Exhibit 10.2

 

RESTRICTED STOCK AGREEMENT

 

FREEDOM LEAF INC.

 

RESTRICTED STOCK AGREEMENT

 

This Restricted Stock Agreement (the “Agreement”) is made as of August 28, 2019
(the “Effective Date”) by and between Freedom Leaf Inc., a Nevada corporation
(the “Company”), and Alex Frias (“Grantee”).

 

1.                   Grant. In consideration of Grantee’s performance of
services for the Company, the Company hereby agrees to grant restricted shares
(the “Restricted Stock”) of the Company’s Common Stock, par value $0.001 per
share (“Common Stock”) to Grantee, subject to the conditions of this Agreement.
As used in this Agreement, the term “Shares” shall mean the Restricted Stock
granted under this Agreement, and all securities received (i) in replacement of
the Restricted Stock, (ii) as a result of stock dividends or stock splits with
respect to the Restricted Stock, and (iii) in replacement of the Restricted
Stock in a merger, recapitalization, reorganization or similar corporate
transaction.

 

2.                   Award and Vesting of Shares.

 

A.                 Award. The Restricted Stock shall be awarded to Grantee in
the following amounts, at the following times and upon the following conditions,
provided that the Continuous Service of Grantee continues through and on the
applicable Award Date:

 

Shares of Restricted Stock Award Date     The First Award (as defined below).
August 28, 2019 (the “First Award Date”)     The Second Award (as defined
below). 12 months after the effective date of Grantee’s Employment Agreement
with the Company (the “Second Award Date”)

 

The Restricted Stock will be issued by the Company to the Grantee on the First
Award Date and on the Second Award Date in accordance with this Agreement and
will not otherwise be issued or held in escrow or otherwise be outstanding prior
to their issuance under this Agreement.

 

B.                  Vesting. The First Award of Restricted Stock will vest in
accordance with the following vesting schedule: (i) 40.74% of the Shares shall
vest in Grantee’s favor on the occurrence of the Milestone (as defined below)
(the “Milestone Vesting Date”); (ii) 29.63% of the Shares shall vest in
Grantee’s favor on the 12-month anniversary of the First Award Date (the “First
Vesting Date”) provided that the Continuous Service of Grantee continues through
such date; and (iii) 29.63% of the Shares shall vest in Grantee’s favor on the
24-month anniversary of the First Award Date (the “Second Vesting Date”)
provided that the Continuous Service of Grantee continues through such date. The
Second Award of Restricted Stock shall fully vest in Grantee’s favor immediately
upon its grant on the Second Award Date (such date, together with the Milestone
Vesting Date, the First Vesting Date and the Second Vesting Date, each a
“Vesting Date” with respect to the applicable Shares of Restricted Stock).

 

 

 

 1 

 

 

C.                  Acceleration of Vesting. Except as otherwise provided in
this Section 2(C) and in Section 4 of this Agreement, there shall be no
proportionate or partial vesting of Shares of Restricted Stock in or during the
months, days or periods prior to each Vesting Date, and all vesting of Shares of
Restricted Stock shall occur only on the applicable Vesting Date.

 

(1)                Acceleration of Vesting Upon Change in Control. In the event
that a Change in Control of the Company occurs during Grantee’s Continuous
Service, the Shares of Restricted Stock subject to this Agreement shall become
immediately vested in Grantee’s favor as of the date of the Change in Control.

(2)                Acceleration of Vesting at Company Discretion.
Notwithstanding any other term or provision of this Agreement, the Board of
Directors of the Company (the “Board”) shall be authorized, in its sole
discretion, based upon its review and evaluation of the performance of Grantee
and of the Company, to accelerate the vesting of any Shares of Restricted Stock
under this Agreement, at such times and upon such terms and conditions as the
Board shall deem advisable.

(3)                Adjustment to Number of Shares. In the event of a forward or
reverse stock split of the issued and outstanding Shares of Common Stock of the
Company, a Common Stock dividend or distribution, an asset distribution,
recapitalization, reorganization or similar transaction by the Company which
would customarily result in an adjustment to the number of Shares of Common
Stock issuable or outstanding under other outstanding securities of the Company,
then the number of Shares subject to vesting and issuance under this Agreement
will automatically be adjusted upward or downward, as the case may be,
proportionately and appropriately.

