated Creditor, its successors, or
assigns, and shall inure to the benefit of and be enforceable by
each Senior Creditor and its successors or assigns.

 

8. This Agreement
shall terminate upon the date on which the Senior Debt shall have
been paid in full.

 

9. Senior Creditor may
administer and manage its credit and other relationships with the
Company in its own best interest, without notice or consent of
Subordinated Creditor. At any time and from time to time, Senior
Creditor may enter into any amendment or agreement with the Company
as Senior Creditor may deem proper.

 

All
conditions, covenants, duties, and obligations contained in this
Agreement can be waived only by written agreement. Forbearance or
indulgence in any form or manner by party shall not be construed as
a waiver, nor in any way limit the remedies available to that
party.

 

11. If one or more
provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this
Agreement, and the balance of the Agreement shall be interpreted as
if such provision were so excluded, and shall be enforceable in
accordance with its terms.

 

12. This Agreement may
be executed in two or more counterparts, each of which is an
original and all of which together constitute one
instrument.

 

13. This Agreement
shall be governed by and be construed in accordance with the laws
of the State of Nevada without regard to the conflicts of law rules
of such state. The parties hereby irrevocably and unconditionally
submit, for themselves and their property, to the jurisdiction of
the courts sitting in Las Vegas, Nevada and any appellate court
from any thereof, in respect of actions brought against it in any
action, suit or proceeding arising out of or relating to this
Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect
of any such action, suit or proceeding may be heard and determined
in such courts. Each of the parties hereto agrees that a final
judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

 

14. If there is an
action to enforce the rights of a party under this Agreement, the
party prevailing will be entitled, in addition to other relief, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred in the action.

 

(signature pages follow)

 

 

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first set forth above.

 

 

SUBORDINATED
CREDITOR:

 

	
By:
___________________________

	
Name:

	
Title (if
applicable):

 

 

[Signature page to
Know Labs, Inc. Subordination Agreement]

 

 

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first set forth above.

 

 

 

AGREED
AND ACKNOWLEDGED:

 

 

KNOW
LABS, INC.

 

	
By: ___________________________

	
Name: Ronald P.
Erickson

	
Title:
Chairman

	
 

	
By: ___________________________

	
Name: Phillip A.
Bosua

	
Title: Chief
Executive Officer

	
 

	
 

                  

 

	

[Signature page to
Know Labs, Inc. Subordination Agreement]knwn_ex106

 
Exhibit 10.6

 

FORM
OF REGISTRATION RIGHTS AGREEMENT

 

This
REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made and
entered into as of , 2021, by and among Know Labs, Inc., a
Nevada corporation (the “Company”) and the investors
identified on Schedule
A hereto (each, including their respective successors and
assigns, an “Investor” and collectively, the
“Investors”).

 

WHEREAS, in connection with the
Securities Purchase Agreement by and among the parties hereto of
even date herewith (the “Purchase Agreement”), the Company
has agreed, upon the terms and subject to the conditions set forth
in the Purchase Agreement, to issue and sell to each Investor units
comprised of (i) subordinated convertible notes (the
“Convertible
Notes”) and (ii) warrants to purchase fifty percent
(50%) of one share of the Company’s common stock, $0.001 par
value per share (“Common
Stock”) at an exercise price of $2.40 per whole share
(the “Warrants”); and

 

WHEREAS, in accordance with the terms of
the Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor
statute (collectively, the “Securities Act”), and applicable
state securities laws.

 

NOW, THEREFORE, in consideration of the
premises and the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and each of the Investors
hereby agree as follows:

 

1. Definitions. Capitalized terms
used and not otherwise defined herein that are defined in the
Purchase Agreement will have the respective meanings given such
terms in the Purchase Agreement. As used in this Agreement, the
following terms have the respective meanings set forth in this
Section 1 and other terms are defined throughout this
Agreement:

 

“Commission Comments” means
written comments pertaining solely to Rule 415 which are received
by the Company from the Commission to a filed Registration
Statement, which either (i) requires the Company to limit the
number of Registrable Securities which may be included therein to a
number which is less than the number sought to be included thereon
as filed with the Commission or (ii) requires the Company to either
exclude Registrable Securities held by specified Holders or deem
such Holders to be underwriters with respect to Registrable
Securities they seek to include in such Registration
Statement.

 

“Effective Date” means, as
to a Registration Statement, the date on which such Registration
Statement is first declared effective by the
Commission.

 

“Effectiveness Date” means
(a) with respect to the initial Registration Statement required to
be filed pursuant to Section 2(a), the earlier of: (i) the
120th day following the Final
Closing Date and (ii) the fifth Trading Day following the date on
which the Company is notified by the Commission that the initial
Registration Statement will not be reviewed or is no longer subject
to further review and comments; (b) with respect to any additional
Registration Statements required to be filed under Section 2(b) due
to SEC Restrictions, the earlier of: (i) the 90th day following the applicable
Restriction Termination Date and (ii) the fifth Trading Day
following the date
on which the Company is notified by the Commission that such
Registration Statement will not be reviewed or is no longer subject
to further review and comments; and (c) with respect to a
Registration Statement required to be filed under Section 2(c), the
earlier of: (i) the 90th day
following the date on which the Company becomes eligible to utilize
Form S-3 to register the resale of Common Stock, and (ii) the fifth
Trading Day following the date on which the Company is notified by
the Commission that the Registration Statement will not be reviewed
or is no longer subject to further review and
comments.

