SECURITIES EXCHANGE AND SETTLEMENT AGREEMENT

 

This Exchange and Settlement Agreement, dated as of October 24, 2014 (this
"Agreement"), between Aja Cannafacturing, Inc., a Nevada corporation (inclusive
of any Subsidiaries, "Issuer"), and Beaufort Capital Partners LLC ("Investor")
(Issuer and Investor may hereinafter be referred to individually as a "Party" or
jointly as the "Parties").

 

WHEREAS, Issuer issued a certain debt security in the form of a promissory note,
dated November 27, 2012, in the face amount of $51,800, which promissory note
was amended on February 28, 201 3 to increase the face amount to $183,497.72,
and further amended on May 31, 2013 to increase the face amount to $289,997.72,
to Investor a copy of which amended promissory note is annexed hereto as Exhibit
A and made a part hereof (the "Debt Securities Instrument");

 

WHEREAS, notwithstanding that, in accordance with its stated terms, the Debt
Securities Instrument has no rights of convertibility into shares of the common
stock of Issuer, $0.00 I par value per share (the "Issuer Common Stock"), and
without regard to the Jack of such an existing "conversion" provision in the
Debt Securities Instrument, Investor desires to exchange the Debt Securities
Instrument from time to time hereinafter for equity securities in the form of
unrestricted shares of Issuer Common Stock, and Issuer desires to facilitate
such exchange. in each case pursuant to their respective economic interests and
in each case as more specifically and fully set forth herein; and

WHEREAS, subject to certain conditions, and pursuant to Section 3(aX9J of the
Securities Act, one or more exchanges of the Debt Securities Instrument for
shares of Issuer Common Stock (each, a "3(a)(9) Exchange") while beneficially
held by Investor is/are eligible to be effected without registration as more
specifically and fully provided herein;

 

NOW, THEREFORE, the Parties hereby acknowledge, represent. warrant, covenant and
agree, in each case as applicable, as follows for the benefit of each other
legal counsel and securities transfer agent professionals involved in any one or
more J(aX9) Exchanges hereunder (such transactions collectively, the
"Transactions''):

 

 

 

1.                   Recitals. The foregoing recitals arc hereby incorporated by
reference into this Agreement and made a part hereof.

 

2.                   Definitions. For purposes of this Agreement, the following
terms when appearing in their capitalized forms as follow shall have the
corresponding assigned meanings:

 

"3(a)(9) Exchange''- shall have the meaning specified in the fifth paragraph of
the recitals to this Agreement.

 

"Affiliate" - with respect to any specified Person, any other Person who,
directly or indirectly through one or more intermediaries, Controls, is
Controlled By, or is Under Common Control With, such specified Person.

"Agreement" -shall have the meaning specified in the preamble above.

 

"Authorization'" - any authorization, approval, consent, certificate license,
permit or franchise of or from any Governmental Authority or pursuant to any
Law.

 

"Beneficial Owner" - with respect to any shares means a Person who shall be
deemed to be the beneficial owner of such shares (i) which such Person or any of
its Affiliates or associates (as such term is defined in Rule I 2 b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) which such Person or any of its Affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights
exchange rights. warrants or options, or otherwise, or {B) the right to vote
pursuant to any agreement, arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other Persons with whom such
Person or any of its Affiliates or associates or any Person with whom such
Person or any of its Affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
such shares, or (iv) pursuant to Section 13{d) of the Exchange Act and any rules
or regulations promulgated thereunder.

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"Clearing Date" the first date upon which both (i) the Exchange Shares under any
Exchange Notice have been deposited into the Investors designated brokerage
account, and (ii) the Investor has thereafter received confirmation from its
brokerage firm that it may execute trades involving such Exchange Shares.

 

"Control" (including "Controlled By" and "Under Common Control With'') - the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise.

 

"Current Form 10 Information" - for a given registrant/company, such infom1ation
as is or may he required by the SEC to satisfy the financial and other
disclosure requirements of SEC Form I 0 within the meaning of Rule 144.

 

"Current Public Information" - in an appropriate format the information
concerning a given issuer specified in paragraphs (a)(5)(i) to (xiv) inclusive,
and paragraph (a)(5)(xvi), of Rule 15c2-l 1 of the Rules and Regulations
promulgated under the Exchange Act.

 

"Debt Securities Instrument" - shall have the meaning specified in the first
paragraph of the recitals to this Agreement.

