Current Report Filing (8-k)

Share Name	Share Symbol	Market	Type
Rightscorp Inc (PK)	USOTC:RIHT	OTCMarkets	Common Stock

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	0.018025	0.011	0.0291				0.00	21:00:10

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 30, 2014

RIGHTSCORP, INC.

(Exact name of registrant as specified in its charter)

Nevada		000-55097		33-1219445
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

3100 Donald Douglas Loop North

Santa Monica, CA 90405

(Address of principal executive offices) (zip code)

310-751-7510

(Registrant’s telephone number, including area code)

Copies to:

Gregory Sichenzia, Esq.

Henry Nisser, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway

New York, New York 10006

Phone: (212) 930-9700

Fax: (212) 930-9725

(Former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 DFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to (i) securing capital for general working purposes, and (ii) other risks and uncertainties contained in reports filed from time to time with the Securities and Exchange Commission (the “SEC”). All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to, and will not, update any forward-looking statements to reflect events or circumstances after the date hereof.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On September 24, 2014 (the “Closing Date”), Rightscorp, Inc. (the “Company”) entered into a Unit Subscription Agreement (the “Agreement”) with certain accredited investors (individually, an “Investor” and collectively, the “Investors”) for the sale of units (the “Units”), with each Unit consisting of ten thousand (10,000) shares (the “Purchased Shares”) of Common Stock, par value $0.001 per share (the “Common Stock”) and warrants (the “Warrants”) to purchase fifteen thousand (15,000) shares (the “Warrant Shares” and with the Purchased Shares, the “Purchased Securities”) of Common Stock. The purchase price was $2,500 per Unit with a minimum investment of ten (10) units. The Company initially sold an aggregate of 1,060.8 Units in this offering (the “Offering”) and received aggregate gross proceeds of $2,652,000. The Warrants are exercisable commencing on the Closing Date, carry an exercise price of $0.25 per Warrant Share and are exercisable for a period of five (5) years.

Subsequent to the Closing Date, an additional investment by two other Investors was made, in which the Company received gross proceeds of $55,000 and issued an additional twenty-two (22) Units. As of September 30, 2014, the Company had received a fully executed Agreement for an additional $275,000 from two additional Investors for the purchase of an additional one hundred and ten (110) Units. Upon receipt of the funds therefor, the aggregate gross proceeds to be raised in this Offering would be $2,982,000 in consideration for the issuance of an aggregate of 1,192.8 Units.

The Company also granted to the Investors, in the event that it issues any shares of Common Stock or securities exercisable for, or convertible into, shares of Common Stock (the “Convertible Securities”) within eighteen (18) months after the Closing Date (A “Subsequent Financing”), the right to participate in up to an amount of the Subsequent Financing such that such Investor’s beneficial ownership of the Company on a fully diluted basis immediately following such Subsequent Financing would not be less than its beneficial ownership of the Company solely based on such Investor’s investment in this offering on the same terms, conditions and price provided for in the Subsequent Financing.

The Company has agreed to file, no later than 45 days following the Closing Date, a registration statement on Form S-1 (the “Form S-1”) with the SEC to register the Purchased Securities under the Securities Act of 1933, as amended (the “Securities Act”), or as many of such Purchased Securities as permitted by Rule 415of the Securities Act. If all Purchased Securities cannot be registered on the initial Form S-1, then the Company shall file additional registration statements on Form S-1 until all the Purchased Securities shall have been registered under the Securities Act. The Form S-1 shall not seek to register any other securities of the Company.

The Units and the other securities issued to the Investors pursuant to the Agreement were not registered under the Securities Act in reliance upon the exemption from registration provided by Section 4(a)(2) of that Act and Regulation D promulgated thereunder, which exempts transactions by an issuer not involving any public offering. These securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. Certificates representing these securities contain a legend stating the same.

Pursuant to the terms of the Agreement, the Company agreed to use the net proceeds from the Offering substantially to, among other things, (a) to pay up to $210,000 in indebtedness, (b) to fund operations, and (c) for working capital and general corporate purposes.

The foregoing description of the Agreement and the Warrants does not purport to be complete and is qualified in its entirety by reference to the complete text of the foregoing documents, which are filed as Exhibits 10.1 and 4.1 hereto, as well as the other Transaction Documents (as such term is defined in the Agreement), all of which are incorporated herein by this reference.

ITEM 1.02 TERMINATION OF A MATERIAL AGREEMENT

On the Closing Date, the Company terminated the securities purchase agreement (the “Purchase Agreement”) it had entered into with Seaside 88, LP (“Seaside”) on March 7, 2014. The Company reported the entry into the Purchase Agreement with Seaside on a Current Report on Form 8-K filed with the SEC on March 10, 2014.

ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.

The information provided in response to Item 1.01 of this report is incorporated by reference into this Item 3.02. The securities were issued in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D under the Securities Act. Each Investor represented that it was an accredited investor, as defined in Rule 501 of Regulation D, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Act.

Where You Can Find Additional Information

The Company files periodic and other reports with the SEC from time to time. Investors and security holders will be able to obtain these materials (when they are available) filed with the SEC free of charge at the SEC’s website, www.sec.gov. Security holders may also read and copy any reports, statements and other information filed by the Company with the SEC, at the SEC public reference room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.

ITEM 7.01 REGULATION FD DISCLOSURE

On September 24, 2014, the Company issued a press release regarding the Agreement. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

The SEC encourages registrants to disclose forward-looking information so that investors can better understand the future prospects of a registrant and make informed investment decisions. This Current Report on Form 8-K and exhibits may contain these types of statements, which are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and which involve risks, uncertainties and reflect the Registrant’s judgment as of the date of this Current Report on Form 8-K. Forward-looking statements may relate to, among other things, operating results and are indicated by words or phrases such as “expects,” “should,” “will,” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this Current Report on Form 8-K. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented within.

The information in this Current Report on Form 8-K furnished pursuant to Items 7.01 and 9.01 shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section. This information shall not be incorporated by reference into any registration statement pursuant to the Securities Act.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d)

Exhibits.

Exhibit No.		Description

4.1		Form of Warrant

10.1		Form of Unit Subscription Agreement

99.1		Text of the press release issued by the Company on September 24, 2014

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RIGHTSCORP, INC.

Dated: September 30, 2014	By:	/s/ Christopher Sabec
	Name:	Christopher Sabec
	Title:	Chief Executive Officer

NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT (AS DEFINED BELOW), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT (II) UNLESS SOLD OR TRANSFERRED TO A “QUALIFIED INSTITUTIONAL BUYER” WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

RIGHTSCORP, INC.

COMMON STOCK PURCHASE WARRANT

No.	September __, 2014

THIS CERTIFIES THAT, for value received, __________ (the “Holder”) is entitled to purchase, and RIGHTSCORP, INC., a Nevada corporation (the “Company”), promises and agrees to sell and issue to the Holder, at any time, or from time to time, during the Exercise Period, up to [__________] shares of Common Stock, par value $0.001 per share (the “Common Stock”), of the Company, at the Exercise Price, subject to the provisions and upon the terms and conditions hereinafter set forth. This Warrant is one of the Warrants issued by the Company pursuant to that certain Unit Subscription Agreement dated as of September 23, 2014 (the “Subscription Agreement”) pursuant to which the Company has offered and sold to the purchasers named therein units of the Company’s securities consisting of shares of Common Stock and Warrants.

1. Definitions of Certain Terms. In addition to the terms defined elsewhere in this Warrant, the following terms have the following meanings:

(a) “Black Scholes Value” means the Black Scholes value of an option for one share of Common Stock at the date of the applicable determination, as such Black Scholes value is determined, calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the VWAP of the Common Stock as of the date of determination (adjusted upward to the same extent that the Exercise Price hereunder has been adjusted upward pursuant to Section 3(a) hereof), (ii) a risk-free interest rate corresponding to the US. Treasury rate for a period equal to the remaining term of the Warrant as of the applicable determination, (iii) a strike price equal to the Exercise Price in effect at the time of the applicable determination, (iv) an expected volatility equal to 100%, and (v) a deemed remaining term of the Warrant of five (5) years (regardless of the actual remaining term of the Warrant).

(b) “Bloomberg” means Bloomberg, L.P.

(d) “Commission” means the U.S. Securities and Exchange Commission.

(e) “Convertible Securities” means (i) options to purchase or rights to subscribe for Common Stock, (ii) securities by their terms convertible into or exchangeable for Common Stock or (iii) options to purchase or rights to subscribe for such convertible or exchangeable securities.

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

(g) “Exempt Issuance” shall have the same meaning as in the Subscription Agreement.

(h) “Exercise Price” means the price at which the Holder may purchase one share of Common Stock upon exercise of this Warrant as determined from time to time pursuant to the provisions hereof. The initial Exercise Price is $0.25 per share, subject to adjustment as provided herein.

(i) “Expiration Date” means the fifth anniversary of the Issue Date.

(j) “Holder” means a record holder of the Warrant or shares of Common Stock obtained or obtainable upon exercise of the Warrant, as applicable. The initial Holder is set forth in the first paragraph of this Warrant.

(k) “Issue Date” means September __, 2014.

(l) “Options” means any rights or options to subscribe for, purchase or otherwise acquire Common Stock.

(m) “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the Holders of the Warrants at any time shall be entitled to receive, or shall have received, upon the exercise of the Warrants, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 3(b) or otherwise.

(n) “Principal Market” means the OTC QB.

(o) “Securities Act” means the Securities Act of 1933, as amended.

(p) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the three highest closing bid prices and the three lowest closing ask prices of all of the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as determined by the board of directors of the Company in good faith. If the Holder disputes the determination of the fair value within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error, and the fees and expenses of such appraiser shall be borne (m), if the appraiser determines that the fair value is within two percent (2%) of the fair value determined by the Company, by the Holder, and (n), otherwise, by the Company. Such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

(q) “Warrant” means this Common Stock purchase warrant and any warrant or warrants hereafter issued as a consequence of the exercise or transfer of this warrant in whole or in part.

(r) “Warrant Shares” means any Common Stock or, if applicable, Other Securities issued or issuable upon exercise of Warrants.

2. Exercise of Warrant.

(a) Manner of Exercise.

(i) Cash Exercise. This Warrant may be exercised, in whole or in part, at any time or from time to time, during the period commencing as of 9:30:01 a.m., New York time, on the Issue Date and ending as of 5:30 p.m., New York time, on the Expiration Date (the “Exercise Period”), for [________________] fully paid and non-assessable shares of Warrant Shares for an exercise price per share equal to the Exercise Price, by delivery to the Company at its headquarters, or at such other place as is designated in writing by the Company, of:

(1) a duly executed Notice of Exercise, substantially in the form of Attachment I attached hereto and incorporated by reference herein;

(2) this Warrant; and

(3) subject to Section 2(a)(ii) below, payment of an amount in cash equal to the product of the Exercise Price multiplied by the number of Warrant Shares being purchased upon such exercise, with such payment being in the form of a wire transfer of immediately available U.S. funds to an account designated in writing by the Company.

The date on which the Company receives the Notice of Exercise, this Warrant, and the Exercise Price payable with respect to the Warrant Shares being purchased shall be deemed to be the date of exercise (the “Date of Exercise”).

(ii) Cashless Exercise. Notwithstanding the provisions of Section 2(a)(i) above (requiring payment by wire transfer), the Company agrees that if at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then Holder shall have the right at such time to exercise this Warrant in full or in part on a cashless basis, computed using the following formula:

X = Y (A - B)

Where:

X = The number of Warrant Shares to be issued to the Holder pursuant to this cashless exercise;

Y = The number of Warrant Shares in respect of which the net issue election is made;

A = The VWAP of one Warrant Share at the time the cashless exercise election is made; and

B = The Exercise Price then in effect at the time of such exercise.

(b) Delivery of Certificates. Certificates for Warrant Shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission system if the Company is a participant in such system and such Warrant Shares are eligible for delivery in such a manner, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within three Business Days from the delivery to the Company of the Notice of Exercise, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (the “Delivery Period”). This Warrant shall be deemed to have been exercised on the date on which this Warrant is surrendered and payment of the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date on which all of the criteria described in the immediately preceding sentence have occurred, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. If fewer than all of the Warrant Shares purchasable under the Warrant are purchased, the Company will, upon such partial exercise, execute and deliver to the Holder a new Warrant (dated as of the Issue Date), in the same form and tenor as this Warrant, evidencing that portion of the Warrant not exercised.

(c) Delivery of Electronic Shares. In lieu of delivering physical certificates representing the Warrant Shares issuable upon exercise (provided that the transfer agent is participating in the DTC Fast Automated Securities Transfer program and provided further that the Holder provides the transfer agent with information required in order to issue such Warrant Shares to the Holder electronically), upon the request of the Holder as set forth in the Notice of Exercise, but only if the Warrant Shares may be issued without restrictive legends, the Company shall cause its transfer agent to electronically transmit, within the Delivery Period, the Warrant Shares issuable upon exercise to the Holder by crediting Holder’s account with DTC through its Deposit Withdrawal Agent Commission system. Any delivery not effected by electronic transmission shall be effected by delivery of physical certificates.

(d) No Fractional Shares. If a fractional share of Warrant Shares would, but for the provisions of this Section 2(d), be issuable upon exercise of the rights represented by this Warrant, the Company shall (i) round a half share or greater to be delivered to Holder up to the next whole share and (ii) round a less-than-half share to be delivered to Holder down to the nearest whole share.

