Exhibit 10.12


 


SECURITIES
PURCHASE AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of January 29, 2020, by and between SURGE HOLDINGS,
INC., a Nevada corporation, with headquarters located at 3124 Brother Blvd, Suite 104, Bartlett, TN 38133 (the “Company”),
and______________________________________________ , with its address at____________, (the “Buyer”).


 


WHEREAS:


 


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


 


B.
WHEREAS, subject to the terms and provisions hereinafter set forth and upon the terms and subject to the limitations and conditions
set forth in the Notes (as defined below), (i) the Buyer desires to purchase, the Company desires to sell and issue to the Buyer,
a promissory note in the form attached hereto as Exhibit A (the “First Note”) convertible into shares of common
stock, $0.001 par value per share, of the Company (the “Common Stock”)(the “First Closing”),
and (ii) the Buyer desires to purchase and the Company desires to sell and issue to the Buyer, one or more additional promissory
notes convertible into shares of Common Stock, each in the form attached hereto as Exhibit A (the “Additional Notes”
and together with the First Note, the “Notes”) as may mutually be agreed in additional closings as set forth
in Section 1(d) below (the “Additional Closings”) (each of the First Closing and the Additional Closings are sometimes
hereinafter individually referred to as a “Closing” and collectively as the “Closings” and
this Agreement any and all documents or instruments executed or to be executed by in connection with this Agreement, including
the Notes and the Irrevocable Transfer Agent Instructions, together with all modifications, amendments, extensions, future advances,
renewals, and substitutions thereof are sometimes hereinafter individually referred to as a “Transaction Document”
and collectively as the “Transaction Documents”); and


 


C.
WHEREAS, the aggregate principal amount of Notes sold pursuant to this Agreement shall not exceed an amount to be determined by
the Buyer.


 


NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:


 


1.
PURCHASE AND SALE OF NOTE.


 


a.
Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees
to purchase, at each Closing, and the Company agrees to sell and issue to the Buyer, at each Closing, a Note in the amount of
the purchase price applicable to each Closing as more specifically set forth below.


 




    	 



     


    

 





b.
First Closing. The First Closing of the purchase and sale of the First Note in a principal amount of United States Dollars
(US$ ) for a purchase price of United States Dollars (US$ ), shall take place on the Effective Date, subject to satisfaction of
the conditions to the First Closing set forth in this Agreement (the “First Closing Date”). Additional Closings
of the purchase and sale of the Notes shall be at such times and for such amounts as determined in accordance with Section 1(d)
below, subject to satisfaction of the conditions to the Additional Closings set forth in this Agreement (the “Additional
Closing Dates”, collectively, with the First Closing Date, referred to as the “Closing Dates”). The
Closings shall occur on the respective Closing Dates through the use of overnight mails and subject to customary escrow instructions
from the Buyer and its counsel, or in such other manner as is mutually agreed to by the Company and the Buyer.


 


c.
Form of Payment. On each Closing Date, (i) the Buyer shall pay the purchase price set forth on the face thereof for the
Note to be issued and sold to it at such Closing (the “Purchase Price”) by wire transfer of immediately available
funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of such Note in the
principal amount set forth on the face thereof, and (ii) the Company shall deliver such duly executed Note on behalf of the Company,
to the Buyer, against delivery of such Purchase Price.


 


d.
Additional Closings. At any time after the First Closing but prior to the maturity date of the Note issued in the First
Closing, the Buyer may demand that the Company issue an additional Note hereunder in an additional Closing under the same terms
and conditions as the First Note by delivering written notice to the Company and the Company shall issue such additional Notes
to the Buyer.


 


2.
REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Company that:


 


a.
Investment Purpose. As of the date hereof, the Buyer is purchasing the Notes and the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Notes (including, without limitation, such additional shares of Common Stock, if any,
as are issuable (i) on account of interest on the Notes (ii) as a result of the events described in Sections 1.3 and 1.4(g) of
each Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement,
such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with
the Notes and the Inducement Shares, the “Securities”) for its own account and not with a present view towards the
public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided,
however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum
or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.


