Exhibit 10.1


 


SECURITIES
PURCHASE AGREEMENT


 


THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of March 25, 2020, by and among KRAIG BIOCRAFT
LABORATORIES, INC., a Wyoming corporation (the “Company”), and YA II PN, LTD., a Cayman Islands
exempt company (“Investor”).


 


WITNESSETH


 


WHEREAS,
the Company and the Investor are executing and delivering this Agreement in reliance upon an exemption from securities registration
pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the U.S. Securities
and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities
Act”);


 


WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the
Investor, as provided herein, and the Investor shall purchase secured convertible debentures substantially in the form attached
hereto as “Exhibit A” in the aggregate principal amount of USD$4,000,000 (the “Convertible Debentures”),
which shall be convertible into shares of the Company’s Class A common stock, no par value (the “Common Stock”)
(as converted, the “Conversion Shares”), of which a secured convertible debenture (the “First Convertible
Debenture”) in the principal amount of $500,000 (the “First Convertible Debenture Purchase Price”)
shall be issued within 1 business day following the date hereof, subject to notification of satisfaction of the conditions to
the First Closing set forth herein and in Sections 7(a) and 8(a) herein (the “First Closing” or “First
Closing Date”), a secured convertible debenture (the “Second Convertible Debenture”) in the principal
amount of $500,000 (the “Second Convertible Debenture Purchase Price”) shall be issued within 1 business day
following notification of satisfaction of the conditions to the Second Closing set forth herein and in Sections 7(b) and 8(b)
herein (the “Second Closing” or “Second Closing Date and a secured convertible debenture (the
“Third Convertible Debenture”) in the principal amount of $3,000,000 (the “Third Convertible Debenture
Purchase Price”) shall be issued within 1 business day following notification of satisfaction of the conditions to the
Third Closing set forth herein and in Sections 7(c) and 8(c) herein (the First Closing, First Closing Date, the Second Closing,
the Second Closing Date, and the Third Closing and the Third Closing Date can each be referred to as a “Closing”
or a “Closing Date” or collectively as the “Closings” or “Closing Dates”)
and (collectively the First Convertible Debenture Purchase Price, the Second Convertible Debenture Purchase Price and the Third
Convertible Debenture Purchase Price shall collectively be referred to as the “Purchase Price”);


 




    	 



    	 



    

 


WHEREAS,
the Convertible Debentures shall be secured by all assets of the Company and its subsidiaries subject to (i) that certain security
agreement by and between the Investor, the Company and the Company’s subsidiaries dated the date hereof (all such security
agreements shall be referred to as the “Security Agreement”) pursuant to which the Company and its wholly owned
subsidiaries agree to provide the Investor a security interest in Pledged Property (as this term is defined in the Security Agreement),
(ii) the intellectual property security agreement by and between the Investor, the Company and the Company’s subsidiaries
referenced therein dated the date hereof (all such security agreements shall be referred to as the “IP Security Agreement”)
pursuant to which the Company and its wholly owned subsidiaries agree to provide the Investor a security interest in the intellectual
property collateral (as this term is defined in the IP Security Agreement), and (iii) the global guaranty by and between the Investor
and the Company’s subsidiaries dated the date hereof (the “Guaranty”) (the “Guaranty” and
collectively with the Security Agreement and the IP Security Agreement the “Security Documents”) in favor of
the Investor;


 


WHEREAS,
contemporaneously with the First Closing the Company shall issue to the Investor a warrant to purchase 8,000,000 shares of the
Company’s Common Stock (the “Warrant Shares”) in the form attached hereto as Exhibit B (the “Warrant”);


 


WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company has agreed to provide
certain registration rights under the Securities Act and the rules and regulations promulgated thereunder, and applicable state
securities laws;


 


WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering Irrevocable
Transfer Agent Instructions (the “Irrevocable Transfer Agent Instructions”); and


 


WHEREAS,
the Convertible Debentures, the Conversion Shares, the Warrant and the Warrant Shares are collectively are referred to herein
as the “Securities”).


 


NOW,
THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Investor
hereby agree as follows:


 


1.
CERTAIN DEFINITIONS.


 


(a)
“Anti-Bribery Laws” shall mean of any provision of any applicable law or regulation implementing the OECD Convention
on Combating Bribery of Foreign Public Officials in International Business Transactions or any applicable provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act 2010, or any other similar
law of any other jurisdiction in which the Company operates its business, including, in each case, the rules and regulations thereunder.


 


(b)
“Applicable Laws” shall mean applicable laws, statutes, rules, regulations, orders, executive orders, directives,
policies, guidelines, ordinance or regulation of any governmental entity and codes having the force of law, whether local, national,
or international, as amended from time to time, including without limitation (i) all applicable laws that relate to money laundering,
terrorist financing, financial record keeping and reporting, (ii) all applicable laws that relate to anti-bribery, anti-corruption,
books and records and internal controls, including the Anti-Bribery Laws, (iii) OFAC and any Sanctions Laws or Sanctions Programs,
and (iv) CAATSA and any CAATSA Sanctions Programs, Anti-Money Laundering Laws.


 




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(c)
“BHCA” shall mean the Bank Holding Company Act of 1956, as amended.


 


(d)
“CAATSA” shall mean Public Law No. 115-44 The Countering America’s Adversaries Through Sanctions Act.


 


(e)
“CAATSA Sanctions Programs” shall mean a country or territory that is, or whose government is, the subject
of sanctions imposed by CAATSA.


 


(f)
“Anti-Money Laundering Laws” shall mean applicable financial recordkeeping and reporting requirements and all
other applicable U.S. and non-U.S. anti-money laundering laws, rules and regulations, including, but not limited to, those of
the Currency and Foreign Transactions Reporting Act of 1970, as amended, the United States Bank Secrecy Act, as amended by the
USA PATRIOT Act of 2001, and the United States Money Laundering Control Act of 1986 (18 U.S.C. §§1956 and 1957), as
amended, as well as the implementing rules and regulations promulgated thereunder, and the applicable money laundering statutes
of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency or self-regulatory.


 


(g)
“OFAC” shall mean the U.S. Department of Treasury’s Office of Foreign Asset Control.


 


(h)
“Sanctioned Country” shall mean a country or territory that is the subject or target of a comprehensive embargo
or Sanctions Laws prohibiting trade with the country or territory, including, without limitation, Crimea, Cuba, Iran, North Korea,
Sudan and Syria.


 


(i)
“Sanctions Laws” shall mean any sanctions administered or enforced by OFAC or the U.S. Departments of State
or Commerce and including, without limitation, the designation as a “Specially Designated National” or on the “Sectoral
Sanctions Identifications List”, collectively “Blocked Persons”), the United Nations Security Council (“UNSC”),
the European Union, Her Majesty’s Treasury (“HMT”) or any other relevant sanctions authority.


 


(j)
“Sanctions Programs” shall mean any OFAC, HMT or UNSC economic sanction program including, without limitation,
programs related to a Sanctioned Country.


 


(k)
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.


 


2.
PURCHASE AND SALE OF THE CONVERTIBLE DEBENTURES.


 


(a)
Purchase of the Convertible Debentures. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement,
the Investor agrees, to purchase at the Closings and the Company agrees to sell and issue to Investor, at the Closing the Convertible
Debentures.


 




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(b)
Closing Dates. The purchase and sale of the Convertible Debentures shall take place at 10:00 a.m. Eastern Standard Time
on the Closing Date, subject to notification of satisfaction of the conditions to the Closing set forth herein and in Sections
7 and 8 below (or such later date as is mutually agreed to by the Company and the Investor.


 


(c)
Form of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on the Closing Dates, (i) the
Investor shall deliver to the Company the aggregate proceeds for the Convertible Debentures to be issued and sold to the Investor
at each Closing, minus the fees to be paid directly from the proceeds of each Closing as set forth herein, and (ii) the Company
shall deliver to the Investor a Convertible Debenture which the Investor is purchasing at each Closing duly executed on behalf
of the Company.


