EXHIBIT 10.2

 

NOTE PURCHASE AGREEMENT

 

This NOTE PURCHASE AGREEMENT (the “Agreement”), dated as of June 17, 2015, by
and among BANJO & MATILDA, INC., a Nevada corporation, with headquarters located
at 76 William Street, Paddington, NSW 2021, Australia (the “Company”), BANJO &
MATILDA (USA), INC., a Delaware corporation (the “US Subsidiary”) and FOREFRONT
INCOME TRUST, a Delaware Statutory Trust with its address at 7 Times Sq., 37th
Floor, New York, New York 10036 (the “Buyer”).

 

WHEREAS:

 

A. The Company, the US Subsidiary (together with the Company, the “Borrower”),
and the Buyer are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the rules and regulations as
promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”);

 

B. Buyer desires to purchase and the Company and the US Subsidiary desire to
issue and sell, upon the terms and conditions set forth in this Agreement an
eighteen (18%) percent secured note of the Company, in the form attached hereto
as Exhibit A, in the aggregate principal amount of $500,000.00 (together with
any note(s) issued in replacement thereof or as a dividend thereon or otherwise
with respect thereto in accordance with the terms thereof, the “Note”), upon the
terms and subject to the limitations and conditions set forth in such Note; and

 

NOW THEREFORE, the Company and the Buyer hereby agree as follows:

 

1. Purchase and Sale of the Note.

 

a. Purchase. On the Closing Date (as defined below), the Borrower shall issue
and sell to the Buyer and the Buyer agrees to purchase from the Borrower the
Note in the original principal amount of $500,000.

 

b. Form of Payment. On the Closing Date the Buyer shall pay $500,000 (the
“Purchase Price”) net of any fees and expenses mutually agreeable by Borrower
and Buyer by wire transfer of immediately available funds to the Borrower, in
accordance with the Borrower’s written wiring instructions, against delivery of
the duly executed Note.

 

c. Closing Date. Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Sections 5 and 6 below, the date and time of the
issuance and sale of the Note (the “Closing Date”) shall be 12:00 noon, Eastern
Standard Time on or about June 17, 2015, or such other mutually agreed upon
time. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall occur on the Closing Date at such location as may be agreed to
by the parties.

 

2. Buyer’s Representations and Warranties. The Buyer represents and warrants to
the Company that:

 

a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Note
for its own account and not with a present view towards the public sale or
distribution thereof, except pursuant to sales registered or exempted from
registration under the 1933 Act; provided, however, that by making the
representations herein, the Buyer does not agree to hold any of the Note for any
minimum or other specific term and reserves the right to dispose of the Note at
any time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.

 

 
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b. Accredited Investor Status. The Buyer is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

 

c. Reliance on Exemptions. The Buyer understands that the Note is a being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Borrower is relying upon the truth and accuracy of, and the Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Note.

 

d. Information. The Buyer and its advisors, if any, have been, and for so long
as the Note remains outstanding will continue to be, furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Note which have been requested
by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and
for so long as the Note remains outstanding will continue to be, afforded the
opportunity to ask questions of the Company. Notwithstanding the foregoing, the
Company has not disclosed to the Buyer any material nonpublic information and
will not disclose such information unless such information is disclosed to the
public prior to or promptly following such disclosure to the Buyer. Neither such
inquiries nor any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect Buyer’s right to
rely on the Company’s representations and warranties contained in Section 3
below. The Buyer understands that its investment in the Note involves a
significant degree of risk. The Buyer is not aware of any facts that may
constitute a breach of any of the Company's representations and warranties made
herein.

 

e. Governmental Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Note.

 

f. Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of
the Note has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Note may not be transferred unless
(a) the Note is sold pursuant to an effective registration statement under the
1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of the
Buyer, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the effect that
the Note may be sold or transferred pursuant to an exemption from such
registration, which opinion shall be accepted by the Company, (c) the Note is
sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under
the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell
or otherwise transfer the Note only in accordance with this Section 2(f) and who
is an Accredited Investor, (d) the Note is sold pursuant to Rule 144, or (e) the
Note is sold pursuant to Regulation S under the 1933 Act (or a successor rule)
(“Regulation S”), and the Buyer shall have delivered to the Company, at the cost
of the Buyer, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which opinion shall
be accepted by the Company; (ii) any sale of the Note made in reliance on Rule
144 may be made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any re-sale of the Note 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 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Note under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case). Notwithstanding the foregoing or anything
else contained herein to the contrary, the Note may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement.