 

D.                 Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:

 

   

“Cause” means (a) Grantee’s material breach of any agreement between Grantee and
the Company; (b) Grantee’s material failure to comply with the Company’s written
policies or rules that result in material injury to the Company; (c) Grantee’s
conviction of, or Grantee’s plea of “guilty” or “no contest” to, a felony under
the laws of the United States or any State; (d) Grantee’s gross negligence or
willful misconduct in connection with the provision of services for the Company;
or (e) Grantee’s failure to cooperate in good faith with a governmental or
internal investigation of the Company or its managers, officers or employees.

 

“Change of Control” means the sale of all or substantially all of the
outstanding Shares of capital stock, assets or business of the Company, by
merger, consolidation, sale of assets or otherwise (other than a merger or
consolidation in which all or substantially all of the individuals and entities
who were beneficial owners of the Company’s voting securities immediately prior
to such transaction beneficially own, directly or indirectly, more than 50%
(determined on an as- converted basis) of the outstanding securities entitled to
vote generally in the election of directors of the resulting, surviving or
acquiring corporation in such transaction).

 

“Common Stock Value” means an amount per share of Common Stock equal to the
arithmetic average of the volume-weighted average (rounded to two decimal
places) trading price per share of Common Stock for the thirty (30) full trading
days ended on and including the trading day prior to the applicable Award Date,
using trading prices reported on the OTCQB based on all trades in Common Stock
on the OTCQB during the primary trading sessions from 9:30 a.m., New York Time,
to 4:00 p.m., New York Time (and not an average of the daily averages during
such thirty (30) trading days).

 

“Continuous Service” means the uninterrupted provision of services as an
employee, consultant, advisor, officer, or director of the Company or any
Related Entity.

 

“First Award” means 48,072,390 Shares of Restricted Stock.

         

 

 

 2 

 

 

   

“Master Agreement” means that certain Master Manufacturing Agreement, dated as
of November 13, 2017, by and between ECS Labs LLC and CBD LIFE SA DE CV (as
amended, restated, supplemented or modified from time to time).

 

“Milestone” means the occurrence of an extension of the Master Agreement through
December 31, 2020.

 

“Net Operating Income” means the difference of gross income less cost of goods
sold, selling, general and administrative expenses, operating expenses,
depreciation, interest, taxes and other expenses, each determined on a generally
accepted accounting principles basis of accounting.

 

“Non-Vested Shares” means any Shares of the Restricted Stock subject to this
Agreement that have not become vested pursuant to this Section 2.

 

“Second Award” means that number of Shares of Restricted Stock amounting to an
aggregate amount equal to 16.66875% of the Net Operating Income received by the
Company from the effective date of Grantee’s Employment Agreement with the
Company until the Second Award Date pursuant to the Master Agreement, as
calculated based on the Common Stock Value as determined on the Second Award
Date; provided, that if such calculation shall result in a fractional Share,
such fraction shall be disregarded.

 

“Related Entity” means the Company’s wholly-owned subsidiaries on or after the
Effective Date, including without limitation ECS Labs LLC, a Texas limited
liability company and/or its wholly-owned subsidiaries, and any other
wholly-owned subsidiaries of the Company.

 

“Vested Shares” means any Shares of the Restricted Stock subject to this
Agreement that have become vested pursuant to this Section 2.

         

3.                   Delivery of Restricted Stock.

 

A.                  Issuance of Stock Certificates and Legends. One or more
stock certificates evidencing the Restricted Stock shall be issued in the name
of Grantee but shall be held and retained by the Company until the Vesting Date
on which the Shares (or a portion thereof) subject to this Restricted Stock
award become Vested Shares pursuant to Section 2 hereof, subject to the
provisions of Section 4 hereof. All such stock certificates shall bear the
following legends, along with such other legends that the Board shall deem
necessary and appropriate or which are otherwise required or indicated pursuant
to any applicable stockholders agreement:

 

THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THAT CERTAIN RESTRICTED STOCK
AGREEMENT BY AND BETWEEN MR. ALEX FRIAS AND FREEDOM LEAF INC. (THE “COMPANY”),
DATED AS OF AUGUST 28, 2019 (A COPY OF WHICH IS ON FILE WITH THE COMPANY; THE
“RSA”). EXCEPT AS OTHERWISE PROVIDED IN THE RSA, NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE COMMON STOCK REPRESENTED BY
THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR (B) IF
THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES
AND REGULATIONS IN EFFECT THEREUNDER.