 


3.
INVESTOR’S REPRESENTATIONS AND WARRANTIES.


 


The
Investor represents and warrants, that:


 


(a)
Investment Purpose. The Investor is acquiring the Securities for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted
under the Securities Act; provided, however, that by making the representations herein, the Investor reserves the right to dispose
of the Securities at any time in accordance with or pursuant to an effective registration statement covering such Securities or
an available exemption under the Securities Act. The Investor does not presently have any agreement or understanding, directly
or indirectly, with any corporation, association, partnership, organization, business, individual, government or political subdivision
thereof or governmental agency (“Person”) to distribute any of the Securities.


 


(b)
Accredited Investor Status. The Investor is an “Accredited Investor” as that term is defined in Rule
501(a)(3) of Regulation D.


 


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


 


(d)
Information. The Investor and its advisors (and his or, its counsel), if any, have been furnished with all materials relating
to the business, finances and operations of the Company and information he deemed material to making an informed investment decision
regarding the purchase of the Securities, which have been requested by the Investor. The Investor and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries nor any other due diligence
investigations conducted by the Investor or its advisors, if any, or its representatives shall modify, amend or affect the Investor’s
right to rely on the Company’s representations and warranties contained in Section 4 below. The Investor understands that
its investment in the Securities involves a high degree of risk. The Investor is in a position regarding the Company, which, based
upon employment, family relationship or economic bargaining power, enabled and enables the Investor to obtain information from
the Company in order to evaluate the merits and risks of this investment. The Investor has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.


 




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(e)
No Governmental Review. The Investor understands that no United States federal or state agency or any other government
or governmental agency has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability
of the investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities.


 


(f)
Transfer or Resale. The Investor understands that: (i) the Securities have not been and are not being registered under
the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) the Investor shall have delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption
from such registration requirements, or (C) the Investor provides the Company with reasonable assurances (in the form of seller
and broker representation letters) that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act, as amended (or a successor rule thereto) (collectively, “Rule 144”),
in each case following the applicable holding period set forth therein; (ii) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that
term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules
and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register
the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption
thereunder.


 


(g)
Legends. The Investor agrees to the imprinting, so long as is required by this Section 3(g), of a restrictive legend in
substantially the following form:


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.


 




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Certificates
evidencing the Conversion Shares and/or the Warrant Shares shall not contain any legend (including the legend set forth above),
(i) while a registration statement covering the resale of such security is effective under the Securities Act, (ii) following
any sale of such Conversion Shares or Warrant Shares pursuant to Rule 144 and the Investor has complied with requirements of Section
3(f), (iii) if such Conversion Shares or Warrant Shares are eligible for sale under Rule 144, or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff
of the SEC). The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after
the effective date (the “Effective Date”) of a registration statement if required by the Company’s transfer
agent to affect the removal of the legend hereunder. If all or any portion of a Convertible Debenture is converted by the Investor
that is not an Affiliate of the Company (a “Non-Affiliated Investor”) at a time when there is an effective
registration statement to cover the resale of the Conversion Shares or Warrant Shares, such Conversion Shares or Warrant Shares
shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no
longer required under this Section 3(g), it will, no later than 3 Trading Days following the delivery by a Non-Affiliated Investor
to the Company or the Company’s transfer agent of a certificate representing Conversion Shares or Warrant Shares, issued
with a restrictive legend (such 3rd Trading Day, the “Legend Removal Date”), deliver or cause to
be delivered to such Non-Affiliated Investor a certificate representing such shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section. The Investor acknowledges that the Company’s agreement hereunder
to remove all legends from Conversion Shares or Warrant Shares is not an affirmative statement or representation that such Conversion
Shares or Warrant Shares are freely tradable. The Investor, agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 3(g) is predicated upon the Company’s reliance that the Investor will
sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus
delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will
be sold in compliance with the plan of distribution set forth therein.


 


(h)
Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the
Investor and is a valid and binding agreement of the Investor enforceable in accordance with its terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.


 


(i)
Receipt of Documents. The Investor and his or its counsel has received and read in their entirety: (i) this Agreement and
each representation, warranty and covenant set forth herein and the Transaction Documents (as defined herein); (ii) all due diligence
and other information necessary to verify the accuracy and completeness of such representations, warranties and covenants; (iii)
the Company’s Form 10-K for the fiscal year ended December 31, 2019; (iv) the Company’s Form 10-Q for the fiscal quarters
ended March 30, 2020, June 31, 2020 and September 30, 2020 and (v) answers to all questions the Investor submitted to the Company
regarding an investment in the Company; and the Investor has relied on the information contained therein and has not been furnished
any other documents, literature, memorandum or prospectus.


 




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(j)
Due Formation of Corporate and Other Investors. If the Investor is a corporation, trust, partnership or other entity that
is not an individual person, it has been formed and validly exists and has not been organized for the specific purpose of purchasing
the Securities and is not prohibited from doing so.


 


(k)
No Legal Advice From the Company. The Investor acknowledges, that it had the opportunity to review this Agreement
and the transactions contemplated by this Agreement with his or its own legal counsel and investment and tax advisors. The Investor
is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives
or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement
or the securities laws of any jurisdiction.


 


(l)
The Investor is not required to be registered as a broker or dealer pursuant to Section 15 of the Exchange Act.


 


4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SUBSIDIARIES.


 


Except
as set forth under the corresponding section of the Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof
and to qualify any representation or warranty otherwise made herein to the extent of such disclosure, the Company hereby makes
the representations and warranties set forth below to the Investor:


 


(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 4(a). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each subsidiary free and clear of any liens,
and all the issued and outstanding shares of capital stock of each subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase securities.


 


(b)
Security Interests Granted. Except as set forth on Disclosure Schedule 4(b). There are no security interests granted,
issued or allowed to exist in any assets of the Company or subsidiary.


 




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(c)
Organization and Qualification. The Company and its subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated, and have the requisite corporate power to own
their properties and to carry on their business as now being conducted. Each of the Company and its subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted
by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would
not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or
otherwise) of the Company and the subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability
to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no proceeding has been instituted in any such jurisdiction revoking, limiting
or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 


(d)
Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement, the Convertible Debentures, the Warrant, the Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively the “Transaction Documents”)
and to issue the Securities in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Securities, the reservation for issuance and the issuance of the Conversion Shares have been duly authorized
by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors
or its stockholders, (iii) the Transaction Documents have been duly executed and delivered by the Company, (iv) the Transaction
Documents constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.
The authorized officer of the Company executing the Transaction Documents knows of no reason why the Company cannot perform any
of the Company’s other obligations under the Transaction Documents.


 




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(e)
Capitalization. The authorized capital stock of the Company consists of an unlimited amount of shares of Class A Common
Stock of which 854,410,001 shares are issued and outstanding an unlimited amount of Class B Common Stock of which -0- shares are
issued and outstanding and an unlimited amount of Class A Preferred Stock of which 2 shares are issued and outstanding. All of
the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities. Except as disclosed in Schedule 4(e): (i) none of the Company’s
capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) other than those disclosed in the SEC filings, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any capital stock of the Company or any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional capital stock of the Company
or any of its subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or
any of its subsidiaries, except as those listed in Schedule 4(e) attached hereto; (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company
or any of its subsidiaries or by which the Company or any of its subsidiaries is or may become bound; (iv) there are no financing
statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company
or any of its subsidiaries; (v) there are no outstanding securities or instruments of the Company or any of its subsidiaries which
contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to redeem a security of the Company or any of its subsidiaries;
(vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance
of the Securities; (vii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement; and (viii) the Company and its subsidiaries have no liabilities or obligations required to be
disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course of
the Company’s or its subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would
not have a Material Adverse Effect. The Company has furnished to the Investor true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”),
and the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms
of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the
holders thereof in respect thereto. No further approval or authorization of any stockholder, the Board of Directors of the Company
or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.