 

“Effectiveness Period”
means, as to any Registration Statement required to be filed
pursuant to this Agreement, the period commencing on the Effective
Date of such Registration Statement and ending on (a) the date that
all of the Registrable Securities covered by such Registration
Statement have been publicly sold by the Holders of the Registrable
Securities included therein, or (b) such time as all of the
Registrable Securities covered by such Registration Statement may
be sold by the Holders without volume restrictions pursuant to Rule
144 as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to
the Company's transfer agent and the affected Holders.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

 

 

 

 

“Filing Date” means (a) with
respect to the initial Registration Statement required to be filed
pursuant to Section 2(a), the 45th day following the Final Closing Date;
(b) with respect to any additional Registration Statements required
to be filed under Section 2(b) due to SEC Restrictions, the
30th day following the
applicable Restriction Termination Date; and (c) with respect to a
Registration Statement required to be filed under Section 2(c), the
30th day following the date on
which the Company becomes eligible to utilize Form S-3 to register
the resale of Common Stock.

 

“Final Closing Date” means
the date on which the final closing of the purchase and sale of the
Convertible Notes and Warrants occurs pursuant to Section 2.2 of
the Purchase Agreement.

 

“FINRA” means the Financial
Industry Regulatory Authority, Inc.

 

“Holder” or “Holders” means the holder
or holders, as the case may be, from time to time of Registrable
Securities and, if other than an Investor, a Person (as defined in
the Purchase Agreement) to whom the rights hereunder have been
properly assigned pursuant to Section 7 hereof.

 

“Investment Amount” means,
with respect to each Investor, the Investment Amount indicated on
such Investor’s signature page to this Agreement, which is
also reflected on the Schedule of Investors attached hereto as
Schedule
A.

 

“Nevada Courts” means the
state and federal courts sitting in Nevada.

 

 

“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

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

 

“Registrable Securities”
means: (i) any shares of Common Stock issuable upon the conversion
of the Convertible Notes issued to Investors pursuant to the
Purchase Agreement,

 

(ii)
any shares of Common Stock issuable upon the exercise of the
Warrants issued to the Investors pursuant to the Purchase
Agreement, (iii) any shares of Common Stock issuable upon the
exercise of warrants issued to Boustead Securities, LLC, (the
“Placement
Agent”) as compensation in connection with the
financing that is the subject of the Purchase Agreement
(“Placement Agent Warrant
Shares”) and (iv) any securities issued or issuable
upon any stock split, dividend or other distribution,
recapitalization or similar event, or any price adjustment as a
result of such stock splits, reverse stock splits or similar events
with respect to any of the securities referenced in (i)
–

(iv)
above. Notwithstanding the foregoing, a security shall cease to be
a Registrable Security for purposes of this Agreement from and
after such time as the Holder of such security may resell such
security without volume restrictions under Rule 144, as determined
by the counsel to the Company pursuant to a written opinion letter
to such effect, addressed and acceptable to the Company’s
transfer agent and the affected Holders.

 

“Registration Statement”
means the initial registration statement required to be filed in
accordance with Section 2(a) and any additional registration
statements required to be filed under this Agreement, including in
each case the Prospectus, amendments and supplements to such
registration statements or Prospectus, including pre- and post-
effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference
therein.

 

“Required Holders” means the
Holders of at least a majority of the Registrable
Securities.

 

“Rule 144” means Rule 144
promulgated by the Commission pursuant to theSecurities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule.

 

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

 

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

 

 

 

 

“Selling Holder
Questionnaire” means the selling security holder
notice and questionnaire attached as Annex B hereto.

 

"Trading Day" means a day on which the
Trading Market on which the Common Stock is listed or quoted for
trading is open for the transaction of business.

 

“Trading Market” means any of the
New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
OTCBB, the OTCQB, the OTCQX or any other market on which the Common
Stock is listed or quoted for trading on the date in
question.

 

2.

Registration.

 

(a) On or prior to the
applicable Filing Date, the Company shall prepare and file with the
Commission one Registration Statement covering the resale of all
Registrable Securities not already covered by an existing and
effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415. Each Registration Statement
required to be filed under this Agreement shall be filed on Form
S-1 (or on such other form appropriate for such purpose) and
contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration
Statement, other than as to the characterization of any Holder as
an underwriter, which shall not occur unless such characterization
is consistent with written information provided by the Holder in
the Selling Holder Questionnaire) the “Plan of
Distribution” substantially in the form attached hereto as
Annex A. The
Company shall cause each Registration Statement required to be
filed under this Agreement to be declared effective under the
Securities Act as soon as possible but, in any event, no later than
its Effectiveness Date, and shall use its commercially reasonable
best efforts to keep each such Registration Statement continuously
effective during its entire Effectiveness Period. By 5:00 p.m. (New
York City time) on the Trading Day immediately following the
Effective Date of each Registration Statement, the Company shall
file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with
sales pursuant to such Registration Statement (whether or not such
filing is technically required under such Rule).