(e) Buy-In. Notwithstanding anything else to the contrary contained herein, in addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the applicable Warrant Shares purchased upon exercise hereof or credit the Holder’s balance account with DTC, as applicable, on or before the end of the Delivery Period (other than a failure caused by any incorrect or incomplete information provided by Holder to the Company hereunder), and if after such date the Holder purchases shares of Common Stock to deliver in satisfaction of a sale by the Holder of Warrant Shares that the Holder anticipated receiving from the Company upon exercise of this Warrant (a “Buy-In”), then the Company shall, within three Business Days after the Holder’s request, (1) pay cash to the Holder in the amount by which (x) the Holder’s total purchase price (including commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue, by (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored, or deliver to the Holder the number of 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, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit the 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 or injunctive relief with respect to the Company’s failure to timely deliver certificates representing the Securities as required pursuant to the terms hereof.

(f) No Charge to Holder Upon Issuance. The issuance of Warrant Shares upon exercise of this Warrant shall be made without charge to Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of Warrant Shares (other than any transfer taxes resulting from the issuance of Warrant Shares to any person other than Holder).

(g) Reservation of Shares. During the Exercise Period, the Company shall reserve and keep available out of its authorized but unissued Common Stock such number of Warrant Shares issuable upon the full exercise of this Warrant. All Warrant Shares which are so issuable shall, when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges and not subject to the pre-emptive rights of any holder of Common Stock or any other class or series of stock of the Company. During the Exercise Period, the Company shall not take any action which would cause the number of authorized but unissued Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon exercise of this Warrant.

(h) Limitations on Exercises.

(i) Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable by the Holder hereof to the extent (but only to the extent) that after giving effect to such issuance after exercise, such Holder or any of its affiliates, as a result of such exercise, would beneficially own in excess of 9.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to such issuance. To the extent the above limitation applies, the determination of whether this Warrant shall be exercisable (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of which such securities shall be exercisable (as among all such securities owned by the Holder) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act. The limitations contained in this paragraph shall apply to a successor Holder of this Warrant. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock. The provisions of this Section 2(h)(i) may be waived by such Holder, at the election of such Holder, upon not less than 61 days’ prior notice to the Company, and the provisions of this Section 2(h)(i) shall continue to apply until such 61st day (or such later date, as determined by such Holder, as may be specified in such notice of waiver). At 12:00 a.m., New York Time, on the 62nd day following the provision of the notice referred to in the preceding sentence, the exercise limitation set forth above shall expire.

(ii) Notwithstanding anything else set forth herein, if required under applicable law or regulation (including the listing rules of the applicable securities exchange), in no event shall this Warrant be exercisable by the Holder to the extent that the Holder or any of its affiliates and any other Person whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), would beneficially own, as a result of such exercise, in excess of 19.99% of the number of shares of the Company’s Common Stock outstanding at the time of such issuance unless any issuances in excess of the foregoing limitation are approved by the Company’s common stockholders.

3. Adjustments in Certain Events. The number, class, and price of Warrant Shares for which this Warrant may be exercised are subject to adjustment from time to time upon the happening of certain events as follows:

(a) Subdivisions, Combinations and Other Issuances. If the outstanding shares of the Company’s Common Stock are divided into a greater number of shares, by forward stock split or otherwise, or a dividend in stock is paid on the Common Stock, then the number of shares of Warrant Shares for which the Warrant is then exercisable will be proportionately increased and the Exercise Price will be proportionately reduced. Conversely, if the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, by reverse stock split or otherwise, then the number of Warrant Shares for which the Warrant is then exercisable will be proportionately reduced and the Exercise Price will be proportionately increased. The increases and reductions provided for in this Section 3(a) will be made with the intent and, as nearly as practicable, the effect that neither the percentage of the total equity of the Company obtainable on exercise of the Warrants nor the price payable for such percentage upon such exercise will be affected by any event described in this Section 3(a).

(b) Merger, Consolidation, Reclassification, Reorganization, Etc. In case of any change in the Common Stock through merger, consolidation, reclassification, reorganization, partial or complete liquidation, purchase of all or substantially all the assets of the Company, or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will be made so that the Holder will have the right thereafter to receive upon the exercise of the Warrant the kind and amount of shares of Common Stock, Other Securities or property to which the Holder would have been entitled if, immediately prior to such event, the Holder had held the Warrant Shares obtainable upon the exercise of the Warrant. In any such case, appropriate adjustment will be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Holder, to the end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of the Warrant. The Company will not permit any change in its capital structure to occur unless the issuer of the shares of stock or other securities to be received by the Holder, if not the Company, agrees to be bound by and comply with the provisions of this Warrant.

(c) Pro Rata Distributions. If securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders of Common Stock, such number of securities will be distributed to the Holder or its assignee upon exercise of its rights hereunder as such Holder or assignee would have been entitled to if this Warrant had been exercised prior to the record date for such distribution. The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the securities to which the Holder or its assignee is entitled under this Section 3(c).

(d) Other Adjustments.

(i) General. Other than as set forth in Sections 3(a) and 3(b), if the Company shall issue any Common Stock other than in an Exempt Issuance for a consideration per share (determined as set forth below) less than the Exercise Price in effect immediately prior to the issuance of such Common Stock (the “Lower Issuance”), the Exercise Price in effect immediately prior to each issuance shall forthwith be reduced to a new Exercise Price determined by dividing (x) the consideration received by the Company in such issue as calculated in Section 3(d)(vii) by (y) the number of shares of Common Stock (not including shares issuable upon conversion or exercise of Options on Convertible Securities included in the consideration) issued in the Lower Issuance (the “New Exercise Price”).

(ii) Convertible Securities.

(1) In case the Company shall issue or sell any Convertible Securities other than in an Exempt Issuance, there shall be determined the price per share for which Common Stock is issuable upon the conversion or exchange thereof, such determination to be made by dividing (i) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the then current aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (ii) the maximum number of shares of Common Stock of the Company issuable upon the conversion or exchange of all of such Convertible Securities.

(2) If the price per share so determined shall be less than the applicable Exercise Price, then such issue or sale shall be deemed to be an issue or sale for cash pursuant to this Section 3(d) with the same effect thereof (as of the date of issue or sale of such Convertible Securities) of such maximum number of shares of Common Stock at the price per share so determined, provided that, if such Convertible Securities shall by their terms provide for an increase or increases or decrease or decreases, with the passage of time, in the amount of additional consideration, if any, to the Company, or in the rate of exchange, upon the conversion or exchange thereof, the adjusted Exercise Price shall, forthwith upon any such increase or decrease becoming effective, be readjusted to reflect the same, and provided further, that upon the expiration of such rights of conversion or exchange of such Convertible Securities, if any thereof shall not have been exercised, the adjusted Exercise Price shall forthwith be readjusted and thereafter be the price which it would have been had an adjustment been made on the basis that the only shares of Common Stock so issued or sold were issued or sold upon the conversion or exchange of such Convertible Securities, and that they were issued or sold for the consideration actually received by the Company upon such conversion or exchange, plus the consideration, if any, actually received by the Company for the issue or sale of all of such Convertible Securities which shall have been converted or exchanged.

(iii) Rights and Options.

(1) In case the Company shall grant any Options, there shall be determined the price per share for which Common Stock is issuable upon the exercise of such Options, such determination to be made by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the then current amount of additional consideration payable to the Company upon the exercise of such Options, by (ii) the maximum number of shares of Common Stock of the Company issuable upon the exercise of such Options.

(2) If the price per share so determined shall be less than the applicable Exercise Price, then the granting of such Options shall be deemed to be an issue or sale for cash pursuant to this Section 3(d) with the same effect thereof (as of the date of the granting of such Options) of such maximum number of shares of Common Stock at the price per share so determined, provided that, if such Options shall by their terms provide for an increase or increases or decrease or decreases, with the passage of time, in the amount of additional consideration payable to the Company upon the exercise thereof, the adjusted Exercise Price shall, forthwith upon any such increase or decrease becoming effective, be readjusted to reflect the same, and provided, further, that upon the expiration of such Options, if any thereof shall not have been exercised, the adjusted Exercise Price shall forthwith be readjusted and thereafter be the price which it would have been had an adjustment been made on the basis that the only shares of Common Stock so issued or sold were those issued or sold upon the exercise of such Options and that they were issued or sold for the consideration actually received by the Company upon such exercise, plus the consideration, if any, actually received by the Company for the granting of all such Options, whether or not exercised.

(iv) Modified Securities. Notwithstanding any provision in this Section 3(d) to the contrary and without limitation to any other provision contained in this Section 3(d), in the event any securities of the Company (other than this Warrant and securities issued in an Exempt Issuance) are amended or otherwise modified (for purposes of this Section 3(d), collectively, the “Modified Securities”) by operation of its terms or otherwise (including, without limitation, by operation of such Modified Securities’ anti-dilution provisions) in any manner whatsoever that results in (i) the reduction of the exercise, conversion or exchange price of such Modified Securities payable upon the exercise for, or conversion or exchange into, Common Stock or other securities exercisable for, or convertible or exchangeable into, Common Stock or (ii) such Modified Securities becoming exercisable for, or convertible or exchangeable into, more Common Stock or a greater dollar amount of other securities exercisable for, or convertible or exchangeable into, Common Stock, then such amendment or modification shall be treated for purposes of Section 3(d) as if the Modified Securities which have been amended or modified have been terminated and new securities have been issued with the amended or modified terms. The Company shall make all necessary adjustments (including successive adjustments if required) to the Exercise Price in accordance with Section 3(d), but in no event shall the Exercise Price be greater than it was immediately prior to the application of this section to the transaction in question. On the expiration or termination of any such Modified Securities for which adjustment has been made pursuant to the operation of the provisions of this Section 3(d)(iv), as the case may be, without such Modified Securities having been exercised, converted or exchanged in full pursuant to their terms, the adjusted Exercise Price shall be appropriately readjusted in the manner specified in this Section.

(v) Other Securities. If any event occurs as to which the provisions of this Warrant are strictly applicable and the application thereof would not fairly protect the rights of the Holders in accordance with the essential intent and principles of such provisions, then the Company shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as the Board of Directors, in good faith, determines to be reasonably necessary to protect such rights as aforesaid. In case at any time or from time to time the Company shall take any action in respect of its Common Stock, other than any action described in this Section 3(d), then, unless such action will not have a material adverse effect upon the rights of the Holders, the Exercise Price shall be adjusted in such manner as the Board of Directors, in good faith, determines to be equitable in the circumstances. In furtherance and not in limitation of the foregoing, if any event occurs of the type contemplated by this Section 3(d) but not expressly provided for by such Section (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights or arrangements with equity features), then the Company’s Board of Directors shall make an appropriate adjustment in the Exercise Price so as to protect the rights of the Holders of such Warrants. No adjustment made pursuant to this Section 3(d) shall increase the Exercise Price or decrease the number of Warrant Shares issuable upon exercise of the Warrants.

(vi) De Minimis Adjustments. No adjustment in the Exercise Price (and the corresponding change in the number of shares for which this Warrant is exercisable) shall be made if the amount of such Exercise Price adjustment would result in a change in the Exercise Price of less than $0.01, but in such case any adjustments that would otherwise be required to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, which together with any adjustment so carried forward, would result in a change in the Exercise Price of $0.01 or more. If the Company shall, at any time or from time to time, issue Common Stock by way of distribution or subdivide or combine the outstanding Common Stock, such amount of $0.01 (as theretofore increased or decreased, if such amounts shall have been adjusted in accordance with the provisions of this Subsection 3(d)(vi)) shall forthwith be proportionately increased in the case of a combination or decreased in the case of a subdivision or distribution so as appropriately to reflect the same. Notwithstanding the provisions of the first sentence of this Subsection 3(d)(vi), any adjustment postponed pursuant to this Subsection 3(d)(vi) shall be made no later than the earlier of (i) the date this Warrant is exercised or (ii) the Expiration Date.

(vii) Calculation of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising one integrated transaction, (x) such Option or Convertible Security (as applicable) will be deemed to have been issued for consideration equal to the Black Scholes Consideration Value thereof and (y) the other securities issued or sold or deemed to have been issued or sold in such integrated transaction shall be deemed to have been issued for consideration equal to the difference of (I) the aggregate consideration received by the Company minus (II) the Black Scholes Consideration Value of each such Option or Convertible Security (as applicable). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or publicly traded securities will be determined by the board of directors of the Company in good faith. If the Holder disputes the determination of the fair value within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error, and the fees and expenses of such appraiser shall be borne (m), if the appraiser determines that the fair value is not less than two percent (2%) less than the fair value determined by the Company, by the Holder, and (n), otherwise, by the Company.

4. No Rights as a Stockholder. Nothing contained in this Agreement shall be construed as conferring upon the Holder any rights whatsoever as a stockholder of the Company, either at law or in equity, including without limitation, the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors the right to receive dividends or any other matter.