 


(f)
Issuance of Securities. The issuance of the Convertible Debentures and the Warrant are duly authorized and free from all
taxes, liens and charges with respect to the issue thereof. Upon conversion in accordance with the terms of a Convertible Debenture
and/or the exercise of the Warrant, the Conversion Shares and/or the Warrant Shares, respectively, when issued will be validly
issued, fully paid and nonassessable, free from all taxes, liens and charges with respect to the issue thereof. The Company has
reserved from its duly authorized capital stock the appropriate number of shares of Common Stock as set forth in this Agreement.


 




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(g)
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Convertible
Debentures, and reservation for issuance and issuance of the Conversion Shares will not (i) result in a violation of any certificate
of incorporation, certificate of formation, any certificate of designations or other constituent documents of the Company or any
of its subsidiaries, any capital stock of the Company or any of its subsidiaries or bylaws of the Company or any of its subsidiaries
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
in any respect under, or 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 (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and the rules
and regulations of the OTC Markets’ OTCQB® Market (the “Primary Market”) 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 in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. The business of the Company and its subsidiaries is not being conducted, and
shall not be conducted in violation of any material law, ordinance, or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Securities 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 or governmental
agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the Transaction
Documents in accordance with the terms hereof or thereof. 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.
The Company and its subsidiaries are unaware of any facts or circumstance, which might give rise to any of the foregoing.


 


(h)
SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”) during the 2 years preceding the date hereof (or such shorter period as the Company was required by law or regulation
to file such material) (all of the foregoing filed within the 2 years preceding the date hereof as amended after the date hereof
and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the “SEC Documents”) on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Document prior to the expiration of any such extension (including pursuant to SEC
from 12b-25). The Company has delivered to the Investor or its representatives, or made available through the SEC’s website
at http://www.sec.gov, true and complete copies of the SEC Documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange 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 the light of the circumstances under which they were made, not misleading. As of their respective dates,
the financial statements of the Company and its subsidiaries 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 generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial statements or the Debenture thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
No other information provided by or on behalf of the Company to the Investor which is not included in the SEC Documents contains
any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein,
in the light of the circumstance under which they are or were made, not misleading.


 




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(i)
10(b)-5. The SEC Documents do not include any untrue statements of material fact, nor do they omit to state any material
fact required to be stated therein necessary to make the statements made, in light of the circumstances under which they were
made, not misleading.


 


(j)
Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation of which the Company is aware before
or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect.


 


(k)
CAATSA. Neither the Company or its subsidiaries, nor, to Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company or subsidiaries, is a Person that is, or is owned or controlled by a Person that has a place of business
in, or is operating, organized, resident or doing business in a country or territory that is, or whose government is, the subject
of the CAATSA Sanctions Programs.


 


(l)
Sarbanes-Oxley Act. The Company and its subsidiaries are in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act, that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by
the SEC thereunder that are applicable to the Company and its subsidiaries and effective as of the date hereof.


 


(m)
BHCA. Neither the Company nor any of its subsidiaries or affiliates is subject to BHCA and to regulation by the Board of
Governors of the Federal Reserve System (the “Federal Reserve). Neither the Company nor any of its Subsidiaries or affiliates
owns or controls, directly or indirectly, 5% or more of the outstanding shares of any class of voting securities or 25% or more
of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 


(n)
No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.


 


(o)
Compliance with Applicable Laws. The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance Applicable Laws and no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of its Subsidiaries with respect to Applicable Laws is pending or, to the
knowledge of the Company, threatened.


 




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(p)
No Conflicts with Sanctions Laws. Neither the Company nor any of its subsidiaries, nor any director, officer, employee,
agent, affiliate or other person associated with or acting on behalf of the Company or any of its subsidiaries or affiliates is,
or is directly or indirectly owned or controlled by, a Person that is currently the subject or the target of any Sanctions Laws
or is a Blocked Person; neither the Company, any of its subsidiaries, nor any director, officer, employee, agent, affiliate or
other person associated with or acting on behalf of the Company or any of its subsidiaries or affiliates, is located, organized
or resident in a country or territory that is the subject or target of a comprehensive embargo, Sanctions Laws or Sanctions Programs
prohibiting trade with a Sanctioned Country; the Company maintains in effect and enforces policies and procedures designed to
ensure compliance by the Company and its Subsidiaries with applicable Sanctions Laws and Sanctions Programs; neither the Company,
any of its subsidiaries, nor any director, officer, employee, agent, affiliate or other person associated with or acting on behalf
of the Company or any of its subsidiaries or affiliates, acting in any capacity in connection with the operations of the Company,
conducts any business with or for the benefit of any Blocked Person or engages in making or receiving any contribution of funds,
goods or services to, from or for the benefit of any Blocked Person, or deals in, or otherwise engages in any transaction relating
to, any property or interests in property blocked or subject to blocking pursuant to any applicable Sanctions Laws or Sanctions
Programs; no action of the Company or any of its subsidiaries in connection with (i) the execution, delivery and performance of
this Agreement and the other Transaction Documents, (ii) the issuance and sale of the Securities, or (iii) the direct or indirect
use of proceeds from the Securities or the consummation of any other transaction contemplated hereby or by the other Transaction
Documents or the fulfillment of the terms hereof or thereof, will result in the proceeds of the transactions contemplated hereby
and by the other Transaction Documents being used, or loaned, contributed or otherwise made available, directly or indirectly,
to any subsidiary, joint venture partner or other person or entity, for the purpose of (i) unlawfully funding or facilitating
any activities of or business with any person that, at the time of such funding or facilitation, is the subject or target of Sanctions
Laws or Sanctions Programs, (ii) unlawfully funding or facilitating any activities of or business in any Sanctioned Country or
(iii) in any other manner that will result in a violation by any Person (including any Person participating in the transaction,
whether as underwriter, advisor, investor or otherwise) of Sanctions Laws or Sanctions Programs. For the past 5 years, the Company
and its subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any
person that at the time of the dealing or transaction is or was the subject or the target of Sanctions Laws, Sanctions Programs
or with any Sanctioned Country.


 




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(q)
No Conflicts with Anti-Bribery Laws. Neither the Company nor any of the subsidiaries has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign office in violation of any law. Neither the Company,
nor any of its subsidiaries or affiliates, nor any director, officer, agent, employee or other person associated with or acting
on behalf of the Company, or any of its subsidiaries or affiliates, has (i) used any funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee, to any employee or agent of a private entity with which the Company does
or seeks to do business (a “Private Sector Counterparty”) or to foreign or domestic political parties or campaigns,
(iii) violated or is in violation of any provision of any Anti-Bribery Laws, (iv) taken, is currently taking or will take any
action in furtherance of an offer, payment, gift or anything else of value, directly or indirectly, to any person while knowing
that all or some portion of the money or value will be offered, given or promised to anyone to improperly influence official action,
to obtain or retain business or otherwise to secure any improper advantage or (v) otherwise made any offer, bribe, rebate, payoff,
influence payment, unlawful kickback or other unlawful payment; the Company and each of its respective subsidiaries has instituted
and has maintained, and will continue to maintain, policies and procedures reasonably designed to promote and achieve compliance
with the laws referred to in (iii) above and with this representation and warranty; none of the Company, nor any of its subsidiaries
or affiliates will directly or indirectly use the proceeds of the Securities or lend, contribute or otherwise make available such
proceeds to any subsidiary, affiliate, joint venture partner or other person or entity for the purpose of financing or facilitating
any activity that would violate the laws and regulations referred to in (iii) above; to the knowledge of the Company, there are,
and have been, no allegations, investigations or inquiries with regard to a potential violation of any Anti-Bribery Laws by the
Company, its subsidiaries or affiliates, or any of their respective current or former directors, officers, employees, stockholders,
representatives or agents, or other persons acting or purporting to act on their behalf.