 

(b) Notwithstanding
anything to the contrary contained in this Section 2, if the
Company receives Commission Comments, and following discussions
with and responses to the Commission in which the Company uses its
commercially reasonable best efforts to cause as many Registrable
Securities for as many Holders as possible to be included in the
Registration Statement filed pursuant to Section 2(a) without
characterizing any Holder as an underwriter unless such
characterization is consistent with written information provided by
the Holder in the Selling Holder Questionnaire (and in such regard
uses its commercially reasonable best efforts to cause the
Commission to permit any Holder or its counsel to participate in
Commission conversations on such issue together with the
Company’s counsel, and timely conveys relevant information
concerning such issue with the Holders or their counsel) (the day
that such discussions and responses are concluded shall be referred
to as the “Tolling
Date”), the Company is unable to cause the inclusion
of all Registrable Securities, then the Company may, following not
less than three (3) Trading Days prior written notice to the
Holders (i) remove from the Registration Statement such Registrable
Securities (the “Cut Back
Shares”) and/or(ii) agree to such
restrictions and limitations on the registration and resale of the
Registrable Securities, in each case as the Commission may require
in order for the Commission to allow such Registration Statement to
become effective; provided, that in no event may
the Company characterize any Holder as an underwriter unless such
characterization is consistent with written information provided by
the Holder in the Selling Holder Questionnaire (collectively, the
“SEC
Restrictions”). Unless the SEC Restrictions otherwise
require, any cut -back imposed pursuant to this Section 2(b) shall
be allocated among the Registrable Securities of the Holders on a
pro rata basis. No liquidated damages under Section 2(d) shall
accrue on or as to any Cut Back Shares, and the required
Effectiveness Date for such Registration Statement will be tolled
until such time as the Company is able to effect the registration
of the Cut Back Shares in accordance with any SEC Restrictions if
such Registrable Securities cannot at such time be resold by the
Holders thereof without volume limitations pursuant to Rule 144
(such date, the “Restriction
Termination Date”). From and after the Restriction
Termination Date, all provisions of this Section 2 shall again be
applicable to the Cut Back Shares (which, for avoidance of doubt,
retain their character as “Registrable Securities”) if
such Registrable Securities cannot at such time be resold by the
Holders thereof without volume limitations pursuant to Rule 144 so
that the Company will be required to file with and cause to be
declared effective by the Commission such additional Registration
Statements in the time frames set forth herein as necessary to
ultimately cause to be covered by effective Registration Statements
all Registrable Securities. For the avoidance of doubt, the time
period starting from the Tolling Date and ending with the
Restriction Termination Date shall be excluded in calculating the
applicable Effectiveness Date.

 

(c) Promptly following
any date on which the Company becomes eligible to use a
registration statement on Form S-3 to register Registrable
Securities for resale, the Company shall file a Registration
Statement on Form S-3 covering all Registrable Securities (or a
post- effective amendment on Form S-3 to the then effective
Registration Statement) and shall cause such Registration Statement
to be filed by the Filing Date for such Registration Statement and
declared effective under the Securities Act as soon as possible
thereafter, but in any event prior to the Effectiveness Date
therefor. Such Registration Statement shall contain (except if
otherwise required pursuant to written comments received from the
Commission upon a review of such Registration Statement, other than
as to the characterization of any Holder as an underwriter, which
shall not occur unless such characterization is consistent with
written information provided by the Holder in the Selling Holder
Questionnaire) the “Plan of Distribution” in
substantially the form attached hereto as Annex A. The Company shall use
its commercially reasonable best efforts to keep such Registration
Statement continuously effective under the Securities Act during
the entire Effectiveness Period. By 5:00 p.m. (New York City time)
on the Trading Day immediately following the Effective Date of such
Registration Statement, the Company shall file with the Commission
in accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such
Registration Statement (whether or not such filing is technically
required under such Rule).

 

 

 

 

(d) If: (i) a
Registration Statement is not filed on or prior to its Filing Date
covering the Registrable Securities required under this Agreement
to be included therein, or (ii) a Registration Statement is not
declared effective by the Commission on or prior to its required
Effectiveness Date or if by the Trading Day immediately following
the Effective Date the Company shall not have filed a
“final” prospectus for the Registration Statement with
the Commission under Rule 424(b) (whether or not such a prospectus
is technically required by such Rule), or (iii)
after its Effective Date, without regard for the reason thereunder
or efforts therefore, such Registration Statement ceases for any
reason to be effective and available to the Investors as to the
Registrable Securities to which it is required to cover at any time
prior to the expiration of its Effectiveness Period for more than
an aggregate of 30 Trading Days (which need not be consecutive)
(any such failure or breach being referred to as an “Event,” and for purposes of
clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 30 Trading Day-period
is exceeded, being referred to as “Event Date”), then in
addition to any other rights the Investors may have hereunder or
under applicable law, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall
not have been cured by such date) until the applicable Event is
cured, the Company shall pay to each Investor an amount in cash, as
partial liquidated damages and not as a penalty, equal to 1.0% of
the aggregate Investment Amount paid by such Investor pursuant to
the Purchase Agreement. The parties agree that in no event will the
Company be liable for liquidated damages under this Agreement in
excess of 1.0% of the aggregate Investment Amount of the Investors
in any single month and the maximum aggregate liquidated damages
payable to a Investor under this Agreement shall be ten percent
(10%) of the aggregate Investment Amount paid by such Investor
pursuant to the Purchase Agreement per Event. The partial
liquidated damages pursuant to the terms hereof shall apply on a
daily pro-rata basis for any portion of a month prior to the cure
of an Event (except in the case of the first Event Date), and shall
cease to accrue (unless earlier cured) upon the expiration of the
Effectiveness Period.