5. Restrictions on Transfer; Legends.

(a) Registration or Exemption Required. Assuming the accuracy of the representations and warranties of the Holder contained in herein, this Warrant has been issued in a transaction exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder and exempt from state registration or qualification under applicable state laws. The Holder acknowledges that the Holder has been advised by the Company that this Warrant and the Warrant Shares issuable upon exercise thereof have not been registered under the Securities Act. Neither this Warrant nor the Warrant Shares may be pledged, transferred, sold or assigned except pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act and applicable state laws. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, will furnish to the Company such documentation as reasonably requested to enable the Company to obtain an opinion of counsel (at the Company’s expense) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

(b) Representations of Holder. The Holder represents and warrants that the Holder has acquired this Warrant and will acquire the Warrant Shares for the Holder’s own account for investment and not with a view to the sale or distribution thereof or the granting of any participation therein, and that the holder has no present intention of distributing or selling to others any of such interest or granting any participation therein. The Holder acknowledges that the Warrant and Warrant Shares must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or registered or qualified under any applicable state securities or “blue-sky” laws or is exempt from registration or qualification. The Holder has no need for liquidity in its investment in the Company, and is able to bear the economic risk of such investment for an indefinite period and to afford a complete loss thereof. The Holder is an “accredited investor” as such term is defined in Rule 501 (the provisions of which are known to the Holder) promulgated under the Act.

(c) Restrictive Legend. The Holder understands that until such time as the Warrant Shares have been registered under the Securities Act, or otherwise may be sold pursuant to Rule 144 under the Securities Act or an exemption from registration under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, this Warrant and the Warrant Shares, as applicable, shall bear a restrictive legend in substantially the form set forth on the cover page of this Warrant (and a stop-transfer order may be placed against transfer of the certificates for such securities).

(d) Disposition of Warrant or Warrant Shares. With respect to any offer, sale or other disposition of this Warrant or any Warrant Shares prior to registration of such Warrant Shares, the Holder agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with evidence, reasonably satisfactory to the Company (which shall include such representation of the transferee regarding investment intent as the Company may request), to the effect that such offer, sale or other disposition may be effected without registration or qualification (under the Act as then in effect or any federal or state securities law then in effect) of this Warrant or such Warrant Shares and indicating whether or not under the Securities Act certificates for this Warrant or Warrant Shares to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to ensure compliance with such law. Upon receiving such written notice and reasonably satisfactory evidence, the Company, as promptly as practicable but no later than seven (7) days after receipt of the written notice, shall notify the Holder that the Holder may sell or otherwise dispose of this Warrant or Warrant Shares, all in accordance with the terms of the notice delivered to the Company. If the Company determines that the evidence is not reasonably satisfactory to the Company, the Company shall so notify the Holder promptly with details thereof after such determination has been made. Notwithstanding the foregoing, any Warrant Shares may be offered, sold or otherwise disposed of in accordance with Rule 144 under the Act and in compliance with the applicable statutory resale restrictions imposed by state securities laws, provided that the Company shall have been furnished with such information as the Company may reasonably request to provide a reasonable assurance that the provisions of Rule 144 and the applicable resale restrictions imposed by state securities laws have been satisfied. Each certificate representing this Warrant or the Warrant Shares thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with such laws, unless pursuant to an opinion of counsel for the Holder, such legend is not required in order to ensure compliance with such laws. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

(e) Removal of Restrictive Legends. The certificates evidencing the Warrant Shares shall not contain any legend restricting the transfer thereof: (A) while a registration statement covering the sale or resale of the Warrant Shares is effective under the Securities Act and such legend removal is permitted under applicable securities laws (including compliance with the prospectus delivery requirements of the Securities Act), or (B) following any sale of such Warrant Shares pursuant to Rule 144, (C) if such Warrant Shares are eligible for sale under Rule 144(b)(1), or (D) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) and the Company shall have received an opinion of counsel to the Holder in form reasonably acceptable to the Company to such effect (collectively, the “Unrestricted Conditions”); provided that the Company shall bear the reasonable expense of any legal opinions relating to (I) sales of Warrants or Warrant Shares made in reliance on Rule 144 by any Purchaser that is not an “affiliate” as defined in Rule 144 made after the first anniversary of the Closing Date or (II) any private sale or other transfer of this Warrant or the Warrant Shares. The Company shall cause its counsel to issue a legal opinion to its transfer agent if required by the transfer agent to effect the issuance of the Warrant Shares, as applicable, without a restrictive legend or removal of the legend hereunder. The Company agrees that at such time as the Unrestricted Conditions are met, it will, no later than three (3) Trading Days following the delivery by the Holder to the Company or the transfer agent of a certificate representing Warrant Shares, issued with a restrictive legend, deliver or cause to be delivered to such Holder a certificate (or electronic transfer) representing such Warrant Shares that is free from all restrictive and other legends.

6. Registration Rights. The Holder shall be entitled to all of the rights and subject to all of the obligations regarding registration of the shares of Common Stock issuable upon the exercise of this Warrant as described in the Subscription Agreement.

7. Notices; Adjustments.

(i) All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day; (iii) two (2) Business Days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company or to Holder, as applicable, at the respective addresses set forth on the signature page to the Subscription Agreement or at such other address(es) as they may designate, respectively, by ten (10) days advance written notice to the other party hereto.

(ii) Upon the occurrence of any adjustments pursuant to Section 3 hereof, the Company at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment in accordance with the terms hereof and furnish to Holder a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date on which any such record is to be taken for the purpose of such dividend or distribution, a notice specifying such date. In the event of any voluntary dissolution, liquidation or winding up of the Company, the Company shall mail to the Holder, at least ten (10) days prior to the date of the occurrence of any such event, a notice specifying such date. If the approval of any stockholders of the Company shall be required in connection with any transaction contemplated by Section 3(b) above, then, the Company shall cause to be mailed to the Holder at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating the date on which such transaction 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 transaction. Notwithstanding the immediately preceding sentences, however, if the date on which the Company is obliged to provide notice hereunder to the Holders is prior to a public announcement relating to the events set forth and on such date the Company’s securities are traded or quoted on any recognized national securities exchange or quotation system, then such notice shall be provided to each Holder simultaneously with the notice provided to the Company’s common stockholders. Failure to give such notice, or any defect therein, shall not, however, affect the legality or validity of any such action.

8. Non-Circumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be reasonably required to protect the rights of the Holder.

9. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles, and notwithstanding the fact that one or more counterparts hereof may be executed outside of the state, or one or more of the obligations of the parties hereunder are to be performed outside of the state.

10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant, having terms and conditions identical to this Warrant, in lieu hereof.

11. Modification and Waiver of Warrants. Any term of this Warrant may be amended, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the holders of the Warrants representing at least 50.1% of the number of Warrant Shares then subject to outstanding Warrants issued pursuant to the Subscription Agreement. Notwithstanding the foregoing, (a) this Warrant may be amended and the observance of any term hereunder may be waived without the written consent of the Holder only in a manner which applies to all Warrants issued pursuant to the Subscription Agreement in the same fashion and (b) other than in connection with a transaction contemplated by Section 3 of this Warrant, the number of Warrant Shares subject to this Warrant and the Exercise Price of this Warrant may not be amended, and the right to exercise this Warrant may not be waived, without the written consent of the Holder and the Company. The Company shall give prompt written notice to the Holder of any amendment hereof or waiver hereunder that was effected without the Holder’s written consent. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

12. Successors. This Warrant shall be binding and inure to the benefit of the parties and their respective successors and assigns hereunder; provided that this Warrant may be assigned by Holder only in compliance with the conditions specified in and in accordance with all of the terms of this Warrant. This Warrant does not create and shall not be construed as creating any rights enforceable by any other person or corporation.

13. Headings. The headings used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

14. Saturdays, Sundays, Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

15. Severability. If any provision of this Warrant shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of this Warrant.

16. Execution and Counterparts. This Warrant may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute only one instrument. Any one of such counterparts shall be sufficient for the purpose of proving the existence and terms of this Warrant, and no party shall be required to produce an original or all of such counterparts in making such proof.

17. Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

[Signature page to Common Stock Purchase Warrant follows.]

IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant to be executed and delivered as of the Issue Date by an officer thereunto duly authorized.

RIGHTSCORP, INC.

	By:
	Name:
	Title:

	Address for Notice:

	3100 Donald Douglas Loop North
	Santa Monica, CA 90405

ATTACHMENT I

NOTICE OF EXERCISE

TO:	RIGHTSCORP, INC.
	Attention: Chief Financial Officer

The undersigned hereby elects to purchase, pursuant to the provisions of the Common Stock Warrant issued by RIGHTSCORP, INC. as of September [__], 2014, and held by the undersigned, the original of which is attached hereto, and (check the applicable box):

[ ]	Tenders herewith payment of the Exercise Price in the form of cash, via wire transfer of immediately available funds, in the amount of $____________ for _________ shares of Common Stock.

[ ]	Elects the cashless exercise option pursuant to Section 2(a)(ii) of the Warrant, and accordingly requests delivery of _________ shares of Common Stock, net, pursuant to the following calculation:

X = Y (A-B)/A

( ) = (_____) [(_____) - (_____)]/(_____)

Where

X = The number of shares of Common Stock to be issued to the Holder pursuant to this cashless exercise;

Y = The number of shares of Common Stock in respect of which the net issue election is made;

A = The VWAP of one share of Common Stock, as calculated per the terms of the Warrant; and

B = The Exercise Price then in effect as of the date of exercise.

[ ]

If this box is checked, as long as the Company’s transfer agent participates in the DTC Fast Automated Securities Transfer program (“FAST” , and except as otherwise provided in the next following sentence, the Company shall effect delivery of the shares of Common Stock to the Holder by crediting to the account of the Holder or its nominee at DTC (as specified in this Exercise Notice with the number of shares of Common Stock required to be delivered. In the event that the Company’s transfer agent is not a participant in FAST, or if the shares of Common Stock are not otherwise eligible for delivery through FAST, the Company shall effect delivery of the shares of Common Stock by delivering to Holder or its nominee physical certificates representing such shares.

Information for Delivery of uncertificated Shares by DWAC:

Account Number:

Account Name:

DTC Number:

[ ] If this box is checked, the Holder requests delivery of physical certificates representing the Warrant Shares and requests that such certificates be delivered to the following address:

Name:
	(please typewrite or print in block letters)

Address:

Tax I.D. No. or Social Security No.:

If such number of shares shall not be all the shares purchasable upon the exercise of the Warrants evidenced by this Warrant, a new warrant certificate for the balance of such Warrants remaining unexercised shall be registered in the name of and delivered to:

Name:
	(please typewrite or print in block letters)

Address:

Tax I.D. No. or Social Security No.:

	HOLDER:


	Name:
	Title:

Date:

ATTACHMENT II

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder

desires to transfer the Warrant Certificate.)

FOR VALUE RECEIVED, the undersigned Holder of this Warrant hereby sells, assigns and transfers the foregoing Warrant and all rights evidenced thereby to

Name:
	(Please Print)

Address:
	(Please Print)

Tax ID No.:

and does hereby irrevocably constitute and appoint _________________________, Attorney, to transfer the within Warrant Certificate on the books of Rightscorp, Inc. with full power of substitution.

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 whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

Dated:

Holder:


	(Print Name)




	(Signature)

STATE OF ___________)

COUNTY OF _________) ss:

On this __ day of ___________, before me personally came ________, to me known, who being by me duly sworn, did depose and say that he resides at __________________, that he is the holder of the foregoing instrument and that he executed such instrument and duly acknowledged to me that he executed the same.


	Notary Public

RIGHTSCORP, INC.

UNIT SUBSCRIPTION AGREEMENT

COMMON STOCK AND WARRANTS

TABLE OF CONTENTS

			Page

1.	Purchase and Sale of Units		4
	1.1.	Sale and Issuance of Securities	4
	1.2.	Closing	5
	1.3.	Investors’ Conditions to Closing	5
	1.4.	Company’s Conditions to Closing	6

2.	Representations and Warranties of the Company		6
	2.1.	Corporate Organization; Authority; Due Authorization	6
	2.2.	Capitalization	7
	2.3.	Validity of Securities	8
	2.4.	Underlying Securities	8
	2.5.	Private Offering	8
	2.6.	Brokers and Finders	8
	2.7.	No Conflict; Required Filings and Consents	8
	2.8.	Compliance	9
	2.9.	SEC Documents; Financial Statements	9
	2.10.	Litigation	11
	2.11.	Absence of Certain Changes	11
	2.12.	Intellectual Property	11
	2.13.	No Adverse Actions	12
	2.14.	Registration Rights	12
	2.15.	Corporate Documents	12
	2.16.	Disclosure	12
	2.17.	Use of Proceeds	12

3.	Representations and Warranties of the Investors		12
	3.1.	Authorization	12
	3.2.	Brokers and Finders	13
	3.3.	No Governmental Review	13
	3.4.	No Conflict; Required Filings and Consents	13

4.	Securities Laws		13
	4.1.	Securities Laws Representations and Covenants of Investors	13
	4.2.	Legends	15
	4.3.	Escrow Covenants	16

5.	Additional Covenants of the Company		17
	5.1.	Reports, Information, Securities	17
	5.2.	Expenses; Indemnification	17
	5.3.	Integration with Subsequent Transactions	19
	5.4.	Form D and Blue Sky	19
	5.5.	Listing on Securities Exchanges; Registration; Issuance of Certain Securities	19

6.	Right of Participation		20

7.	Registration of the Shares; Compliance with the Securities Act		21
	7.1.	Registration Procedures and Expenses	21
	7.2.	Transfer of Registrable Shares After Registration	24
	7.3.	Indemnification	24
	7.4.	Termination of Conditions and Obligations	28
	7.5.	Information Available	28
	7.6.	Assignment of Registration Rights	29
	7.7.	Restriction on Issuance	29

8.	Miscellaneous		29
	8.1.	Entire Agreement; Successors and Assigns	29
	8.2.	Survival of Representations and Warranties	30
	8.3.	Governing Law; Jurisdiction	30
	8.4.	Counterparts	30
	8.5.	Headings	30
	8.6.	Notices	30
	8.7.	Rights of Transferees	31
	8.8.	Severability	31
	8.9.	Fees and Expenses	31
	8.10.	Amendments and Waivers	32
	8.11.	Company Disclosure Letter	32
	8.12.	Construction	32

UNIT SUBSCRIPTION AGREEMENT dated as of September XX, 2014 (this “Agreement”), among Rightscorp, Inc., a Nevada corporation (the “Company”), and the persons who execute this agreement as investors (each an “Investor” and collectively the “Investors”).