 


(r)
No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under
the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer,
any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of
20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter
(as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each,
an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of
the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Investor a copy of any disclosures provided
thereunder.


 


(s)
Acknowledgment Regarding Investor’s Purchase of the Convertible Debentures and the Warrant. The Company acknowledges
and agrees that the Investor is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement
and the transactions contemplated hereby. The Company further acknowledges that the Investor is not acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby
and any advice given by the Investor or any of their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Investor’s purchase of the Securities. The Company further
represents to the Investor that the Company’s decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.


 


(t)
No General Solicitation. 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 Securities.


 




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(u)
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 of the Securities under the Securities Act or cause this offering of the Securities to be integrated
with prior offerings by the Company for purposes of the Securities Act.


 


(v)
Employee Relations. Neither the Company nor any of its subsidiaries is involved in any labor dispute or, to the knowledge
of the Company or any of its subsidiaries, is any such dispute threatened. None of the Company’s or its subsidiaries’
employees is a member of a union and the Company and its subsidiaries believe that their relations with their employees are good.


 


(w)
Intellectual Property Rights. The Company and its subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted.
The Company and its subsidiaries do not have any knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, and, to the knowledge of the Company there is no claim, action or proceeding being
made or brought against, or to the Company’s knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations,
trade secret or other infringement; and the Company and its subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing.


 


(x)
Environmental Laws. The Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval.


 


(y)
Title. All 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 are not material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company and its subsidiaries.


 




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(z)
Insurance. The Company and each of its subsidiaries is 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 been refused any insurance
coverage sought or applied for and 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 materially and adversely affect the condition, financial
or otherwise, or the earnings, business or operations of the Company and its subsidiaries, taken as a whole.


 


(aa)
Regulatory Permits. The Company and its subsidiaries possess all material certificates, authorizations and permits issued
by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither
the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.


 


(bb)
Internal Accounting Controls. The Company and each of its subsidiaries maintains a system of internal accounting controls
sufficient 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 generally accepted accounting principles and to maintain asset accountability, and (iii) the recorded amounts for assets
are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences;
provided however, that the Company disclosed in its form 10-Q for the period ended September 30, 2020, that management had determined
that its internal accounting controls were not effective as of September 30, 2020.


 


(cc)
No Material Adverse Breaches, 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 on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries. Neither the Company nor any of its subsidiaries is in breach
of any contract or agreement which breach, in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect on the business, properties, operations, financial condition, results of operations or prospects of the Company
or its subsidiaries.


 


(dd)
Tax Status. The Company and each of its subsidiaries has made and filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is subject and (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) 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 provision 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.


 




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(ee)
Certain Transactions. Except for arm’s length transactions pursuant to which the Company makes payments in the ordinary
course of business upon terms no less favorable than the Company could obtain from third parties and other than the grant of stock
options disclosed in the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (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.


 


(ff)
Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, all of which shall
be publicly disclosed by the Company as soon as possible after the date hereof, the Company covenants and agrees that neither
the Company, nor any other person acting on its behalf, will provide the Investor or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless prior thereto the Investor shall have entered into
a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms
that the Investor shall be relying on the foregoing covenant in effecting transactions in securities of the Company.


 


(gg)
Fees and Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of
first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.


 


(hh)
Investment Company. The Company is not, and is not an affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act.


 


(ii)
Registration Rights. Except as set forth on Schedule 4(ii), no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company. There are no outstanding registration statements not yet
declared effective and there are no outstanding comment letters from the SEC or any other regulatory agency.


 


(jj)
Private Placement. Assuming the accuracy of the Investor’s representations and warranties set forth in Section 3,
no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Investor as
contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Primary
Market.


 




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(kk)
Listing and Maintenance Requirements. The Company has not, in the 12 months preceding the date hereof, received notice
from the Primary Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Primary Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.


 


(ll)
Reporting Status. With a view to making available to the Investor the benefits of Rule 144 or any similar rule or regulation
of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration, and
as a material inducement to the Investor’s purchase of the Securities, the Company represents and warrants that: (i) the
Company is, and has been for a period of at least 90 days immediately preceding the date hereof, subject to the reporting requirements
of section 13 or 15(d) of the Exchange Act (ii) the Company has filed all required reports under section 13 or 15(d) of the Exchange,
as applicable, during the 12 months preceding the date hereof (or for such shorter period that the Company was required to file
such reports), (iii) it is not an issuer defined as a “Shell Company,” and (iv) it is not an issuer that has been
at any time previously an issuer defined as a “Shell Company.” For the purposes hereof, the term “Shell Company”
shall mean an issuer that meets the description defined in paragraph (i)(1)(i) of Rule 144.


 


(mm)
Disclosure. The Company has made available to the Investor and its counsel all the information reasonably available to
the Company that the Investor or its counsel have requested for deciding whether to acquire the Securities. No representation
or warranty of the Company contained in this Agreement (as qualified by the Disclosure Schedule) or any of the other Transaction
Documents, and no certificate furnished or to be furnished to the Investor at the Closing, or any due diligence evaluation materials
furnished by the Company or on behalf of the Company, including without limitation, due diligence questionnaires, or any other
documents, presentations, correspondence, or information contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances
under which they were made.


 


(nn)
Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s
placement agent in connection with the placement of the Securities.


 


(oo)
Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares and/or Warrant Shares issuable
upon conversion of the Convertible Debenture and/or exercise of thew Warrant will increase in certain circumstances. The Company
further acknowledges that its obligation to issue Conversion Shares upon conversion of the Convertible Debenture or issue Warrant
Shares upon exercise of the Warrant in accordance with this Agreement, the Convertible Debenture and the Warrant is absolute and
unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of
the Company.


 




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(pp)
Relationship of the Parties. Neither the Company, nor any of its subsidiaries, affiliates, nor any person acting on its
or their behalf is a client or customer of the Investor or any of its affiliates and neither the Investor nor any of its affiliates
has provided, or will provide, any services to the Company or any of its affiliates, its subsidiaries, or any person acting on
its or their behalf. The Investor’s relationship to Company is solely as investor as provided for in the Transaction Documents.


 


5.
COVENANTS.


 


(a)
Best Efforts. Each party shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided
in Sections 7 and 8 of this Agreement.


 


(b)
Compliance with Applicable Laws. While the Investor owns any Securities the Company shall comply with all Applicable Laws
and will not take any action which will cause the Investor to be in violation of any such Applicable Laws.


 


(c)
Conduct of Business. While the Investor owns any Securities, the business of the Company shall not be conducted in violation
of Applicable Laws and will not take any action which will cause the Investor to be in violation of any such Applicable Laws.


 


(d)
While the Investor owns any Securities, neither the Company, nor any of its Subsidiaries or affiliates, directors, officers, employees,
representatives or agents shall:


 


(i)
conduct any business or engage in any transaction or dealing with or for the benefit of any Blocked Person, including the making
or receiving of any contribution of funds, goods or services to, from or for the benefit of any Blocked Person;


 


(ii)
deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked or subject to blocking
pursuant to the applicable Sanctions Laws, Sanctions Programs, located in a Sanctioned Country, or CAATSA or CAATSA Sanctions
Programs;


 


(iii)
use any of the proceeds of the transactions contemplated by this Agreement to finance, promote or otherwise support in any manner
any illegal activity, including, without limitation, in contravention of any Anti-Money Laundering Laws, Sanctions Laws, Sanctioned
Program, Anti-Bribery Laws or in any Sanctioned Country.


 


(iv)
violate, attempt to violate, or engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, any of the Anti-Money Laundering Laws, Sanctions Laws, Sanctions Program, Anti-Bribery Laws, CAATSA or CAATSA
Sanctions Programs.