 

(e) Each Holder agrees
to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Holder
Questionnaire”). The Company shall not be required to
include the Registrable Securities of a Holder in a Registration
Statement and shall not be required to pay any liquidated or other
damages under Section 2(d) to any Holder who fails to furnish to
the Company a fully completed Selling Holder Questionnaire at least
two Trading Days prior to the Filing Date (subject to the
requirements set forth in Section 3(a)).

 

3. Registration Procedures. In
connection with the Company’s registration obligations
hereunder:

 

(a) The Company shall
not file a Registration Statement, any Prospectus or any amendments
or supplements thereto in which the “Selling
Stockholder” section thereof differs in any material respect
from the disclosure received from a Holder in its Selling Holder
Questionnaire (as amended or supplemented). The Company shall not
file a Registration Statement, any Prospectus or any amendments or
supplements thereto in which it (i) characterizes any Holder as an
underwriter, unless such characterization is consistent with
written information provided by the Holder in the Selling Holder
Questionnaire, (ii) excludes a particular Holder due to such Holder
refusing to be named as an underwriter, or (iii) reduces the number
of Registrable Securities being registered on behalf of a Holder
except pursuant to, in the case of subsection (iii), the Commission
Comments, without, in each case, such Holder’s express
written authorization, unless such reduction is made pursuant to
Section 2(b) hereof. The Company shall also ensure that each
Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the
statements therein (in the case of prospectuses, in the light of
the circumstances in which they were
made) not misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent
that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly
for use in the Registration Statement, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for this
purpose).

 

(b) The Company shall
(i) prepare and file with the Commission such amendments, including
post-effective amendments, to each Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep
such Registration Statement continuously effective as to the
applicable Registrable Securities for its Effectiveness Period and,
if required under Section 2(b) with respect to Cut Back Shares,
prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant
to Rule 424; (iii) respond as promptly as reasonably possible to
any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of
all correspondence from and to the Commission relating to such
Registration Statement that would not result in the disclosure to
the Holders of material and non-public information concerning the
Company; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect
to the Registration Statement(s) and the disposition of all
Registrable Securities covered by each Registration
Statement.

 

 

 

(c) The Company shall
notify the Holders as promptly as reasonably possible (and, in the
case of (i)(A) below, not less than three Trading Days prior to
such filing and, in the case of (v) below, not less than three
Trading Days prior to the financial statements in any Registration
Statement becoming ineligible for inclusion therein) and (if
requested by any such Person) confirm such notice in writing no
later than one Trading Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment
to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a
“review” of such Registration Statement and whenever
the Commission comments in writing on such Registration Statement
(the Company shall provide true and complete copies thereof and all
written responses thereto to that pertain to the Holders as a
Selling Stockholder or to the Plan of Distribution, but not
information which the Company believes would constitute material
and non-public information); and (C) with respect to each
Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or
any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt
by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and
(v) of the occurrence of any event or passage of time that makes
the financial statements included
in a Registration Statement ineligible for inclusion therein or any
statement made in such Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any
revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or
the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, except to the extent, but only to the extent, that
such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent
that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly
for use in the Registration Statement, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for this
purpose).

 

(d) The Company shall
use its commercially reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of
a Registration Statement, or the suspension of the qualification of
any of the Registrable Securities for sale in any jurisdiction and,
if such an order or suspension is issued, to obtain the withdrawal
of such order or suspension at the earliest possible moment and to
notify the Holders of the issuance of such order and the resolution
thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.

 

(e) The Company shall
furnish to the Holders, without charge and at the option of the
Company in electronic format, at least one conformed copy of each
Registration Statement and each amendment thereto and all exhibits
to the extent requested by the Holders (including those previously
furnished) promptly after the filing of such documents with the
Commission.

 

(f) The Company shall
promptly deliver to the Holders, without charge, as many copies of
each Prospectus or Prospectuses (including each form of prospectus)
and each amendment or supplement thereto as the Holders may
reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment
or supplement thereto.

 

(g) Prior to any public
offering of Registrable Securities, the Company shall register or
qualify such Registrable Securities for offer and sale under the
securities or Blue Sky laws of all jurisdictions within the United
States as any Holder may request, to keep each such registration or
qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the
Registration Statements; provided, that in connection
with any such registration or qualification, the Company shall not
be required to (i) qualify to do business in any jurisdiction where
the Company would not otherwise be required to qualify, (ii)
subject itself to general taxation in any such jurisdiction, (iii)
file a general consent to service of process
in any jurisdiction, or (iv) make any change to the Company’s
articles of incorporation or bylaws.

 

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

 

 

 

 

(i) Upon the occurrence
of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, the Company shall prepare a supplement or
amendment, including a post-effective amendment, to the affected
Registration Statements or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein
by reference, and file any other required document so that, as
thereafter delivered, no Registration Statement nor any Prospectus
will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

(j) The Company shall
notify the Holders in writing of the happening of any event, as
promptly as practicable after becoming aware of such event, as a
result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omission 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 (provided, that in no event
shall such notice contain any material, nonpublic information), and
promptly prepare a supplement or amendment to such Registration
Statement to correct such untrue statement or omission. The Company
shall also promptly notify the Holders in writing when a prospectus
or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective
amendment has become effective.