Background: The Company desires to sell to the Investors, and the Investors desire to purchase, a minimum of eight hundred (800) Units (as defined below) and a maximum of one thousand two hundred (1,200) Units, with the maximum number of Units offered consisting in the aggregate of twelve million (12,000,000) shares of common stock, $.001 par value per share, of the Company (the “Shares”) and warrants in substantially the form attached hereto as Exhibit 1, exercisable over a five (5) year period to purchase up to a maximum of eighteen million (18,000,000) Shares at $0.25 per share (the “Warrants”). The proceeds of the sale of Units will be used to pay up to $210,000 of indebtedness and for the development and continuance of the business of the Company and each of its Subsidiaries.

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties agree as follows:

Certain Definitions:

“Action” has the meaning set forth in Section 2.10.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

“AIGH” means AIGH Investment Partners, L.P., a Delaware limited partnership.

“Articles of Incorporation” has the meaning set forth in Section 2.2(a).

“Audited Financial Statements” has the meaning set forth in Section 2.9(d).

“Blue Sky Laws” means any state securities or “blue sky” laws.

“Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

“Closing Date” has the meaning set forth in Section 1.2.

“Closing” has the meaning set forth in Section 1.2.

“Common Stock” means the Company’s Common Stock, $.001 par value per share, authorized as of the date hereof, and any stock of any class or classes (however designated) hereafter authorized upon reclassification thereof, which, if the Board of Directors declares a dividend or distribution, has the right to participate in the distribution of earnings and assets of the Company after the payment of dividends or other distributions on any shares of capital stock of the Company entitled to a preference and in the voting for the election of directors of the Company.

“Company” has the meaning set forth at the head of this Agreement and any corporation or other entity which shall succeed to or assume, directly or indirectly, the obligations of the Company hereunder. The term “corporation” shall include an association, joint stock company, business trust, limited liability company or other similar organization.

“Company Disclosure Letter” means the disclosure letter dated the date of this Agreement delivered to the Investors prior to the execution of this Agreement, which letter is incorporated in this Agreement.

“Company IP” has the meaning set forth in Section 2.12(a).

“Convertible Security” means any (i) option to purchase or right to subscribe for Common Stock, (ii) security by its terms convertible into or exchangeable for Common Stock or (iii) option to purchase or right to subscribe for such convertible or exchangeable securities.

“Contemplated Transactions” has the meaning set forth in Section 2.1(b).

“Escrow Agent” means Hahn & Hessen LLP in its capacity as Escrow Agent under the Escrow Agreement.

“Escrow Agreement” means the agreement, dated the date hereof, in substantially the form attached hereto as Exhibit 3, among the Company, the Investor Representative and the Escrow Agent.

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

“Exempt Issuance” means (i) all shares of Common Stock issued or issuable to employees, directors or consultants pursuant to any equity compensation plan that is in effect on the date of this Agreement, (ii) all shares of Common Stock issued or issuable to employees or directors pursuant to any equity compensation plan approved by the Company’s Board of Directors of the Company after the date of this Agreement, (iii) all shares of Common Stock issued or issuable to employees, directors or consultants as bona fide compensation for business services rendered, not compensation for fundraising activities, (iv) all shares of Common Stock issued or issuable to bona fide leasing companies, strategic partners, or major lenders or other financing or credit transaction which is not an equity capital raising event for the Company, (v) all shares of Common Stock issued or issuable as the purchase price in a bona fide acquisition or merger (including reasonable fees paid in connection therewith), (vi) all Warrant Shares and shares or other securities issued upon conversion or exercise of other Convertible Securities outstanding on the date of the last Closing hereunder, or (vii) all shares of Common Stock issued or issuable pursuant to the Financing.

Fair Value” has the meaning set forth in Section 1.5.

“Financing” has the meaning set forth in the Merger Agreement.

“Governmental Body” shall mean any: (i) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature in the United States; (ii) federal, state, local, municipal, foreign or other government; or (iii) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, unit, body or entity and any court or other tribunal) in the United States.

“Indemnified Party” has the meaning set forth in Section 5.2(b).

“Indemnifying Party” has the meaning set forth in Section 5.2(c).

“Investor” shall mean each Investor who purchases Units hereunder.

“Investor Representative” has the meaning set forth in Section 4.3.

“Investor Majority” shall mean (a) until Closing, Investors who have subscribed for a majority of the Units then subscribed for and (b), thereafter, Investors (or their assignees in private transactions) who have purchased more than fifty percent (50%) of the Units.

“Knowledge” shall mean, with respect to a particular fact or other matter, the knowledge, after reasonable investigation, of the Chief Executive Officer or Chief Financial Officer of the Company.

“Legal Requirement” has the meaning set forth in Section 2.8.

“Losses” has the meaning set forth in Section 5.2(b).

“Material Adverse Effect” has the meaning set forth in Section 2.1(a).

“Material Agreement” has the meaning set forth in Section 2.7.

“Merger Agreement” means the Agreement and Plan of Merger, dated October 25, 2013, among the Company, Rightscorp Merger Acquisition Sub, Inc. and Rightscorp, Inc. (a Delaware corporation).

“Notice” has the meaning set forth in Section 6.6.

“Other Securities” has the meaning set forth in the Warrants.

“Person” means any individual, sole proprietorship, partnership, corporation, limited liability company, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity, any university or similar institution, or any government or any agency or instrumentality or political subdivision thereof.

“Purchased Shares” has the meaning set forth in Section 1.1(a).

“Purchased Warrants” has the meaning set forth in Section 1.1(a).

“Rule 144” means Rule 144 promulgated under the Securities Act or any successor or substitute rule, law or provision.

“SEC” means the Securities and Exchange Commission.

“SEC Documents” has the meaning set forth in Section 2.9(a).

“Securities” has the meaning set forth in Section 1.1(a).

“Securities Act” means the Securities Act of 1933, as amended.

“Shares” has the meaning set forth in the Background.

“Subsidiary” means any significant subsidiary (as defined under Rule 1.02(w) of Regulation S-X promulgated by the SEC) of the Company.

“Transaction Documents” means this Agreement and the Warrants.

“Underlying Securities” means the shares of Common Stock or Other Securities issued or from time to time issuable upon exercise of the Warrants.

“Unit” means a unit consisting of (i) ten thousand (10,000) Shares and (ii) fifteen thousand (15,000) Warrants.

“Warrant” has the meaning set forth in Background.

1. Purchase and Sale of Units.

1.1. Sale and Issuance of Securities.

(a) The Company shall sell to the Investors and the Investors shall purchase from the Company, a minimum of 800 units and up to a maximum of 1,200 Units, at a price per Unit equal to $2,500.00, for a purchase price aggregating to a minimum of $2,000,000 (the “Minimum Proceeds”) and a maximum of $3,000,000.00. The Shares sold as part of the Units are referred to as the “Purchased Shares” and the Warrants sold as part of the Units are referred to as the “Purchased Warrants,” and collectively with the Purchased Shares, the “Securities.”

(b) The number of Units to be purchased by each Investor from the Company is set forth on the signature page hereto, subject to acceptance, in whole or in part, by the Company.

1.2. Closing. The closing (the “Closing”) of the purchase and sale of the Securities hereunder shall take place on September __, 2014 or such other date thereafter, but no later than September 23, 2014, as is determined by the Company with the consent of the Investor Majority (the “Closing Date”). The Closing shall take place at the offices of Hahn & Hessen LLP, the Investors’ counsel, in New York, New York, or at such other location as is mutually acceptable to the Investor Majority and the Company, subject to fulfillment of the conditions to the Closing set forth in the Agreement. At the Closing:

(a) each Investor purchasing Securities at the Closing shall deliver to the Escrow Agent or its designees prior to the Closing by wire transfer or such other method of payment as the Company shall approve, an amount equal to the purchase price of the Securities purchased by such Investor hereunder, as set forth opposite such Investor’s name on the signature pages hereof;

(b) the Company shall authorize its transfer agent to arrange delivery to each Investor of one or more stock certificates registered in the name of the Investor, or in such nominee name(s) as designated by the Investor in writing, representing the number of Purchased Shares as set forth opposite such Investor’s name on the signature page hereof; and

(c) the Company shall issue and deliver to each Investor purchasing Securities at the Closing the Warrants, registered in the name of such Investor, pursuant to which such Investor shall have the right to acquire the number of Underlying Securities as set forth opposite such Investor’s name on the signature page hereof on the terms set forth therein.

1.3. Investors’ Conditions to Closing. The obligation of the Investors to complete the purchase of the Securities at the applicable Closing is subject to the Company delivering Securities as set forth in Section 1.2 and to fulfillment of the following conditions:

(a) the Company shall deliver to the Investors an opinion of counsel, dated the Closing Date and reasonably satisfactory to counsel for the Investors, with respect to the matters set forth on Exhibit 2;

(b) the representation and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), and the Company shall have performed in all material respects all covenants and other obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Investors shall have received a certificate signed on behalf of the Company by an authorized officer of the Company to such effect;

(c) the Company shall deliver to Investors a certified copy of its Articles of Incorporation and by-laws and a Certificate of Good Standing from the Secretary of State of the State of Nevada;

(d) the Company shall pay the Investors’ expenses to the extent set forth in Section 8.9 hereof;

(e) Hartford Equity Inc., the current directors, officers, and 5% beneficial owners of the Company shall have delivered lock-up letters, in customary form, effective from the Closing Date until 60 days after the effective date of the Initial Registration Statement;

(f) the Company shall deliver to the Investors evidence of the termination of the Securities Purchase Agreement among the Company and Seaside 88, LP, dated as of March 7, 2014, in form and substance reasonably satisfactory to counsel for the Investors;

(g) the Company shall have received no less than the Minimum Proceeds; and

(h) the Company shall have executed and delivered all other documents reasonably requested by counsel for the Investors.

1.4. Company’s Conditions to Closing. The obligation of the Company to complete the sale of the Units at the Closing is subject to fulfillment of the following conditions:

(a) the representation and warranties of the Investors set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties speak as of an earlier date), in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), and

(b) such Investors shall have performed in all material respects all covenants and other obligations required to be performed by them under this Agreement, if any, at or prior to the Closing Date.

2. Representations and Warranties of the Company. The Company hereby represents and warrants to each of the Investors as follows:

2.1. Corporate Organization; Authority; Due Authorization.

(a) The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) has the corporate power and authority to own or lease its properties as and in the places where its business is now conducted and to carry on its business as now conducted, and (iii) is duly qualified as a foreign corporation authorized to do business in every jurisdiction where the failure to so qualify, individually or in the aggregate, would have a material adverse effect on the operations, assets, liabilities, financial condition or business of the Company and its Subsidiaries taken as a whole (a “Material Adverse Effect”). Set forth in Section 2.1(a) of the Company Disclosure Letter is a complete and correct list of all Subsidiaries. Each Subsidiary is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to so qualify would not have, individually or in the aggregate, a Material Adverse Effect.

(b) The Company (i) has the requisite corporate power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and to incur the obligations herein and therein and (ii) has been authorized by all necessary corporate action to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby (the “Contemplated Transactions”). This Agreement is and each of the other Transaction Documents will be on the Closing Date a valid and binding obligation of the Company enforceable in accordance with its terms except as limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors’ rights and the availability of equitable remedies (regardless of whether such enforceability is considered in a proceeding at law or equity).

2.2. Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (a) two hundred and fifty million (250,000,000) shares of Common Stock, $.001 par value, of which seventy five million seven hundred eighty one thousand thirty one (75,781,031) shares of Common Stock are outstanding and (b) ten million (10,000,000) shares of preferred stock, $.001 per value, of which none are outstanding. All outstanding shares of capital stock of the Company were issued in compliance with all applicable federal and state securities laws, and the issuance of such shares was duly authorized by all necessary corporate action on the part of the Company. Except as contemplated by this Agreement or as set forth in Section 2.2 of the Company Disclosure Letter, there are (A) no outstanding subscriptions, warrants, options, conversion privileges or other rights or agreements obligating the Company to purchase or otherwise acquire or issue any shares of capital stock of the Company (or shares reserved for such purpose), (B) no preemptive rights contained in the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), the By-laws of the Company or contracts to which the Company is a party or other rights of first refusal with respect to the issuance of additional shares of capital stock of the Company, including without limitation the Securities and the Underlying Securities, and (C) no commitments or understandings (oral or written) of the Company to issue any shares, warrants, options or other rights to acquire any equity securities of the Company. No Persons have any anti-dilution rights of any kind, whether triggered by the Contemplated Transactions or otherwise. To the Company’s Knowledge, except as set forth in Section 2.2 of the Company Disclosure Letter, none of the shares of Common Stock are subject to any stockholders’ agreement, voting trust agreement or similar arrangement or understanding. Except as set forth in Section 2.2 of the Company Disclosure Letter, the Company has no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

2.3. Validity of Securities. The issuance of the Securities has been duly authorized by all necessary corporate action on the part of the Company and, when issued to, delivered to, and paid for by the Investors in accordance with this Agreement, the Purchased Shares will be validly issued, fully paid and non-assessable.