 


(v)
While the Investor owns any Securities, the Company shall maintain in effect and enforce policies and procedures designed to ensure
compliance by the Company and its Subsidiaries and their directors, officers, employees, agents, representatives and affiliates
with Applicable Laws.


 




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(vi)
While any Investor owns any Securities, the Company will promptly notify the Investor in writing if any of the Company, or any
of its Subsidiaries or affiliates, directors, officers, employees, representatives or agents, shall become a Blocked Person, or
become directly or indirectly owned or controlled by a Blocked Person.


 


(vii)
The Company shall provide such information and documentation it may have as the Investor or any of their affiliates may reasonably
request to satisfy compliance with Applicable Laws.


 


(viii)
The covenants set forth above shall be ongoing while the Investor owns any Securities. The Company shall promptly notify the Investor
in writing should it become aware during such period (a) of any changes to these covenants, or (b) if it cannot comply with the
covenants set forth herein. The Company shall also promptly notify the Investor in writing during such period should it become
aware of an investigation, litigation or regulatory action relating to an alleged or potential violation of Applicable Laws.


 


(e)
Form D. If required, the Company agrees to file a Form D with respect to the Securities as required under Regulation D
and to provide a copy thereof to the Investor promptly after such filing. The Company shall, on or before each Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify the Securities, or obtain an exemption for the Securities
for sale to the Investor at each Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws
of the states of the United States, and shall provide evidence of any such action so taken to the Investor on or prior to each
Closing Date.


 


(f)
Reporting Status. With a view to making available to the Investor the benefits of Rule 144 or any similar rule or regulation
of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration, and
as a material inducement to the Investor’s purchase of the Securities, the Company represents, warrants, and covenants to
the following:


 


(i) The Company
is subject to the reporting requirements of the Exchange Act and has filed all required reports under section 13 or 15(d) of the
Exchange Act during the 12 months prior to the date hereof (or for such shorter period that the issuer was required to file such
reports), other than Form 8-K reports;


 



(ii) From the date hereof until all the Securities either have been sold by the Investor, or may permanently be sold by the Investor
without any restrictions pursuant to Rule 144, (the “Registration Period”) the Company shall be required to
file with the SEC in a timely manner all reports under section 13 or 15(d) of the Exchange Act and such reports shall conform
to the requirement of the Exchange Act and the SEC for filing thereunder;


 


(iii)
The Company shall furnish to the Investor so long as the Investor owns Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and


 




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(iv)
During the Registration Period 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 otherwise permit such termination.


 


(g)
Use of Proceeds. The Company shall use the proceeds from the issuance of the Convertible Debentures hereunder for working
capital and other general corporate purposes. So long as any amounts are outstanding under the Convertible Debentures, the Company
shall not use the proceeds of the Convertible Debentures to pay any related party obligations all of which related party obligations
shall be subordinated to the obligations owed to the Investor. Neither the Company nor any subsidiary shall, directly or indirectly,
use any portion of the proceeds of the transactions contemplated herein, to lend, contribute, facilitate or otherwise make available
such proceeds to any Person (i) to make any payment towards any indebtedness or other obligations of the Company or subsidiary;
(ii) to pay any obligations of any nature or kind due or owing to any officers, directors, employees, or shareholders of the Company
or subsidiary, other than salaries payable in the ordinary course of business of the Company, which may include salaries to be
paid to related parties; (iii) to fund, either directly or indirectly, any activities or business of or with any Blocked Person,
in any Sanctioned Country, (iv) or in any manner or in a country or territory, that, at the time of such funding, is, or whose
government is, the subject of CAATSA Sanctions Programs or (iv) in any other manner that will result in a violation of Anti-Money
Laundering Laws, Sanctions Laws, Sanctioned Program, Anti-Bribery Laws or CAATSA Sanctions Programs.


 


(h)
Reservation of Shares. On the date hereof, the Company shall reserve for issuance to the Investor 160,875,161 shares for
issuance upon conversions of the Convertible Denture (the “Share Reserve”). The Company represents that it
has sufficient authorized and unissued shares of Common Stock available to create the Share Reserve after considering all other
commitments that may require the issuance of Common Stock. The Company shall take all action reasonably necessary to at all times
have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to affect
the full conversion of the Convertible Debentures. If at any time the Share Reserve is insufficient to affect the full conversion
of the Convertible Debentures the Investor shall be entitled to increase the Shares Reserve in accordance with the Irrevocable
Transfer Agent Instructions. If the Company does not have sufficient authorized and unissued shares of Common Stock available
to increase the Share Reserve, the Company shall call and hold a special meeting of the shareholders within 30 days of such occurrence,
for the sole purpose of increasing the number of shares authorized. The Company’s management shall recommend to the shareholders
to vote in favor of increasing the number of shares of Common Stock authorized. Management shall also vote all of its shares in
favor of increasing the number of authorized shares of Common Stock.


 




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(i)
Listings or Quotation. The Company’s Common Stock shall be listed or quoted for trading on the Primary Market. The
Company shall promptly secure the listing of all of the Securities upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed (subject to official notice of issuance) and shall maintain such listing
of all Registrable Securities from time to time issuable under the terms of the Transaction Documents.


 


(j)
Obligation to Obtain Shareholder Approval. In the event that the Company’s Common Stock is listed on a market other
than the Primary Market and the Company is unable to issue Conversion Shares and or Warrant Shares to the Investor as a result
of such issuance of Common Stock being in excess of the aggregate number of shares of Common Stock that the Company may issue
under the rules or regulations of such market, or any other applicable rule or limitation, the Company, shall no later than 30
calendar days of the date of such conversion notice obtain the approval of its stockholders or approval of such market, as required
by the applicable rules of such market, to issue such shares of Common Stock issuable as Conversion Shares and or Warrant Shares.


 


(k)
Shareholder Votes. Should the Company require approval of its stockholders, including but not limited pursuant to Section
(j) above to enter into this transaction and or issue the Conversion Shares and or Warrant Shares, the Company shall recommend
that its shareholders vote in favor of such issuance of Conversion Shares and or Warrant Shares or to enter into this transaction.


 


(l)
Fees and Expenses.


 


(i) The Company shall
pay all of its costs and expenses incurred by it connection with the negotiation, investigation, preparation, execution and delivery
of the Transaction Documents.


 


(ii) The Company paid to YA Global II SPV, LLC, an affiliate of the Investor and as its designee (the “Designee”),
a due diligence and structuring fee of $10,000 on March 9, 2021.


 


(iii)
On the First Closing Date the Company shall issue to the Investor the Warrant to purchase 8,000,000 Warrant Shares at an exercise
price of $0.25 for a period of 5 years from the date hereof in the form attached here to as Exhibit B.


 


(m)
Corporate Existence. So long as the Convertible Debenture remains outstanding, the Company shall not directly or indirectly
consummate any merger, reorganization, restructuring, reverse stock split consolidation, sale of all or substantially all of the
Company’s assets or any similar transaction or related transactions (each such transaction, an “Organizational
Change”) unless, prior to the consummation an Organizational Change, the Company obtains the written consent of the
Investor. In any such case, the Company will make appropriate provision with respect to such holders’ rights and interests
to insure that the provisions of this Section 5(k) will thereafter be applicable to the Convertible Debenture. Notwithstanding
the foregoing, the Company may consummate a reverse stock split if its board of Directors reasonably determines that such reverse
stock split is necessary to facilitate an uplisting of the Company’s Common Stock to the Nasdaq Capital Market.