 

 

 

 3 

 

 

THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VOTING
REQUIREMENTS AND OTHER RESTRICTIONS SET FORTH IN A VOTING AGREEMENT BETWEEN THE
HOLDER OF THIS CERTIFICATE AND CERTAIN OTHER PARTIES. TRANSFER OF THE COMMON
STOCK IS SUBJECT TO THE RESTRICTIONS CONTAINED IN SUCH AGREEMENT.

 

THE COMPANY WILL FURNISH TO EACH HOLDER WHO SO REQUESTS A STATEMENT OF THE
POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF WHICH THE COMPANY IS
AUTHORIZED TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF
SUCH PREFERENCES AND/OR RIGHTS. ANY SUCH REQUEST IS TO BE ADDRESSED TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.

 

B.                  Stop-Transfer Instructions. Grantee agrees that, to ensure
compliance with the restrictions imposed by this Agreement, the Company may
issue appropriate “stop-transfer” instructions to its transfer agent, if any,
and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

 

C.                  Stock Powers. Grantee shall deposit with the Company stock
powers or other instruments of transfer or assignment, duly endorsed in blank
with signature(s) guaranteed, corresponding to each certificate representing
Shares of Restricted Stock until such Shares become Vested Shares. If Grantee
shall fail to provide the Company with any such stock power or other instrument
of transfer or assignment, Grantee hereby irrevocably appoints the Secretary of
the Company as his attorney-in-fact, with full power of appointment and
substitution, to execute and deliver any such power or other instrument which
may be necessary to effectuate the transfer of the Restricted Stock (or
assignment of distributions thereon) on the books and records of the Company.

 

D.                 Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares, or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares have been so transferred.

 

E.                  Delivery of Stock Certificates. On or after each Vesting
Date, upon written request to the Company by Grantee, the Company shall promptly
cause a new certificate or certificates to be issued to Grantee for and with
respect to all Shares that become Vested Shares on that Vesting Date, which
certificate(s) shall be delivered to Grantee as soon as administratively
practicable after the date of receipt by the Company of Grantee’s written
request. The new certificate or certificates shall continue to bear those
legends and endorsements that the Company shall deem necessary or appropriate
(including those relating to restrictions on transferability and/or obligations
and restrictions under applicable securities laws).

 

F.                  Issuance Without Certificates. If the Company is authorized
to issue Shares without certificates, then the Company may, in the discretion of
the Board, issue Shares pursuant to this Agreement without certificates, in
which case any references in this Agreement to certificates shall instead refer
to whatever evidence may be issued to reflect Grantee’s ownership of the Shares
subject to the terms and conditions of this Agreement.

 

4.                   Forfeiture of Non-Vested Shares. If Grantee’s Continuous
Service with the Company and the Related Entities is terminated for any reason,
all Non-Vested Shares shall be forfeited immediately upon such termination of
Continuous Service and revert back to the Company without any payment to
Grantee. The Board shall have the power and authority to enforce on behalf of
the Company any rights of the Company under this Agreement in the event of
Grantee’s forfeiture of Non-Vested Shares pursuant to this Section 4.