 

"DTC" -The Depository Trust Company, a subsidiary of DTCC.

 

"DTCC" - The Depository Trust & Clearing Corporation.

 

"DTC Eligibility" / "DTC Eligible" - in respect of a given security its
eligibility to be traded electronically in book-entry form through OTC.

 

"DWAC" - DTC's Deposit Withdrawal Agent Commission system

 

"Exchange Act" -the Securities and Exchange Act of I 934, as amended

 

"Exchange Amount" - shall have the meaning specified in Section 2.1 of this
Agreement.

 

"Exchange Cap" - the maximum number of shares of Issuer Common Stock that Issuer
may issue pursuant to this Agreement and the transactions contemplated hereby
without (i) breaching Issuer's obligations under the applicable rules of The
Nasdaq Stock Market or any other Principal Market on which the Issuer Common
Stock may be listed or quoted, or (ii) obtaining stockholder approval under the
applicable rules of The Nasdaq Stock Market or any other Principal Market on
which the Issuer Common Stock may be listed or quoted.

 

"Exchange Notice" - a written notice to the Investor executed by a duly
authorized officer of the Issuer and including an Exchange Request, in each case
as the same may be deemed amended in accordance with Section 2.4.3.4.

 

"Exchange Notice Date" - shall have the meaning specified in Section 2.4.1 of
this Agreement.

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"Exchange Notice Date/Time Stamp" - shall have the meaning specified in Section
2.4.l of this Agreement.

"Exchange Request" -·shall have the meaning specified in Section 2.1 of this
Agreement.

 

"Exchange Shares" - shall have the meaning specified in Section 2.1 of this
Agreement

 

"Exchange Shares Delivery Period" - in relation to any given Exchange Notice,
the period commencing upon the date and time indicated in the Exchange Notice
Date/Time Stamp and continuing thereafter for twenty-eight (28) Trading Hours.

 

"FAST Program" – DTC’s Fast Automated Securities Transfer program, participation
in which is a required for OTC Eligibility.

 

"FINRA" - shall mean the Financial Industry Regulatory Authority.

 

"Governmental Authority" means any entity or body exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to United States federal, state, local, or municipal government, foreign,
international, multinational or other government, including any department,
commission. Board, agency, bureau, subdivision, instrumentality, official or
other regulatory, administrative or judicial authority thereof, and any
non-governmental regulatory body to the extent that the rules and regulations or
orders of such body have the force of Law.

 

''Gypsy Swap" - any series of transactions i n which, by arrangement or
otherwise, the resale of an outstanding unrestricted security by the then holder
thereof results, directly or indirectly, and no matter the sequence of such
transactions, in a capital infusion into the issuing company.

 

"Investor" - shall have the meaning specified in the preamble to this Agreement.

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"Issuer'" -shall have the meaning specified in the preamble to this Agreement.

 

"Issuer Common Stock" - shall have the meaning specified in the fourth paragraph
of the recitals to this Agreement.

 

''Issuer's Share Delivery Obligation" - shall have the meaning specified in
Section 2.4.3.3 of this Agreement

 

"Knowledge" - of a given Person, and with respect to any fact or matter, the
actual knowledge of the directors and executive officers of such Person and each
of its Subsidiaries, together with such knowledge that such directors, executive
officers and other employees could be expected to discover after due
investigation concerning the existence of the fact or matter in question.

 

"Law" means any statute, law (including common Law) constitution, treaty,
ordinance, code, order, decree, judgment, rule, regulation and any other binding
requirement or determination of any Governmental Authority.

 

"Liens" means any liens, claims, charges, security interests, mortgages, pledges
easements, conditional sale or other title retention agreements, defects, in
title, covenants or other restrictions of any kind, including, any restrictions
on the use, voting, transfer or other attributes of ownership.

 

"Material Adverse Effect" - with respect to any Person, any stale of facts,
development, even circumstance, condition. occurrence or effect that,
individually or taken collectively with all other preceding facts, developments,
events, circumstances, c-0nditions, occurrences or effects (a) is materially
adverse to the condition (financial or otherwise), business, operations or
results of operations of such Person, or (b) impairs the ability of such Person
to perform its obligations under this Agreement.

 

"Officer's Certificate" - shall have the meaning specified in Section 2.4.3.2 of
this Agreement.

 

"Officer's Certificate Deadline'" - shall have the n1eaning specified in Section
2.4.3.2 of Agreement

 

"Officer's Certificate Delivery Obligation" - shall have the meaning specified
in Section 2.4.3.2 of this Agreement.