 




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(n)
Transactions With Affiliates. So long as the Convertible Debenture is outstanding, the Company shall not, and shall cause
each of its subsidiaries not to, enter into, amend, modify or supplement, or permit any subsidiary to enter into, amend, modify
or supplement any agreement, transaction, commitment, or arrangement with any of its or any subsidiary’s officers, directors,
person who were officers or directors at any time during the previous 2 years, stockholders who beneficially own 5% or more of
the Common Stock, or Affiliates (as defined below) or with any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual owns a 5% or more beneficial interest (each a “Related
Party”), except for (a) customary employment arrangements and benefit programs on reasonable terms, (b) any investment
in an Affiliate of the Company, (c) any agreement, transaction, commitment, or arrangement on an arms-length basis on terms no
less favorable than terms which would have been obtainable from a person other than such Related Party, (d) any agreement, transaction,
commitment, or arrangement which is approved by a majority of the disinterested directors of the Company. “Affiliate”
for purposes hereof means, with respect to any person or entity, another person or entity that, directly or indirectly, (i) has
a 10% or more equity interest in that person or entity, (ii) has 10% or more common ownership with that person or entity, (iii)
controls that person or entity, or (iv) shares common control with that person or entity. “Control” or “controls”
for purposes hereof means that a person or entity has the power, direct or indirect, to conduct or govern the policies of another
person or entity. Notwithstanding the forgoing, the Company shall be permitted to convert unpaid salaries, or shareholder loans
of Kim Thompson into equity of the Company at the then fair market value if approved by its board of directors and reasonably
determined that such action is necessary to facilitate an uplisting of the Company’s Common Stock to the Nasdaq Capital
Market.


 


(o)
Transfer Agent. The Company covenants and agrees that, in the event that the Company’s agency relationship with the
transfer agent should be terminated for any reason prior to a date which is 2 years after the Closing Date, the Company shall
immediately appoint a new transfer agent and shall require that the new transfer agent execute and agree to be bound by the terms
of the Irrevocable Transfer Agent Instructions (as defined herein).


 


(p)
Restriction on Issuance of the Capital Stock and Prohibition on Variable Rate Transactions. So long as the Convertible
Debenture is outstanding, the Company shall not, without the prior written consent of the Investor, (i) issue or sell shares of
Common Stock or Preferred Stock without consideration or for a consideration per share less than the bid price of the Common Stock
determined immediately prior to its issuance, (ii) issue any preferred stock, warrant, option, right, contract, call, or other
security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration
less than such Common Stock’s Bid Price, as quoted by Bloomberg, LP and determined immediately prior to its issuance, (iii)
enter into any agreement to issue or sell, any Common Stock, Preferred Stock, options, warrants or convertible securities that
are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price
which varies or may vary with the bid price or volume weighted average price of the shares of Common Stock, as quoted by Bloomberg,
LP, (iv) enter into any security instrument granting the holder a security interest in any and all assets of the Company, or (v)
file any registration statement on Form S-8.


 




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(q)
Neither the Investor nor any of its affiliates have an open short position in the Common Stock of the Company, and the Investor
agrees 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 as long as any Convertible Debenture shall remain outstanding.


 


(r)
Additional Registration Statements. So long as the Convertible Debentures and/or the Warrant are outstanding, and/or the
Investor holds Conversion Shares and/or Warrant Shares and such Conversion Shares and/or Warrant Shares are either not registered
for resale pursuant to an effective registration statement or eligible for resale pursuant to an exemption of the registration
requirements of the Securities Act, the Company will not file a registration statement under the Securities Act relating to securities
that are not the Securities without including the Conversion Shares and/or Warrant Shares issuable upon conversion of the Convertible
Debentures and/or exercise of the Warrant and/or such Conversion Shares and/or Warrant Shares issued and held by the Investor;
provided, however that such prohibition shall not apply to its registration statement No. 333-23888, which is currently on file
with the SEC (including any related registration statement, prospectus or supplement required by Rule 462 or 424 of the Securities
Act).


 


(s)
Registration Rights. As may otherwise be required by section 2(c) of the Registration Rights Agreement and in addition
to the requirement therein, so long as the Convertible Debentures and/or Warrant are outstanding and/or the Investor holds Conversion
Shares and/or Warrant Shares and such Conversion Shares and/or Warrant Shares issuable upon conversion of the Convertible Debentures
and/or exercise of the Warrant and/or are issued and held by the Investor are either not registered for resale pursuant to an
effective registration statement or eligible for resale pursuant to an exemption of the registration requirements of the Securities
Act the Company shall file a registration statement or an amendment to the then existing Registration Statement (as this term
is defined in the Registration Rights Agreement) under the Securities Act relating to the Conversion Shares and/or Warrant Shares
issuable upon conversion of the Convertible Debentures and/or exercise of the Warrant and/or issued and held by the Investor.
Notwithstanding the foregoing, as long as the Company is in compliance with the requirements of the Registration Rights Agreement,
the failure to file a registration statement or an amendment thereto prior to the date on which such filing is required by the
Registration Rights Agreement shall not be considered a breach of this Section 5(s).


 


(t)
Review of Public Disclosures. All SEC filings (including, without limitation, all filings required under the Exchange Act,
which include Forms 10-Q and 10-QSB, 10-K and 8-K, etc) and other public disclosures made by the Company, including, without limitation,
all press releases, investor relations materials, and scripts of analysts meetings and calls, shall be reviewed and approved for
release by the Company’s attorneys and, if containing financial information, the Company’s independent certified public
accountants.


 




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(u)
Disclosure of Transaction. Within 4 Business Day following the date of this Agreement, the Company shall file a Current
Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by
the Exchange Act and attaching the material Transaction Documents (including, without limitation, this Agreement, the form of
the Convertible Debenture, and the form of the Warrant) as exhibits to such filing.


 


(v)
Granting of Security. So long as any portion of Convertible Debenture is outstanding neither the Company nor any subsidiary
may grant, issue or allow to exist any security interest in any or all of the assets of the Company and or subsidiary.


 


(w)
Rights of First Refusal. So long as any portion of Convertible Debenture is outstanding, if the Company intends to raise
additional capital by the issuance or sale of, including but not limited to, shares of Common Stock, (ii) preferred stock, warrant,
option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common Stock,
preferred stock, options, warrants or any other securities convertible or exercisable into shares of Common Stock (whether the
offering is conducted by the Company, underwriter, placement agent or any third party) the Company shall be obligated to offer
to the Investor such issuance or sale, by providing in writing the principal amount of capital it intends to raise and outline
of the material terms of such capital raise, prior to the offering such issuance or sale of capital stock to any third parties
including, but not limited to, current or former officers or directors, current or former shareholders and/or investors of the
obligor, underwriters, brokers, agents or other third parties. The Investor shall have two (2) business days from receipt of such
notice of the sale or issuance of capital stock to accept or reject all or a portion of such capital raising offer. Notwithstanding
the foregoing, the rights granted in this Section 5(w) shall not apply with regard to the securities offered on registration statement
No. 333-23888 currently on file with the SEC (including any related registration statement, prospectus or supplement required
by Rule 462 or 424 of the Securities Act).


 


(x)
So long as the Convertible Debenture is outstanding if the Company conducts a capital raise at the Investor’s option, it
may request that the Company utilize proceeds of such capital raise to redeem, in whole or in part, the Convertible Debenture
pursuant to its terms. Notwithstanding the foregoing, the rights granted in this Section 5(x) shall not apply with regard to the
securities offered on registration statement No. 333-23888 currently on file with the SEC (including any related registration
statement, prospectus or supplement required by Rule 462 or 424 of the Securities Act).


 


(y)
Obligation to Obtain Shareholder Approval. After the date of this Agreement so long as any portion of the Convertible Debentures
or Warrants remain outstanding should the Company’s Common Stock become listed on an exchange other than the Primary Market
and the Company be unable to issue Conversion Shares and/or Warrant Shares to the Investor as a result of such issuance of Common
Stock being in excess of the aggregate number of shares of Common Stock that the Company may issue under the rules or regulations
of such exchange or market, or any other applicable rule or limitation, the Company, shall no later than 30 calendar days of the
date of such conversion notice or exercise notice, as applicable, obtain the approval of its stockholders or approval of the market
or exchange, as required by the applicable rules of such market or exchange, to issue such shares of Common Stock issuable as
Conversion Shares and/or Warrant Shares.