 

 

 

 4 

 

 

5.                   Rights with Respect to Restricted Stock.

 

A.                 General. Except as otherwise provided in this Agreement,
Grantee shall have, with respect to all of the Shares of Restricted Stock,
whether Vested Shares or Non-Vested Shares, all of the rights of a holder of
Shares of Common Stock of the Company, including without limitation (i) the
right to vote such Restricted Stock, (ii) the right to receive dividends, if
any, as may be declared on the Restricted Stock from time to time, and (iii) the
rights available to all holders of Shares of Common Stock of the Company upon
any merger, consolidation, reorganization, liquidation or dissolution, stock
split-up, stock dividend or recapitalization undertaken by the Company;
provided, however, that all of such rights shall be subject to the terms,
provisions, conditions and restrictions set forth in this Agreement (including
without limitation conditions under which all such rights shall be forfeited).
Any Shares issued to Grantee as a dividend with respect to Shares of Restricted
Stock shall have the same status and bear the same legend as the Shares of
Restricted Stock and shall be held by the Company, if the Shares of Restricted
Stock that such dividend is attributed to is being so held, unless otherwise
determined by the Board.

 

B.                  No Restrictions on Certain Transactions. Notwithstanding any
term or provision of this Agreement to the contrary, the existence of this
Agreement, or of any outstanding Restricted Stock awarded hereunder, shall not
affect in any manner the right, power or authority of the Company to make,
authorize or consummate: (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business; (ii) any merger, consolidation or similar transaction by or of the
Company; (iii) any offer, issue or sale by the Company of any capital stock of
the Company, including any equity or debt securities, or preferred or preference
stock that would rank prior to or on parity with the Restricted Stock and/or
that would include, have or possess other rights, benefits and/or preferences
superior to those that the Restricted Stock includes, has or possesses, or any
warrants, options or rights with respect to any of the foregoing; (iv) the
dissolution or liquidation of the Company; (v) any sale, transfer or assignment
of all or any part of the stock, assets or business of the Company; or (vi) any
other corporate transaction, act or proceeding (whether of a similar character
or otherwise).

 

C.                  Transferability. Unless otherwise determined by the Board,
the Shares of Restricted Stock are not transferable unless and until the later
of (i) the date that is twelve (12) months after the date hereof and (ii) the
date such Shares become Vested Shares in accordance with this Agreement,
otherwise than by will or under the applicable laws of descent and distribution.
The terms of this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of Grantee. Except as otherwise permitted pursuant
to the first sentence of this Section 5(C), any attempt to effect a Transfer of
any Shares of Restricted Stock prior to the date on which the Shares become
Vested Shares shall be void ab initio. For purposes of this Agreement,
“Transfer” shall mean any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, or other disposition, whether similar or
dissimilar to those previously enumerated, whether voluntary or involuntary, and
including, but not limited to, any disposition by operation of law, by court
order, by judicial process, or by foreclosure, levy or attachment.

 

6.                   Representations and Warranties of Grantee. Grantee hereby
represents and warrants to the Company that:

 

A.                 Terms of this Agreement. Grantee has received a copy of this
Agreement, has read and understands the terms of this Agreement, and agrees to
be bound by its terms and conditions.

 

B.                  Acceptance of Shares for Own Account for Investment. Grantee
is acquiring the Shares for Grantee’s own account for investment purposes only
and not with a view to, or for sale in connection with, a distribution of the
Shares within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”). Grantee has no present intention of selling or otherwise
disposing of all or any portion of the Shares.

 

 

 

 5 

 

 

C.                  Access to Information. Grantee has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Grantee reasonably considers
important in making the decision to acquire the Shares, and Grantee has had
ample opportunity to ask questions of the Company’s representatives concerning
such matters and this investment.

 

D.                 Understanding of Risks. Grantee is fully aware of: (i) the
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares and the restrictions
on transferability of the Shares (e.g., that Grantee may not be able to sell or
dispose of the Shares or use them as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of an investment in the Shares. Grantee is capable of evaluating
the merits and risks of this investment, has the ability to protect Grantee’s
own interests in this transaction and is financially capable of bearing a total
loss of this investment.

 

E.                  Accredited Investor. Grantee is an “accredited investor”
pursuant to Rule 501(a) of Regulation D under the Securities Act.

 

F.                  No General Solicitation. At no time was Grantee presented
with or solicited by any publicly issued newspaper, mail, radio, television or
other form of general advertising or solicitation in connection with the offer,
sale and issue of the Shares.