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"Order" - any award, injunction, judgment, decree, stay, order, ruling, subpoena
or verdict, or other decision entered, issued or rendered by any Governmental
Authority.

 

"OTC" --over-the-counter

 

"OTCPink - Current" - the OTCMarkets tier for companies that are not SEC
Reporting Companies but that regularly tile and make available Current Public
Information reports and that are current in such filings as of the date hereof.

 

"OTCOB"- the base level OTCMarkets tier for SEC Reporting Companies. "Ownership
Limitation" -at any given point in time, 4.99%.

 

"Parties"- shall have the meaning specified in the preamble to this Agreement.

 

"Person"- an individual, a corporation, a partnership, a limited liability
company, a trust, an unincorporated association, Governmental Authority, a
person (including, without l imitation, a "person" as defined in Section I
3(dX3) of the Exchange Act), or any political subdivision, agency or
instrumentality of a Governmental Authority or any other entity or body.

 

"Pricing Period" - in relation to any Exchange Shares, the twenty (20) Trading
Days immediately preceding the date upon which Investor shall have delivered to
Issuer the corresponding Exchange Notice.

 

"Principal Market" - as of any given date, whichever of the New York Stock
Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market, the American Stock Exchange, the OTCQB, or the OTCPink is at the
time the principal trading exchange or market for the Issuer Common Stock.

 

"Proceeding" or "'Proceedings" - any actions, suits, claims, hearing
arbitrations, mediations, Proceedings (public or private) or governmental
investigations that have been brought by any Governmental Authority or any other
Person.

 

"Rule 144"- Rule 144 promulgated under the Securities Act.

 

"Rule 405" - Rule 405 of Regulation S-T.

 

"SEC" -shall mean the U.S. Securities and Exchange Commission.

 

"SEC Reporting Company" - any company with a class of common stock registered
under Section 12 of the Exchange Act and that, as of the date hereof is, and for
at least the ninety (90) day period immediately preceding the date hereof has
been, subject to the periodic and other reporting requirements of either Section
13 or I 5(d) of the Exchange Act.

 

"Securities Act" -the Securities Act of 1933, as amended.

 

"Shell Company" - a company having no or nominal operations and either (a) no or
nominal assets, (b) assets consisting solely of cash and cash equivalents, or
(c} assets consisting of any amount of cash and cash equivalents and nominal
other assets.

 

"Stock Price"' - on any given Trading Day, the intra-day lowest traded stock
price (as reported by a direct feed service) of the Issuer Common Stock on the
Principal Market or if the Issuer Common Stock is not traded on a Principal
Market, the highest reported bid price for the Issuer Common Stock as provided
by FINRA.

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''Trading Day" -any day during which the Principal Market shall be open for
business.

 

''Trading Hours'' - for any given Trading Day, those hours between 9:30 am (U.S.
Eastern Time and 4:30 pm (U.S.) Eastern Time.

 

"Transactions" - shall have the meaning specified in the sixth paragraph of the
recitals to this Agreement.

 

"Transfer Agent" - as of any given date, the transfer agent firm engaged by
Issuer to perform securities transfer agent and related services for the Issuer
and which, as of the date of this Agreement, is Globex Transfer, LLC, 780
Deltona Blvd., Suite 202, Deltona, FL 32725.

 

"Transfer Agent Instruction Letter'' - shall have the meaning specified in
Section 2.4.3.1 of this Agreement.

 

"Transfer Agent Instruction Delivery Deadline" - shall have the meaning
specified m Section 2.4.3.l of this Agreement.

 

"Transfer Agent Instruction Delivery Requirement" - shall have the meaning
specified in Section 2.4.3.1 of this Agreement.

 

"Transfer Agent Legal Opinion Letter" - shall have the meaning specified in
Section

2.4.3.2 of this Agreement.