 

g. Legends. The Buyer understands that the Note may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for the Note):

 

 
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“THE ISSUANCE AND SALE OF THIS NOTE, HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS
NOTE MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE NOTE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL
SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A OR REGULATION S UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE NOTE.”

 

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Note, if, unless otherwise
required by applicable state securities laws, (a) the Note is registered for
sale under an effective registration statement filed under the 1933 Act or
otherwise may be sold pursuant to Rule 144 without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
or (b) such holder provides the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of the Note may be
made without registration under the 1933 Act, which opinion shall be accepted by
the Company so that the sale or transfer is effected. The Buyer agrees to sell
the Note in compliance with applicable prospectus delivery requirements, if any.
In the event that the Company does not accept the opinion of counsel provided by
the Buyer with respect to the transfer of the Note pursuant to an exemption from
registration, such as Rule 144, it will be considered an Event of Default
pursuant to Section 3.2 of the Note.

 

h. Authorization; Enforcement. This Agreement has been duly and validly
authorized. This Agreement has been duly executed and delivered on behalf of the
Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer
enforceable in accordance with its terms.

 

i. Residency. The Buyer is a resident of New York State.

 

3. Representations and Warranties of the Company. The Company represents and
warrants to the Buyer that except as disclosed in the SEC Documents:

 

a. Organization and Qualification. The Company and each of its Subsidiaries (as
defined below), if any, is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated,
with full power and authority (corporate and other) to own, lease, use and
operate its properties and to carry on its business as and where now owned,
leased, used, operated and conducted. The Company and each of its Subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership or use of property or the
nature of the business conducted by it makes such qualification necessary except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect. “Material Adverse Effect” means any material adverse
effect on the business, operations, assets, financial condition or prospects of
the Company or its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “Subsidiaries” means any corporation or
other organization, whether incorporated or unincorporated, in which the Company
owns, directly or indirectly, any equity or other ownership interest. The
Subsidiaries of the Company are Banjo & Matilda Pty Ltd. And Banjo & Matilda
USA, Inc.

 

b. Authorization; Enforcement. (i) The Company has all requisite corporate power
and authority to enter into and perform this Agreement and the Note and to
consummate the transactions contemplated hereby and thereby and to issue the
Note in accordance with the terms hereof, (ii) the execution and delivery of
this Agreement and the Note by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation, the
issuance of the Note have been duly authorized by the Company’s Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its shareholders is required, (iii) this Agreement has been duly
executed and delivered by the Company by its authorized representative, and such
authorized representative is the true and official representative with authority
to sign this Agreement and the other documents executed in connection herewith
and bind the Company accordingly, and (iv) this Agreement constitutes, and upon
execution and delivery by the Company of the Note, such instrument will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.

 

 
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c. Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of: (i) 100,000,000 authorized shares of common Stock, $0.00001
par value per share (“Common Stock”), (ii) 100,000,000 authorized shares of
preferred stock, $0.00001 par value per share. As of March 31, 2015, there were
58,492,967 shares of Common Stock issued and outstanding and 1,000,000 shares of
preferred stock issued and outstanding; no shares are reserved for issuance
pursuant to the Company’s stock option plans, no shares are reserved for
issuance pursuant to securities exercisable for, or convertible into or
exchangeable for shares of Common Stock other than those shares reserved for
issuance pursuant to the Warrant to be issued to the Company’s Advisor and
Placement Agent. All of such outstanding shares of capital stock are duly
authorized, validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. As of the effective date
of this Agreement, (i) there are no outstanding options, warrants, scrip, rights
to subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for any shares of capital stock of the Company or any of its Subsidiaries, or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries, (ii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
its or their securities under the 1933 Act and (iii) there are no anti-dilution
or price adjustment provisions contained in any security issued by the Company
(or in any agreement providing rights to security holders) that will be
triggered by the issuance of the Note. The Company has furnished to the Buyer
true and correct copies of the Company’s Certificate of Incorporation as in
effect on the date hereof (“Certificate of Incorporation”), the Company’s
By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all
securities convertible into or exercisable for Common Stock of the Company and
the material rights of the holders thereof in respect thereto. The Company shall
provide the Buyer with a written update of this representation signed by the
Company’s Chief Executive on behalf of the Company as of the Closing Date.