 

(k) If any Holder is
required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request
of such Holder, the Company shall furnish to such Holder, on the
date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as a Holder may
reasonably request: (i) a letter, dated such date, from the
Company’s independent certified public accountants in form
and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the Holders, and (ii) an opinion, dated as
of such date, of counsel representing the Company for purposes of
such Registration Statement, in form, scope and substance
reasonably acceptable to such counsel and as is customarily given
in an underwritten public offering, addressed to the
Holders.

 

(l) The Company shall
hold in confidence and not make any disclosure of information
concerning a Holder provided to the Company unless: (i) disclosure
of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction,
or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or
any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning a Holder is
sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to
such Holder and allow such Holder, at the Holder’s expense,
to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.

 

(m) The Company shall
use its commercially reasonable best efforts to cause all of the
Registrable Securities covered by a Registration Statement to be
listed on each Trading Market on which securities of the same class
or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the
rules of such exchange. The Company shall pay all fees and expenses
in connection with satisfying its obligation under this Section
3(m).

 

(n) The Company shall
cooperate with the Holders who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any
restrictive legend to the extent permitted by the Purchase
Agreement) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates
to be in such denominations or amounts, as the case may be, as the
Holders may reasonably request and registered in such names as the
Holders may request.

 

(o) If requested by a
Holder, the Company shall as soon as practicable: (i) incorporate
in a prospectus supplement or post-effective amendment such
information as a Holder reasonably requests to be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the
purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by a Holder holding
any Registrable Securities.

 

(p) The Company shall
use its commercially reasonable best efforts to cause the
Registrable Securities covered by a Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of
such Registrable Securities.

 

 

 

 

4. Registration Expenses. All fees
and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or
not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed or quoted for
trading, (B) with respect to
filings with FINRA by any underwriter’s counsel for
compensation review pursuant to FINRA Rule 5110, and (C) in
compliance with applicable state securities orBlue Sky laws), (ii)
printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing
prospectuses if the printing of prospectuses is reasonably
requested by a Holder), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires
such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the
Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and
the fees and expenses incurred in connection with the listing of
the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any
broker or similar commissions incurred by any Holder or, except to
the extent provided for in the Transaction Documents (as defined in
the Purchase Agreement), any legal fees or other cost of the
Holders in connection with this Agreement.

 

5.

Indemnification.

 

(a) Indemnification by the Company.
The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, investment advisors, partners, members and
employees of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys' fees) and
expenses (collectively, “Losses”), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading, except to the extent,
but only to the extent, that (1) such untrue statements or
omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for
use therein, or to the extent that such information relates to such
Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in
writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the
Holder has approved Annex
A hereto for this purpose) or (2) in the case of an
occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified the Holder in writing
that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice (as defined below) or an
amended or supplemented Prospectus, but only if and to the extent
that following the receipt of the Advice or the amended or
supplemented Prospectus the misstatement or omission giving rise to
such Loss would have been corrected. The Company shall notify the
Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.

 

(b) Indemnification by Holders.
Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses, as incurred, arising solely out
of or based solely upon: (x) such Holder's failure to comply with
the prospectus delivery requirements of the Securities Act or (y)
any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus,
or in any amendment or supplement thereto, or arising solely out of
or based solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent that, (1) such
untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method
of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in
the Registration Statement (it being understood that the Holder has
approved Annex A
hereto for this purpose), such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (2) in the
case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the
receipt of the Advice or the amended or supplemented Prospectus the
misstatement or omission giving rise to such Loss would have been
corrected. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification
obligation.

 

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

 

 

 

 

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

 

All
fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party (regardless of whether it
is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided, that the Indemnifying
Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to
indemnification hereunder).

 

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

The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of
this Section 5(d), (i) no Person involved in the sale of
Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) in connection with such sale shall be
entitled to contribution from any Person involved in such sale of
Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Holder from the sale
of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.

 

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

 

 

 

 

6. Reports Under the Exchange Act.
With a view to making available to the Holders the benefits of Rule
144 or any other similar rule or regulation of the SEC that may at
any time permit the Holders to sell Registrable Securities of the
Company to the public without registration, the Company agrees, for
so long as Registrable Securities are outstanding and held by the
Holders, to:

 

(a) make and keep
public information available, as those terms are understood,
defined and required in Rule 144;

 

(b) file with the SEC
in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as
the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable
provisions of Rule 144; and

 

(c) furnish to each
Holder so long as such Holder owns Registrable Securities, promptly
upon request, such information as may be reasonably and customarily
requested to permit the Holders to sell such securities pursuant to
Rule 144 without registration.

 

7. Assignment of Registration
Rights. The rights under this Agreement shall be
automatically assignable by the Investors to any permitted
transferee of all or any portion of such Investor’s
Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within five (5) Trading
Days after such assignment; (ii) the Company is, within five (5)
Trading Days after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is
restricted under the Securities Act or applicable state securities
laws; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence the transferee
or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein; and (v) such transfer shall
have been made in accordance with the applicable requirements of
the Purchase Agreement.