 




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


 


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


 


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


 


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


 


f.
Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being
registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred
to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”))
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the
1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of
the Company, not to exceed $500 per opinion, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in
reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any
re-sale of such 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 1933 Act) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation
to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities
may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. In the event that
the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to
an exemption from registration, such as Rule 144 or Regulation S, within three (3) business days of delivery of the opinion to
the Company, the Company shall pay to the Buyer liquidated damages of three and one half percent (3.5%) of the outstanding amount
of applicable Note per day plus accrued and unpaid interest on such Note, prorated for partial months, in cash or shares at the
option of the Buyer (“Standard Liquidated Damages Amount”). If the Buyer elects to be pay the Standard Liquidated
Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price (as defined in the Note) at the
time of payment.


 




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g.
Legends. The Buyer understands that each Note and, until such time as the Conversion Shares have been registered under
the 1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the shares of Common Stock for such Securities):


 


“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 


The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any
Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is
registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to
Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be
immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made
without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is
effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has
been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline (as such term is defined in Section 1.4(d) of the Note), it
will be considered an Event of Default pursuant to Section 3.2 of the Note. The shares of Common Stock issued hereunder shall
be issued in book entry and transferred electronically via DTC DWAC and shall only be issued in certificate form at the
discretion of the Buyer.


 


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


 


i.
Residency. The Buyer is organized in the jurisdiction set forth in the Preamble of this Agreement.


 




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3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Buyer, as of the date of the
execution and delivery of this Agreement and as of the date of each Closing hereunder, and which shall survive the execution and
delivery of this Agreement:


 


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


 


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


 


c.
Capitalization. As of January 2, 2020, as disclosed in the SEC Documents, the authorized capital stock of the Company consists
of 500,000,000 shares of Common Stock, of which 101,158,316 shares are issued and outstanding, 100,000,000 shares of Series A
preferred stock, of which 13,000,000 shares are issued and outstanding, and 1,000,000 shares of Series C convertible preferred
stock of which, 721,598 are issued and outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance
pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the
Notes) exercisable for, or convertible into or exchangeable for shares of Common Stock and immediately upon the Company increasing
its authorized shares of Common Stock the Company shall reserve 4,050,000 shares for issuance upon conversion of the Notes. All
of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.
No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of
the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in
the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of
the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound
to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the
1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares.
The Company has filed in its SEC Documents true and correct copies of the Company’s Certificate of Incorporation as in effect
on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof
(the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and
the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this
representation signed by the Company’s Chief Executive on behalf of the Company as of each Closing Date.


 




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d.
Issuance of Shares. The issuance of each Note is duly authorized and, upon issuance in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof. The Conversion Shares are duly authorized and reserved for issuance
and, upon conversion of each Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.


 


e.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock
upon the issuance of the Conversion Shares upon conversion of each Note. The Company further acknowledges that its obligation
to issue Conversion Shares upon conversion of each Note in accordance with this Agreement, the Note is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.


 


f.
No Conflicts. The execution, delivery and performance of this Agreement and the Notes by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate
of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset
of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By- laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse
of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries
has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which
any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any,
are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law,
ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under
the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental agency, regulatory agency, self-regulatory organization or
stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the
Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue
the Conversion Shares upon conversion of the Note. 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
is not in violation of the listing requirements of the Over- the-Counter Bulletin Board (the “OTCBB”), the OTCQB or
any similar quotation system, and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB, the OTCQB
or any similar quotation system, in the foreseeable future nor are the Company’s securities “chilled” by DTC.
The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.


 




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g.
SEC Documents; Financial Statements. The Company has timely filed all quarterly and annual reports required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred
to herein as the “SEC Documents”). The Company has delivered to the Buyer true and complete copies of the SEC Documents,
except for such exhibits and incorporated documents, and except as such Documents are available EDGAR filings on the SEC’s
sec.gov website. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended
or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date
hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles,
consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except
as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent
or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to December 31, 2019, and (ii)
obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material
to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934
Act. For the avoidance of doubt, filing of the documents required in this Section 3(g) via the SEC’s Electronic Data Gathering,
Analysis, and Retrieval system (“EDGAR”) shall satisfy all delivery requirements of this Section 3(g).