2.4. Underlying Securities. (a) The issuance of the Underlying Securities upon exercise of the Purchased Warrants has been duly authorized, (b) the Underlying Securities prior to such exercise will have been duly reserved for issuance upon such exercise and (c) when so issued, the Underlying Securities will be validly issued, fully paid and non-assessable.

2.5. Private Offering. Neither the Company nor anyone authorized to act on its behalf has within the last twelve (12) months issued, sold or offered any security of the Company (including, without limitation, any Common Stock or warrants of similar tenor to the Purchased Warrants) to any Person under circumstances that would cause the issuance and sale of the Securities, as contemplated by this Agreement, to the Company’s Knowledge to be subject to the registration requirements of Section 5 of the Securities Act. The Company agrees that neither the Company nor anyone authorized to act on its behalf will offer the Securities or any part thereof or any similar securities for issuance or sale to, or solicit any offer to acquire any of the same from, anyone so as to make the issuance and sale of the Securities subject to the registration requirements of Section 5 of the Securities Act.

2.6. Brokers and Finders. Except as set forth in Section 2.6 of the Company Disclosure Letter, the Company has not retained any broker, investment banker or finder in connection with the Contemplated Transactions and will not owe any fees to any broker, investment banker or finder under a tail or similar covenant from an earlier engagement or financing.

2.7. No Conflict; Required Filings and Consents.

(a) The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company do not, and the consummation by the Company of the Contemplated Transactions will not, (i) conflict with or violate the Articles of Incorporation or the By-laws of the Company or its Subsidiaries, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or its Subsidiaries or by which any property or asset of the Company or its Subsidiaries is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the loss of a material benefit under, or give to others any right of purchase or sale, or any right of termination, amendment, acceleration, increased payments or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of the Company or of any of its Subsidiaries pursuant to, any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or of any of its Subsidiaries or any property or asset of the Company or of any of its Subsidiaries is bound or affected (the “Material Agreements”); except, in the case of clauses (ii) and (iii) above, for any such conflicts, violations, breaches, defaults or other occurrences that would not prevent or delay consummation of any of the Contemplated Transactions in any material respect or otherwise prevent the Company from performing its obligations under this Agreement or any of the other Transaction Documents in any material respect, and would not, individually or in the aggregate, have a Material Adverse Effect.

(b) The execution and delivery of this Agreement and the other Transaction Documents by the Company do not, and the performance of this Agreement and the other Transaction Documents and the consummation by the Company of the Contemplated Transactions will not, require, on the part or in respect of the Company, any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body (as hereinafter defined) except for the filing of a Form D with the SEC and applicable requirements, if any, of the Exchange Act or Blue Sky Laws, and any approval required by applicable rules of the markets in which the Company’s securities are traded.

2.8. Compliance. Except as set forth in the SEC Documents or in Section 2.8 of the Company Disclosure Letter, neither the Company nor any Subsidiary is in conflict with, or in default or violation of (i) any law, rule, regulation, order, judgment or decree applicable to the Company or such Subsidiary or by which any property or asset of the Company or such Subsidiary is bound or affected (“Legal Requirement”), or (ii) any Material Agreement, in each case except for any such conflicts, defaults or violations that would not, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any written notice or other communication from any Governmental Body regarding any actual or possible violation of, or failure to comply with, any Legal Requirement, except any such violations or failures that would not, individually or in the aggregate, have a Material Adverse Effect.

2.9. SEC Documents; Financial Statements.

(a) The information contained in the following documents, did not, as of the date of the applicable document, include 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 the light of the circumstances in which they were made, not misleading, as of their respective filing dates or, if amended, as so amended (the following documents, collectively, the “SEC Documents”), provided that the representation in this sentence shall not apply to any misstatement or omission in any SEC Document filed prior to the date of this Agreement which was superseded by a subsequent SEC Document filed prior to the date of this Agreement:

(i) the Company’s Annual Report on Form 10-K for the year ended December 31, 2013;

(ii) the Company’s Quarterly Reports on Form 10-Q for the quarters ended June 30 and March 31, 2014; and

(iii) the Company’s filings on Form 8-K, dated August 22, August 18, August 7, May 16, May 7, and March 28, 2014.

(b) As of the date of this Agreement, the Company Disclosure Letter, when read together with the SEC Documents and the information, qualifications and exceptions contained in this Agreement, does not include any untrue statement of a material fact or omit to state a material fact in light of the circumstances in which such written disclosures were made. Each press release issued by the Company during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists (other than the consummation of the transactions contemplated hereby) with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

(c) The Company has filed all forms, reports and documents required to be filed by it with the SEC for the 12 months preceding the date of this Agreement, including without limitation the SEC Documents. As of their respective dates, the SEC Documents filed prior to the date hereof complied as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act, and the rules and regulations thereunder.

(d) The Company’s Annual Report on Form 10-K for the year ended December 31, 2013, includes audited consolidated balance sheets as of December 31, 2013 and 2012, consolidated statements of operations and consolidated statements of cash flows for the one year periods then ended (the “Audited Financial Statements”), and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, includes unaudited consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows for the six (6) month periods ended June 30, 2013 and June 30, 2104 (the “Unaudited Financial Statements,” and collectively with the Audited Financial Statements, the “Financial Statements”).

(e) The Financial Statements (including the related notes and schedules thereto) fairly present in all material respects the consolidated financial position, the results of operations, retained earnings or cash flows, as the case may be, of the Company for the periods set forth therein (subject, in the case of the Unaudited Financial Statements, to normal year-end audit adjustments that would not be material in amount or effect), in each case in accordance with generally accepted accounting principles consistently applied during the periods involved, except as may be noted therein.

2.10. Litigation. Except as set forth in the SEC Documents or in Section 2.10 of the Company Disclosure Letter, there are no claims, actions, suits, investigations, inquiries or proceedings (each, an “Action”) pending against the Company or any of its Subsidiaries or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries, at law or in equity, or before or by any court, tribunal, arbitrator, mediator or any federal or state commission, board, bureau, agency or instrumentality, that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Except as set forth in the SEC Documents or in Section 2.10 of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

2.11. Absence of Certain Changes. Except as specifically contemplated by this Agreement or as set forth in Section 2.11 of the Company Disclosure Letter or in the SEC Documents, since June 30, 2014, there has not been (a) any material adverse change in the business, prospects or financial condition of the Company; (b) any dividends or other distribution of assets to stockholders of the Company; (c) any acquisition (by merger, consolidation, acquisition of stock or assets or otherwise) of any Person by the Company; or (d) any transactions, other than in the ordinary course of business, consistent in all material respects with past practices, with any of its officers, directors or principal stockholders or any of their respective Affiliates.

2.12. Intellectual Property.

(a) To the Knowledge of the Company, it owns, or has the right to use, sell or license all intellectual property reasonably required for the conduct of its business as presently conducted (collectively, the “Company IP”) except for any failure to own or have the right to use, sell or license the Company IP that would not have a Material Adverse Effect.

(b) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not constitute a breach of any instrument or agreement governing any Company IP, will not cause the forfeiture or termination or give rise to a right of forfeiture or termination of any Company IP or impair the right of the Company and its Subsidiaries to use, sell or license any Company IP, except for the occurrence of any such breach, forfeiture, termination or impairment that would not, individually or in the aggregate, result in a Material Adverse Effect.

(c) (i) None of the manufacture, marketing, license, sale and use of any product currently licensed or sold by the Company or any of its Subsidiaries violates any license or agreement between the Company or any of its Subsidiaries and any third party or, to the Knowledge of the Company, infringes any intellectual property right of any other party; and (ii) there is no pending or, to the Knowledge of the Company, threatened claim or litigation contesting the validity, ownership or right to use, sell, license or dispose of any Company IP; except, with respect to clauses (i) and (ii), for any violations, infringements, claims or litigations that would not, individually or in the aggregate, have a Material Adverse Effect.

2.13. No Adverse Actions. Except as set forth in the SEC Documents or in Section 2.13 of the Company Disclosure Letter, there is no existing, pending or, to the Knowledge of the Company, threatened termination, cancellation, limitation, modification or change in the business relationship of the Company or any of its Subsidiaries, with any supplier, customer or other Person except such as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

2.14. Registration Rights. Except as set forth below or in Section 2.14 of the Company Disclosure Letter, the Company is not under any obligation to register under the Securities Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities nor is the Company obligated to register or qualify any such securities under any Blue Sky Laws.

2.15. Corporate Documents. The Company’s Articles of Incorporation and By-laws, each as amended to date, which are certified as of the Closing Date are true, correct and complete and contain all amendments thereto.

2.16. Disclosure. On or before 9:00 a.m., New York City Time, on the fourth Business Day after the Closing, the Company shall file with the SEC a Current Report on Form 8-K describing the material terms of the Contemplated Transactions, and attaching as exhibits to such Form 8-K copies of this Agreement and the other Transaction Documents, as required by the SEC. Except for information that may be provided to the Investors pursuant to this Agreement, the Company shall not, and shall use commercially reasonable efforts to cause each of its officers, directors, employees and agents not to, provide any Investor with any material nonpublic information regarding the Company from and after the filing of such Form 8-K without the express written consent of such Investor.

2.17. Use of Proceeds. The net proceeds received by the Company from the sale of the Units shall be used by the Company to pay up to $210,000 in indebtedness, for working capital and for general corporate purposes.

3. Representations and Warranties of the Investors. Each Investor represents and warrants to the Company as follows:

3.1. Authorization. If an entity, such Investor (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and (ii) has the power and authority to own and hold the Units. Such Investor (i) has full power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and to incur the obligations herein and therein and (ii), if applicable, has been authorized by all necessary corporate or equivalent action to execute, deliver and perform this Agreement and the other Transaction Documents and to consummate the Contemplated Transactions. This Agreement is and each of the other Transaction Documents will be upon the execution and delivery by such Investor, a valid and binding obligation of such Investor enforceable in accordance with its terms, except as limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors’ rights and the availability of equitable remedies (regardless of whether such enforceability is considered in a proceeding at law or equity).

3.2. Brokers and Finders. Such Investor has either not retained an investment banker, broker or finder, or has provided the name and information concerning such entity to the Company on or prior to the Closing Date.

3.3. No Governmental Review. Such Investor understands that no United States Federal or state agency or any other Governmental Body has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor has any agency or other Governmental Body passed upon or endorsed the merits of the offering of the Securities.

3.4. No Conflict; Required Filings and Consents.

(a) The execution, delivery and performance of this Agreement and the other Transaction Documents by each Investor do not, and the consummation by such Investor of the Contemplated Transactions will not, (i), if such Investor is an entity, conflict with or violate the Articles of Incorporation or the By-laws (or equivalent or comparable documents) of such Investor, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to such Investor or by which any property or asset of such Investor is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the loss of a material benefit under, or give to others any right of purchase or sale, or any right of termination, amendment, acceleration, increased payments or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of such Investor pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Investor is a party or by which such Investor or any property or asset of such Investor is bound or affected; except, for any such conflicts, violations, breaches, defaults or other occurrences that would not prevent or delay consummation of any of the Contemplated Transactions in any material respect or otherwise prevent such Investor from performing its obligations under this Agreement or any of the other Transaction Documents in any material respect.

(b) The execution and delivery of this Agreement and the other Transaction Documents by each Investor do not, and the performance of this Agreement and the other Transaction Documents and the consummation by such Investor of the Contemplated Transactions will not, require, on the part or in respect of such Investor, any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body.

4. Securities Laws.

4.1. Securities Laws Representations and Covenants of Investors.

(a) Each Investor represents and warrants to the Company that: this Agreement is made by the Company with such Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement such Investor hereby confirms, that the Securities to be received by such Investor will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof such that such Investors would constitute an “underwriter” under the Securities Act; provided that this representation and warranty shall not limit (i) the Investor’s right to sell the Underlying Securities in compliance with an exemption from registration under the Securities Act and in compliance with all applicable federal securities laws and Blue Sky Laws or (ii) the Investor’s rights to indemnification under this Agreement.

(b) Each Investor understands and acknowledges that (i) the offering of the Securities pursuant to this Agreement will not be registered under the Securities Act or qualified under any Blue Sky Laws on the grounds that the offering and sale of the Securities are exempt from registration and qualification, respectively, under the Securities Act and the Blue Sky Laws, (ii) nothing in this Agreement or any of the other Transaction Documents or in any other materials presented by or on behalf of the Company to such Investor in connection with the purchase of Securities constitutes legal, tax or investment advice, (iii) such Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Securities and (iv) if the Securities have not been registered under the Securities Act and Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder.

(c) Each Investor covenants that, unless the Purchased Shares, the Purchased Warrants, the Underlying Securities or any other shares of capital stock of the Company received in respect of the foregoing have been registered, such Investor will not dispose of such securities unless and until such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with an opinion of counsel reasonably satisfactory in form and substance to the Company to the effect that (i) such disposition will not require registration under the Securities Act and (ii) appropriate action necessary for compliance with the Securities Act, all applicable Blue Sky Laws and any other applicable state, local or foreign law has been taken; provided, however, that if an Investor provides such an opinion reasonably satisfactory in form and substance to the Company, the Company will bear the reasonable expense thereof.