 

8.

Miscellaneous.

 

(a) Third Party Beneficiary. The
Placement Agent is an intended third party beneficiary of this
Agreement and have all of the rights of an “Investor”
under this Agreement and the Placement Agent Warrant Shares (and
any capital stock of the Company issued or issuable, with
respect to the warrants issued to Placement Agent in connection
with the financing that is the subject of the Purchase Agreement,
as a result of any stock split, stock dividend, recapitalization,
exchange, anti-dilution adjustment or similar event or otherwise,
without regard to any limitations on exercises of the Warrants, if
any) constitute Registrable Securities for all purposes of this
Agreement.

 

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

 

(c) No Piggyback on Registrations.
Neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of
the Company in a Registration Statement other than the Registrable
Securities, and the Company shall not during the Effectiveness
Period enter into any agreement providing any such right to any of
its security holders without the prior written consent of the
Required Holders, which shall not be unreasonably
withheld.

 

 

 

 

(d) Compliance. Each Holder
covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the
Registration Statement.

 

(e) Discontinued Disposition. Each
Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(c), such Holder
will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement or until it is advised in writing (the
“Advice”) by the
Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.

 

(f) Piggy-Back Registrations. If at
any time during the Effectiveness Period there is not an effective
Registration Statement covering all of the Registrable Securities
and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its
own account or the account of others under the Securities Act of
any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other
employee benefit plans, then the Company shall send to each Holder
written notice of such determination and, if within fifteen
calendar days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include
in such registration statement all or any part of such Registrable
Securities such holder requests to be registered, subject to
customary underwriter cutbacks applicable to all holders of
registration rights.

 

(g) Amendments and Waivers.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written
consent of the Company and the Required Holders. Any amendment or
waiver effected in accordance with this Section 8(g) shall be
binding upon each Investor and the Company. No such amendment shall
be effective to the extent that it applies to less than all of the
Holders. No consideration shall be offered or paid to any Person to
amend or consent to a waiver or modification of any provision of
this Agreement unless the same consideration also is offered to all
of the parties to this Agreement. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of certain
Holders and that does not directly or indirectly affect the rights
of other Holders may be given by Holders of at least a majority of
the Registrable Securities to which such waiver or consent
relates.

 

(h) Notices. Any notices, consents,
waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be
deemed to have been delivered if delivered in accordance with
Section 6.3 of the Purchase Agreement.

 

(i) Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties and shall
inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent
of the Required Holders, provided, that in the event
that the Company is a party to a merger, consolidation, share
exchange or similar business combination transaction in which the
Common Stock is converted into the equity securities of another
Person, from and after the effective time of such transaction, such
Person shall, by virtue of such transaction, be deemed to have
assumed the obligations of the Company hereunder, the term
“Company” shall be deemed to refer to such Person and
the term “Registrable Securities” shall be deemed to
include the securities received by the Investors in connection with
such transaction unless such securities are otherwise freely
tradable by the Investors after giving effect to such transaction.
Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Purchase
Agreement.

 

(j) Execution and Counterparts.
This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by
facsimile or email transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect
as if such facsimile or email signature were the original
thereof.

 

 

 

 

(k) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed
and enforced in
accordance with the internal laws of the State of Nevada, without
regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this
Agreement (whether brought against a party hereto or its respective
Affiliates, employees or agents) will be commenced in the Nevada
Courts. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the Nevada Courts for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any
claim that it is not personally subject to the jurisdiction of any
Nevada Court, or that such Proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Each
party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in
any Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a
Proceeding to enforce any provisions of this Agreement, then the
prevailing party in such Proceeding shall be reimbursed by the
other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and
prosecution of such Proceeding.

 

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

 

(m) Entire Agreement. This
Agreement, the other Transaction Documents and the instruments
referenced herein and therein constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior
agreements and understandings among the parties hereto with respect
to the subject matter hereof and thereof.

 

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

 

(o) Headings. The headings in this
Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.

 

(p) Independent Nature of Holders'
Obligations and Rights. The obligations of each Holder under
this Agreement are several and not joint with the obligations of
each other Holder, and no Holder shall be responsible in any way
for the performance of the obligations of any other Holder under
this Agreement. Nothing contained herein or in any Transaction
Document, and no action taken by any Holder pursuant thereto, shall
be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create
a presumption that the Holders are in any way acting in concert or
as a group with respect to such obligations or the transactions
contemplated by this Agreement or any other Transaction Document.
Each Holder acknowledges that no other Holder will be acting as
agent of such Holder in enforcing its rights under this Agreement.
Each Holder 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 Holder
to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Holders has been
provided with the same Registration Rights Agreement for the
purpose of closing a transaction with multiple Holders and not
because it was required or requested to do so by any
Holder.

 

(signature page follows)

 

 

 

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

 

 

COMPANY:

 

KNOW
LABS, INC.

 

	
By:

	
Name: Ronald P.
Erickson

	
Title:
Chairman

 

	
By:

	
Name: Phillip A.
Bosua

	
Title: Chief
Executive Officer

 

INVESTORS:

 

 

The
Investors executing the Signature Page in the form attached hereto
as Annex C and
delivering the same to the Company or its agents shall be deemed to
have executed this Agreement and agreed to the terms
hereof.

 

 

 

Annex
A

 

Plan
of Distribution

 

The
Selling Stockholders and any of their pledgees, donees,
transferees, assignees and successors-in-interest may, from time to
time, sell any or all of their shares of common stock on any stock
exchange, market or trading facility on which the shares are traded
or quoted or in private transactions. These sales may be at fixed
or negotiated prices. The Selling Stockholders may use any one or
more of the following methods when selling shares:

 

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

 

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

 

purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account; an exchange distribution in accordance with the rules of
the applicable exchange; privately negotiated
transactions;

through
the writing of options on the shares;

 

to
cover short sales made after the date that this Registration
Statement is declared effective by the Commission;

 

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

 

a
combination of any such methods of sale.

 

The
selling stockholders may also sell shares under Rule 144 of the
Securities Act of 1933, as amended (the “Securities
Act”), if available, rather than under this prospectus. The
selling stockholders shall have the sole and absolute discretion
not to accept any purchase offer or make any sale of shares if it
deems the purchase price to be unsatisfactory at any particular
time.

 

The
selling stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the
shares directly to market makers acting as principals and/or
broker-dealers acting as agents for themselves or their customers.
Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders
and/or the purchasers of shares for whom such broker-dealers may
act as agents or to whom they sell as principal or both, which
compensation as to a particular broker-dealer might be in excess of
customary commissions. Market makers and block purchasers
purchasing the shares will do so for their own account and at their
own risk. It is possible that a selling stockholder will attempt to
sell shares of common stock in block transactions to market makers
or other purchasers at a price per share which may be below the
then existing market price. We cannot assure that all or any of the
shares offered in this prospectus will be issued to, or sold
by, the selling
stockholders. The selling stockholders and any brokers, dealers or
agents, upon effecting the sale of any of the shares offered in
this prospectus, may be deemed to be “underwriters” as
that term is defined under the Securities Act, the Exchange Act and
the rules and regulations of such acts. In such event, any
commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities
Act.

 

We are
required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the
selling stockholders, but excluding brokerage commissions or
underwriter discounts.

 

The
selling stockholders, alternatively, may sell all or any part of
the shares offered in this prospectus through an underwriter. The
selling stockholders have not entered into any agreement with a
prospective underwriter and there is no assurance that any such
agreement will be entered into.

 

 

 

 

The
selling stockholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a selling
stockholder defaults on a margin loan, the broker may, from time to
time, offer and sell the pledged shares. The selling stockholders
and any other persons participating in the sale or distribution of
the shares will be subject to applicable provisions of the Exchange
Act, and the rules and regulations under such act, including,
without limitation, Regulation M. These provisions may restrict
certain activities of, and limit the timing of purchases and sales
of any of the shares by, the selling stockholders or any other such
person. In the event that any of the selling stockholders are
deemed an affiliated purchaser or distribution participant within
the meaning of Regulation M, then the selling stockholders will not
be permitted to engage in short sales of common stock. Furthermore,
under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and
certain other activities with respect to such securities for a
specified period of time prior to the commencement of such
distributions, subject to specified exceptions or exemptions. In
addition, if a short sale is deemed to be a stabilizing activity,
then the selling stockholders will not be permitted to engage in a
short sale of our common stock. All of these limitations may affect
the marketability of the shares.

 

If a
selling stockholder notifies us that it has a material arrangement
with a broker-dealer for the resale of the common stock, then we
would be required to amend the registration statement of which this
prospectus is a part, and file a prospectus supplement to describe
the agreements between the selling stockholder and the
broker-dealer.

 

 

 

Annex
B

 

 

KNOW
LABS, INC.

 

 

Selling
Securityholder Notice and Questionnaire

 

 

 

The
undersigned beneficial owner of common stock (the “Common Stock”), of Know
Labs, Inc., a Nevada corporation (the “Company”), understands that
the Company has filed or intends to file with the Securities and
Exchange Commission (the “Commission”) a Registration
Statement for the registration and resale of the Registrable
Securities, in accordance with the terms of the Registration Rights
Agreement, dated as of [], 2020 (the “Registration Rights
Agreement”), among the Company and the Investors named
therein. A copy of the Registration Rights Agreement is available
from the Company upon request at the address set forth below. All
capitalized terms used and not otherwise defined herein shall have
the meanings ascribed thereto in the Registration Rights
Agreement.

 

The
undersigned hereby provides the following information to the
Company and represents and warrants that such information is
accurate:

 

QUESTIONNAIRE

 

 

 

1.

Name.

 

 

(a)

Full Legal Name of
Selling Securityholder

 

 
_______________________________________________________________________

 

 

(b)

Full Legal Name of
Registered Holder (if not the same as (a) above) through which
Registrable Securities Listed in Item 3 below are
held:

 

 
_______________________________________________________________________

 

 

(c)

Full Legal Name of
Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of
the securities covered by the questionnaire):

 

     
           
           
           
       
_______________________________________________________________________

 

 

2.

Address
for Notices to Selling Securityholder:

 

 

 _______________________________________________________________________

 

_______________________________________________________________________ 

 

_______________________________________________________________________ 

 

    
           
        Telephone:  _______________________________________________________________________

 

                        
Fax:
_______________________________________________________________________

 

    
           
        Contact Person: _______________________________________________________________________

 

                                                                                                                                          

 

 

 

3.