 

d. No Conflicts. The execution, delivery and performance of this Agreement and
the Note by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby will not (i) conflict with or result in a
violation of any provision of the Articles of Incorporation or By-laws, or (ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its Subsidiaries is in violation of its Articles of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries, if any, are not being conducted, and shall
not be conducted so long as the Buyer owns the Note, in violation of any law,
ordinance or regulation of any governmental entity which would reasonably be
anticipated to result in a Material Adverse Effect. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court, governmental agency, regulatory agency, self-regulatory organization or
stock market or any third party in order for it to execute, deliver or perform
any of its obligations under this Agreement or the Note in accordance with the
terms hereof or thereof or to issue and sell the Note in accordance with the
terms hereof. All consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the date hereof. If the Company is
listed on the OTCBB, the Company is not in violation of the listing requirements
of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably
anticipate that the Common Stock will be delisted by the OTCBB in the
foreseeable future. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

 

 
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e. SEC Documents; Financial Statements. The Company has timely filed after
giving effect to all extensions available as of right, all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements and schedules thereto
and documents (other than exhibits to such documents) incorporated by reference
therein, being hereinafter referred to herein as the “SEC Documents”). Upon
written request the Company will deliver to the Buyer true and complete copies
of the SEC Documents, except that such exhibits and incorporated documents will
only be delivered in response to a specific request. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the statements made in any such SEC
Documents is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in subsequent
filings prior the date hereof). As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles, consistently applied, during the periods involved and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the financial statements of the Company
included in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to March 31, 2015, and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial
statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company. The Company is subject
to the reporting requirements of the 1934 Act.

 

f. Absence of Certain Changes. Since the date of execution hereof, there has
been no material adverse change and no material adverse development in the
assets, liabilities, business, properties, operations, financial condition,
results of operations, prospects or 1934 Act reporting status of the Company or
any of its Subsidiaries.

 

g. Absence of Litigation. There is no action, suit, claim, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company or any
of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing.

 

h. Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
(“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); there is
no claim or action by any person pertaining to, or proceeding pending, or to the
Company’s knowledge threatened, which challenges the right of the Company or of
a Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently contemplated to be
operated in the future); to the best of the Company’s knowledge, the Company’s
or its Subsidiaries’ current and intended products, services and processes do
not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.

 

 
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i. No Materially Adverse Contracts, Etc. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.

 

j. Private Placement. Assuming the accuracy of the Buyer’s representations and
warranties set forth herein, no registration under the Securities Act is
required for the offer and sale of the Note by the Company to the Buyer as
contemplated hereby.

 

k. Seniority. Banjo & Matilda (USA) Inc. is party to an Account Sale and
Purchase Agreement dated August 15, 2014 (the “Sallyport Agreement”) with
Sallyport Commercial Finance LLC (“Sallyport”) pursuant to which Sallyport
acquires title to garments and receivables which would otherwise be property of
the Company and a line of credit facility dated on or about 27th of May 2009
with Moneytech Finance Pty Ltd. pursuant to which Moneytech has been granted a
lien on the assets of the Company’s Subsidiary Banjo & Matilda Pty Ltd. As of
the Closing Date, except for the rights granted to Sallyport and Moneytech, no
claim against the Company or any of its Subsidiaries is senior to the Note in
right of payment, whether with respect to interest or upon liquidation or
dissolution, or otherwise, other than indebtedness secured by purchase money
security interests (which is senior only as to underlying assets covered
thereby) and capital lease obligations (which is senior only as to the property
covered thereby). More specifically, the Note will have the first and only lien
on all credit card receivables generated from online, retail store, and
wholesale channels of the Company, up to the amounts due hereunder, until all
obligations under the Note have been paid back in full. Concurrently[MO1] , the
Company and the Buyer will also enter into a Security Agreement.

 

l. Indebtedness. (i) The Financial Statements set forth all outstanding secured
and unsecured Indebtedness of the Company and the Subsidiaries on a consolidated
basis, or for which the Subsidiaries have commitments as of the date of such
Financial Statements or any subsequent period that would require disclosure. For
the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities
for borrowed money or amounts owed in excess of $100,000 (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same should be reflected in the
Company’s balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business; and (c) the present value of any lease payments
in excess of $100,000 due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any subsidiary is in default with respect to
any Indebtedness.