 

2. The 3(aX9l Exchange(s).

 

2.1                Generally. Subject to the terms, conditions and limitations
of this Agreement, for so long as any amounts payable under the Debt Securities
Instrument remain (i) unexchanged for shares of Issuer Common Stock hereunder,
or (ii) unpaid and outstanding (such period being deemed the "Investor Holding
Period"), the Investor shall have a continuing right in its sole and exclusive
discretion, through the delivery by Investor to Issuer of an Exchange Notice, to
elect to exchange as part of a 3(a)(9) Exchange (in each instance, an "Exchange
Request") all or any part of the amount of any principal and/or accrued but
unpaid interest thereon (as set forth within any such Exchange Notice. the
"Exchange Amount") for a number of fully-paid and non-assessable shares of
Issuer Common Stock equal to (x) the Exchange Amount divided by (y) fifty
percent (50%) of t h e Stock Price during the Pricing Period (such result in
each instance constituting the "Exchange Shares"); provided, however, that any
and all obligations under the Debt Securities shall remain unaffected during
such Investor Holding Period for all or any part thereof remaining unexchanged,
including without limitation any events or other terms of default. In connection
with this provision, the Debt Securities Instrument shall be deemed to have been
incorporated by reference herein with all rights and obligations attendant
thereto and arising thereunder to be continuing unaffected hereby but only
insofar as not in conflict at any given time with any superseding provisions of
this Agreement.

 

2.2                Certain Acknowledgments and Covenants. Each of Issuer and
Investor hereby (a) acknowledge that they are aware and understand that, in
order to be eligible for exemption from registration under the Securities Act,
any 3(a)(9) Exchange(s) hereunder may not involve (i) any additional
consideration beyond the Debt Securities Instrument being surrendered/exchanged
by the Investor, or (ii) any payment by the Issuer of any commission or other
remuneration either directly or indirectly for the solicitation of such
exchange{s), and (b) covenant that any 3(a)(9) Exchange(s) hereunder shall not
involve (i) any additional consideration beyond the Debt Securities Instrument
being surrendered/exchanged by the Investor, or (ii) any payment by the Issuer
of any commission or other remuneration either directly or indirectly for the
solicitation of such exchru1ge(s).

 

2.3                Mechanics and Related Matters.

 

2.3.1 Delivery of Exchange Notice. Any given Exchange Notice shall be deemed to
have been delivered to the Issuer as of the date (the "Exchange Notice Date")
and time of dispatch by email to the Issuer as set forth on the email so
dispatched, provided, however, that no reasonably compelling basis upon which to
challenge such date and time exists and has been provided to Investor (in each
case, the "Exchange Notice Date/time Stamp").

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2.3.2 Certain Exchange Notice Limitations. Anything in this Agreement to the
contrary notwithstanding, in no event shall any Exchange Notice be deemed valid
(i) if and to the extent that fulfillment of the Exchange Request contained
therein would cause the aggregate number of shares of Issuer Common Stock
beneficially owned by the Investor and its affiliates, including those in
relation to which it/they have a right to acquire within sixty (60) day>, lo
exceed the Ownership Limitation, or (ii) if at such time the Issuer Common Stock
is listed or quoted on· The Nasdaq Stock Market or any other U.S. national
securities exchange, and to the extent that that fulfillment of the Exchange
Request contained therein would cause the aggregate number of shares of Issuer
Common Stock issued pursuant to this Agreement, when combined with all shares of
Issuer Common Stock issued pursuant to any transactions with which they may be
aggregated with other transactions for purposes of and under applicable rules of
The Nasdaq Stock Market or any other Principal Market on which the Common Stock
may at such time be listed or quoted, would cause the aggregate number of shares
of Issuer Common Stock that would be deemed issued pursuant to this Agreement,
to exceed the Exchange Cap. In the event that any Exchange Notice shall have
been delivered by Investor to Issuer but is invalid to any extent in accordance
with the foregoing, such Exchange Notice shall be void ab initio but only to the
extent of such invalidity.

 

2.3.3 Delivery and Settlement of Exchange Shares.

 

2.3.3.1 Transfer Agent Instruction Requirement. Upon receipt of an Exchange
Notice, Issuer shall immediately, but in no event more than seventy two (72)
hours (the "Transfer Agent Instruction Delivery Deadline"). deliver a letter to
Transfer Agent, by email as a .pdf attachment and with a cc (courtesy copy)
email to Investor, such letter to be in the fom1 annexed hereto as Exhibit D and
incorporated by reference herein, inclusive of the unanimous written board
consent annexed thereto (the "Transfer Agent Instruction Letter"), in each case
filled in as appropriate based on the information set forth in the corresponding
Exchange Notice, or deemed set forth in the corresponding Exchange Notice in
accordance with Section 2.4.3.4 below (the ''Transfer Agent Instruction Delivery
Requirement''). Failure to meet the Transfer Agent Instruction Delivery
Requirement shall result in an adjustment to the Exchange A mount so that the
Exchange Shares shall be a number of fully-paid and nonassessable shares of
Issuer Common Stock equal co ( x) the Exchange Amount divided by (y) the lessor
of (A) $0.00001 and (B) twenty percent (20%) of the Stock Price during the
Pricing Period .