 




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(z)
Shareholder Votes. Should the Company require approval of its stockholders, including but not limited pursuant to Section
(l) above to issue the Conversion Shares and/or Warrant Shares, the Company shall recommend that its shareholders vote in favor
of such issuance or Conversion Shares and/or Warrant Shares.


 


(aa)
Wyoming Opinion of Counsel. The Company shall deliver an opinion of counsel from Wyoming counsel to the Company, in a form
satisfactory to the Investor, no later than 14 calendar days from the date hereof.


 


6.
TRANSFER AGENT INSTRUCTIONS.


 


The
Company shall issue the Irrevocable Transfer Agent Instructions to its transfer agent in a form acceptable to the Investor.


 


7.
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.


 


(a)
The obligation of the Company hereunder to issue and sell the First Convertible Debenture to the Investor at the First Closing
is subject to the satisfaction, at or before the First Closing Date, of each of the following conditions, 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:


 


(i)
The Investor shall have executed the Transaction Documents and delivered them to the Company.


 


(ii)
The Investor shall have delivered to the Company the First Convertible Debenture Purchase Price by wire transfer of immediately
available U.S. funds pursuant to the wire instructions provided by the Company.


 


(iii)
The representations and warranties of the Investor shall be true and correct in all material respects as of the date when made
and as of the First Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date), and the Investor 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 Investor at or prior to the First Closing
Date.


 


(b)
The obligation of the Company hereunder to issue and sell the Second Convertible Debenture to the Investor at the Second Closing
is subject to the satisfaction, at or before the Second Closing Date, of each of the following conditions, 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:


 


(i)
The Investor shall have executed the Transaction Documents and delivered them to the Company.


 




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(ii)
The Investor shall have delivered to the Company the Second Convertible Debenture Purchase Price by wire transfer of immediately
available U.S. funds pursuant to the wire instructions provided by the Company.


 


(iii)
The representations and warranties of the Investor shall be true and correct in all material respects as of the date when made
and as of the Second Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date), and the Investor 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 Investor at or prior to the Second Closing
Date.


 


(c)
The obligation of the Company hereunder to issue and sell the Third Convertible Debenture to the Investor at the Third Closing
is subject to the satisfaction, at or before the Third Closing Date, of each of the following conditions, 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:


 


(i)
The Investor shall have executed the Transaction Documents and delivered them to the Company.


 


(ii)
The Investor shall have delivered to the Company the Third Convertible Debenture Purchase Price by wire transfer of immediately
available U.S. funds pursuant to the wire instructions provided by the Company.


 


(iii)
The representations and warranties of the Investor shall be true and correct in all material respects as of the date when made
and as of the Third Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date), and the Investor 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 Investor at or prior to the Third Closing
Date.


 


8.
CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE.


 


(a)
The obligation of the Investor hereunder to purchase the First Convertible Debenture at the First Closing is subject to the satisfaction,
at or before the First Closing Date, of each of the following conditions, provided that these conditions are for the Investor’s
sole benefit and may be waived by the Investor at any time in its sole discretion:


 


(i)
The Company, and the Company’s Transfer Agent, as applicable, shall have executed the Transaction Documents and delivered
the same to the Investor.


 


(ii)
The Common Stock shall be authorized for quotation or trading on the Primary Market and trading in the Common Stock shall not
have been suspended for any reason.


 




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(iii)
The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to materiality in Section 5 above, in which case, such representations
and warranties shall be true and correct without further qualification) as of the date when made and as of the First Closing Date
as though made at that 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 First Closing Date.


 


(iv)
The Company shall have executed and delivered to the Investor the First Convertible Debenture and the Warrant.


 


(v)
The Investor shall have received an opinion of counsel from counsel to the Company in a form satisfactory to the Investor, which
shall include but not be limited to whether the Company is an issuer defined as a “Shell Company,” as defined in paragraph
(i)(1)(i) of Rule 144 or has been at any time previously an issuer defined as a “Shell Company.”


 


(vi)
The Company shall have delivered to the Investor a certificate, executed by an officer of the Company in a form satisfactory to
the Investor and dated as of the First Closing Date, as to (i) the Company’s Article of Incorporation, (ii) the Bylaws of
the Company, (iii) the resolutions as adopted by the Company’s Board of Directors in a form reasonably acceptable to the
Investor, (iv) the Company’s Certificate of Good, each as in effect at the Closing.


 


(vii)
The Company shall have provided Investor a true copy of a certificate of good standing evidencing the formation and good standing
of the Company from the secretary of state (or comparable office) from the jurisdiction in which the Company is incorporated,
as of a date within 10 days of the First Closing Date.


 


(viii)
The Company and its transfer agent shall have created the Share Reserve.


 


(b)
The obligation of the Investor hereunder to purchase the Second Convertible Debenture at the Second Closing is subject to the
satisfaction, at or before the Second Closing Date, of each of the following conditions, provided that these conditions are for
the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion:


 


(i)
The Registration Statement shall have been filed with the SEC as required by the Registration Rights Agreement.


 


(ii)
The Common Stock shall be authorized for quotation or trading on the Primary Market and trading in the Common Stock shall not
have been suspended for any reason.


 




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(iii)
The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to materiality in Section 5 above, in which case, such representations
and warranties shall be true and correct without further qualification) as of the date when made and as of the Second Closing
Date as though made at that 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 Second Closing Date.


 


(iv)
The Company shall have executed and delivered to the Investor the Second Convertible Debenture.


 


(v)
The Company shall have provided to the Investor an executed Officer’s Certificate in a form satisfactory to the Investor.


 


(c)
The obligation of the Investor hereunder to purchase the Third Convertible Debenture at the Third Closing is subject to the satisfaction,
at or before the Third Closing Date, of each of the following conditions, provided that these conditions are for the Investor’s
sole benefit and may be waived by the Investor at any time in its sole discretion:


 


(i)
The Registration Statement shall have been declared effective by the SEC as required by the Registration Rights Agreement.


 


(ii)
The Common Stock shall be authorized for quotation or trading on the Primary Market and trading in the Common Stock shall not
have been suspended for any reason.


 


(iii)
The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to materiality in Section 5 above, in which case, such representations
and warranties shall be true and correct without further qualification) as of the date when made and as of the Third Closing Date
as though made at that 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 Third Closing Date.


 


(iv)
The Company shall have executed and delivered to the Investor the Third Convertible Debenture.


 


(v)
The Company shall have provided to the Investor an executed Officer’s Certificate in a form satisfactory to the Investor.


 




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9.
INDEMNIFICATION.


 


(a)
In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Convertible Debentures, the
Conversion Shares upon conversion of the Debentures, the Warrant and the Warrant Shares upon exercise of the Warrant and in addition
to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless
the Investor, and all of their officers, directors, employees and agents (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Investor Indemnitees”) from and against
any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Investor Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by the Investor Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation
or breach of any representation or warranty made by the Company in this Agreement, the Convertible Debentures or the other Transaction
Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement
or obligation of the Company contained in this Agreement, or the other Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Investor Indemnitee
and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the parties hereto, any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the Convertible Debentures or the status of the Investor
or holder of the Convertible Debentures or the Conversion Shares, as an Investor of Convertible Debentures in the Company. To
the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law.


 


(b)
In consideration of the Company’s execution and delivery of this Agreement, and in addition to all of the Investor’s
other obligations under this Agreement, the Investor shall defend, protect, indemnify and hold harmless the Company and all of
its officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Company Indemnitees”) from and against any and all Indemnified
Liabilities incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation
or breach of any representation or warranty made by the Investor(s) in this Agreement, instrument or document contemplated hereby
or thereby executed by the Investor, (b) any breach of any covenant, agreement or obligation of the Investor(s) contained in this
Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby executed
by the Investor, or (c) any cause of action, suit or claim brought or made against such Company Indemnitee based on material misrepresentations
or due to a material breach and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement,
the Transaction Documents or any other instrument, document or agreement executed pursuant hereto by any of the parties hereto.
To the extent that the foregoing undertaking by the Investor may be unenforceable for any reason, the Investor shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable
law.


