Document:

EXHIBIT
10.3

 

NEITHER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE “RESTRICTED SECURITIES”
AS THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE
SATISFACTION OF COUNSEL TO THE ISSUER.

 

IMPRIMIS
PHARMACEUTICALS, INC.

 

COMMON
STOCK PURCHASE WARRANT

 

	Warrant
    No. 2016-__	Dated:
    December ___, 2016

 

Imprimis
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby certifies that, for value received, [________],
or his, her or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total
of [________] shares of common stock, $0.001 par value per share (the “Common Stock”), of the Company
(each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise
price equal to $1.79 per share (as adjusted from time to time as provided in Section 9, the “Exercise Price”),
at any time from June ___, 2017 and through and including December ___, 2019 (the “Expiration Date”), and subject
to the following terms and conditions. This Common Stock Purchase Warrant (this “Warrant”) is one of a series
of similar warrants (collectively, the “Warrants”) forming a part of those Units issued pursuant to that certain
Securities Purchase Agreement, dated as of the date hereof, by and among the Company and the Buyers identified therein (the “Securities
Purchase Agreement”).

 

1.       Definitions.
In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings
given to such terms in the Securities Purchase Agreement.

 

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

 

3.       Registration
of Transfers. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto as Annex A duly completed and signed, to the transfer agent
or to the Company at its address specified herein. Upon any such registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof
shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

    	 

    	 		 

    

 

4.       Exercise
and Duration of Warrants.

 

(a)       Exercise
Period. This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after June ___,
2017 up to and including the Expiration Date. At 5:00 p.m., New York City time on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value.

 

(b)       Exercise
Notice. A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto
as Annex B (the “Exercise Notice”), appropriately completed and duly signed, and (ii) payment of
the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a
“cashless exercise” if so indicated in the Exercise Notice only if a “cashless exercise” may occur at
such time pursuant to Section 10 below), and the date such items are delivered to the Company (as determined in accordance
with the notice provisions hereof) is an “Exercise Date.” Execution and delivery of the Exercise Notice shall
have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.

 

(c)       Insufficient
Authorized Shares. If at any time while this Warrant is outstanding, the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of this Warrant and Warrants
of like tenor at least a number of shares of Common Stock equal to 100% (the “Required Reserve Amount”) of
the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants of
like tenor then outstanding (an “Authorized Share Failure”), then the Company shall promptly take all action
reasonably necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company
to reserve the Required Reserve Amount for the Warrants of like tenor then outstanding. Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later
than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and use its best efforts to cause its Board of Directors to recommend
to the stockholders that they approve such proposal.

 

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(d)       Limitations
on Exercises; Beneficial Ownership. The Holder shall not have the right to exercise this Warrant, to the extent that after
giving effect to such exercise, such Holder (together with such Holder’s affiliates) would beneficially own in excess of
9.99% (“Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such
exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder
and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise
of the remaining, unexercised portion of this Warrant beneficially owned by such Holder and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Holder
and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants), that are
subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock,
the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent SEC
Reports or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement
by the Company or (3) any other notice by the Company or the transfer agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within two Business
Days confirm to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
the Warrants, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was
reported. By written notice to the Company, any Holder may increase or decrease the Maximum Percentage to any other percentage
not in excess of 19.99% specified in such notice; provided that (i) any such increase will not be effective until the 61st day
after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder sending such
notice and not to any other holder of Warrants. In addition, by written notice to the Company, any Holder may remove the limitations
on exercises provided in this Section 4(d) entirely; provided that (i) any such removal will not be effective until the 61st day
after such notice is delivered to the Company, and (ii) any such removal will apply only to the Holder sending such notice and
not to any other holder of Warrants. The provisions of this paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary
or desirable to properly give effect to such limitation.

 

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5.
      Delivery of Warrant Shares.

 

(a)       The
Holder shall not be required to physically surrender this Warrant unless this Warrant is being exercised in full. To effect exercises
hereunder, the Holder shall duly execute and deliver to the Company at its address for notice set forth herein, an Exercise Notice
in the form of Annex B hereto, along with the Warrant Share Exercise Log in the form of Annex C hereto, and shall
pay the Exercise Price, if applicable, multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder.
Warrant Shares purchased hereunder shall be transmitted by the transfer agent to the Holder by crediting the account of the Holder’s
or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system
if the transfer agent is then a participant in such system and either (A) there is an effective registration statement permitting
the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for
resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of
a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Exercise Notice
by the date that is three (3) business days after the delivery to the Company of the Exercise Notice. Upon delivery of the Notice
of Exercise 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 Warrant Shares; provided payment
of the aggregate Exercise Price, if applicable, is received within three business days of delivery of the Exercise Notice. If
by the third business day after exercise of this Warrant, the Company fails to deliver the required number of Warrant Shares,
the Holder will have the right to rescind the exercise. If by the third business day after exercise, the Company fails to deliver
the required number of Warrant Shares, and if after such third business day and prior to the receipt of such Warrant Shares, 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 Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy In”), then the Company
shall (i) pay in cash to the Holder the amount by which (x) the Holder’s purchase price for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue by (B) the closing bid price of the Common Stock on the exercise date and
(ii) at the option of the Company, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which
such exercise was not honored or deliver to the Holder the number of shares of Warrant Shares that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy In. The Company agrees to maintain a transfer agent
that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.

 

(b)       This
Warrant may be exercised either in full or in part. Upon surrender of this Warrant following one or more partial exercises, the
Company shall issue or cause to be issued, at its expense, a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares.

 

(c)       The
Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision
hereof, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any
obligation to the Company or any violation or alleged violation of law by the Holder, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

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6.       Charges,
Taxes and Expenses. Initial issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant
shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental
tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any
transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder.
The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant
or receiving Warrant Shares upon exercise hereof.

 

7.       Replacement
of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond
or indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.

 

8.       Reservation
of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its
authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares that are then issuable and deliverable upon the exercise
of this entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder.
The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The
Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation
system upon which the Common Stock may be listed. The Company will notify its transfer agent for the Common Stock of the reservation
of shares of Common Stock as required under this provision.

 

9.       Certain
Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 9.

 

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

 

(b)       Stock
Dividends and Splits. If after the date hereof, the number of outstanding shares of Common Stock is increased by a stock dividend
payable in shares of Common Stock or by a split-up of shares of Common Stock or other similar event, then, on the effective date
thereof, the number of shares issuable on exercise of each Warrant shall be increased in proportion to such increase in outstanding
shares and the then applicable Exercise Price shall be correspondingly decreased.

 

(c)       Aggregation
of Shares. If after the date hereof, the number of outstanding shares of Common Stock is decreased by a consolidation, combination
or reclassification of shares of Common Stock or other similar event, then, upon the effective date of such consolidation, combination
or reclassification, the number of shares issuable on exercise of each Warrant shall be decreased in proportion to such decrease
in outstanding shares and the then applicable Exercise Price shall be correspondingly increased.

 

(d)       Adjustments
for Other Distributions. In the event the Company shall declare a distribution payable in securities of other Persons, evidences
of indebtedness issued by the Company or other Persons, assets (excluding cash dividends or distributions to the holders of Common
Stock paid out of current or retained earnings and declared by the Company’s Board of Directors) or options or rights not
referred to in Sections 9(b) or 9(c) then, in each such case for the purpose of this Section 9(d), upon exercise of this Warrant,
the Holder shall be entitled to a proportionate share of any such distribution as though the Holder was the actual record holder
of the number of Warrant Shares as of the record date fixed for the determination of the holders of Common Stock of the Company
entitled to receive such distribution.

 

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(e)       Calculations.
All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

(f)       Notice
of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will
promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment,
including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities, cash or
property issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy
of each such certificate to the Holder and to the Company’s transfer agent.

 

10.       Payment
of Exercise Price. The Holder shall pay the Exercise Price in immediately available funds or the Holder may satisfy its obligation
to pay the Exercise Price through a “cashless exercise,” in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:

 

	 	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 this Warrant is being exercised.
	 	 
	 	A
    = the average of the Closing Prices for the five trading days immediately prior to (but not including) the Exercise Date.
	 	 
	 	B
    = the Exercise Price.

 

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 the
Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued.

 

(a)       Fractional
Shares. The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this
Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon exercise of this
Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

 

(b)       Notices.
Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be
in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in the Securities Purchase Agreement prior to 5:00 p.m. (New York
City time) on a business day, (ii) the next business day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in the Securities Purchase Agreement on a day that is not a business day or later
than 5:00 p.m. (New York City time) on any business day, (iii) the business day following the date of mailing, if sent by nationally
recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given. The
address for such notices or communications shall be as set forth in the Securities Purchase Agreement.

 

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11.      
Miscellaneous.

 

(a)       Subject
to the restrictions on transfer set forth herein, this Warrant may be assigned by the Holder. This Warrant may not be assigned
by the Company except to a successor in the event of a sale of all or substantially all of the Company’s assets or a merger
or acquisition of the Company. This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective
successors and assigns. Subject to the preceding sentences, nothing in this Warrant shall be construed to give to any Person other
than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be
amended only in writing signed by the Company and the Holder and their successors and assigns.

 

(b)       The
Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be reasonably necessary or appropriate in order to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above
the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in
order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant,
and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant.

  

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(c)       Governing
Law; Venue; Waiver Of Jury Trial. all questions concerning the construction, validity, enforcement and interpretation of this
warrant shall be governed by and construed and enforced in accordance with the laws of the state of new york, without giving regard
to any applicable principlEs of conflicts of law. each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the city of new york, borough of manhattan, for the adjudication of any dispute hereunder or in
connection herewith, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. each party
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this 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. the company hereby waives all rights to a trial by jury.

 

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

 

(e)       In
case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will
attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

 

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

 

	 	IMPRIMIS
    PHARMACEUTICALS, INC.
	 	 	 
	 	By:	                                               
	 	Name:	 
	 	Title:	 

 

 

    	 

    	 		 

    

 

ANNEX
A

 

FORM
OF ASSIGNMENT

 

[To
be completed and signed only upon transfer of Warrant]

 

FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented
by the within Warrant to purchase ____________ shares of Common Stock of Imprimis Pharmaceuticals, Inc. to which the within Warrant
relates and appoints ________________ attorney to transfer said right on the books of Imprimis Pharmaceuticals, Inc. with full
power of substitution in the premises.

 

	Dated:________________,
    _____	 
	 	 
	 	(Signature
    must conform in all respects to name of holder as specified on the face of the Warrant)
	 	 
	 	 
	 	Address
    of Transferee
	 	 
	 	 
	 	 
	 	 
	 	 
	In
    the presence of:	 
	 	 
	 	 

 

    	A-1

    	 		 

    

 

ANNEX
B

 

FORM
OF EXERCISE NOTICE

 

[To
be executed by the Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant]

 

To:
Imprimis PharmaceuticalS, Inc.

 

The
undersigned is the Holder of Warrant No. _______ (the “Warrant”) issued by Imprimis Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”). Capitalized terms used herein and not otherwise defined have the respective
meanings set forth in the Warrant.

 

The
Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.

 

The
undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

 

The
Holder intends that payment of the Exercise Price shall be made as (check one):

 

____    
“Cash Exercise” under Section 10

 

____
    “Cashless Exercise” under Section 10

 

If
the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms
of the Warrant.

 

Pursuant
to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.

 

Following
this exercise, the Warrant shall be exercisable to purchase a total of ______________ Warrant Shares.

 

	Dated:
    ________________, _____	 	Name
    of Holder:
	 	 	 	 
	 	 	(Print)	 
	 	 	 	 
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 
	 	 	 	(Signature
    must conform in all respects to name of holder as specified on the face of the Warrant)

 

    	B-1

    	 		 

    

 

ANNEX
C

 

WARRANT
SHARES EXERCISE LOG

 

	DATE	 	NUMBER
    OF WARRANT

    SHARES AVAILABLE TO

    BE EXERCISED	 	NUMBER
    OF WARRANT

    SHARES EXERCISED	 	NUMBER
    OF WARRANT

    SHARES REMAINING TO BE

    EXERCISED
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

    	C-1Unassociated Document

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

 AIR INDUSTRIES GROUP

 

	Warrant Shares:  _____ 	December __, 2016

 

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ______ or assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or prior to the close of business on November 30, 2021 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Air Industries Group, a Nevada corporation (the “Company”), up to ___________ (______) shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s common stock (“Common Stock”).  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.        Definitions.  In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated in this Section 1:

 

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

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

  

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

 

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

“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

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

 

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

 

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

 

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

 

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTCQB or OTCQX (or any successors to any of the foregoing.

 

“Transfer Agent” means Broadridge Corporate Issuer Solutions, Inc., the current transfer agent of the Company, with a mailing address of PO Box 1342, Brentwood, New York 11717 and a facsimile number of (215) 553-5402, and any successor transfer agent of the Company.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTCQB or OTCQX, (c) if the Common Stock is not then listed or quoted for trading on the OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

  

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Section 2.        Exercise.

 

a)            Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

  

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b)            Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be Three Dollars ($3.00), subject to adjustment hereunder (the “Exercise Price”).

 

c)            Cashless Exercise.  If at the time of exercise hereof there is no effective registration statement registering for sale or resale the Warrant Shares, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

	
(A) =  

	
the last VWAP immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last VWAP as calculated over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading Market is open, the prior Trading Day’s VWAP shall be used in this calculation);

	
(B) =  

	
the Exercise Price of this Warrant, as adjusted hereunder; and

	
(X) =  

	
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares.  The Company agrees not to take any position contrary to this Section 2(c).

	
  

	
d)

	
Mechanics of Exercise.

 

i.      Delivery of Warrant Shares Upon Exercise.  The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).   Upon delivery of the Notice of Exercise  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 Warrant Shares; provided  payment of the aggregate Exercise Price (other than in the case of a Cashless Exercise) is received within three Trading Days of delivery of the Notice of Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this warrant remains outstanding and exercisable.

 

  

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

 

iii.         Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

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

 

  

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

 

vi.      Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

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

 

  

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Section 3.        Certain Adjustments.

 

a)      Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution of capital stock in respect of its Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)      Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

c)      Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

 

  

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d)      Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

  

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e)      Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

f)      Notice to Holder.

 

i.   Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.      Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice  except as may otherwise be expressly set forth herein.

 

  

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Section 4.        Transfer of Warrant.

 

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

 

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

 

  

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

 

d)      Transfer Restrictions. (i) If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, provides to the Company an opinion of counsel, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that the transfer of this Warrant does not require registration under the Securities Act.

 

                           (ii)  The Holder will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Holder of this Warrant, the Warrant Shares and any other securities issuable upon exercise hereof.

e)      Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.        Miscellaneous.

 

a)      No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

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

 

  

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

 

d)      Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

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

 

  

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

 

e)      Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of this Warrant shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant.  If any party shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

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

 

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

 

a)      Notices.  Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above Attention: Daniel R. Godin, facsimile number (631) 206-9152, email address kpetersen@airindustriesgroup.com, with a copy to Daniel R. Godin at Dgodin@airindustriesgroup.com or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

  

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

 

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

 

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

 

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

 

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

 

  

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m)      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.

(Signature Page Follows)

 

  

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[Warrant Issued December 22, 2016]

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

 

	
 

 

 

 

 

 

Confirmed

_________

By: __________________

	
AIR INDUSTRIES GROUP

 

 

By:____________________

     Name: Daniel R. Godin

     Title: President and CEO

 

 

 

 

 

 

 

 

  

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NOTICE OF EXERCISE

TO:           AIR INDUSTRIES GROUP

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

 

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

 

o in lawful money of the United States; or

 

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

 

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

 

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: __________________________

Signature of Authorized Signatory of Investing Entity: ____________________

Name of Authorized Signatory: ____________________________

Title of Authorized Signatory: _____________________________

Date: _______________

 

  

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, _____ shares of Common Stock underlying the foregoing Warrant and all rights evidenced thereby are hereby assigned to _____________.

 

Dated:

Holder’s Signature:      _______________

Holder’s Address:       _______________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

  

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