 

G.                 Compliance with Securities Laws. Grantee understands and
acknowledges that the Shares have not been registered with the Securities and
Exchange Commission (the “SEC”) under the Securities Act and that,
notwithstanding any other provision of this Agreement to the contrary, the
issuance of any Shares is expressly conditioned upon compliance with the
Securities Act and all applicable state securities laws. Grantee agrees to
cooperate in good faith (but at no material cost to Grantee) with the Company to
ensure compliance with such laws.

 

H.                 No Transfers Unless Registered or Exempt. Grantee understands
that Grantee may not transfer any Shares unless such Shares are registered under
the Securities Act and qualified under applicable state securities laws or
unless, in the good faith opinion of counsel to the Company, exemptions from
such registration and qualification requirements are available. Grantee
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares.
Grantee has also been advised that exemptions from registration and
qualification may not be available or may not permit Grantee to transfer all or
any of the Shares in the amounts or at the times proposed by Grantee.

 

I.                    SEC Rule 144. In addition, Grantee has been advised that
SEC Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, may not always be available with respect to
the Shares and, in any event, requires that the Shares be held for a minimum of
six months, and in certain cases one (1) year, after they have been acquired
before they may be resold under Rule 144. Grantee understands that Rule 144 may
indefinitely restrict transfer of the Shares so long as Grantee remains an
“affiliate” of the Company or if “current public information” about the Company
(as defined in Rule 144) is not publicly available.

 

J.                    Market Standoff Agreement. Grantee agrees in connection
with any registration of the Company’s securities that, upon the request of the
Company or the underwriters managing any public offering of the Company’s
securities, Grantee shall not sell or otherwise dispose of any Shares without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) after
the effective date of such registration that is requested by such underwriters
and subject to all restrictions as the Company or the underwriters may specify.
Grantee further agrees to enter into any agreement reasonably required by the
underwriters to implement the foregoing.

 

 

 

 6 

 

 

7.                   Tax Matters; Section 83(b) Election.

 

A.                 Section 83(b) Election. If Grantee properly elects, within
thirty (30) days of the applicable Award Date, to include in gross income for
federal income tax purposes an amount equal to the fair market value (as of the
applicable Award Date) of the Restricted Stock pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended (the “Code”), Grantee shall make
arrangements satisfactory to the Company to pay to the Company any federal,
state or local income taxes required to be withheld with respect to the
Restricted Stock. If Grantee shall fail to make such tax payments as are
required, the Company shall, to the extent permitted by law, have the right to
deduct from any payment of any kind (including without limitation, the
withholding of any Shares that otherwise would be issued to Grantee under this
Agreement) otherwise due to Grantee any federal, state or local taxes of any
kind required by law to be withheld with respect to the Restricted Stock.

 

B.                  No Section 83(b) Election. If Grantee does not properly make
the election described in paragraph 7(A) above, Grantee shall, no later than the
date or dates as of which the restrictions referred to in this Agreement hereof
shall lapse, pay to the Company, or make arrangements satisfactory to the Board
for payment of, any federal, state or local taxes of any kind required by law to
be withheld with respect to the Restricted Stock (including without limitation
the vesting thereof), and the Company shall, to the extent permitted by law,
have the right to deduct from any payment of any kind (including without
limitation, the withholding of any Shares that otherwise would be distributed to
Grantee under this Agreement) otherwise due to Grantee any federal, state, or
local taxes of any kind required by law to be withheld with respect to the
Restricted Stock.

 

C.                  Satisfaction of Withholding Requirements. Grantee may
satisfy the withholding requirements with respect to the Restricted Stock
pursuant to any one or combination of the following methods: (a) payment in
cash; or (b) if and to the extent permitted by the Board, payment by
surrendering unrestricted previously held Shares which have a value equal to the
required withholding amount or the withholding of Shares that otherwise would be
deliverable to Grantee pursuant to this Award. Grantee may surrender Shares
either by attestation or by delivery of a certificate or certificates for Shares
duly endorsed for transfer to the Company, and if required with medallion level
signature guarantee by a member firm of a national stock exchange, by a national
or state bank (or guaranteed or notarized in such other manner as the Board may
require).