 


h.
Absence of Certain Changes. Since December 31, 2019, there has been no material adverse change and no material adverse
development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects
or 1934 Act reporting status of the Company or any of its Subsidiaries.


 


i.
Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to
the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard
to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.


 




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


 


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


 


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


 


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


 




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n.
Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby
is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event
or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s
reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the
1933 Act).


 


o.
Acknowledgment Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting
solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby.
The Company further acknowledges that the Buyer 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 statement made by the Buyer or any of
its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice
or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company further represents to
the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of
the Company and its representatives.


 


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


 


q.
No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.


 




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r.
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”),
and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of
the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of
the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since December 31, 2019, neither the Company nor any of its Subsidiaries
has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse
Effect.


 


s.
Environmental Matters.


 


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


 


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


 




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


 


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


 


u.
Internal Accounting Controls. Except as disclosed in the SEC Documents the Company and each of its Subsidiaries maintain
a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, 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, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.


 


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


 


w.
Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e.,
its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that
the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it
intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as
such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year
end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon
which its auditors might issue a qualified opinion in respect of its current fiscal year. For the avoidance of doubt any disclosure
of the Company’s ability to continue as a “going concern” shall not, by itself, be a violation of this Section
3(w).


 




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x.
No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement
will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment
Company”). The Company is not controlled by an Investment Company.


 


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


 


z.
Bad Actor. No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act as amended
on the basis of being a “bad actor” as that term is established in the September 19, 2013 Small Entity Compliance
Guide published by the SEC.


 


aa.
Shell Status. The Company represents that it is not a “shell” issuer and has never been a “shell”
issuer, or that if it previously has been a “shell” issuer, that at least twelve (12) months have passed since the
Company has reported Form 10 type information indicating that it is no longer a “shell” issuer. Further, the Company
will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow for salability of the Conversion Shares or (ii)
accept such opinion from the Buyer’s counsel.


 


bb.
No-Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any
of its Subsidiaries and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in
its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.


 


cc.
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, or that could reasonably be expected to cause or 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.


 




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dd.
Sarbanes-Oxley Act. The Company and each Subsidiary is in material compliance with all applicable requirements of the Sarbanes-Oxley
Act of 2002 that are effective as of the date hereof, and all applicable rules and regulations promulgated by the SEC thereunder
that are effective as of the date hereof.


 


ee.
Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union. The Company believes that its and its Subsidiaries’ relations with their respective employees
are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company
or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any
such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. To the knowledge
of the Company, no executive officer or other key employee of the Company or any of its Subsidiaries is, or is now expected to
be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each
such executive officer or other key employee (as the case may be) does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions
of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.


 


ff.
Breach of Representations and Warranties by the Company. The Company agrees that if the Company breaches any of the representations
or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement
and it being considered an Event of Default under Section 3.5 of the Note, the Company shall pay to the Buyer the Standard Liquidated
Damages Amount in cash or in shares of Common Stock at the option of the Company, until such breach is cured. If the Company elects
to pay the Standard Liquidated Damages Amounts in shares of Common Stock, such shares shall be issued at the Conversion Price
at the time of payment.


 


4.
COVENANTS.


 


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


 


b.
Form D; Blue Sky Laws. 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 Buyer 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 for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or
prior to such Closing Date.


 




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c.
Use of Proceeds. The Company shall use the proceeds from the sale of the Notes for working capital and other general corporate
purposes and shall not, directly or indirectly, use such proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its currently existing direct or indirect Subsidiaries) or to repay any
indebtedness owing under any securities of the Company issued after October 7, 2019.


 


d.
Financial Information. The Company agrees to send or make available the following reports to the Buyer until the Buyer
transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual
Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release,
copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available
or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives
to such shareholders. For the avoidance of doubt, filing the documents required in (i) above via EDGAR or releasing any documents
set forth in (ii) above via a recognized wire service shall satisfy the delivery requirements of this Section 4(e).