(d) Each Investor represents to the Company that: (i) such Investor is able to fend for itself in the Contemplated Transactions; (ii) such Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of such Investor’s prospective investment in the Securities and has so evaluated the merits and risks of such investment; (iii) such Investor has the ability to bear the economic risks of such Investor’s prospective investment and can afford the complete loss of such investment; (iv) such Investor has been furnished with and has reviewed the SEC Documents and the Company Disclosure Letter; (v) such Investor has been furnished with and has had access to such information as is in the SEC Documents and in the Company Disclosure Letter, together with the opportunity to obtain such additional information as it requested to verify the accuracy of the information contained therein or otherwise supplied to such Investor so that such Investor can make an informed investment decision with respect to an investment in the Securities; (vi) such Investor has had access to officers of the Company and an opportunity to ask questions of and receive answers from such officers and has had all questions that have been asked by such Investor satisfactorily answered by the Company; and (vii) such Investor is not subscribing to purchase the Securities as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting, or any solicitation of a subscription by a Person not previously known to such Investor in connection with investments in securities generally.

(e) Each Investor represents to the Company that: such Investor: (i) was qualified at the time such Investor was offered the securities, (ii) qualifies on the date hereof, and (iii) will qualify on the Closing Date, as an “accredited investor” as such term is defined under Rule 501 promulgated under the Securities Act. Any Investor that is a corporation, a partnership, a limited liability company, a trust or other business entity further represents to the Company that it has not been organized for the purpose of purchasing the Securities.

(f) By acceptance hereof, each Investor acknowledges that the Purchased Shares, the Purchased Warrants, the Underlying Securities and any shares of capital stock of the Company received in respect of the foregoing held by it may not be sold by such Investor without registration under the Securities Act or an exemption therefrom, and therefore such Investor may be required to hold such securities for an indeterminate period.

(g) In connection with any transfer of Securities made by each Investor in compliance with the provisions of this Agreement, such Investor will cause each proposed transferee of such Securities to agree and take hold such Securities subject to the provisions of this Agreement.

(h) The representations, warranties and covenants of each Investor in this Agreement are made severally and not jointly.

4.2. Legends. All certificates for the Purchased Shares, Purchased Warrants and the Underlying Securities, and each certificate representing any shares of capital stock of the Company or Other Securities received in respect of the foregoing, whether by reason of a stock split or share reclassification thereof, a stock dividend thereon or otherwise, and each certificate for any such securities issued to subsequent transferees of any such certificate (unless otherwise permitted herein) shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.”

4.3. Escrow Covenants.

(a) Each Investor shall deposit an amount equal to the purchase price for Units purchased by such Investor (the “Purchase Price Amount”) in escrow (the “Escrow”) with the Escrow Agent, to be held in a non-interest bearing account. Each Investor hereby designates AIGH as its representative (in such capacity, the “Investor Representative”) to authorize release of the Purchase Price Amount upon Closing pursuant to the Escrow Agreement and to take other appropriate action on behalf of the Investors as set forth in the Escrow Agreement. The powers conferred on the Escrow Agent or Investor Representative hereunder are solely to protect the Investor’s interest in the Purchase Price Amount and shall not impose any duty upon the Escrow Agent or Investor Representative to exercise any such powers. Except as set forth in the Escrow Agreement, the Escrow Agent shall have no duty as to the Purchase Price Amount, as to ascertaining or taking action with respect to the Purchase Price Amount, whether or not the Escrow Agent has or is deemed to have knowledge of such matters. The Escrow Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Purchase Price Amount in its possession if the Purchase Price Amount is accorded treatment substantially equal to that which it accords its own property. Except for authorizing the release of the Purchase Price Amount held by the Escrow Agent upon satisfaction of the conditions to Closing, the Investor Representative shall have no duty as to the Purchase Price Amount as to ascertaining or taking action with respect to the Purchase Price Amount other than determining whether to release the Purchase Price Amount, and shall apply the same standard of care as it would use in determining whether to release any Purchase Price Amount to the Escrow Agent in its capacity as an Investor. Interest, if any, earned on the Purchase Price Amount while held by the Escrow Agent shall be paid (i) to the Investor in the event the Purchase Price Amount is returned to the Investor or (ii) to a charity designated by the Investor Representative in the event the Purchase Price Amount is paid to the Company.

(b) As set forth in the Escrow Agreement, the Investors, jointly and severally, agree to indemnify the Investor Representative and the Escrow Agent from and against any and all reasonable claims, losses, and liabilities (including, without limitation, reasonable attorney fees) growing out of or resulting from the Escrow, except claims, losses, or liabilities resulting from the gross negligence or willful misconduct of the Escrow Agent or Investor Representative. The Company agrees to indemnify the Escrow Agent and Investor Representative from and against any and all reasonable claims, losses, and liabilities (including, without limitation, reasonable attorney fees) arising from claims made by the Company or its Affiliates, except claims, losses, or liabilities resulting from the gross negligence or willful misconduct of the Escrow Agent or Investor Representative.

(c) The Company will, subject to Section 8.9 hereof, upon demand pay the amount of any and all reasonable expenses, including, without limitation, the reasonable fees and expenses of counsel (including Hahn & Hessen LLP) and of any experts and agents, which the Escrow Agent or Investor Representative may incur in connection with (i) the preparation and administration of the Escrow; (ii) the custody, preservation, collection from, or other realization upon, any of the Subscription Amounts; or (iii) the exercise or enforcement of any of the rights of the Escrow Agent or Investor Representative hereunder.

(d) The participation of Hahn & Hessen LLP as Escrow Agent is being undertaken as an accommodation to the parties hereto, and shall in no way hinder or limit the present or future ability of Hahn & Hessen LLP to act as counsel to any party or any of their affiliates with respect to any matter including, but not limited to, disputes between or among any of the Company, the Investor Representative and the Investors with regard to the Escrow or otherwise. Without limitation on the foregoing, the parties (i) recognize that Hahn & Hessen LLP represents AIGH in this and other matters and may continue to do so, (ii) recognizes that Hahn & Hessen LLP represents all the Investors in the transactions contemplated by the Agreements, and (iii) waive any conflicts that may arise from such representation.

5. Additional Covenants of the Company.

5.1. Reports, Information, Securities.

(a) The Company shall cooperate with each Investor in supplying such information as may be reasonably requested by such Investor to complete and file any information reporting forms presently or hereafter required by the SEC as a condition to the availability of the safe harbor pursuant to Rule 144 for the sale of any of the Purchased Shares, the Purchased Warrants, the Underlying Securities and shares of capital stock of the Company received in respect of the foregoing.

(b) The Company shall keep reserved for issuance a sufficient number of authorized but unissued shares of Common Stock (or Other Securities into which the Purchased Warrants are then exercisable) so that the Purchased Warrants may be converted or exercised to purchase Common Stock (or such Other Securities) at any time.

5.2. Expenses; Indemnification.

(a) The Company agrees to pay on the Closing Date and save the Investors harmless against liability for (i) the payment of any stamp or similar taxes (including interest and penalties, if any) that may be determined to be payable in respect of the execution and delivery of this Agreement, and the issue and sale of any Securities and the Underlying Securities, (ii) the expense of preparing and issuing the certificates for the Securities and the Underlying Securities, and (iii) the cost of delivering the Securities and the Underlying Securities of each Investor to such Investor’s address, insured in accordance with customary practice. Each Investor shall be responsible for its out-of-pocket expenses arising in connection with the Contemplated Transactions, except that the Company shall pay fees and disbursements of counsel to the Investors as set forth in Section 6.9.

(b) The Company hereby agrees and acknowledges that the Investors have been induced to enter into this Agreement and to purchase the Securities hereunder, in part, based upon the representations, warranties, agreements and covenants of the Company contained herein. The Company hereby agrees to pay, indemnify and hold harmless the Investors and any director, officer, partner, member, employee or other affiliate of any Investor (each, an “Indemnified Party”) against all claims, losses and damages resulting from any and all legal or administrative proceedings, including without limitation, reasonable attorneys’ fees and expenses incurred in connection therewith (but in no event for more than one law firm, selected by the Investor Majority, for all the Investors) (collectively, “Losses”), resulting from a breach by the Company of any representation or warranty of the Company contained herein or the failure of the Company to perform any agreement or covenant made herein;

(c) As soon as reasonably practicable after receipt by any Indemnified Party of notice of any Losses in respect of which the Company (the “Indemnifying Party”) may be required to provide indemnification thereof under this Section 5.2, the Indemnified Party shall give written notice thereof to the Indemnifying Party. The Indemnified Party may, at its option, claim indemnity under this Section 5.2 as soon as a claim has been threatened by a third party, regardless of whether any actual Losses have been suffered, so long as counsel for such Indemnified Party shall in good faith determine that such claim is not frivolous and that the Indemnifying Party may be required to provide indemnification therefor as a result thereof and shall give notice of such determination to the Indemnifying Party. The Indemnified Party shall permit the Indemnifying Party at the Indemnifying Party’s option and expense, to assume the defense of any such claim by counsel mutually and reasonably satisfactory to the Indemnifying Party and a majority in interest of the Indemnified Parties and to settle or otherwise dispose of the same; provided, however, that each Indemnified Party may at all times participate in such defense at such Indemnified Party’s expense; and provided further, however, that the Indemnifying Party shall not, in defense of any such claim, except with the prior written consent of the Indemnified Party, consent to the entry of any judgment or settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff in question to such Indemnified Party of a release of all liabilities in respect of such claim. If the Indemnifying Party does not promptly assume the defense of such claim or if any such counsel is unable to represent one or more of the Indemnified Parties due to a conflict of interest, then an Indemnified Party may assume, to the extent separable, the defense of such portion of the claim as to which the conflict arose (and, if not separable, the entire claim) and be entitled to indemnification and prompt reimbursement from the Indemnifying Party for such Indemnified Party’s reasonable costs and expenses incurred in connection therewith, including without limitation, reasonable attorneys’ fees and expenses (not to exceed the cost of more than one law firm for all Investors). Such fees and expenses shall be reimbursed to the Indemnified Parties as soon as practicable after submission of invoices to the Indemnifying Party.

5.3. Integration with Subsequent Transactions. The Company shall not directly or indirectly, sell, offer for sale or solicit offers to buy or otherwise negotiate with respect of any security (as defined in section 2 of the Securities Act) of the same or similar class as the Units that would (i) be integrated with the offer or sale of the Units in a manner that would require the registration under the Securities Act of the sale of the Units to the Investor; (ii) cause the offer and sale of the Units to fail to be entitled to the exemption from registration afforded by Section 4(a)(2) of the Securities Act; or (iii) be integrated with the offer or sale of the Units for purposes of the rules or regulations of any national securities exchange on which the Company’s Common Stock are listed or designated such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained prior to the closing of such subsequent transactions. As used in this Agreement, the terms “offer” and “sale” shall have the meanings specified in Section 2(3) of the Securities Act.

5.4. Form D and Blue Sky. The Company agrees to file a Form D with respect to the Units as required under Regulation D promulgated under the Securities Act and to promptly provide a copy thereof to the Investor who requests a copy after such filing by reference to the web site www.sec.gov maintained by the SEC. The Company, on or before the Closing Date, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Units for sale to the Investors at Closing pursuant to this Agreement under the applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and if requested by an Investor, shall provide evidence of any such action so taken. The Company shall make such filings and reports relating to the offer and sale of the Units as required under applicable Blue Sky laws following or on the Closing Date. No Investor shall incur any costs or expenses relating to Form D or such filings under applicable Blue Sky laws.

5.5. Listing on Securities Exchanges; Registration; Issuance of Certain Securities.

(a) In furtherance and not in limitation of any other provision of this Agreement, during any period of time in which the Company’s Common Stock is listed on any national securities exchange, the Company will, at its expense, exercise its best efforts to simultaneously list on such exchange, upon official notice of issuance upon the exercise of the Warrants, and maintain such listing, all Shares and Underlying Securities; and the Company will exercise its best efforts to (i) list on the national securities exchange, (ii) so register and (iii) maintain such listing of, any Other Securities if and at the time that any securities of like class or similar type shall be listed on the national securities exchange by the Company.

(b) Until the second anniversary of the Closing Date, the Company shall not issue any (X) Convertible Securities or similar securities that contain a provision that provides for any change or determination of the applicable conversion price, conversion rate, or exercise price (or a similar provision which might have a similar effect) based on the Fair Market Value (as defined in the Warrant) or any other determination of the market price or value of the Company’s securities or any other market based or contingent standard, such as so-called “toxic” or “death spiral” convertible securities; provided, however, that this prohibition shall not include Convertible Securities or similar securities the conversion or exercise price or conversion rate of which is fixed on the date of issuance or subject to adjustment based upon the issuance by the Company of additional securities, including without limitation, standard anti-dilution adjustment provisions which are not based on calculations of the Fair Market Value or other variable valuations; and provided, further, that in no event shall this provision be deemed to prohibit the Contemplated Transactions, or (Y) any preferred stock, debt instruments or similar securities or investment instruments providing for (i) preferences or other payments substantially in excess of the original investment by purchasers thereof or (ii) dividends, interest or similar payments other than dividends, interest or similar payments computed on an annual basis and not in excess, directly or indirectly, of the lesser of a rate equal to (A) twice the interest rate on 10 year US Treasury Notes and (B) 20%.

6. Right of Participation.

(a) From the date hereof until the date that is eighteen (18) months after the Closing Date, upon any issuance by the Company of Common Stock or Convertible Securities (a “Subsequent Financing”), each Investor shall have the right to participate in up to an amount of the Subsequent Financing such that such Investor’s beneficial ownership of the Company (ignoring for such purpose any beneficial ownership caps) on a fully diluted basis immediately following such Subsequent Financing would not be less than its beneficial ownership of the Company (ignoring for such purposes any beneficial ownership caps) solely based on such Investor’s investment in this offering (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing.

(b) At least five (5) Business Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Investor a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Investor if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request of an Investor, and only upon a request by such Investor, for a Subsequent Financing Notice, the Company shall promptly, but no later than two (2) Business Days after such request, deliver a Subsequent Financing Notice to such Investor. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and shall include a term sheet or similar document relating thereto as an attachment.

(c) Any Investor desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the second (2nd) Business Day after all of the Investors have received the Subsequent Financing Notice that such Investor desires to participate in the Subsequent Financing, the amount of such Investor’s participation, and representing and warranting that such Investor has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from an Investor as of such second (2nd) Business Day, such Investor shall be deemed to have notified the Company that it does not elect to participate.

(d) If by 5:30 p.m. (New York City time) on the second (2nd) Business Day after all of the Investors have received the Subsequent Financing Notice, notifications by the Investors of their desire to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.

(e) The Company must provide the Investors with a second Subsequent Financing Notice, and the Investors will again have the right of participation set forth above in this Section, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within sixty (60) Business Days after the date of the initial Subsequent Financing Notice.

(f) Notwithstanding the foregoing, this Section 6 shall not apply in respect of an Exempt Issuance or to a registered primary public offering. The right of first refusal set forth in this Section (i) shall be assignable in any private sale of Securities, (ii) shall be assignable by an Investor to any Affiliate of the Investor, (iii) upon the death of any individual Investor, shall pass to the beneficiaries under the deceased Investor’s last will and testament or to the distributees of the deceased Investor’s estate, and (iv) shall be assignable by a trust, partnership or limited liability company to its beneficiaries, partners or members, as applicable, provided, however, that each such assignee shall on the date of the assignment be an “accredited investor” within the meaning of Regulation D of the Securities Act.

7. Registration of the Shares; Compliance with the Securities Act.

7.1. Registration Procedures and Expenses. The Company shall:

(a) subject to receipt of necessary information in writing from the Investors, as soon as reasonably practicable, but in no event later than forty-five (45) calendar days following the Closing Date (the “Filing Date”), prepare and file with the Securities & Exchange Commission (the “Commission”) a Registration Statement on Form S-1 relating to the sale of the Shares and Underlying Securities (the “Registrable Shares”) by each Investor from time to time on the OTC QB or the facilities of any national securities exchange on which the Common Stock is then traded or in privately negotiated transactions (each a “Registration Statement”, with the initial Registration Statement referred to as the “First Registration Statement”) and will use its best efforts to maintain the quotation of such Shares on the OTC QB or the facilities of any national securities exchange on which the Common Stock is then traded. The Registration Statement shall not include securities owned by persons other than Investors and their respective assigns. The First Registration Statement shall contain (except if otherwise directed by the Required Investors) a broad “Plan of Distribution” in customary form (the “Plan of Distribution”). The amount of Registrable Shares required to be included in the Registration Statement as described in Section 7.1(a) (“Initial Registrable Securities”) shall be limited to not less than 100% of the maximum amount (“Rule 415 Amount”) of Common Stock which may be included in a single Registration Statement without exceeding registration limitations imposed by the Commission pursuant to Rule 415 of the Securities Act;

(b) in the event that less than all of the Initial Registrable Securities are included in the First Registration Statement as a result of the limitation described in Section 7.1(a), file additional Registration Statements each registering the Rule 415 Amount (each such Registration Statement a “Subsequent Registration Statement”), seriatim, until all of the Initial Registrable Securities have been registered. The filing date and effective date of each such additional Registration Statement shall be, respectively, twenty-one (21) and sixty (60) days after the first day such Subsequent Registration Statement may be filed without objection by the Commission based on Rule 415 of the 1933 Act. Initial Registrable Securities and the Registrable Shares to be included in additional Registration Statements shall be allocated and registered pro rata among the Investors based upon their initial investments in Units;

(c) use its commercially reasonable efforts, subject to receipt of necessary information from the Investors, to cause the Commission to declare the First Registration Statement effective within sixty (60) calendar days after the Closing Date (the “Required Effective Date”). However, so long as the Company filed the First Registration Statement by the Filing Date, if the First Registration Statement receives Commission review, then the Required Effective Date will be the ninetieth (90th) calendar day after the Filing Date. The Company’s commercially reasonable efforts will include, but not be limited to, promptly responding to all comments received from the staff of the Commission. If at any time the Company receives notification from the Commission that the First Registration Statement will receive no action or review from the Commission, then the Company will, subject to its rights under this Agreement, use its commercially reasonable efforts to cause the First Registration Statement to become effective within two (2) Business Days after such Commission notification. The Company shall not file any registration statements with the Commission relating to securities that are not Registrable Shares until ninety (90) days after the actual effective date of the First Registration Statement; provided nothing herein shall prohibit the filing of amendments or supplements to already filed registration statements;

(d) use its commercially reasonable efforts to promptly prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the earliest of (i) two years after the Closing Date, (ii) the date on which the Investors may sell all of the Registrable Shares then owned by the Investors, without registration, pursuant to Rule 144 promulgated under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold and the adequate current public information requirement of Rule 144(c)(1) no longer applies to the sale of Shares, or (iii) such time as all Registrable Shares owned by all Investors have been sold pursuant to a Registration Statement or Rule 144 promulgated under the Securities Act. Thereafter, the Company shall be entitled to withdraw the Registration Statement and the Investors shall have no further right to offer or sell any of the Registrable Shares pursuant to the Registration Statement;

(e) use commercially reasonably efforts to furnish (i) to each Investor with respect to the Registrable Shares registered under the Registration Statement by fax or email (in each case with answerback confirmed) or other prompt means one copy of the prospectus promptly after effectiveness of the Registration Statement and in any case before the next opening of the principal market for the Shares and (ii) to each Investor with respect to the Registrable Shares registered under the Registration Statement (and to each underwriter, if any, of such Registrable Shares) such number of copies of prospectuses and such other documents as such Investor may reasonably request within a reasonable time, in order to facilitate the public sale or other disposition of all or any of the Registrable Shares by such Investor;

(f) file documents required of the Company for normal Blue Sky clearance in states specified in writing by each Investor and reasonably acceptable to the Company; provided, however, that the Company shall not be required to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 7.1; (ii) file a general consent to service of process in any such jurisdiction; (iii) subject itself to taxation in any such jurisdiction; (iv) provide any undertakings that cause material expense or burden to the Company; or (v) make any change to its organizational documents, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders;

(g) bear all expenses in connection with the procedures in paragraphs (a) through (f) of this Section 7.1 and the registration of the Registrable Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to each Investor or underwriting discounts, brokerage fees and commissions incurred by such Investor, if any; and

(h) promptly notify each Investor of the effectiveness of a Registration Statement, and any post-effective amendments thereto, as well as of the receipt by the Company of any stop orders of the Commission with respect to a Registration Statement and the lifting of any such order or of any pending proceeding under Section 8A of the Securities Act in connection with the offering of the Registrable Shares.

Notwithstanding the foregoing, it shall be a condition precedent to the obligations of the Company to take any action pursuant to paragraphs (a) through (f) of this Section 7.1, that such Investor shall furnish to the Company such information regarding itself, the Registrable Shares to be sold by such Investor, and the intended method of disposition of such Registrable Shares as shall be required to effect the registration of the Registrable Shares, all of which information shall be furnished to the Company in writing specifically for use in the Registration Statement.

The Company understands that each Investor disclaims being an underwriter, but such Investor being deemed an underwriter shall not relieve the Company of any obligations it has hereunder, provided, however, that if the Company receives notification from the Commission that such Investor is deemed an underwriter, then the period in which the Company is obligated to submit an acceleration request to the Commission shall be extended to the earlier of (i) the sixtieth (60th) day after such Commission notification, or (ii) ninety (90) days after the initial filing of the Registration Statement with the Commission. Company shall not be obligated to retain an underwriter with respect to the offer and sale of Registrable Shares pursuant to the Registration Statement. Neither the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or filing with the Commission and any Investor being deemed an underwriter by the Commission shall not relieve the Company of any obligations it has under this Agreement; provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the Plan of Distribution (as identified below).

7.2. Transfer of Registrable Shares After Registration. While the Registration Statement is effective and available for resale, each Investor agrees that it will not effect any disposition of the Registrable Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 7.1 hereof in the section titled “Plan of Distribution” or pursuant to an applicable exemption from registration, the availability of which is confirmed in writing by counsel to such Investor (the form, substance and scope of which opinion shall be reasonably acceptable to the Company) and delivered to the Company, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding such Investor or its plan of distribution.

7.3. Indemnification.

For purpose of this Section 7, the term “Investor/Affiliate” shall mean any Affiliate of an Investor (including without limitation all stockholders, partners, members, officers, directors, employees and direct or indirect investors of such Investor and any of the foregoing Person’s agents or other representatives); and

For purpose of this Section 7.3, the term “Registration Statement” shall include any final prospectus, exhibit, supplement or amendment included in or relating to, and any document incorporated by reference in, the Registration Statement referred to in Section 7.1 hereof.

(a) The Company agrees to indemnify and hold harmless each Investor and each Investor/Affiliate against any losses, claims, damages, liabilities or expenses, joint or several, to which such Investor or Investor/Affiliate may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations, or filed as part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required (the “Prospectus”), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in the light of the circumstances under which they were made, or arise out of or are based in whole or in part on any material breach of the representations and warranties of the Company contained in this Agreement (except that where representations and warranties are qualified by materiality, any breach), or any material breach by the Company of its obligations hereunder, and will reimburse such Investor or Investor/Affiliate for any legal and other expenses as such expenses are reasonably incurred by such Investor or Investor/Affiliate in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent, but only to the extent, that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Investor expressly for use therein, or (ii) the failure of such Investor to comply with the covenants and agreements contained in Section 7.2 hereof respecting the sale of the Shares, or (iii) the inaccuracy of any representations made by such Investor herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to such Investor prior to the pertinent sale or sales by such Investor.

(b) Each Investor will severally, but not jointly, indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling Person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Investor) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Section 7.2 hereof respecting the sale of the Shares or (ii) any material breach of any representation made by such Investor herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in the light of the circumstances under which they were made, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use therein, and such Investor will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling Person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling Person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the obligations of such Investor under this Section 7.3 shall not exceed the net proceeds to such Investor from the sale of Registrable Shares pursuant to such Registration Statement.

(c) Promptly after receipt by an indemnified party under this Section 7.3 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7.3, promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained in this Section 7.3 (except to the extent that such omission materially and adversely affects the indemnifying Person’s ability to defend such action). Subject to provisions hereinafter stated, in case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnifying party and the indemnified party, based upon the advice of such indemnified party’s counsel, shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7.3 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of Section 7.3(a), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. In no event shall any indemnifying Person be liable in respect of any amounts paid in settlement of any action unless the indemnifying Person shall have approved the terms of such settlement; provided that such consent shall not be unreasonably withheld. No indemnifying Person shall, without the prior written consent of the indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified Person is or could have been a party and indemnification could have been sought hereunder by such indemnified Person, unless such settlement includes an unconditional release of such indemnified Person from all liability on claims that are the subject matter of such proceeding.

(d) If the indemnification provided for in this Section 7.3 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under Section 7.3(a), (b) or (c) in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and such Investor or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and such Investor in connection with the statements or omissions or inaccuracies in the representations and warranties in the Registration Statement that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and each Investor on the other shall be deemed to be in the same proportion as the amount paid by such Investor to the Company pursuant to this Agreement for the Registrable Shares purchased by such Investor that were sold pursuant to the Registration Statement bears to the difference (the “Difference”) between the amount such Investor paid (directly or indirectly) for the Shares that were sold pursuant to the Registration Statement and the amount received by such Investor from such sale. The relative fault of the Company on the one hand and each Investor on the other shall be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation or warranty relates to information supplied by the Company or by such Investor and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7.3(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (c) of this Section 7.3 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (d); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (c) for purposes of indemnification. The Company and each Investor agree that it would not be just and equitable if contribution pursuant to this Section 7.3 were determined solely by pro rata allocation (even if such Investor were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 7.3, no Investor shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages which such Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Each Investor’s obligation to contribute pursuant to this Section 7.3 is several and not joint.

(e) Each Investor hereby acknowledges that it is a sophisticated business Person who was represented by counsel during the negotiations regarding the provisions hereof including, without limitation, the provisions of this Section 7.3, and is fully informed regarding said provisions. Each of the Company and each Investor is advised that federal or state public policy as interpreted by the courts in certain jurisdictions may be contrary to certain of the provisions of this Section 7.3, and each of the Company and such Investor hereby expressly waives and relinquishes any right or ability to assert such public policy as a defense to a claim under this Section 7.3 and further agrees not to attempt to assert any such defense.

7.4. Termination of Conditions and Obligations. The conditions precedent imposed by Section 5 or this Section 7 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the earliest to occur of (i) the sale of the Registrable Shares pursuant to the Registration Statement, (ii) the sale of the Registrable Shares pursuant to Rule 144 promulgated under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold and the adequate current public information requirement of Rule 144(c)(1) no longer applies to the sale of Registrable Shares, or (iii) the passage of one year from the effective date of the Registration Statement covering such Registrable Shares, provided that the holder of such Registrable Shares is not at such time, and was not for ninety (90) days immediately prior thereto, an affiliate of the Company (as such term is defined in Rule 144), or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

7.5. Information Available. As long as any Investor owns the Registrable Shares and the Company is subject to the filing requirements of the Exchange Act, the Company covenants to timely file (or obtain extensions in respect thereof pursuant to Rule 12b-25 promulgated under the Exchange Act and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations promulgated thereunder would otherwise permit such termination. So long as the Registration Statement is effective covering the resale of Registrable Shares owned by such Investor, the Company will furnish to such Investor upon such Investor’s request:

(a) as soon as practicable after availability (but in the case of the Company’s Annual Report to Stockholders, concurrently with delivery to its shareholders generally), by reference to the web site www.sec.gov maintained by the SEC, one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with U.S. generally accepted accounting principles by a firm of certified public accountants that is registered with the PCAOB), (ii) if not included in substance in the Annual Report to Stockholders, upon the request of such Investor, its Annual Report on Form 10-K, (iii) upon the request of an Investor, its Quarterly Reports on Form 10-Q, (iv) upon the request of an Investor, its Current Reports on Form 8-K, and (v) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

(b) upon the reasonable request of an Investor, a reasonable number of copies of the prospectuses and supplements thereto to supply to any other Person requiring such prospectuses and supplements.

7.6. Assignment of Registration Rights. The rights of each Investor hereunder, including the right to have the Company register the Shares pursuant to this Agreement, will be automatically assigned by such Investor to transferees or assignees of the Registrable Shares, but only if (a) such Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company prior to such assignment, (b) the Company is, prior to such transfer or assignment, furnished with written notice of the name and address of such transferee or assignee and the Registrable Shares with respect to which such registration rights are being transferred or assigned, (c) after such transfer or assignment, the further disposition of such Registrable Shares by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (d) at or before the time the Company received the written notice contemplated by clause (b) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein, (e) the transferee is an “accredited investor” as that term is defined in Rule 501 of Regulation D, and (f) the transfer of Registrable Shares is made in accordance with the provisions of Section 7.2 hereof.

7.7. Restriction on Issuance. The Company shall not issue or sell (or agree to issue or sell) any Common Stock or Convertible Securities (other than in an Exempt Issuance) during the period commencing on the Closing Date and ending at 5:00 p.m. (New York time) on the sixtieth (60th) day after the effective date of the First Registration Statement.

8. Miscellaneous.

8.1. Entire Agreement; Successors and Assigns. This Agreement and the other Transaction Documents constitute the entire contract between the parties relative to the subject matter hereof and thereof, and no party shall be liable or bound to the other in any manner by any warranties or representations (express or implied) or agreements or covenants except as specifically set forth herein or therein. This Agreement and the other Transaction Documents supersede any previous agreement among the parties with respect to the subject matter hereof and thereof. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, successors and assigns of the parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

8.2. Survival of Representations and Warranties. Notwithstanding any right of the Investors fully to investigate the affairs of the Company and notwithstanding any knowledge of facts determined or determinable by any Investor pursuant to such right of investigation, each Investor has the right to rely fully upon the representations, warranties, covenants and agreements of the Company contained in this Agreement or in any documents delivered pursuant to this Agreement. All such representations and warranties of the Company contained in this Agreement shall survive the execution and delivery of this Agreement and the Closing hereunder and shall continue in full force and effect until the earlier of (a) the date that is one year after the last Closing and (b) the sale of all of the Shares pursuant to Rule 144 under the Securities Act or an effective registration statement under the Securities Act covering the Purchased Shares and Underlying Securities. All representations and warranties of the Investors contained in this Agreement shall survive the execution and delivery of this Agreement and the applicable Closing hereunder. The covenants of the Investors (to the extent set forth in Section 4.1(c)) and the Company set forth in this Agreement shall survive the applicable Closing.

8.3. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law. Each party hereby irrevocably consents and submits to the jurisdiction of any New York State or United States Federal Court sitting in the State of New York, County of New York, over any action or proceeding arising out of or relating to this Agreement and irrevocably consents to the service of any and all process in any such action or proceeding in the manner for the giving of Notices at its address specified in Section 8.6. Each party further waives any objection to venue in the State of New York, County of New York and any objection to an action or proceeding in such state and county on the basis of forum non conveniens. Each party also waives any right to trial by jury.

8.4. Counterparts. This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.5. Headings. The headings of the sections of this Agreement are for convenience and shall not by themselves determine the interpretation of this Agreement.

8.6. Notices. Any notice or other communication required or permitted to be given hereunder (each a “Notice”) shall be given in writing and shall be made by personal delivery or sent by courier or certified or registered first-class mail (postage prepaid), addressed to a party at its address shown below or at such other address as such party may designate by three days’ advance Notice to the other parties.

Any Notice to any of the Investors shall be sent to the addresses for such Investor set forth on the signature pages hereof, with a copy to:

Hahn & Hessen LLP

488 Madison Avenue

New York, New York 10022

Attention: James Kardon, Esq.

Email: jkardon@hahnhessen.com

Any Notice to the Company shall be sent to:

Rightscorp, Inc.

3100 Donald Douglas Loop North

Santa Monica, California 90405

Attention: Christopher Sabec

Email: cjsabec@rightscorp.com

with a copy to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Attention: Gregory Sichenzia

Email: gsichenzia@srff.com

Each Notice shall be deemed given and effective upon receipt (or refusal of receipt).

8.7. Rights of Transferees. Subject to Section 7.6, any and all rights and obligations of each of the Investors herein incident to the ownership of Securities or the Underlying Securities shall pass successively to all subsequent transferees of such securities until extinguished pursuant to the terms hereof; provided, however, that no Investor may transfer or assign its rights under this Agreement (other than to an Affiliate) between the date of this Agreement and the Closing Date.

8.8. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or any other provision of this Agreement.

8.9. Fees and Expenses.

(a) Subject to Section 8.9(c), irrespective of whether the Closing is effected, the Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement.

(b) The Company and each Investor shall be responsible for all costs and expenses incurred by the Company and such Investor, respectively, in connection with the negotiation, execution, delivery and performance of this Agreement, except that the Company shall pay at the Closing the legal fees and expenses of Hahn & Hessen LLP issued through the Closing, as counsel to the Investors and Escrow Agent up to $25,000. The Company shall also be obliged to pay additional legal fees and expenses of Hahn & Hessen LLP incurred after the Closing relating to the Company’s performance under the Escrow Agreement, the Warrants and Section 7, provided, however, that any legal fees and expenses payable by the Company to Hahn & Hessen LLP pursuant to Section 7.1 hereof shall be limited to $2,500.

(c) If any action at law or in equity is necessary to enforce or interpret any of the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

8.10. Amendments and Waivers. Unless a particular provision or section of this Agreement requires otherwise explicitly in a particular instance, any provision of this Agreement may be amended and the observance of any provision of this Agreement 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 Investor Majority. Any amendment or waiver effected in accordance with this Section 8.10 shall be binding upon each Investor, each holder of any Securities at the time outstanding (including without limitation securities into which any such Securities are convertible or exercisable), each future holder thereof, and the Company.

8.11. Company Disclosure Letter. Information disclosed in any section of the Company Disclosure Letter shall be deemed to be disclosed with respect to the corresponding numbered section of this Agreement, as well as to such other sections of this Agreement to which such disclosure shall reasonably pertain in light of the form and substance of the disclosure made.

8.12. Construction. Words (including capitalized terms defined herein) in the singular shall be held to include the plural and vice versa as the context requires. The words “herein,” “hereinafter,” “hereunder” and words of similar import used in this Agreement shall, unless otherwise stated, refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “or” and “any” are not exclusive. All references to “$” in this Agreement and the other agreements contemplated hereby shall refer to United States dollars (unless otherwise specified expressly). Any reference to any gender includes the other genders.

[Signature Page Follows]

IF the INVESTOR is an INDIVIDUAL, please complete the following:

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first above written.

Amount of Subscription:	_____________________________________
$___________________	Print Name

Number of Units to be Purchased: _______	_____________________________________
	Signature of Investor

	_____________________________________
	Social Security Number

	_____________________________________
	Address and Fax Number

	_____________________________________
	E-mail Address

	State of Domicile: ____________________

Accepted and Agreed to as of the date first above written:

RIGHTSCORP, INC.

By:
Name:
Title:
Date:

Signature Page to Unit Subscription Agreement - 4696900

IF the UNITS will be held as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY, please complete the following:

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

Amount of Subscription:	_____________________________________
$___________________	Print Name of Purchaser

Number of Units to be Purchased: _______	_____________________________________
	Signature of a Purchaser

	_____________________________________
	Social Security Number

	_____________________________________
	Print Name of Spouse or Other Purchaser

	_____________________________________
	Signature of Spouse or Other Purchaser

	_____________________________________
	Social Security Number

	_____________________________________
	Address and Fax Number

	_____________________________________
	E-mail Address

	State of Domicile: ____________________

Accepted and Agreed to as of the date first above written:

RIGHTSCORP, INC.

By:
Name:
Title:
Date:

Signature Page to Unit Subscription Agreement - 4696900

IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY, TRUST or OTHER ENTITY, please complete the following:

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first above written.

Amount of Subscription:	_____________________________________
$___________________	Print Full Legal Name of Partnership, Company, Limited Liability Company, Trust or Other Entity

Number of Units to be Purchased: _______

	By:__________________________________
	(Authorized Signatory)
	Name:
	Title:

	_____________________________________
	Address and Fax Number

	_____________________________________
	Taxpayer Identification Number

	Date and State of Incorporation or
	Organization: ________________________

	Date on which Taxable Year Ends: _______

	_____________________________________
	E-mail Address

Accepted and Agreed to as of the date first above written:

RIGHTSCORP, INC.

By:
Name:
Title:
Date:

Signature Page to Unit Subscription Agreement - 4696900

EXHIBITS TO THE UNIT SUBSCRIPTION AGREEMENT

Company Disclosure Letter

Exhibit 1:	Form of Warrant

Exhibit 2:	Form of Legal Opinion

Exhibit 3:	Form of Escrow Agreement

Exhibits

Exhibit 1

Form of Warrant

Exhibits 1 - 1

Exhibit 2

Form of Legal Opinion

Exhibits 2 - 1

Exhibit 3

Form of Escrow Agreement

Exhibits 3 - 1

Rightscorp Announces $2.65 Million in Equity Financing Led by Institutional Investors

Proceeds to Accelerate Growth and Path to Profitability

Santa Monica, Calif. - September XX, 2014 – Rightscorp (OTCQB: RIHT), a provider of monetization services for artists and holders of copyrighted intellectual property (IP), today announced that it has raised $2,652,000 in a private financing led by institutional investors from the sale of 10,608,000 shares of common stock in the Company and warrants to purchase 15,912,000 shares of common stock in the Company.

The proceeds will be used for general working capital purposes to accelerate the Company’s growth. Additional information about this financing will be filed with the Securities Exchange Commission and available at www.sec.gov.

“This funding will be used to expand on our automation and continue our growth trend,” said Christopher Sabec, CEO of Rightscorp. “We are confident this funding, at a time when pre-release piracy is on a rise, will accelerate our path to profitability and help us realize our vision that digital creative works should be protected economically so that the next generation of great music, movies, video games, books, and software can be made and their creators can prosper.”

Rightscorp’s digital loss prevention technology focuses on unauthorized online distribution of content on peer–to–peer networks (P2P). The company works directly with the owners of copyrighted IP such as music, movies, books, software, and games and works to ensure that owners and creators are rightfully paid for the use of their work.

The Company represents more than 1.5 million copyrights and has partnered with major motion picture studios, numerous platinum recording artists, songwriters, authors, Academy Award-winning films, and top TV shows. Rightscorp has already received settlements from subscribers of more than 140 ISPs and closed over 100,000 cases of copyright infringement to date.

About Rightscorp, Inc.

Rightscorp (OTCQB: RIHT) is a provider of monetization services for artists and holders of copyrighted intellectual property (IP). The Company’s patent pending digital loss prevention technology focuses on the infringement of digital content such as music, movies, software, books, and games and ensures that owners and creators are rightfully paid for their IP. Rightscorp implements existing laws to solve copyright infringements by collecting payments from illegal file sharing activities via notifications sent through Internet service providers (ISPs). The Company’s technology identifies copyright infringers, who are offered a reasonable settlement option when compared to the legal liability defined in the Digital Millennium Copyrights Act (DMCA). Based on the fact that 22% of all Internet traffic is used to distribute copyrighted content without permission or compensation to the creators, Rightscorp is pursuing an estimated $2.3 billion opportunity and has monetized major media titles through relationships with industry leaders. http://www.rightscorp.com/

Safe Harbor Statement

This press release may include forward-looking statements. All statements other than statements of historical fact included in this press release, including, without limitation, statements regarding the Company’s anticipated financial position, business strategy and plans and objectives of management of the Company for future operations, are forward-looking statements. When used in this press release, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors not limited to, general economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personnel, and changes in legal and regulatory requirements. Such forward-looking statements reflect the current views of the Company with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this paragraph.

For further investor and media information contact:

Andrew Haag

Managing Partner

IRTH Communications

rightscorp@irthcommunications.com

1-866-976-4784

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