 

D.                 Grantee’s Responsibilities for Tax Consequences. Tax
consequences on Grantee (including without limitation federal, state, local and
foreign income tax consequences) with respect to the Restricted Stock (including
without limitation the grant, vesting and/or forfeiture thereof) are the sole
responsibility of Grantee. Grantee shall consult with his or her own personal
accountant(s) and/or tax advisor(s) regarding these matters, the making of a
Section 83(b) election, and Grantee’s filing, withholding and payment (or tax
liability) obligations.

 

E.                  Amendment, Modification & Assignment; Non-Transferability.
This Agreement may only be modified or amended in a writing signed by both the
Company and the Grantee. No promises, assurances, commitments, agreements,
undertakings or representations, whether oral, written, electronic or otherwise,
and whether express or implied, with respect to the subject matter hereof, have
been made by either party which are not set forth expressly in this Agreement.
Unless otherwise consented to in writing by the Company, in its sole discretion,
this Agreement (and Grantee’s rights hereunder) may not be assigned, and the
obligations of Grantee hereunder may not be delegated, in whole or in part. The
rights and obligations created hereunder shall be binding on Grantee and his
heirs and legal representatives and on the successors and assigns of the
Company.

 

F.                  Complete Agreement. This Agreement (together with those
agreements and documents expressly referred to herein, but only for the purposes
referred to herein) embody the complete and entire agreement and understanding
between the parties with respect to the subject matter hereof, and supersede any
and all prior promises, assurances, commitments, agreements, undertakings or
representations, whether oral, written, electronic or otherwise, and whether
express or implied, which may relate to the subject matter hereof in any way.

 

 

 

 7 

 

 

8.                   Miscellaneous.

 

A.                 No Right to (Continued) Employment or Service. This Agreement
and the grants of Restricted Stock hereunder shall not shall confer, or be
construed to confer, upon Grantee any right to employment or service, or
continued employment or service, with the Company or any Related Entity.

 

B.                  No Limit on Other Compensation Arrangements. Nothing
contained in this Agreement shall preclude the Company or any Related Entity
from adopting or continuing in effect other or additional compensation plans,
agreements or arrangements, and any such plans, agreements and arrangements may
be either generally applicable or applicable only in specific cases or to
specific persons.

 

C.                  Severability. If any term or provision of this Agreement is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or under any applicable law, rule or regulation, then such
provision shall be construed or deemed amended to conform to applicable law (or
if such provision cannot be so construed or deemed amended without materially
altering the purpose or intent of this Agreement and the grants of Restricted
Stock to Grantee hereunder, such provision shall be stricken as to such
jurisdiction and the remainder of this Agreement and the award hereunder shall
remain in full force and effect).

 

D.                 No Trust or Fund Created. Neither this Agreement nor the
grants of Restricted Stock hereunder shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company or any Related Entity and Grantee or any other person. To the extent
that Grantee or any other person acquires a right to receive payments from the
Company or any Related Entity pursuant to this Agreement, such right shall be no
greater than the right of any unsecured general creditor of the Company.

 

E.                  Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Nevada (without reference to the conflict of laws rules or principles thereof).

 

F.                  Interpretation. Grantee accepts the Restricted Stock subject
to all of the terms, provisions and restrictions of this Agreement. The
undersigned Grantee hereby accepts as binding, conclusive and final all
decisions or interpretations of the Board upon any questions arising under this
Agreement.

 

G.                 Headings. Section, paragraph and other headings and captions
are provided solely as a convenience to facilitate reference. Such headings and
captions shall not be deemed in any way material or relevant to the
construction, meaning or interpretation of this Agreement or any term or
provision hereof.