 


e.
Listing; Uplisting. The Company shall promptly secure the listing of the Conversion Shares upon each national securities
exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice
of issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company
will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the
OTCBB, OTCQB, OTC Pink or any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap
Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the NYSE MKT and will comply in all
respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry
Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Buyer
copies of any material notices it receives from the OTCBB, OTCQB and any other exchanges or quotation systems on which the Common
Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.
Within six months of the Effective Date, the Company shall will obtain the listing and trading of its Common Stock on an exchange
senior to the exchange on which the Common Stock is listed and traded as of the Effective Date. The Company shall pay any and
all fees and expenses in connection with satisfying its obligation under this Section 4(f).


 




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


 


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


 


h.
Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns any Note, the Company shall comply with the
quarterly and annual reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements
of the 1934 Act.


 


i.
Trading Activities. Neither the Buyer nor its affiliates has an open short position (or other hedging or similar transactions)
in the Common Stock of the Company and the Buyer agree that it shall not, and that it will cause its affiliates not to, engage
in any short sales of or hedging transactions with respect to the Common Stock of the Company.


 


j.
Restriction on Activities. Commencing as of the date first above written, and until the sooner of the six month anniversary
of the date first written above or payment of the Note in full, or full conversion of the Note, the Company shall not, directly
or indirectly, without the Buyer’s prior written consent, which consent shall not be unreasonably withheld: (a) change the
nature of its business; or (b) sell, divest, acquire, change the structure of any material assets other than in the ordinary course
of business.


 


k.
Par Value. If the closing bid price at any time a Note is outstanding falls below $0.001 for five (5) consecutive days, the Company
shall cause the par value of its Common Stock to be reduced to $0.0001 or less.


 


l.
Breach of Covenants. The Company agrees that if the Company breaches any of the covenants set forth in this Section 4,
and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default
under Section 3.4 of the Notes, the Company shall pay to the Buyer the Standard Liquidated Damages Amount in cash or in shares
of Common Stock at the option of the Buyer, until such breach is cured, or with respect to Section 4(d) above, the Company shall
pay to the Buyer the Standard Liquidated Damages Amount in cash or shares of Common Stock, at the option of the Buyer, upon each
violation of such provision. If the Company elects to pay the Standard Liquidated Damages Amounts in shares of Common Stock, such
shares shall be issued at the Conversion Price at the time of payment.


 




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m.
Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates,
registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by
the Buyer to the Company upon conversion of the Notes in accordance with the terms thereof (the “Irrevocable Transfer Agent
Instructions”). In the event that the Company proposes to replace its transfer agent, the Company shall provide, prior to
the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Company and the Company. Prior to registration of the Conversion
Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction
as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section, and stop transfer instructions to give effect to Section 2(f) hereof
(in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which
the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular
date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise
be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii)
it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)
(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or
otherwise pursuant to the Notes as and when required by the Notes and this Agreement; and (iii) it will not fail to remove (or
directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued
to the Buyer upon conversion of or otherwise pursuant to the Notes as and when required by the Note and this Agreement. Nothing
in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2 (g) hereof to comply
with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company,
at the cost of the Company not to exceed $500, with (i) an opinion of counsel in form, substance and scope customary for opinions
in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under
the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be
sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct
its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as
specified by the Buyer. Additionally, upon request by the Buyer to the Transfer Agent with notice to the Company, the Transfer
Agent shall deliver to the Buyer reports reflecting issued and outstanding shares of the Company, and the lowest cost basis for
share issuances of the Company. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section may be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being required. Upon


 




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n.
Transaction Expense Amount and Original Issue Discount. Upon the First Closing, the Company shall pay US$2,500.00 to the
Buyer’s legal counsel for preparation of the Transaction Documents (the “Transaction Expense Amount”). The Transaction
Expense Amount shall be offset against the proceeds of the First Note and shall be paid to the Buyer’s legal counsel upon
the execution hereof. Additionally, the Company shall pay US$13,333.34 to the Buyer as an original issue discount (the “OID”).”)
in respect of the First Note. The OID shall be added to the Principal Amount of the Note and accordingly the Principal Amount
of the First Note is US$180,000.00.


 


o.
Issuance of Shares of Common Stock; True-Up Shares.


 


(i)
As additional consideration for the Buyer loaning the Purchase Price to the Company, the Company shall issue to the Buyer, or
designees of the Buyer, 250,000 shares of Common Stock of the Company (the “Initial Share Issuance”). The Initial
Share Issuance shall be issued and delivered to the Buyer on the Closing Date.