 

2.3.3.2 Officer's Certificates. In connection with the delivery of any Exchange
Shares, the cost of obtaining any formal written legal opinion reasonably
requested by Transfer Agent, including any one or more concluding that such
Exchange Shares be delivered free of any restrictive legend (each, a "Transfer
Agent Legal Opinion Letter"), shall be borne by Investor, and it shall be within
the exclusive discretion of Investor as to what legal firm shall be engaged for
this purpose. Promptly upon delivery via email by Investor's designated counsel
lo the President and chief executive officer of Issuer at the email address
provided in Section 5 of this Agreement (but in no event more than two [2]
Trading Days) (the "Officer's Certificate Deadline") of any officer's
certificates identified in such email as being required by Investor's designated
counsel for purposes of Investor's designated counsel being able to deliver the
Transfer Agent Legal Opinion Letter (each, an "Officer's Certificate"), the CEO
and chief executive. officer of Issuer shall duly execute and return to
Investor's designated counsel, in .pdf format at the email address from which
the corresponding unexecuted Officer's Certificate(s) had been received, such
duly executed Officer's Certificate (the "Officer's Certificate Delivery
Obligation").

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2.3.3.3 Share Delivery Obligation. Subject only to the limitations set forth in
Section 2.4.2 above and any delays in delivery to Transfer Agent of the Transfer
Agent Legal Opinion Letter and within the applicable Exchange Share Delivery
Period. Issuer shall be obligated to and shall take any and all steps required
to either (a) if Transfer Agent is not participating in the OTC FAST Program
during the applicable Exchange Share Delivery Period, and/or the Exchange Shares
are not OTC Eligible, deliver for settlement to the window of Investor's
brokerage account (as designated in the Transfer Agent Instruction Letter)
physical certificates representing the Exchange Shares deliverable pursuant to
the corresponding Exchange Request, or (b) if Transfer Agent is participating in
the OTC FAST Program during the applicable Exchange Share Delivery Period,
and/or the Exchange Shares are OTC Eligible, cause such transfer agent to
effectuate delivery and settlement of such Exchange Shares electronically, in
book-entry form, by appropriately crediting the account of the Investor's prime
broker (as designated in the Transfer Agent Instruction Letter) with OTC through
its DWAC System and providing proof satisfactory to the Investor thereof (in
relation to any given Exchange Request, the "Issuer's Share Delivery
Obligation").

 

3.                   Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Investor, which representations and warranties,
excepting (c) below, shall be deemed to be repeated by Issuer on each day on
which any amounts payable under the Debt Securities Instrument, including
interest, remain (i) unexchanged for shares of Issuer Common Stock hereunder, or
(ii) unpaid and outstanding, that:

 

(a)                 it is a corporation duly organized, validly existing, and in
good standing under the Laws of the State of Nevada:

 

(b)                 it has taken all requisite corporate and other action to
authorize, and it has full corporate power and authority without any required
further action, to (i) carry on its present business as current) conducted, (ii)
own its properties and assets, (iii) execute, deliver, and perform all of its
obligations under this Agreement, (iv) have borrowed and to repay with interest
the indebtedness evidenced by the Debt Securities Instrument. and (v) issue and
deliver to Investor or its designee any and all Exchange Shares potentially
deliverable pursuant to this Agreement;

 

(c)                 its capitalization as of the date of this Agreement includes
(i) ___________ (_________) shares of Issuer Common Stock authorized, of which
________________ (_________) shares are issued and outstanding, and (ii)
_____________ (_________) shares of Issuer preferred stock, par value $0.00001
per share authorized, of [Series A, B, C , D] are issued and outstanding, and
_______________________ ( ) notes/debentures in the combined amount
of______________ dollars ($ __________) that, in accordance with their terms,
are "convertible" into capital stock of Issuer, issued and outstanding;

 

(d)                 the Debt Securities Instrument constitutes a legal, valid
and binding, and past due obligation of Issuer, enforceable against Issuer i n
accordance with the terms thereof, subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar Laws affecting creditors'
rights generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a proceeding
in equity or at law), there is no dispute relating to the validity of such
obligation, and any defenses to its validity have been waived in their entirety:

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(e)                 the execution, delivery and performance of this Agreement,
the payment of all amounts due under the Debt Securities Instrument by Issuer,
and the consummation of the Transactions, do not and will not (i) violate any
provision of its articles of incorporation or bylaws, (ii) conflict with or
result in the breach of any material provision of, or give rise to a default
under, any agreement with respect to indebtedness or of any other material
agreement to which Issuer is a party or by which it or any of its properties or
assets are bound (iii) conflict with any Law, statute, rule or regulation or any
Order judgment or ruling of any court or other agency of government to which it
is subject or any of its properties or assets may be bound or affected. in each
case except where such conflict would not have a Material Adverse Effect on
Issuer or (iv) result in the creation or imposition of any Lien, charge,
mortgage, encumbrance or other security interest or any segregation of assets or
revenues or other preferential arrangement ( whether or not constituting a
security interest) with respect to any present or future assets, revenues or
rights to the receipt of income of Issuer;

 

(f)                  it is currently an SEC Reporting Company .

 

(g)                 it is not a Shell Company, and, if it ever was a Shell
Company, it (i) has ceased to be a Shell Company, (ii) has filed all reports and
other materials required to be filed by Section 13 or 15(d) of the Exchange Act,
as applicable, during the twelve (I 2) month period immediately preceding the
date of this Agreement (or for such shorter period as it has been required to
file such reports and materials), other than current reports on Form 8-K, and
(iii) has filed Current Form I 0 Information with the SEC reflecting its status
as an entity that is no longer a Shell Company, and at least one (1) year has
elapsed since such Current Form I 0 Information was filed:

 

(h)                 the Issuer Common Stock currently trades publicly on the
OTCQB market on under the symbol ''AJAC" and is not currently subject to any
trading halts, suspensions, delistings or similar actions imposed by the SEC,
FINRA, or any other regulatory or similar authorities and no members of its
management or board of directors is aware or has any reason to be aware of any
such threatened halts, suspensions, delistings or similar actions;

 

(i)                   the Issuer Common Stock is currently DTC Eligible,
Transfer Agent is participating in the OTC FAST Program, and no OTC "chill" has
been imposed upon the Issuer Common Stock:

 

(j)                  its management understands what a Gypsy Swap is and that
such arrangements are deemed to constitute unlawful schemes to evade the
registration requirements of the Securities Act, and has no knowledge of any
such arrangements in connection with the Transactions;

 

(k)                 there are no legal actions, suits, arbitration proceedings,
investigations or other Proceedings pending or, to the reasonable knowledge of
Issuer's officers or directors, threatened against Issuer which, if resolved
unfavorably would have a Material Adverse Effect on the financial condition of
Issuer or the validity or enforceability of, or Issuer's ability to perform its
obligations under, the Debt Securities Instrument and/or this Agreement; and

 

(l)                   all governmental and other consents, authorizations,
approvals, licenses and orders that were required to have been obtained by
Issuer with respect to the Debt Securities Instrument and/or its issuance were
duly obtained and remain in full force and effect and all conditions of any such
consents, Authorizations approvals, licenses and orders have been complied with.

 

4.                   Covenants of Issuer. In addition to the other obligations
hereunder and under the Debt Securities Instrument, and for so long as any
amounts payable under the Debt Securities Instrument, including interest. remain
(i) unexchanged for shares of Issuer Common Stock hereunder, or (ii) unpaid and
outstanding, Issuer hereby covenants to the Investor as follows:

 

(a)                 upon issuance, any Exchange Shares shall be duly authorized,
fully paid and nonassessable;

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(b)                 it shall refrain from disclosing, and shall cause its
officers, directors, employees and agents to refrain from disclosing, any
material non-public information to Investor without also disseminating such
information to the public in accordance with applicable Law, unless prior to
disclosure of such information Issuer identifies such information as being
material non-public information and provides Investor with the opportunity to
accept or refuse to accept such material non-public information for review,

 

(c)                 it shall timely file all reports required by it to be filed,
in each case in full compliance "ith the content requirements thereof, and shall
meet all other of its obligations under the Exchange Act;

 

(d)                 it shall take any and all steps as may be necessary to
insure that the Issuer Common Stock continues to trade publicly and does not
become the subject of any trading halts, suspensions, delistings or similar
actions imposed by the SEC, FINRA, or any other regulatory or similar
authorities:

 

(e)                 it shall take any and all steps as may be necessary to
insure that the Issuer Common Stock continues to be DTC Eligible, that Transfer
Agent continue to participate in the OTC FAST Program, and that no DTC "chill"
is imposed upon the Issuer Common Stock;

 

(f)                  it shall take any and all steps as may be necessary to
insure that it avoid becoming or otherwise being deemed by the SEC a Shell
Company;

 

(g)                 it shall not issue any shares of Issuer Common Stock under
this Agreement which, when aggregated with all other shares of Issuer Common
Stock then beneficially owned by Investor and its affiliates, including those in
relation to which it/they have a right to acquire within sixty (60) days, would
result in the beneficial ownership by Investor and its affiliates to exceed the
Ownership Limitation, and, upon the written or telephonic request of Investor
from time to time, Issuer shall confirm to Investor within one (I) Trading Day
of such request the number of shares of Issuer Common Stock then outstanding;

 

(h)                 it shall not initiate or otherwise execute any share
buybacks of the Issuer Common Stock that would have the effect of increasing
Investor's percentage beneficial ownership together with its affiliates,
including those in relation to which it/they have a right to acquire within
sixty (60) days, to exceed the ownership Limitation;

 

(i)                   if the Common Stock is listed or quoted on The Nasdaq
Stock Market or any other U.S. national securities exchange during the Investor
Holding Period, it shall not issue any shares of Issuer Common Stock pursuant to
this Agreement to the extent that after giving effect thereto, the aggregate
number of all shares of Issuer Common Stock that would be issued pursuant to
this Agreement together with all shares of Issuer Common Stock issued pursuant
to any transactions that may be aggregated with the transactions contemplated by
this Agreement under applicable rules of The Nasdaq Stock Market or any other
Principal Market on which the Issuer Common Stock may be listed or quoted, would
exceed the Exchange Cap, unless and until Issuer elects to solicit stockholder
approval of the transactions contemplated by this Agreement and the stockholders
of Issuer have in fact so approved the transactions contemplated by this
Agreement in accordance with the applicable rules and regulations of The Nasdaq
Stock Market, any other Principal Market on which the Issuer Common Stock may be
listed or quoted, and the Issuer's articles of incorporation and bylaws; and

 

(j)                  it shall not knowingly be a participant in any Gypsy Swap
in connection with the Transactions or otherwise.

 

5.                   Notices. Except as otherwise expressly set forth herein,
any notice, demand or request relating to any matter set forth herein shall be
made in writing and shall be deemed effective when hand delivered or when
mailed, postage pre-paid by registered or certified mail return receipt
requested, when picked-up by or delivered to a recognized overnight courier
service, or when sent by email to either Issuer at its address below, or to
Investor at its address below, or such other address as either Party shall have
notified the other in writing as provided herein from and after the date hereof.

 

If to Issuer:

 

Aja Cannafacturing, Inc.

5333 Birch Street

Lake Elsinore, CA 92530

Att: Kendall Smith

 

If to Investor:

 

Beaufort Capital Partners LLC

660 White Plains Road, Suite 455

Tarrytown, NY I 0591

Att: Robert Marino

 

6.                   Governing Law. This Agreement and the Exhibits hereto shall
be governed by and interpreted and enforced in accordance with the Laws of the
State of New York, without giving effect to any choice of Law or conflict of
Laws rules or provisions (whether of the State of New York or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of New York.

 

7.                   Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

 

8.                   Counterparts. This Agreement may be executed and delivered
(including by facsimile or email .pdf file format attachment transmission) in
one or more counterparts, and by the different Parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.

 

9.                   Integration; Modification. This Agreement including the
Exhibits hereto. constitutes the entirety of the rights and obligations of each
of the Investor and Issuer with respect to the subject matter hereof. No
provision of this Agreement may be modified except by an instrument in writing
signed by the Party against whom the enforcement of any such modification is or
may be sought.

 

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, the Parties have caused Ibis Agreement to be executed by 1he
respective office thereunto duly authorized, in each case as of the date first
written above.

 

"ISSUER"

 

AJA CANNAFACTURING, INC.

 

By: /s/ Kendall Smith'

Name: Kendall Smith

Title: CEO

 

BEAUFORT CAPITAL PARTNERS LLC

 

By: /s/ Leib Schaeffer

Name: Laib Schaeffer

Title: Managing Member

12