 

 

 

 8 

 

 

H.                 Notices. Any and all notices provided for in this Agreement
shall be given in writing and shall be deemed given to a party at the earlier of
(a) when actually delivered to such party, or (b) when mailed to such party by
registered or certified mail (return receipt requested) or sent to such party by
courier, confirmed by receipt, and addressed to such party at the address
designated below for such party as follows (subject to the right of either party
to designate some other address at any time hereafter in a notice satisfying the
requirements of this Section 8(H)):

 

If to the Company: Freedom Leaf Inc.   3571 E. Sunset Road, Suite 420   Las
Vegas, NV 89120     with a copy to: Kleinberg, Kaplan, Wolff & Cohen, P.C.   551
Fifth Avenue   New York, NY 10176   Telecopy: (212) 986-8866   Telephone: (212)
880-9869   Email: [REDACTED]   Attention: Jonathan Ain     If to Grantee: Alex
Frias   [REDACTED]     with a copy to: Saunders Koechel & Sharp LLP   Attention:
John Koechel   5404 Birchman Avenue   Fort Worth, Texas 76107   Telecopy:
303.396.0243   Telephone: 214.923.7577   Email: [REDACTED]

 

I.                    Section 409A.

 

(1)                It is intended that the Restricted Stock awarded pursuant to
this Agreement be exempt from Section 409A of the Code (“Section 409A”) because
it is believed that the Agreement does not provide for a deferral of
compensation and accordingly that the Agreement does not constitute a
nonqualified deferred compensation plan within the meaning of Section 409A. The
provisions of this Agreement shall be interpreted in a manner consistent with
this intention, and the provisions of this Agreement shall not be amended,
adjusted, assumed or substituted for, converted or otherwise modified without
Grantee’s prior written consent if and to the extent that the Company believes
or reasonably should believe that such amendment, adjustment, assumption or
substitution, conversion or modification would cause the award to violate the
requirements of Section 409A.

 

 

 

 9 

 

 

(2)                In the event that either the Company or Grantee believes, at
any time, that any benefit or right under this Agreement is subject to Section
409A, and does not comply with the requirements of Section 409A, it shall
promptly advise the other and the Company and Grantee shall negotiate reasonably
and in good faith to amend the terms of such benefits and rights, if such an
amendment may be made in a commercially reasonable manner, such that they comply
with Section 409A with the most limited possible economic effect on Grantee and
on the Company.

 

(3)                Notwithstanding the foregoing, the Company does not make any
representation to Grantee that the Shares of Restricted Stock awarded pursuant
to this Agreement are exempt from, or satisfies, the requirements of Section
409A, and the Company shall have no liability or other obligation to indemnify
or hold harmless Grantee or any beneficiary for any tax, additional tax,
interest or penalties that Grantee or any beneficiary may incur in the event
that any provision of this Agreement, or any amendment or modification thereof
or any other action taken with respect thereto that either is consented to by
Grantee or that the Company reasonably believes should not result in a violation
of Section 409A, is deemed to violate any of the requirements of Section 409A.

 

J.                    Non-Waiver of Breach. The waiver by any party hereto of
the other party’s prompt and complete performance, or breach or violation, of
any term or provision of this Agreement shall be effected solely in a writing
signed by such party, and shall not operate nor be construed as a waiver of any
subsequent breach or violation, and the waiver by any party hereto to exercise
any right or remedy which he or it may possess shall not operate nor be
construed as the waiver of such right or remedy by such party, or as a bar to
the exercise of such right or remedy by such party, upon the occurrence of any
subsequent breach or violation.

 

K.                 Reliance on Counsel and Advisors. Grantee acknowledges that
Kleinberg, Kaplan, Wolff & Cohen, P.C., is representing only the Company in this
transaction. Grantee acknowledges that he or she has had the opportunity to
review this Agreement, including all attachments hereto, and the transactions
contemplated by this Agreement with his or her own legal counsel, tax advisors
and other advisors. Grantee is relying solely on his or her own counsel and
advisors and not on any statements or representations of the Company or its
agents for legal or other advice with respect to this investment or the
transactions contemplated by this Agreement.

 

L.                  Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement. This Agreement may be
executed and delivered by facsimile or other electronic transmission. A
complete, accurate, fully-executed PDF or other facsimile copy of this Agreement
may be used in place of an original for all purposes.

 

(signature page follows)

 

 

 

 10 

 

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement as of the date first written above.

 

 

ALEX FRIAS

 

 

 

 

/s/ Alex Frias             
Signature

 

 

 

FREEDOM LEAF INC.

 

 

 

By:    /s/ Carlos Frias                  Name: Carlos Frias   Title: CEO

 

 

 

 

 

 

 11