 


(ii)
Commencing on the date that is six (6) months plus one (1) day from the Issue Date (the “True-Up Exercise Date”),
in the event the Common Stock was on the preceding ten (10) Trading Day period less than $0.35 per share, Buyer shall have the
right to deliver a notice to the Company in the form of Exhibit B hereto (the “True-Up Notice”), notifying the Company
of its obligation to deliver the True-Up Amount (as defined below) to the Buyer. On the True-Up Exercise Date the Buyer shall
deliver the True-Up Notice to the Company and the Company shall within two (2) business days of the Buyer’s delivery of
the True Up Notice, issue to the Buyer additional shares of Common Stock equal to the True-Up Amount (as defined below). The “True-Up
Amount” shall mean an amount equal to (a) $0.35 minus (b) the lowest one day VWAP for the Common Stock during the ten (10)
Trading Day period ending on the latest complete Trading Day prior to the True-Up Exercise Date (the “True-Up Exercise Price”)
multiplied by (c) 250,000 divided by (d) the True-Up Exercise Price. The shares of Common Stock comprising the True-Up Amount
shall be referred to herein as the “True-Up Shares”. The Initial Share Issuance and the True-Up Shares shall collectively,
in the aggregate, be referred to herein as the “Inducement Shares”. Accordingly, the True-Up Shares, if required to
be issued pursuant to this Agreement, shall be issued in accordance with such beneficial ownership limitations, and in successive
tranches if required to comply with such beneficial ownership limitations (each an “Additional Tranche”). The Company
shall issue each Additional Tranche within two (2) business days of the request by Buyer. Additionally, in the event of a reverse
stock split by the Company any fractional shares held by the Buyer shall be rounded up to the nearest whole share.


 




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5.
CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL. The obligation of the Company hereunder to issue and sell
a Note to the Buyer at a Closing is subject to the satisfaction, at or before each Closing Date of each of the following conditions
thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion:


 


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


 


b.
The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.


 


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


 


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


 


6.
CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATION TO PURCHASE.


 


a.
The obligation of the Buyer hereunder to purchase the First Note 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 Buyer’s sole benefit
and may be waived by the Buyer at any time in its sole discretion:


 


(i)
The Company shall have executed this Agreement, effectuated the Issuance, and delivered the Agreement and Issuance to the Buyer.


 


(ii)
The Board of Directors of the Company shall have approved by Unanimous Written Consent (the “Consent”) the Issuance
and transactions contemplated by this Agreement and the First Note and the Company shall have delivered a copy of such fully executed
Consent to the Buyer.


 




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(iii)
The Company shall have delivered to the Buyer the duly executed First Note (in such denominations as the Buyer shall request)
and in accordance with Section 1(b) above.


 


(iv)
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company’s Transfer Agent and such fully executed Irrevocable Transfer Agent Instructions
shall have been delivered to the Buyer.


 


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


 


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


 


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


 


(viii)
The Conversion Shares shall have been authorized for quotation on the OTCBB, OTCQB, OTC Pink or any similar quotation system and
trading in the Common Stock on the OTCBB, OTCQB or any similar quotation system shall not have been suspended by the SEC or the
OTCBB, OTCQB, OTC Pink or any similar quotation system.


 




    	19



     


    

 


(ix)
The Buyer shall have received the Initial Inducement Shares and an officer’s certificate described in Section 3(c) above,
dated as of the First Closing Date.


 


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


 


(i)
The Company shall have executed the Transaction Documents applicable to the Additional Closing and delivered copies of the same
to the Buyer.


 


(ii)
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 are already qualified as to materiality in Section 2 above, in which case, such representations
and warranties shall be true and correct in all respects without further qualification) as of the date when made and as of the
Additional 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 Additional Closing Date.


 


(iii)
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.


 


(iv)
No default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Documents,
and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute a default or
an Event of Default under this Agreement or any other Transaction Documents.


 


(v)
The Company shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may require to
consummate the transactions contemplated by this Agreement and the Transaction Documents.