Beneficial
Ownership of Registrable Securities:

 

 

Type
and Principal Amount of Registrable Securities beneficially
owned:

 

   
           
           
           
       
_______________________________________________________________________
 

   
           
           
           
       
_______________________________________________________________________ 

 

   
           
           
           
       
_______________________________________________________________________ 

 

 

4.

Broker-Dealer
Status:

 

 

(a)

Are you a
broker-dealer?

 

Yes [ ]                       
No [ ]

 

Note:
If yes, the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration
Statement.

 

(b)

Are you an
affiliate of a broker-dealer?

 

Yes [ ]                       
No [ ]

 

(c)

If you are an
affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at
the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable
Securities?

 

Yes [ ]                       
No [ ]

 

Note:
If no, the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration
Statement.

 

5.

Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

 

Except as set forth below in this Item 5, the undersigned is not
the beneficial or registered owner of any securities of the Company
other than the Registrable Securities listed above in Item
3.

 

Type
and Amount of Other Securities beneficially owned by the Selling
Securityholder:

 

_______________________________________________________________________ 

 

_______________________________________________________________________ 

 

 

 

 

6.

Relationships
with the Company:

 

 

Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners
of 5% of more of the equity securities of the undersigned) has held
any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the
past three years.

 

State
any exceptions here:

 

 

_______________________________________________________________________

 

_______________________________________________________________________ 

 

7. The
Company has advised each Selling Stockholder that it is the view of
the Commission that it may not use shares registered on the
Registration Statement to cover short sales of Common Stock made
prior to the date on which the Registration Statement is declared
effective by the Commission, in accordance with 1997 Securities and
Exchange Commission Manual of Publicly Available Telephone
Interpretations Section A.65. If a Selling Stockholder uses the
prospectus for any sale of the Common Stock, it will be subject to
the prospectus delivery requirements of the Securities Act. The
Selling Stockholders will be responsible to comply with the
applicable provisions of the Securities Act and Exchange Act, and
the rules and regulations thereunder promulgated, including,
without limitation, Regulation M, as applicable to such Selling
Stockholders in connection with resales of their respective shares
under the Registration Statement.

 

The
undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof and prior to the Effective Date
for the Registration Statement.

 

Certain
legal consequences arise from being named as a Selling
Securityholder in the Registration Statement and related
prospectus. Accordingly, the undersigned is advised to consult
their own securities law counsel regarding the consequence of being
named or not being named as a Selling Securityholder in the
Registration Statement and the related prospectus.

 

By
signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6
and the inclusion of such information in the Registration Statement
and the related prospectus. The undersigned understands that such
information will be relied upon by the Company in connection with
the preparation or amendment of the Registration Statement and the
related prospectus. The undersigned hereby elects to include the
Registrable Securities owned by it and listed above in Item 3
(unless otherwise specified in Item 3) in the Registration
Statement.

 

 

 

 

IN
WITNESS WHEREOF the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.

 

	
Dated:
_____________________

	
Beneficial Owner:
_____________________

	
  

	
  

	
 

	
By: _____________________

	
 

	
Name:

	
 

	
Title:

 

PLEASE
EMAIL A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE
TO:

 

KNOW
LABS, INC.

Attention: Ron
Erickson

Email:
ron@knowlabs.com

 

 

 

 

Annex
C

 

Registration
Rights Agreement

Investor
Counterpart Signature Page

 

 

The
undersigned, desiring to: (i) enter into this Registration Rights
Agreement, dated as of _____________________________ (the
“Agreement”),
between the undersigned, Know Labs, Inc., a Nevada corporation (the
“Company”), and
the other parties thereto, in or substantially in the form
furnished to the undersigned and (ii) purchase the securities of
the Company appearing below, hereby agrees to purchase such
securities from the Company as of the Closing and further agrees to
join the 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.

 

IN WITNESS WHEREOF, the undersigned has
executed the Agreement as of

Name and Address, Fax No. and Social Security No./EIN of
Investor:

 

	

_______________________________________________________

	

_______________________________________________________ 

	

_______________________________________________________

	
Fax No.:
_______________________________________________________

	
Soc. Sec.
No./EIN:
_______________________________________________________

 

If a partnership, corporation, trust or other business
entity:

 

	
By:
_____________________

	
Name:

	
Title:

 

If an individual:

 

	
Signature:
_________________________________

	
Investment
Amount: _________________________________

	
Amount
of Units to be Purchased:
_________________________________

	
 

                                                                             

 

                                                         

 

 

 

 

ADDRESS
FOR NOTICE

 

	
c/o: 
_________________________________

	
Street:

_________________________________

	
City/State/Zip:
_________________________________

	
Attention:
_________________________________

	Tel: _________________________________
	
Fax: _________________________________

 

 

DELIVERY
INSTRUCTIONS

 

(if
different from above)

 

	
c/o: 
_________________________________

	
Street:

_________________________________

	
City/State/Zip:
_________________________________

	
Attention:
_________________________________

	Tel: _________________________________

 

 

 

 

 

Schedule
A

 

 

SCHEDULE
OF INVESTORS

 

 

 

	
 

	

Investment

	
 

	

Number
of

	

Number
of

	

Name

	
 

	

Amount

	
 

	
 

	

Shares

	
 

	

Warrants

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

TOTALS

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