 

(ii) Within twenty days of the date hereof the Company shall have caused the
holder of $125,000 of Indebtedness to convert the principal amount thereof and
all interest accrued thereon into Common Stock at a conversion price of six
cents ($0.06) or more.

 

(iii) So long as any amounts are outstanding under the Note, the Company will
not incur any Indebtedness other than (w) capital leases or purchase money
security interests secured only by the assets acquired upon the issuance
thereof, (x)Indebtedness incurred to replace Indebtedness outstanding as of the
date hereof and (y) Indebtedness which by its terms is not secured by the
Company’s credit card receivables and which subordinates and, in case of (x) and
(y) above on terms acceptable to the Buyer , any claim it may have in the credit
card receivables to the interest of the Buyer therein.

 

m. Tax Status. The Company and each of its Subsidiaries has made or filed all
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax. None of the Company’s
tax returns is presently being audited by any taxing authority.

 

 
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n. Certain Transactions. Except for arm’s length transactions pursuant to which
the Company or any of its Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable than the Company or any of its
Subsidiaries could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

 

o. Disclosure. All information relating to or concerning the Company or any of
its Subsidiaries set forth in this Agreement and provided to the Buyer pursuant
to the terms hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects and the Company
has not omitted to state any material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading. No event or circumstance has occurred or exists
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
(assuming for this purpose that the Company’s reports filed under the 1934 Act
are being incorporated into an effective registration statement filed by the
Company under the 1933 Act).

 

p. No Integrated Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933 Act of the
issuance of the Note to the Buyer. The issuance of the Securities to the Buyer
will not be integrated with any other issuance of the Company’s securities
(past, current or future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.

 

q. No Brokers. The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby
except for the Company’s Placement Agent, Forefront Capital Markets, LLC.

 

r. Permits; Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since December 31, 2013, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

 

 
7

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s. Sarbanes-Oxley Act. The Company is in compliance with the applicable
provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the
rules and regulations promulgated thereunder, that are effective and for which
compliance by the Company is required as of the date hereof.

 

t. Environmental Matters.

 

(i) There are, to the Company’s knowledge, with respect to the Company or any of
its Subsidiaries or any predecessor of the Company, no past or present
violations of Environmental Laws (as defined below), releases of any material
into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar federal, state,
local or foreign laws and neither the Company nor any of its Subsidiaries has
received any notice with respect to any of the foregoing, nor is any action
pending or, to the Company’s knowledge, threatened in connection with any of the
foregoing. The term “Environmental Laws” means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

(ii) Other than those that are or were stored, used or disposed of in compliance
with applicable law, no Hazardous Materials are contained on or about any real
property currently owned, leased or used by the Company or any of its
Subsidiaries, and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.

 

(iii) There are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries that are not in
compliance with applicable law.

 

u. Title to Property. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in the SEC Documents or such as would not
have a Material Adverse Effect. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as would not have a
Material Adverse Effect.

 

v. Insurance. The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.
Upon written request the Company will provide to the Buyer true and correct
copies of all policies relating to directors’ and officers’ liability coverage,
errors and omissions coverage, and commercial general liability coverage.

 

w. Internal Accounting Controls. Except as otherwise disclosed in the Form
10-Ks, the Form 10-Qs, or the Form 8-K, the books and records of the Company and
its subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any subsidiary. The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient, in the judgment of the Company, to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate actions are taken with respect to any
differences.

 

 
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x. Securities Act of 1933. Assuming the accuracy of the representations of the
Buyer set forth in Section 2 hereof, the Company has complied and will comply
with all applicable federal and state securities laws in connection with the
offer, issuance and sale of the Note hereunder and the offer and sale of the
Note to the Buyer is exempted from the registration requirement of the
Securities Act. Neither the Company nor anyone acting on its behalf, directly or
indirectly, has or will sell, offer to sell or solicit offers to buy any of the
Note, or similar securities to, or solicit offers with respect thereto from, or
enter into any preliminary conversations or negotiations relating thereto with,
any person, or has taken or will take any action so as to bring the issuance and
sale of any of the Note in violation of the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or sale
of the Note.

 

 y. Governmental Approvals. Except for the filing of any notice prior or
subsequent to the Closing Date that may be required under applicable state
and/or Federal securities laws (which if required, shall be filed on a timely
basis), including the filing of a Form D, no authorization, consent, approval,
license, exemption of, filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the execution or
delivery of the Note or for the performance by the Company of its obligations
under the transaction documents.

 

z. Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries,
nor any director, officer, agent, employee or other person acting on behalf of
the Company or any Subsidiary has, in the course of his actions for, or on
behalf of, the Company, used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended, or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

 

aa. Not an Investment Company. The Company is not, and upon the issuance and
sale of the Securities as contemplated by this Agreement will not be an
“investment company” required to be registered under the Investment Company Act
of 1940 (an “Investment Company”). The Company is not controlled by an
Investment Company.

 

4. COVENANTS.

 

a. Best Efforts. The parties shall use their best efforts to satisfy timely each
of the conditions described in Sections 5 and 6 of this Agreement.

 

b. Blue Sky Laws.. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to qualify the
Note for sale to the Buyer at the applicable closing pursuant to this Agreement
under applicable securities or “blue sky” laws of the states of the United
States (or to obtain an exemption from such qualification[MO2] ). 

 

c. Use of Proceeds. The Company shall use the proceeds for general working
capital purposes; more specifically, marketing and sales and general corporate
purposes.

 

 
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d. Expenses. At the Closing, the Company shall reimburse Buyer for expenses
incurred by it in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the other agreements to be
executed in connection herewith (“Documents”), including, without limitation,
reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees,
fees for stock quotation services, fees relating to any amendments or
modifications of the Documents or any consents or waivers of provisions in the
Documents, fees for the preparation of opinions of counsel, escrow fees, and
costs of restructuring the transactions contemplated by the Documents. When
possible, the Company must pay these fees directly, otherwise the Company must
make immediate payment for reimbursement to the Buyer for all fees and expenses
immediately upon written notice by the Buyer or the submission of an invoice by
the Buyer. The Company’s obligation with respect to this transaction is to
reimburse Buyer’ expenses shall be $5,000.

 

e. Financial Information. Upon written request the Company agrees to send or
make available the following reports to the Buyer until the Buyer transfers,
assigns, or sells all of the Note: (i) within ten (10) days after the filing
with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on
Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after
release, copies of all press releases issued by the Company or any of its
Subsidiaries; and (iii) contemporaneously with the making available or giving to
the shareholders of the Company, copies of any notices or other information the
Company makes available or gives to such shareholders.

 

f. Registration and Listing. The Company shall (a) comply in all respects with
its reporting and filing obligations under the Exchange Act and (b) not take any
action or file any document (whether or not permitted by the Securities Act or
the rules promulgated thereunder) to terminate or suspend its reporting and
filing obligations under the Exchange Act or Securities Act except as permitted
under the transaction documents. Subject to the terms of the transaction
documents, the Company further covenants that it will take such further action
as the Buyer may reasonably request, all to the extent required from time to
time to enable the Buyer to sell the Note without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, as amended. Upon the request of the Buyer,
the Company shall deliver to the Buyer a written certification of a duly
authorized officer as to whether it has complied with such requirements the
Buyer may reasonably request, all to the extent required from time to time to
enable the Buyer to sell the Note without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, as amended. Upon the request of the Buyer, the Company shall
deliver to the Buyer a written certification of a duly authorized officer as to
whether it has complied with such requirements.

 

g. Participation in Future Financing. From the date hereof until the date that
is the 24 month anniversary of the Effective Date, upon any issuance by the
Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents for
cash consideration, indebtedness or a combination of units hereof (a “Subsequent
Financing”), the Buyer shall have the right to participate in up to an amount of
the Subsequent Financing equal to 20% of the Subsequent Financing (the
“Participation Maximum”) on the same terms, conditions and price provided for in
the Subsequent Financing.

 

h. Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the transaction documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf, will provide any Buyer or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Buyer shall have entered into a written agreement with the
Company regarding the confidentiality and use of such information. The Company
understands and confirms that each Buyer shall be relying on the foregoing
covenant in effecting transactions in securities of the Company.

 

i. Corporate Existence. So long as the Buyer beneficially owns the Note, the
Company shall maintain its corporate existence and shall not sell all or
substantially all of the Company’s assets, except in the event of a merger or
consolidation or sale of all or substantially all of the Company’s assets, where
the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on the Pink Sheets, OTCQX, OTCBB, Nasdaq, Nasdaq SmallCap,
NYSE or AMEX.

 

 
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j. No Integration. The Company shall not make any offers or sales of any
security under circumstances that would require registration of the Note being
offered or sold hereunder under the 1933 Act or cause the offering of the
Securities to be integrated with any other offering of securities by the Company
for the purpose of any stockholder approval provision applicable to the Company
or its securities.

 

k. Breach of Covenants. If the Company breaches any of the covenants set forth
in this Section 4, and in addition to any other remedies available to the Buyer
pursuant to this Agreement, it will be considered an event of default under
Section 3.4 of the Note.

 

l. Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns
the Note, the Company shall comply with the reporting requirements of the 1934
Act; and the Company shall continue to be subject to the reporting requirements
of the 1934 Act. If, after giving effect to any as of right extension, the
Company fails to comply with the 1934 Act until such time as it shall cure such
failure, the Interest Rate, as defined in the Purchase Agreement, shall increase
by an additional 1% per month for each month that the Company fails to comply.
Such 1% shall be paid to the Holder on a monthly basis

 

m. Trading Activities. Neither the Buyer nor its affiliates has an open short
position in the common stock of the Company and the Buyer agree that it shall
not, and that it will cause its affiliates not to, engage in any short sales of
or hedging transactions with respect to the common stock of the Company.

 

n. Disposition of Assets. So long as any amounts are due under the Note, neither
the Company nor any subsidiary shall sell, transfer or otherwise dispose of any
of its properties, assets and rights to any person except for (i) sales to
customers in the ordinary course of business (ii) sales or transfers between the
Company and its subsidiaries or between subsidiaries of the Company, or (iii)
otherwise with the prior written consent of the holders of a majority of the
outstanding principal amount of the Note.

 

o. Reporting Status. So long as a Buyer beneficially owns any portion of the
Note, the Company shall timely file all reports required to be filed with the
Commission 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 thereunder would permit such
termination

 

p. Keeping of Records and Books of Account. The Company shall keep and cause
each subsidiary to keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting
all financial transactions of the Company and its subsidiaries, and in which,
for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.

 

q. Sarbanes-Oxley Act. The Company is in compliance with the applicable
provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the
rules and regulations promulgated thereunder, that are effective and for which
compliance by the Company is required as of the date hereof.

 

r. Compliance with Law. The business of the Company and the subsidiaries has
been and is presently being conducted in material compliance with all applicable
federal, state and local governmental laws, rules, regulations and ordinances.
The Company and each of its subsidiaries have all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals
necessary for the conduct of its business in all material respects as now being
conducted by it unless the failure to possess such franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

s. Credit card processing. So long as any amounts are due under the Note,
neither the Company nor any subsidiary shall change the Company’s credit card
merchant processing, bank it receives payment from its credit card sales or have
credit card sales flow through any other entity without the prior written
consent of the Buyer. The Company represents to Buyer that not less than 95% of
its credit card sales for global e-commerce and U.S. retail will go through
Banjo & Matilda USA, Inc. and the merchant facility securing the payment of
amounts due under the Note.

 

 
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5. Conditions to the Company’s Obligation to Sell. The obligation of the Company
hereunder to issue and sell the Note to the Buyer at the Closing is subject to
the satisfaction, at or before the Closing Date of each of the following
conditions thereto, provided that these conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion:

 

a. The Buyer shall have executed this Agreement and delivered the same to the
Company.

 

b. The Buyer shall have delivered the Purchase Price, net of agreed expenses, to
the Company.

 

c. The representations and warranties of the Buyer shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Closing Date.

 

d. No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

6. Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer
hereunder to purchase the Note at the Closing is subject to the satisfaction, at
or before the Closing Date of each of the following conditions, provided that
these conditions are for the Buyer’s sole benefit and may be waived by the Buyer
at any time in its sole discretion:

 

a. The Company shall have executed this Agreement and delivered the same to the
Buyer.

 

b. The Company shall have delivered to the Buyer the duly executed Note.

 

c. The representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though made at such time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Buyer shall have received a
certificate or certificates, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer including, but not
limited to certificates with respect to the Company’s Articles of Incorporation,
By-laws and Board of Directors’ resolutions relating to the transactions
contemplated hereby.

 

d. No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

 
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e. No event shall have occurred which could reasonably be expected to have a
Material Adverse Effect on the Company including but not limited to a change in
the 1934 Act reporting status of the Company or the failure of the Company to be
timely in its 1934 Act reporting obligations.

 

f. The Buyer shall have received an officer’s certificate described in Section
6(c) above, dated as of the Closing Date.

 

g. The Company shall have caused a legal opinion of Company Counsel in form and
substance satisfactory to be delivered to the Buyer.

 

7. Governing Law; Miscellaneous.

 

a. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to principles of
conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the borough
of Manhattan in the city of New York. The parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. The Company and Buyer
waive trial by jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of any agreement. Each party hereby irrevocably waives personal service of
process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.

 

b. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party.

 

c. Headings. The headings of this Agreement are for convenience of reference
only and shall not form part of, or affect the interpretation of, this
Agreement.

 

d. Severability. In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.

 

e. Entire Agreement; Amendments. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the majority in interest of the Buyer.

 

 
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f. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, in the cases of notices to the Company, shall be
sent by e-mail and shall be (i) personally served, (ii) delivered by reputable
air courier service with charges prepaid, or (iii) transmitted by hand delivery
or facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:

 

If to the Borrower, to:

BANJO & MATILDA, INC.

76 William Street

Paddington, NSW 2021, Australia

Attn: BRENDAN MACPHERSON, Chief Executive Officer

facsimile: +61 2 8011 1213 

e-mail: ben@banjoandmatilda.com

 

With a copy by fax only to (which copy shall not constitute notice):

Eaton & Van Winkle LLP

3 Park Avenue

New York, New York 10016

Attn: Vincent J. McGill

facsimile : 212 779 2228

vmcgill@evw.com

 

If to the Buyer:

Forefront Income Trust

7 Times Sq., 37th Floor

New York, New York 10036

Attn: Francis J. Argenziano & Nicole Teow

e-mail: fargenziano@forefrontincometrust.com & nteow@forefrontincometrust.com

 

Each party shall provide notice to the other party of any change in address.

 

g. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. Neither the Company nor
the Buyer shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing,
subject to Section 2(f), the Buyer may assign its rights hereunder to any person
that purchases Securities in a private transaction from the Buyer or to any of
its “affiliates,” as that term is defined under the 1934 Act, without the
consent of the Company.

 

h. Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
person.

 

 
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i. Survival. The representations and warranties of the Company and the
agreements and covenants set forth in this Agreement shall survive the closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer
and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company
of any of its representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this Agreement,
including advancement of expenses as they are incurred.

 

j. Securities Laws Disclosure; Publicity. The Company shall immediately
following the Closing issue a press release disclosing the material terms of the
transactions contemplated hereby, and file a Current Report on Form 8-K,
including the transactions documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. From and after the issuance of
such press release, the Company represents to the Buyer that it shall have
publicly disclosed all material, non-public information delivered to the Buyer
by the Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the transaction documents. The Company, and the Buyer shall have the right to
review a reasonable period of time before issuance of any press releases, SEC,
OTCBB or FINRA filings, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of the Buyer, to make any press release or
SEC, OTCBB (or other applicable trading market) or FINRA filings with respect to
such transactions as is required by applicable law and regulations (although the
Buyer shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy thereof and be
given an opportunity to comment thereon).

 

k. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

l. No Strict Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

m. Remedies. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Agreement will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Agreement, that the Buyer shall
be entitled, in addition to all other available remedies at law or in equity,
and in addition to the penalties assessable herein, to an injunction or
injunctions restraining, preventing or curing any breach of this Agreement and
to enforce specifically the terms and provisions hereof, without the necessity
of showing economic loss and without any bond or other security being required.

 

[signature page is on following page]

 

 
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IN WITNESS WHEREOF, the undersigned Borrower and the Buyer have caused this
Agreement to be duly executed as of the date first above written.

 

 

BORROWER:

 

BANJO & MATILDA, INC.

       

 

By:

/s/ Brendan Macpherson

   

Brendan Macpherson

   

Chief Executive Officer

 

 

 

BANJO & MATILDA (USA), INC.

 

 

 

By:

/s/ Brendan Macpherson

   

Brendan Macpherson

   

Chief Executive Officer

 

 

BUYER:

 

FOREFRONT INCOME TRUST

       

 

By:

/s/ Francis J. Argenziano

 

 

Name:

Francis J. Argenziano

 

 

Title:

Senior Managing Director and Secretary

 

 

 

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