 


(c)
The foregoing indemnity provisions of the Company and the Investor shall not apply to the extent that the indemnified liabilities
result from gross negligence or willfull misconduct of the party seeking indemnification hereunder.


 




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10.
COMPANY LIABILITY.


 


(a)
The Company shall be liable for all debt, principal, interest, and other amounts owed to the Investor by Company pursuant to this
Agreement, the Transaction Documents, or any other agreement, whether absolute or contingent, due or to become due, now existing
or hereafter arising (the “Obligations”) and the Investor may proceed against the Company to enforce the Obligations
without waiving its right to proceed against any other party. This Agreement and the Debenture are a primary and original obligation
of the Company and shall remain in effect notwithstanding future changes in conditions, including any change of law or any invalidity
or irregularity in the creation or acquisition of any Obligations or in the execution or delivery of any agreement between the
Investor and the Company. The Company shall be liable for existing and future Obligations as fully as if all of the funds advanced
by the Investor hereunder were advanced to the Company.


 


(b)
Notwithstanding any other provision of this Agreement or any other Transaction Documents, the Company irrevocably waives, until
all obligations are paid in full, all rights that it may have at law or in equity (including, without limitation, any law subrogating
the Company to the rights of Investor under the Transaction Documents) to seek contribution, indemnification, or any other form
of reimbursement from the Investor, or any other person now or hereafter primarily or secondarily liable for any of the Obligations,
for any payment made by the Company with respect to the Obligations in connection with the Transaction Documents or otherwise
and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment
made by the Company with respect to the Obligations in connection with the Transaction Documents or otherwise. If any payment
is made to the Company in contravention of this Section, the Company shall hold such payment in trust for the Investor and such
payment shall be promptly delivered to the Investor for application to the Obligations, whether matured or unmatured.


 


11.
GOVERNING LAW: MISCELLANEOUS.


 


(a)
Governing Law; Mandatory Jurisdiction. TO INDUCE INVESTOR TO PURCHASE THE CONVERTIBLE DEBENTURES, THE COMPANY IRREVOCABLY
AGREES THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO
ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER TRANSACTION DOCUMENT (WHETHER OR NOT SUCH CLAIM IS
BASED UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE COURTS SITTING IN
UNION COUNTY, NEW JERSEY AND THE FEDERAL COURTS SITTING IN NEWARK, NEW JERSEY; PROVIDED, HOWEVER, INVESTOR MAY, AT ITS
SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM
SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH NEW JERSEY LAW. THE COMPANY HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY, AND WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENT THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE COMPANY AS SET FORTH HEREIN IN THE MANNER PROVIDED BY
APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE


 




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(b)
Counterparts. This Agreement may be executed in 2 or more identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and physically or electronically
delivered to the other party.


 


(c)
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now
or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Investor in order
to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of
them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to
the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof,
the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from
the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to the Investor with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by the Investor to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at the Investor’s election.


 


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


 


(e)
Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other jurisdiction.


 


(f)
Entire Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor,
the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and 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 any Investor 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 party to be charged with enforcement.


 




    	31



    	 



    

 


12.
Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered upon: (i) receipt, when delivered personally, (ii) 1 Business
Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the
party to receive the same, or (iii) receipt, when sent by electronic mail (provided that the electronic mail transmission is not
returned in error or the sender is not otherwise notified of any error in transmission. The addresses and e-mail addresses for
such communications shall be:


 


	If
    to the Company, to:	Kraig
    Biocraft Laboratories, Inc.
	 	2723
    South State Street – Suite 150 
	 	Ann
    Arbor, MI 48104
	 	Attention:
                                         Kim Thompson

        Telephone:
(734) 619-8066





	 	Email:	Thompson@kraiglabs.com
	 	 	Jon.Rice@kraiglabs.com


 


	With
                                         a copy (which notice shall

                                                                     not constitute notice) to:

         
	Hunter
                                         Taubman Fischer & Li LLC

        800
        Third Avenue, Suite 2800

        New
        York, NY 10022

	 	Attention:
                                         Louis Taubman, Esq.

        Telephone:
        (917) 512-0827

        Email:
        ltaubman@htflawyers.com



 


	If
    to the Investor:	YA
    II PN, Ltd.
	 	c/o
                                         Yorkville Advisors Global, LP

        1012
        Springfield Avenue

	 	Mountainside,
    NJ 07092
	 	Attention:
    Mark Angelo
	 	Telephone:
                                         (201) 536-5114

        Email:
        mangelo@yorkvilleadvisors.com

	 	 
	With
    a copy to:	David
    Gonzalez, Esq. 
	 	1012
    Springfield Avenue
	 	Mountainside,
    NJ 07092
	 	Telephone:
    (201) 536-5109
	 	Email:
    dgonzalez@yorkvilleadvisors.com 


 




    	32



    	 



    

 


or
at such other address and/or electronic email address and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party 3 Business Days prior to the effectiveness of such change. Written confirmation
of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s computer containing the time, date, recipient’s electronic mail address and the text of
such electronic mail or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of
personal service, receipt by electronic mail or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.


 


(a)
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns. Neither the Company nor any Investor shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party hereto.


 


(b)
No 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.


 


(c)
Survival. Unless this Agreement is terminated under Section 11(f), all agreements, representations and warranties contained
in this Agreement or made in writing by or on behalf of any party in connection with the transactions contemplated by this Agreement
shall survive the execution and delivery of this Agreement and the Closing.


 


(d)
Publicity. The Company and the Investor shall have the right to approve, before issuance any press release or any other
public statement with respect to the transactions contemplated hereby made by any party; provided, however, that the Company shall
be entitled, without the prior approval of the Investor, to issue any press release or other public disclosure with respect to
such transactions required under applicable securities or other laws or regulations (the Company shall use its best efforts to
consult the Investor in connection with any such press release or other public disclosure prior to its release and Investor shall
be provided with a copy thereof upon release thereof).


 


(e)
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.


 


(f)
Termination. In the event that the Closing shall not have occurred on or before 5th business days from the date
hereof due to the Company’s or the Investor’s failure to satisfy the conditions set forth in Sections 7 and 8 above
(and the non-breaching party’s failure to waive such unsatisfied condition(s)), the non-breaching party shall have the option
to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any
party to any other party.


 


(g)
Brokerage. The Company represents that other than Maxim Group, LLC no broker, agent, finder or other party has been retained
by it in connection with the transactions contemplated hereby and that no other fee or commission has been agreed by the Company
to be paid for or on account of the transactions contemplated hereby.


 


(h)
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.


 


[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]


 




    	33



    	 



    

 


IN
WITNESS WHEREOF, each of the Investor and the Company has affixed their respective signatures to this Securities Purchase
Agreement as of the date first written above.


 


	 	COMPANY:
	 	 
	 	KRAIG
    BIOCRAFT LABORATORIES, INC.
	 	 	 
	 	By:	 
	 	Name:
    	Kim
    Thompson
	 	Title:	CEO
	 	 	 
	 	INVESTOR:
	 	 
	 	YA
    II PN, LTD.
	 	 
	 	By:	Yorkville
    Advisors Global, LP
	 	Its:	Investment
    Manager
	 	 	 
	 	By:	Yorkville
    Advisors Global II, LLC
	 	Its:	General
    Partner
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 


 






    	34



    	 



    

 


LIST
OF EXHIBITS:


 


Disclosure
Schedule


 


Exhibit
A – Form of Convertible Debenture


Exhibit
B – Form of Warrant