 




    	20



     


    

 


7.
GOVERNING LAW; MISCELLANEOUS.


 


a.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement, the Notes or any other agreement, certificate, instrument or document contemplated hereby shall be brought
only in the state courts of New York or in the federal courts in the State of New York. The parties to this Agreement hereby irrevocably
waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack
of jurisdiction or venue or based upon forum non conveniens. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY
OR THEREBY. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and
costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.


 


b.
Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.


 


c.
Construction; Headings. This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not
be construed against any person as the drafter hereof. The headings of this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this Agreement.


 


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


 


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


 




    	21



     


    

 


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


 


If
to the Company, to:


 


Surge
Holdings, Inc.


3124
Brother Blvd


Suite
104


Bartlett,
Tennessee 38133


 


If
to the Buyer, to:


 


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


 


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


 


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


 




    	22



     


    

 


i.
Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement
shall survive the closing hereunder not withstanding any due diligence investigation conducted by or on behalf of the Buyer. The
Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and
covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses
as they are incurred.


 


j.
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.


 


k.
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.


 


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


 


m.
Indemnification. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities
hereunder, and in addition to all of the Company’s other obligations under this Agreement or the Notes, the Company shall
defend, protect, indemnify and hold harmless the Buyer and its stockholders, partners, members, officers, directors, employees
and direct or indirect investors and any of the foregoing persons’ agents or other representatives (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, the “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 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 any Indemnitee 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 or the Notes or any other agreement, 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 Notes
or any other agreement, certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or
claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement
or the Notes or any other agreement, certificate, instrument or document contemplated hereby or thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or
(iii) the status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated
by this Agreement. 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 that is permissible
under applicable law.


 


n.
Leak-Out. So long as no Event of Default has occurred, the Buyer agrees that the aggregate number of shares of Conversion
Share and/or Inducement Shares that may be sold or otherwise transferred by the Buyer (taking into account sales and other transfers:
(a) directly from the Buyer, (b) the Buyer’s affiliates, and (c) any holder of such shares previously sold or otherwise
transferred to such holder by the Buyer after the Closing Date) shall not exceed the greater of (i) five percent (5%) of the average
daily trading volume for the previous thirty (30) Trading Days of the Common Stock as reported by the OTC Markets Group if the
Common Stock is quoted over-the-counter, or by Bloomberg L.P. if the Common Stock is traded on an exchange, and (ii) in any calendar
month, an amount equal to $50,000.00 of share sales at a per share price equal to the closing price of the Common Stock on the
date hereof.


 


[signature
page follows]


 




    	23



     


    

 


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


 


	SURGE
    HOLDINGS, INC.
	 	 	 
	By:
     	 	 
	Name:	Kevin
    Brian Cox	 
	Title:	Chief
    Executive Officer	 
	 	 	 
	By:
     	 	 
	Name:	 	 
	Title:	 	 





 


AGGREGATE
SUBSCRIPTION AMOUNT:


 


Principal
Amount of the First Note: US$_________


 


Purchase
Price of the First Note: US$________


 




    	24



     


    

 


Exhibit
A


 


Note


 


See
attached


 




    	25



     


    

 


Exhibit
B


 


Form
of True-Up Notice


 


TRUE-UP
NOTICE


 


Reference
is made to that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of January 29, 2020 by
and between Surge Holdings, Inc., a Nevada corporation (the “Borrower”) and___________________________ (the “Buyer”). Pursuant to
Section 4(o)(ii) of the Purchase Agreement, the undersigned hereby directs you to issue that number of shares of Common Stock
constituting the “True-Up Amount” as set forth below, of the Borrower, within two (2) days of the date hereof or the
next succeeding business day. No fee will be charged to the Buyer for any such issuance, except for transfer taxes, if any.


 


Box
Checked as to applicable instructions:


 


[  ]
The Borrower shall electronically transmit the Common Stock issuable pursuant to this True Notice to the account of the undersigned
or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).


 


Name
of DTC Prime Broker:


Account
Number:


 


[  ]
The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock
set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately
below or, if additional space is necessary, on an attachment hereto:


 


True-Up
Amount (number of shares of common stock to be issued)_______________________


 


	By:	 	 
	Name:	 	 
	Title:	 	 
	Date: