SECURITIES
PURCHASE AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated and effective as of April 27, 2018 (the “Effective
Date”), by and between FAT BRANDS INC., a corporation organized and existing under the laws of the State of Delaware
(the “Company”) and TCA GLOBAL CREDIT MASTER FUND, LP, a limited partnership organized and existing under the
laws of the Cayman Islands (the “Buyer”).


 


WHEREAS,
Buyer desires to purchase from the Company, and the Company desires to sell and issue to Buyer, upon the terms and subject to
the conditions contained herein, up to Five Million and No/100 United States Dollars ($5,000,000) of senior secured, redeemable
debenture in the form attached hereto as Exhibit A the “Debenture”), of which Two Million and No/100
United States Dollars ($2,000,000) shall be purchased on the date hereof (the “First Closing”) for the total
purchase price of Two Million and No/100 United States Dollars ($2,000,000) (the “Purchase Price”), and up
to Three Million and No/100 United States Dollars ($3,000,000) may be purchased in additional closings as set forth in Section
4.2 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”),
all subject to the terms and provisions hereinafter set forth;


 


WHEREAS,
the Company and Fog Cutter Capital Group, Inc., a corporation organized and existing under the laws of the State of Maryland (“Fog
Cutter”) have each agreed to secure all of the Company’s Obligations to Buyer under the Debenture, this Agreement
and all other Transaction Documents by granting to the Buyer an unconditional and continuing security interest in all of the assets
and properties of the Company and Fog Cutter, whether now existing or hereafter acquired, pursuant to those certain Security Agreements,
each dated as of the date hereof (in the forms attached hereto as Exhibit B, the “Security Agreements”);


 


WHEREAS,
for purposes of this Agreement, the Debenture and each of the other Transaction Documents, each of the Company, Fatburger, Buffalo’s,
Ponderosa, Bonanza, and any other person or entity to hereafter become a guarantor or party hereunder shall be deemed “Credit
Parties”;


 


WHEREAS,
the Fog Cutter, Fatburger North America Inc., a corporation organized and existing under the laws of the State of Delaware (“Fatburger”),
Buffalo’s Franchise Concepts Inc., a corporation organized and existing under the laws of the State of Nevada (“Buffalo’s”),
Ponderosa Franchising Company, a general partnership organized and existing under the laws of the State of Delaware (“Ponderosa”),
and Bonanza Restaurant Company, a general partnership organized and existing under the laws of the State of Delaware (“Bonanza”,
and together with Fog Cutter, Fatburger, Buffalo’s, Ponderosa, jointly and severally, the “Guarantors”),
will receive a substantial benefit from the Buyer’s purchase of the Debentures and, as such, have agreed to guarantee all
of the Obligations of the Buyer under the Debentures, this Agreement and all other Transaction Documents pursuant to those certain
Guaranty Agreements, each dated as of the date hereof (in the form attached hereto as Exhibit C, the “Guaranty
Agreements”); and


 




    	1



    	 



    

 


WHEREAS,
as security for the payment and performance of any and all of the Company’s Obligations to Buyer under the Debentures, this
Agreement and all other Transaction Documents, Fog Cutter has agreed to execute a Pledge Agreement in favor of Buyer, whereby
Fog Cutter shall pledge to the Buyer all of its right, title and interest in and to, and provide a first priority lien and security
interest on, certain issued and outstanding shares of common stock of the Company, dated as of the date hereof (in the form attached
hereto as Exhibit D, the “Pledge Agreement”).


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound,
agree as follows:


 


ARTICLE
I


RECITALS,
EXHIBITS, SCHEDULES


 


The
foregoing recitals are true and correct and, together with the Schedules and Exhibits referred to hereafter, are hereby incorporated
into this Agreement by this reference.


 


ARTICLE
II


DEFINITIONS


 


For
purposes of this Agreement, except as otherwise expressly provided or otherwise defined elsewhere in this Agreement, or unless
the context otherwise requires, the capitalized terms in this Agreement shall have the meanings assigned to them in this Article
as follows:


 


2.1
“Affiliate” means, with respect to a Person, any other Person directly or indirectly controlling, controlled
by, or under common control with, such Person at any time during the period for which the determination of affiliation is being
made. For purposes of this definition, the term “control,” “controlling,” “controlled”
and words of similar import, when used in this context, means, with respect to any Person, the possession, directly or indirectly,
of the power to direct, or cause the direction of, management policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.


 


2.2
“Assets” means all of the properties and assets of the Person in question, as the context may so require, whether
real, personal or mixed, tangible or intangible, wherever located, whether now owned or hereafter acquired.


 


2.3
“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which federal banks are
authorized or required to be closed for the conduct of commercial banking business.


 


2.4
“Claims” means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies, settlements,
assessments, charges, costs and expenses of any nature or kind.


 




    	2



    	 



    

 


2.5
“Collateral” shall have the meaning given to it in the Security Agreements.


 


2.6
“Compliance Certificate” means that certain compliance certificate executed by an officer of the Company in
the form attached hereto as Exhibit E.


 


2.7
“Consent” means any consent, approval, order or authorization of, or any declaration, filing or registration
with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing)
of, by or with, any Person, which is necessary in order to take a specified action or actions, in a specified manner and/or to
achieve a specific result.


 


2.8
“Contract” means any written or oral contract, agreement, order or commitment of any nature whatsoever, including,
any sales order, purchase order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security agreement,
guarantee, management contract, employment agreement, consulting agreement, partnership agreement, shareholders agreement, buy-sell
agreement, option, warrant, debenture, subscription, call or put.


 


2.9
“Credit Party(ies)” shall have the meaning given to it in the recitals hereof.


 


2.10
“Debentures” shall have the meaning given to it in the preamble hereof.


 


2.11
“Effective Date” means the date so defined in the introductory paragraph of this Agreement.


 


2.12
“Encumbrance” means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, tax, covenant,
restriction, reservation, conditional sale, prior assignment, or any other encumbrance, claim, burden or charge of any nature
whatsoever.


 


2.13
“Environmental Requirements” means all Laws and requirements relating to human health, safety or protection
of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous Materials
in the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata),
or otherwise relating to the treatment, storage, disposal, transport or handling of any Hazardous Materials.


 


2.14
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.


 


2.15
“Fee Debenture” shall mean that certain debenture, or any replacement, substitution or amended and restated
form thereof, in the principal amount of one hundred seventy thousand and no/100 United States Dollars ($170,000), issued by the
Company in favor of the Buyer, the form of which is attached hereto as Exhibit F.


 


2.16
“GAAP” means generally accepted accounting principles, methods and practices set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, and statements and
pronouncements of the Financial Accounting Standards Board, or of such other Person as may be approved by a significant segment
of the U.S. accounting profession, in each case as of the date or period at issue, and as applied in the U.S. to U.S. companies.


 




    	3



    	 



    

 


2.17
“Governmental Authority” means any foreign, federal, state or local government, or any political subdivision
thereof, or any court, agency or other body, organization, group, stock market or exchange exercising any executive, legislative,
judicial, quasi-judicial, regulatory or administrative function of government.


 


2.18
“Guaranty Agreements” shall have the meaning given to it in the recitals hereof.


 


2.19
“Guarantors” shall have the meaning given to it in the recitals hereof.


 


2.20
“Hazardous Materials” means: (i) any chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,”
“toxic pollutants” or words of similar import, under any Law; and (iii) any other chemical, material, substance, or
waste, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Authority.


 


2.21
“Judgment” means any order, writ, injunction, fine, citation, award, decree, or any other judgment of any nature
whatsoever of any Governmental Authority.


 


2.22
“Law” means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation
of any Governmental Authority.


 


2.23
“Leases” means all leases for real or personal property.


 


2.24
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory
or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right
of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as
any of the foregoing).


 


2.25
“Material Adverse Effect” shall mean: (i) a material adverse change in, or a material adverse effect upon,
the Assets, business, prospects, properties, financial condition or results of operations of any Credit Party; (ii) a material
impairment of the ability of any Credit Party to perform any of its Obligations under any of the Transaction Documents; (iii)
a material adverse effect on: (A) any material portion of the “Collateral” (as such term is defined in the Security
Agreements); (B) the legality, validity, binding effect or enforceability against the Credit Parties of any of the Transaction
Documents; (C) the perfection or priority of any Encumbrance granted to Buyer under any Transaction Documents; or (D) the rights
or remedies of the Buyer under any of the Transaction Documents. For purposes of determining whether any of the foregoing changes,
effects, impairments, or other events have occurred, such determination shall be made by Buyer, in its sole, but reasonably exercised,
discretion.


 




    	4



    	 



    

 


2.26
“Material Contract” shall mean any Contract to which a Credit Party is a party or by which the Company or any
of its Assets are bound and which is required to be filed as an exhibit to the SEC Reports of the Company pursuant to Item 601
of Regulation S-K promulgated under the Exchange Act.


 


2.27
“Obligation” means, now existing or in the future, any debt, liability or obligation of any nature whatsoever
(including any required performance of any covenants or agreements), whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, voluntary or involuntary, direct or indirect, absolute, fixed, contingent, ascertained, unascertained,
known, unknown, whether or not jointly owed with others, whether or not from time to time decreased or extinguished and later
decreased, created or incurred, or obligations existing or incurred under this Agreement, the Debentures or any other Transaction
Documents, or any other agreement between any of the Credit Parties and the Buyer, as such obligations may be amended, supplemented,
converted, extended or modified from time to time.


 


2.28
“Ordinary Course of Business” means the ordinary course of business of the Person in question, consistent with
past custom and practice (including with respect to quantity, quality and frequency).


 


2.29
“Permit” means any license, permit, approval, waiver, order, authorization, right or privilege of any nature
whatsoever, granted, issued, approved or allowed by any Governmental Authority.


 


2.30
“Permitted Encumbrances”: (a) Liens securing taxes, assessments or governmental charges or levies not delinquent
or which are being contested in good faith; (b) Liens incurred or deposits made in the ordinary course of business in connection
with workers’ compensation, unemployment insurance, social security and other like laws; (c) Liens on fixed assets securing
purchase money indebtedness; (d) Liens existing on the Effective Date and disclosed on Schedule 2.30 hereto; (e) carrier’s
warehousemen’s, mechanic’s, workmen’s, landlord’s and other materialmen’s or other like Liens arising
in the ordinary course of business with respect to obligations which are not due or which are being contested in good faith; (f)
attachments, appeal bonds, judgment liens and other similar Liens for sums not exceeding $250,000 in the aggregate arising in
connection with court proceedings; (g) Liens of collecting banks under the UCC arising in the course of collection and statutory
Liens and rights of set-off of banks, in each case arising in the ordinary course of business; (h) deposits to secure the performance
of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a
like nature incurred in the Ordinary Course of business; and (i) zoning restrictions, easements, rights-of-way, restrictions on
use of real property and other similar encumbrances incurred in the Ordinary Course of Business.


 




    	5



    	 



    

 


2.31
“Person” means any individual, sole proprietorship, joint venture, partnership, company, corporation, association,
cooperation, trust, estate, Governmental Authority, or any other entity of any nature whatsoever.


 


2.32
“Pledge Agreement” shall have the meaning given to it in the recitals hereof.


 


2.33
“Pledged Company” shall mean Fat Brands Inc.


 


2.34
“Pledgor” shall mean Fog Cutter Capital Group, Inc.


 


2.35
“Proceeding” means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative
hearing, or any other proceeding of any nature whatsoever.


 


2.36
“Real Property” means any real estate, land, building, structure, improvement, fixture or other real property
of any nature whatsoever, including, but not limited to, fee and leasehold interests.


 


2.37
“SEC” means the U.S. Securities and Exchange Commission.


 


2.38
“SEC Reports” means the Offering Statement (File No. 024-10737) filed by the Company with the SEC, the related
Offering Circular filed on October 23, 2017, and such other reports, schedules, forms, statements and other documents filed by
the Company with the SEC under the Exchange Act from time to time, including the exhibits thereto and documents incorporated by
reference therein.


 


2.39
 “Securities” means the Debentures.


 


2.40
“Security Agreements” shall have the meaning given to it in the recitals hereof.


 


2.41
“Tax” means (i) any foreign, federal, state or local income, profits, gross receipts, franchise, sales, use,
occupancy, general property, real property, personal property, intangible property, transfer, fuel, excise, accumulated earnings,
personal holding company, unemployment compensation, social security, withholding taxes, payroll taxes, or any other tax of any
nature whatsoever, (ii) any foreign, federal, state or local organization fee, qualification fee, annual report fee, filing fee,
occupation fee, assessment, rent, or any other fee or charge of any nature whatsoever, or (iii) any deficiency, interest or penalty
imposed with respect to any of the foregoing.


 


2.42
“Tax Return” means any tax return, filing, declaration, information statement or other form or document required
to be filed in connection with or with respect to any Tax.


 


2.43
“Transaction Documents” means this Agreement any and all documents or instruments executed or to be executed
by any Credit Party in connection with this Agreement, including the Debentures, the Security Agreements, the Guaranty Agreements,
the Use of Proceeds Confirmation, the Pledge Agreements, the Fee Debenture and the Validity Certificates, together with all modifications,
amendments, extensions, future advances, renewals, and substitutions thereof.


 




    	6



    	 



    

 


2.44
“Use of Proceeds Confirmation” means that certain use of proceeds confirmation executed by an officer of the
Company in the form attached hereto as G.


 


2.45
“Validity Certificate(s)” shall mean those certain validity certificates executed by such officers and directors
of the Credit Parties as the Buyer shall require, in the Buyer’s sole discretion, the form of which is attached hereto as
Exhibit H.


 


ARTICLE
III


INTERPRETATION


 


In
this Agreement, unless the express context otherwise requires: (i) the words “herein,” “hereof” and “hereunder”
and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) references
to the words “Article” or “Section” refer to the respective Articles and Sections of this Agreement, and
references to “Exhibit” or “Schedule” refer to the respective Exhibits and Schedules annexed hereto; (iii)
references to a “party” mean a party to this Agreement and include references to such party’s permitted successors
and permitted assigns; (iv) references to a “third party” mean a Person not a party to this Agreement; (v) references
to the words “share” or “shareholder”, if in reference to the Company, shall refer to “units”
or “unitholder” respectively and (v) the terms “dollars” and “$” means U.S. dollars; (vi)
wherever the word “include,” “includes” or “including” is used in this Agreement, it will
be deemed to be followed by the words “without limitation”.


 


ARTICLE
IV


PURCHASE
AND SALE OF DEBENTURES


 


4.1
Purchase and Sale of Debentures. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement,
Buyer agrees to purchase, at each Closing, and Company agrees to sell and issue to Buyer, at each Closing, Debentures in the amount
of the purchase price applicable to each Closing as more specifically set forth below.


 


4.2
Closing Dates. The First Closing of the purchase and sale of the Debentures shall be for two million and No/100 United
States Dollars ($2,000,000), and 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 Debentures shall be at such times and for such amounts as determined in accordance with Section 4.4 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 Buyer and its
counsel, or in such other manner as is mutually agreed to by the Company and the Buyer.


 




    	7



    	 



    

 


4.3
Form of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on each Closing Date: (i) the
Buyer shall deliver to the Company, to an account designated by the Company, the aggregate proceeds for the Debentures to be issued
and sold to Buyer at each such Closing, minus the fees to be paid directly from the proceeds of each such Closing as set forth
in this Agreement, in the form of wire transfers of immediately available U.S. dollars; and (ii) the Company shall deliver to
Buyer the Securities which Buyer is purchasing hereunder at each Closing, duly executed on behalf of the Company, together with
any other documents required to be delivered pursuant to this Agreement.


 


4.4
Additional Closings. At any time after the First Closing but prior to the maturity date of the Debenture issued in the
First Closing, the Company may request that Buyer purchase additional Debentures hereunder in Additional Closings by written notice
to Buyer, and, subject to the conditions below, Buyer shall purchase such additional Debentures in such amounts and at such times
as Buyer and the Company may mutually agree; provided that (i) no fewer than ninety (90) days have elapsed since the date of the
First Closing, (ii) no default or “Event of Default” (as such term is defined in any of the Transaction Documents)
shall have occurred or 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 hereunder or
thereunder; and (iii) any additional purchase of Debentures beyond the purchase of Debentures at the First Closing shall have
been approved by Buyer, which approval may be given or withheld in Buyer’s sole and absolute discretion.


 


ARTICLE
V


BUYER’S
REPRESENTATIONS AND WARRANTIES


 


Buyer
represents and warrants to the Company, that:


 


5.1
Investment Purpose. Buyer 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.


 


5.2
Accredited Buyer Status. Buyer is an “accredited investor” as that term is defined in Rule 501 of Regulation
D, as promulgated under the Securities Act of 1933.


 


5.3
Reliance on Exemptions. Buyer 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 Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of
Buyer to acquire the Securities.


 


5.4
Information. Buyer and its advisors, if any, have been furnished with all materials they have requested relating to the
business, finances and operations of the Company and information Buyer deemed material to making an informed investment decision
regarding its purchase of the Securities. Buyer and its advisors, if any, have been afforded the opportunity to ask questions
of the Company and their management. Neither such inquiries, nor any materials provided to Buyer, nor any other due diligence
investigations conducted by Buyer or its advisors, if any, or its representatives, shall modify, amend or affect Buyer’s
right to fully rely on the Company’s representations and warranties contained in Article VI below. Buyer understands that
its investment in the Securities involves a high degree of risk. Buyer is in a position regarding the Company, which, based upon
economic bargaining power, enabled and enables Buyer to obtain information from the Company in order to evaluate the merits and
risks of this investment. Buyer 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.


 




    	8



    	 



    

 


5.5
No Governmental Review. Buyer understands that no United States federal or state Governmental Authority 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 Governmental Authorities passed upon or endorsed the merits of the offering of the Securities.


 


5.6
Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Buyer
and is a valid and binding agreement of Buyer, 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.


 


ARTICLE
VI


REPRESENTATIONS
AND WARRANTIES OF THE CREDIT PARTIES


 


To
induce the Buyer to purchase the Securities, the Credit Parties make the following representations and warranties to Buyer, each
of which shall be true and correct in all respects 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:


 


6.1
Subsidiaries. A list of all of the Company’s and Guarantors’ Subsidiaries, direct and indirect, is set forth
in Schedule 6.1 hereto.


 


6.2
Organization. Each of the Company and the Guarantors are a corporation, limited liability company, or other form of legally
recognized entity, as applicable, duly organized, validly existing and in good standing under the Laws of the jurisdiction in
which it is incorporated, and has the full power and authority and all necessary certificates, licenses, approvals and Permits
to: (i) enter into and execute this Agreement and the Transaction Documents and to perform all of its Obligations hereunder and
thereunder; and (ii) own and operate its Assets and properties and to conduct and carry on its business as and to the extent now
conducted. Each of the Company and the Guarantors are duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the character of its business or the ownership or use and operation of its Assets or properties
requires such qualification. The exact legal name of each of the Credit Parties is as set forth in the preamble to this Agreement,
and none of the Credit Parties currently conducts, nor has any Credit Party, during the last five (5) years conducted, business
under any other name or trade name.


 




    	9



    	 



    

 


6.3
Authority and Approval of Agreement; Binding Effect. The execution and delivery by Credit Parties of this Agreement and
the Transaction Documents, and the performance by each Credit Party of all of its Obligations hereunder and thereunder, including
the issuance of the Securities, have been duly and validly authorized and approved by each Credit Party and, as applicable, its
board of directors, stockholders, members, managers or partners pursuant to all applicable Laws and no other action or Consent
on the part of any Credit Party, its board of directors, managers, stockholders members, partners or any other Person is necessary
or required by any Credit Parties to execute this Agreement and the Transaction Documents, consummate the transactions contemplated
herein and therein, perform all Obligations hereunder and thereunder, or to issue the Securities. This Agreement and each of the
Transaction Documents has been duly and validly executed by the applicable Credit Parties party thereto (and the officer executing
this Agreement and all such other Transaction Documents is duly authorized to act and execute same on behalf of each Credit Party)
and constitutes a valid and legally binding agreement of the Credit Parties, enforceable against each Credit Party in accordance
with their respective 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.


 


6.4
Capitalization. The authorized capital stock or other capitalization of the Credit Parties, as applicable, is set forth
in the SEC Reports. All of such outstanding shares or other securities of the Credit Parties are validly issued, fully paid and
non-assessable and have been issued in compliance with all foreign, federal and state securities laws and none of such outstanding
shares or other securities were issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.
As of the Effective Date, no shares of capital stock or other securities of the Credit Parties or any Subsidiary thereof that
are pledged as Collateral under the Pledge Agreements are subject to preemptive rights or any other similar rights or any Claims
or Encumbrances suffered or permitted by any Credit Party or Subsidiary thereof. Except as set forth in the SEC Reports and except
for the Securities to be issued pursuant to this Agreement, as of the Effective Date: (i) 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, any shares of capital stock of any Credit Party or any Subsidiary thereof, or Contracts, commitments, understandings or
arrangements by which any Credit Party or any Subsidiary thereof is or may become bound to issue additional shares of capital
stock of any Credit Party or any Subsidiary thereof, or options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of any Credit Party
or Subsidiary thereof; (ii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other Contracts
or instruments evidencing indebtedness of any Credit Party or any Subsidiary thereof, or by which any Credit Party or Subsidiary
thereof, is or may become bound; and (vii) there are no outstanding securities or instruments of any Credit Party or any Subsidiary
thereof which contain any redemption or similar provisions, and there are no Contracts by which such Credit Party or Subsidiary
is or may become bound to redeem a security of such Credit Party or Subsidiary. Fog Cutter and the Credit Parties have furnished
to the Buyer true, complete and correct copies of: Fog Cutter’s and each Credit Party’s respective articles of incorporation
(including any certificates of designation, as applicable), bylaws, operating agreement, partnership agreement, certificate of
organization or similar organizational and governing documents (the “Organizational Documents”). Except for
the Organizational Documents or as disclosed in the SEC Reports, there are no other shareholder agreements, voting agreements
or other Contracts of any nature or kind that restrict, limit or in any manner impose Obligations on the governance of any Credit
Party.


 






    	10



    	 



    

 


6.5
No Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Transaction Documents,
and the consummation of the transactions contemplated hereby and thereby, including the issuance of any of the Securities, will
not: (i) constitute a violation of or conflict with the Organizational Documents of the Company and the Guarantors; (ii) constitute
a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with,
or gives to any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any Contract
to which the Company and the Guarantors are a party or by which any of its Assets or properties may be bound; (iii) constitute
a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with,
any Judgment; (iv) constitute a violation of, or conflict with, any Law (including United States federal and state securities
Laws); or (v) result in the loss or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with
respect to, any Permit granted or issued to, or otherwise held by or for the use of, any Credit Party or any of its Assets. The
Company and the Guarantors are not in violation of any Company or Guarantor’s Organizational Documents and the Credit Parties
are not in default or breach (and no event has occurred which with notice or lapse of time or both could put any Credit Party
in default or breach) under, and the Credit Parties have not taken any action or failed to take any action that would give to
any other Person any rights of termination, amendment, acceleration or cancellation of, any Contract to which any Credit Party
is a party or by which any property or Assets of the Credit Parties are bound or affected. The businesses of the Credit Parties
are not being conducted, and shall not be conducted so long as Buyer owns any of the Securities, in violation of any Law. Except
as specifically contemplated by this Agreement, no Credit Party is required to obtain any Consent of, from, or with any Governmental
Authority, or any other Person, in order for it to execute, deliver or perform any of its Obligations under this Agreement or
the Transaction Documents in accordance with the terms hereof or thereof, or to issue and sell the Securities in accordance with
the terms hereof. All Consents which any Credit Party is required to obtain pursuant to the immediately preceding sentence have
been obtained or effected on or prior to the date hereof. The Credit Parties are not aware of any facts or circumstances which
might give rise to any of the foregoing.


 


6.6
Issuance of Securities. The Securities are duly authorized and, upon issuance in accordance with the terms hereof, shall
be duly issued, fully paid and non-assessable, and free from all Encumbrances with respect to the issue thereof, and will be issued
in compliance with all applicable United States federal and state securities Laws.


 






    	11



    	 



    

 


6.7
Financial Statements. The Company has delivered to the Buyer copies of the financial statements filed by the Company with
the SEC Reports (collectively, the “Financial Statements”). The Financial Statements have been prepared in
accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise indicated in such Financial
Statements or the notes 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 and accurately present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the dates thereof and the consolidated 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). To the best knowledge
of the Credit Parties, no other information provided by or on behalf of the Credit Parties and its Subsidiaries to the Buyer,
either as a disclosure schedule to this Agreement, or otherwise in connection with Buyer’s due diligence investigation of
the Credit Parties and its Subsidiaries, 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.


 


6.8
Absence of Certain Changes. Since the date of the most recent of the Financial Statements, none of the following have occurred:


 


(a)
There has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect; or


 


(b)
Any transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Credit
Parties other than in the Credit Parties’ Ordinary Course of Business.


 


6.9
Absence of Litigation or Adverse Matters. No condition, circumstance, event, agreement, document, instrument, restriction,
litigation or Proceeding (or threatened litigation or Proceeding or basis therefor) exists which: (i) could adversely affect the
validity or priority of the Encumbrances granted to the Buyer under the Transaction Documents; (ii) could adversely affect the
ability of each Credit Party to perform its Obligations under the Transaction Documents; (iii) would constitute a default under
any of the Transaction Documents; (iv) would constitute such a default with the giving of notice or lapse of time or both; or
(v) would constitute or give rise to a Material Adverse Effect. In addition: (vi) there is no Proceeding before or by any Governmental
Authority or any other Person, pending, or to the best of each Credit Party’s knowledge, threatened or contemplated by,
against or affecting either Credit Party, its business or Assets; (vii) there is no outstanding Judgment against or affecting
either Credit Party, its business or Assets; (viii) neither Credit Party is in breach or violation of any Contract; and (ix) neither
Company has received any material complaint from any customer, supplier, vendor or employee.


 


6.10
Liabilities and Indebtedness of the Company. The Company and its Subsidiaries do not have any Obligations of any nature
whatsoever, except: (i) as disclosed in the Financial Statements; or (ii) Obligations incurred in the Ordinary Course of Business
since the date of the most recent Financial Statements which do not or would not, individually or in the aggregate, have a Material
Adverse Effect; or (iii) Obligations owed to the Buyer.


 






    	12



    	 



    

 


6.11
Title to Assets. Each of the Company and Guarantors have good and marketable title to, or a valid leasehold interest in,
all of its Assets which are material to the business and operations of the Company as presently conducted, free and clear of all
Encumbrances or restrictions on the transfer or use of same. Except as would not have a Material Adverse Effect, each Guarantors
Assets are in good operating condition and repair, ordinary wear and tear excepted, and are free of any latent or patent defects
which might impair their usefulness, and are suitable for the purposes for which they are currently used and for the purposes
for which they are proposed to be used.


 


6.12
Real Estate.


 


(a)
Real Property Ownership. Except for the Credit Party Leases and as described in the SEC Reports, the Credit Parties do
not own any Real Property.


 


(b)
Real Property Leases. Except for ordinary office Leases disclosed to the Buyer in writing prior to the date hereof (the
“Credit Party Leases”), the Credit Parties do not lease any other Real Property. With respect to each of the
Credit Party Leases: (i) the Credit Parties have been in peaceful possession of the property leased thereunder and neither the
Credit Parties nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the Obligations
thereunder has been granted by the Credit Parties or landlord thereunder; and (iii) there exists no event, occurrence, condition
or act known to the officers or directors of Credit Parties which, upon notice or lapse of time or both, would be or could become
a default thereunder or which could result in the termination of the Credit Party Leases, or any of them, or have a Material Adverse
Effect on the business of any Credit Party, its Assets or its operations or financial results. The Credit Parties have not violated
nor breached any provision of any such Credit Party Leases, and all Obligations required to be performed by the Credit Parties
under any of such Credit Party Leases have been fully, timely and properly performed. The Credit Parties have delivered to the
Buyer true, correct and complete copies of all Credit Party Leases, including all modifications and amendments thereto, whether
in writing or otherwise. The Credit Parties have not received any written or oral notice to the effect that any of the Credit
Party Leases will not be renewed at the termination of the term of such Credit Party Leases, or that any of such Credit Party
Leases will be renewed only at higher rents.


 


6.13
Material Contracts. An accurate, current and complete copy of each of the Material Contracts has been filed as an exhibit
to the SEC Reports, and each of the Material Contracts constitutes the entire agreement of the respective parties thereto relating
to the subject matter thereof. There are no outstanding offers, bids, proposals or quotations made by any Credit Party which,
if accepted, would create a Material Contract with any Credit Party. Each of the Material Contracts is in full force and effect
and is a valid and binding Obligation of the parties thereto in accordance with the terms and conditions thereof. To the knowledge
of each Credit Party and its officers, all Obligations required to be performed under the terms of each of the Material Contracts
by any party thereto through and including the date hereof have been fully performed by all parties thereto, and no party to any
Material Contracts is in default with respect to any term or condition thereof, nor has any event occurred which, through the
passage of time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration or modification
of any Obligation of any party thereto or the creation of any Encumbrance upon any of the Assets of the Credit Parties. Further,
no Credit Party has received notice, nor does any Credit Party have any knowledge, of any pending or contemplated termination
of any of the Material Contracts and, no such termination is proposed or has been threatened, whether in writing or orally.


 






    	13



    	 



    

 


6.14
Compliance with Laws. To the knowledge of each Credit Party and its officers, each Credit Party is and at all times has
been in full compliance with all Laws, except for any such violations which, individually or in the aggregate, would not have
a Material Adverse Effect. No Credit Party has received any notice that it is in violation of, has violated, or is under investigation
with respect to, or has been threatened to be charged with, any violation of any Law, except for any such violations which, individually
or in the aggregate, would not have a Material Adverse Effect.


 


6.15
Intellectual Property. The Credit Parties own or possess adequate and legally enforceable 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 all other intellectual property rights necessary to conduct
its business as now conducted (collectively, the “IP Rights”). All IP Rights, and any federal, state, local
or foreign patent and trademark office, or functional equivalent thereof where any such IP Rights may be filed or registered,
is set forth in Schedule 6.15. All of the IP Rights are owned by the Credit Parties, except for IP Rights licensed by the
Credit Parties, which licensed IP Rights are specifically outlined and described in Schedule 6.15. If any IP Rights are
licensed by any Credit Party, the underlying license agreement or other agreement pursuant to which such IP Rights are licensed
(collectively, the “License Agreements”), permits Buyer to encumber such License Agreements without any further
consent or approval of any other Person, including the underlying owner of such IP Rights, such that if there was an Event of
Default and Buyer foreclosed on all Collateral, Buyer would have the right to use such IP Rights under the License Agreements,
subject only to Buyer’s obligation to comply with the terms of such License Agreements. The Credit Parties do not have any
knowledge of any infringement by any Credit Party of any IP Rights of others, and, to the knowledge of the Credit Parties, there
is no claim, demand or Proceeding, or other demand of any nature being made or brought against, or to any Credit Party’s
knowledge, being threatened against, any Credit Party regarding IP Rights or other intellectual property infringement; and is
the Credit Parties are not aware of any facts or circumstances which might give rise to any of the foregoing.


 


6.16
Labor and Employment Matters. The Credit Parties are not involved in any labor dispute or, to the knowledge of each Credit
Party, is any such dispute threatened. To the knowledge of the Company and the Guarantors and their respective officers, none
of the employees of the Company and the Guarantors are a member of a union and the Company and the Guarantors believe that their
relations with their employees are good. To the knowledge of the Company and the Guarantors and their respective officers, the
Company and the Guarantors have complied in all material respects with all Laws relating to employment matters, civil rights and
equal employment opportunities.


 






    	14



    	 



    

 


6.17
Employee Benefit Plans. Except as disclosed in the SEC Reports, the Company and the Guarantors do not have and have not
ever maintained, and have no Obligations with respect to any employee benefit plans or arrangements, including employee pension
benefit plans, as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA,
deferred compensation plans, stock option plans, bonus plans, stock purchase plans, hospitalization, disability and other insurance
plans, severance or termination pay plans and policies, whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents of the Company and the Guarantors participate (collectively, the “Employee Benefit Plans”).
The Company and the Guarantors knowledge, all Employee Benefit Plans meet the minimum funding standards of Section 302 of ERISA,
where applicable, and each such Employee Benefit Plan that is intended to be qualified within the meaning of Section 401 of the
Internal Revenue Code of 1986 is qualified. No withdrawal liability has been incurred under any such Employee Benefit Plans and
no “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), has occurred with
respect to any such Employee Benefit Plans, unless approved by the appropriate Governmental Authority. To the Company and the
Guarantors’ knowledge, the Company and the Guarantors have promptly paid and discharged all Obligations arising under ERISA
of a character which if unpaid or unperformed might result in the imposition of an Encumbrance against any of its Assets or otherwise
have a Material Adverse Effect.


 


6.18
Tax Matters. The Company and its Subsidiaries has made and timely filed all Tax Returns required by any jurisdiction to
which it is subject, subject to any permissible extensions, and each such Tax Return has been prepared in compliance with all
applicable Laws, and all such Tax Returns are true and accurate in all respects. Except and only to the extent that the Company
and its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported Taxes,
each of Company and its Subsidiaries has timely paid all Taxes shown or determined to be due on such Tax Returns, except those
being contested in good faith, and each of them has set aside on its books provision reasonably adequate for the payment of all
Taxes for periods subsequent to the periods to which such Tax Returns 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 and its Subsidiaries know of no
basis for any such claim. The Company and its Subsidiaries have withheld and paid all Taxes to the appropriate Governmental Authority
required to have been withheld and paid in connection with amounts paid or owing to any Person. There is no Proceeding or Claim
for refund now in progress, pending or threatened against or with respect to any of the Company or its Subsidiaries regarding
Taxes.


 


6.19
Insurance. The Company and its Subsidiaries are each covered by valid, outstanding and enforceable policies of insurance
which were issued to it by reputable insurers of recognized financial responsibility, covering its properties, Assets and businesses
against losses and risks normally insured against by other corporations or entities in the same or similar lines of businesses
as the Company and its Subsidiaries are engaged and in coverage amounts which are prudent and typically and reasonably carried
by such other corporations or entities (the “Insurance Policies”). Such Insurance Policies are in full force
and effect, and all premiums due thereon have been paid. None of the Insurance Policies will lapse or terminate as a result of
the transactions contemplated by this Agreement. The Company and its Subsidiaries have complied with the provisions of such Insurance
Policies. The Company and its Subsidiaries have not been refused any insurance coverage sought or applied for and the Company
and its Subsidiaries do not have any reason to believe that it will not be able to renew its existing Insurance Policies as and
when such Insurance Policies expire 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.


 






    	15



    	 



    

 


6.20
Permits. The Company and its Subsidiaries possess all Permits necessary to conduct its business, and neither the Company
nor its Subsidiaries have received any notice of, or is otherwise involved in any Proceedings relating to, the revocation or modification
of any such Permits. All such Permits are valid and in full force and effect and the Company and its Subsidiaries are in full
compliance with the respective requirements of all such Permits.


 


6.21
Bank Accounts; Business Location. Schedule 6.21 sets forth, with respect to each account of the of the Company and
the Guarantors with any bank, broker or other depository institution: (i) the name and account number of such account; (ii) the
name and address of the institution where such account is held; (iii) the name of any Person(s) holding a power of attorney with
respect to such account, if any; and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds
from each such account. The Company and the Guarantors have no office or place of business other than as identified on Schedule
6.21 and each of the Credit Party’s principal places of business and chief executive offices are indicated on Schedule
6.21. All books and records of the Company and the Guarantors and other material Assets of the Credit Parties are held or
located at the principal offices of the Credit Parties indicated on Schedule 6.21. 


 


6.22
Environmental Laws. Except as are used in such amounts as are customary in the Ordinary Course of Business of the Company
and its Subsidiaries and in compliance with all applicable Environmental Laws, the Company and its Subsidiaries represents and
warrants to Buyer that: (i) neither the Company or its Subsidiaries have generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off any of the premises of the Company and its Subsidiaries (whether
or not owned by the Company or the Guarantors) in any manner which at any time violates any Environmental Law or any Permit, certificate,
approval or similar authorization thereunder; (ii) the operations of the Company and its Subsidiaries comply in all material respects
with all Environmental Laws and all Permits certificates, approvals and similar authorizations thereunder; (iii) there has been
no investigation, Proceeding, complaint, order, directive, Claim, citation or notice by any Governmental Authority or any other
Person, nor is any pending or, to the Company and its Subsidiaries knowledge, threatened; and (iv) the Company and its Subsidiaries
do not have any liability, contingent or otherwise, in connection with a release, spill or discharge, threatened or actual, of
any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal
of any Hazardous Material.


 






    	16



    	 



    

 


6.23
Illegal Payments. Neither the Credit Parties, nor any director, officer, agent, employee or other Person acting on behalf
of the Credit Parties has, in the course of his actions for, or on behalf of, the Credit Parties: (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or
is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.


 


6.24
Related Party Transactions. Except for arm’s length transactions pursuant to which the Credit Parties make payments
in the Ordinary Course of Business upon terms no less favorable than the Credit Parties could obtain from third parties and the
transactions disclosed in the SEC Reports, none of the officers, directors or employees of the Credit Parties, nor any stockholders
who own, legally or beneficially, five percent (5%) or more of the ownership interests of the Credit Parties (each a “Material
Shareholder”), is presently a party to any transaction with the Credit Parties (other than for services as employees,
officers and directors), including any Contract 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 Material
Shareholder or, to the best knowledge of the Credit Parties, any other Person in which any officer, director, or any such employee
or Material Shareholder has a substantial or material interest in or of which any officer, director or employee of the Credit
Parties or Material Shareholder is an officer, director, trustee or partner. There are no Claims or disputes of any nature or
kind between the Credit Parties and any officer, director or employee of the Credit Parties or any Material Shareholder, or between
any of them, relating to each Credit Party and its business.


 


6.25
Internal Accounting Controls. The Company 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 GAAP and to maintain asset accountability;
(iii) access to Assets is permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for Assets is compared with the existing Assets at reasonable intervals and appropriate action is taken
with respect to any differences.


 


6.26
Acknowledgment Regarding Buyer’s Purchase of the Securities. Each Credit Party acknowledges and agrees that Buyer
is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated
hereby. Each Company and each Guarantor further acknowledges that Buyer is not acting as a financial advisor or fiduciary of the
Credit Parties (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice
given by Buyer or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby
is merely incidental to Buyer’s purchase of the Securities. The Credit Parties further represent to Buyer that each Company’s
and each Guarantor’s decision to enter into this Agreement has been based solely on the independent evaluation by the Company,
each Guarantor and its representatives.


 






    	17



    	 



    

 


6.27
Seniority. No indebtedness or other equity or security of the Company is senior to the Debentures in right of payment,
whether with respect to interest or upon liquidation or dissolution, or otherwise, except only purchase money security interests
(which are senior only as to underlying Assets covered thereby).


 


6.28
Brokerage Fees. With the exception of the Dalmore Group, LLC, there is no Person acting on behalf of the Credit Parties
who is entitled to or has any claim for any brokerage or finder’s fee or commission in connection with the execution of
this Agreement or the consummation of the transactions contemplated hereby.


 


6.29
No General Solicitation. Neither the Credit Parties, 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 issuance of the Securities.


 


6.30
No Integrated Offering. Neither the Credit Parties, 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 such securities to be integrated
with prior offerings by the Credit Parties for purposes of the Securities Act.


 


6.31
Private Placement. No registration under the Securities Act or the laws, rules or regulation of any other governmental
authority is required for the issuance of the Securities.


 


6.32
Full Disclosure. All the representations and warranties made by the Company herein or in the Schedules hereto, and all
of the financial statements, schedules, certificates, confirmations, agreements, contracts, and other materials of the Company
submitted to the Buyer in connection with or in furtherance of this Agreement or pertaining to the transaction contemplated herein,
whether made or given by the Company, its agents or representatives, are complete and accurate, and do not omit any information
required to make the statements and information provided, in light of the transaction contemplated herein and in light of the
circumstances under which they were made, not misleading, accurate and meaningful.


 


ARTICLE
VII


COVENANTS


 


7.1
Negative Covenants.


 


(a)
Indebtedness. So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either
directly or indirectly, create, assume, incur or have outstanding any indebtedness for borrowed money of any nature or kind (including
purchase money indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any Obligation of any
other Person, except for: (i) the Debentures; (ii) Obligations disclosed in the financial statements or SEC Reports provided to
the Buyer as of the Effective Date; (iii) obligations for accounts payable, other than for money borrowed, and equipment financing
arrangements incurred in the Ordinary Course of Business of the Credit Parties; (iv) indebtedness which is junior in priority
to the Debentures and the Fee Debenture and which such junior priority is evidenced by a subordination agreement with the Buyer;
and (vi) indebtedness which is incurred to repay in full the Debentures and the Fee Debenture; provided that, any management or
similar fees (other than regular compensation payable to directors and officers in the Ordinary Course of Business), payable by
the Credit Parties shall be fully subordinated in right of payment to the prior payment in full of the Debentures and the Fee
Debenture.


 






    	18



    	 



    

 


(b)
Encumbrances. So long as Buyer owns, legally or beneficially, any of the Debentures or the Fee Debenture, the Credit Parties
shall not, either directly or indirectly, create, assume, incur or suffer or permit to exist any Encumbrance upon any Asset of
the Credit Parties, whether owned at the date hereof or hereafter acquired, other than Permitted Encumbrances.


 


(c)
Investments. So long as Buyer owns, legally or beneficially, any of the Debentures, no Credit Party shall, either directly
or indirectly, make or have outstanding any new investments (whether through purchase of stocks, obligations or otherwise) in,
or loans or advances to, any other Person, or acquire all or any substantial part of the assets, business, stock or other evidence
of beneficial ownership of any other Person, except for the following: (i) investments in direct obligations of the United States
or any state in the United States; (ii) trade credit extended by any Credit Party in its Ordinary Course of Business; (iii) investments
existing on the Effective Date and set forth in the financial statements provided to the Buyer; (iv) intercompany advances among
the Credit Parties, (v) notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers in the
Ordinary Course of Business; (vi) obligations received in connection with the satisfaction or enforcement of claims due or owing
to any of the Credit Parties, and (vii) capital expenditures, unless first approved by the Buyer in writing, which approval shall
not be unreasonably withheld.


 


(d)
Issuances. So long as Buyer owns, legally or beneficially, any of the Debentures or the Fee Debenture, no Credit Party
shall, either directly or indirectly, issue any equity, debt or convertible or derivative instruments or securities whatsoever,
without obtaining Buyer’s prior written consent, which consent may be withheld in Buyer’s sole discretion, provided,
however, that the Company may issue or convert equity, debt or convertible or derivative instruments or securities without consent,
if immediately following such issuance or conversion there would be no Change in Control.


 


(e)
Transfer; Merger. So long as Buyer owns, legally or beneficially, any of the Debentures or the Fee Debenture, Fog Cutter
and the Credit Parties shall not, either directly or indirectly, permit or enter into any transaction involving a “Change
in Control” (as hereinafter defined), or any other merger, consolidation, sale, transfer, license, Lease, Encumbrance or
other disposition of all or substantially all of its properties or business or all or substantially all of its Assets, except
for the sale, lease or licensing of property or Assets of Fog Cutter or the Credit Parties in the Ordinary Course of Business
of Fog Cutter and the Credit Parties. For purposes of this Agreement, the term “Change of Control” shall mean
any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership interest of the Fog Cutter and the
Credit Parties which results in any change in the identity of the individuals or entities previously having the power to direct,
or cause the direction of, the management and policies Fog Cutter or the Credit Parties, or the grant of a security interest in
any ownership interest of any Person directly or indirectly controlling Fog Cutter or any of the Credit Parties, which could result
in a change in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the
management and policies of Fog Cutter or the Credit Parties.


 






    	19



    	 



    

 


(f)
Distributions; Restricted Payments; Change in Management. So long as Buyer owns, legally or beneficially, any of the Debentures
or the Fee Debenture, the Credit Parties shall not, either directly or indirectly: (i) purchase or redeem any shares of its capital
stock; (ii) declare or pay any dividends or distributions, whether in cash or otherwise, or set aside any funds for any such purpose,
other than a quarterly cash dividend of $0.12 per share, pro rata stock dividends, and inter-company transfers in the Ordinary
Course of Business; (iii) make any distribution to its shareholders (other than as permitted in clause (i)), make any distribution
of its property or Assets or make any loans, advances or extensions of credit to, or investments in, any Person, other than in
the Ordinary Course of Business, including, without limitation, any Affiliates of the Company and the Guarantors, or the Company
and the Guarantors’ officers, directors, employees or Material Shareholder; (iv) pay any outstanding indebtedness of the
Credit Parties, except for indebtedness and other Obligations permitted hereunder or as stated in the Use of Proceeds; or (v)
increase the annual salary paid to any officers or directors of the Company and the Guarantors as of the Effective Date, unless
any such increase is approved by a majority of the disinterested members of the Board of Directors of the Company. The Company
and the Guarantors shall not pay any brokerage or finder’s fee or commission in connection with the execution of this Agreement
or the consummation of the transactions contemplated hereby.


 


(g)
Use of Proceeds. Except as set forth in the use of proceeds confirmation related to this Agreement, the Credit Parties
shall not use any portion of the proceeds of the Debentures, either directly or indirectly, for any of the following purposes:
(i) to make any payment towards any indebtedness or other Obligations of the Credit Parties; (ii) to pay any Taxes of any nature
or kind that may be due by the Credit Parties; or (iii) to pay any Obligations of any nature or kind due or owing to any officers,
directors, employees, or Material Shareholders of the Credit Parties, other than salaries payable in the Ordinary Course of Business
of the Credit Parties. Each Credit Party covenants and agrees to only use any portion of the proceeds of the purchase and sale
of the Debentures for the purposes set forth in the Use of Proceeds Confirmation to be executed by the Company on the Effective
Date, unless the Company obtains the prior written consent of the Buyer to use such proceeds for any other purpose, which consent
may be granted or withheld or conditioned by Buyer in its sole and absolute discretion.


 


(h)
Business Activities; Change of Legal Status and Organizational Documents. The Credit Parties shall not: (i) engage in any
line of business other than the businesses engaged in as of the Effective Date and business reasonably related thereto (including
the pending acquisition of Hurricane AMT, LLC); (ii) change its name, organizational identification number (if applicable), its
type of organization, its jurisdiction of organization or other legal structure; or (iii) permit its Certificate of Incorporation,
Bylaws or other organizational documents to be amended or modified in any way which could reasonably be expected to have a Material
Adverse Effect.


 






    	20



    	 



    

 


(i)
Transactions with Affiliates. No Credit Party shall enter into any transaction with any of its Affiliates, officers, directors,
employees, Material Shareholders or other insiders, except in the Ordinary Course of Business of such Credit Party and upon fair
and reasonable terms that are no less favorable to such Credit Party than it would obtain in a comparable arm’s length transaction
with a Person not an Affiliate of such Credit Party.


 


(j)
Bank Accounts. The Credit Parties shall not maintain any bank, deposit, credit card payment processing accounts, or other
accounts with any financial institution, or any other Person, other than the Credit Parties’ accounts listed in the attached
Schedule 6.21 or that is otherwise disclosed to Buyer no later than ten business days in advance of depositing any funds.


 


7.2
Affirmative Covenants.


 


(a)
Corporate Existence. Fog Cutter and the Credit Parties shall at all times preserve and maintain its: (i) existence and
good standing in the jurisdiction of its organization; and (ii) its qualification to do business and good standing in each jurisdiction
where the nature of its business makes such qualification necessary, and shall at all times continue as a going concern in the
business which Fog Cutter and the Credit Parties are presently conducting.


 


(b)
Tax Liabilities. Each Credit Party shall at all times pay and discharge all Taxes upon, and all Claims (including claims
for labor, materials and supplies) against the such Credit Party or any of its properties or Assets, before the same shall become
delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP are being maintained.


 


(c)
Notice of Proceedings. The Credit Parties shall, promptly, but not more than five (5) days after knowledge thereof shall
have come to the attention of any officer of any Credit Party, give written notice to the Buyer of all threatened or pending Proceedings
before any Governmental Authority or otherwise affecting any Credit Party or any of its Assets.


 


(d)
Material Adverse Effect. The Credit Parties shall, promptly, but not more than five (5) days after knowledge thereof shall
have come to the attention of any officer of a Credit Party, give written notice to the Buyer of any event, circumstance, fact
or other matter that could in any way have or be reasonably expected to have a Material Adverse Effect.


 


(e)
Notice of Default. The Company and the Guarantors shall, promptly, but not more than five (5) days after the commencement
thereof, give notice to the Buyer in writing of the occurrence of any “Event of Default” (as such term is defined
in any of the Transaction Documents) or of any event which, with the lapse of time, the giving of notice or both, would constitute
an Event of Default hereunder or under any other Transaction Documents.


 






    	21



    	 



    

 


(f)
Maintain Property. The Credit Parties shall at all times maintain, preserve and keep all of its Assets in good repair,
working order and condition, normal wear and tear excepted, and shall from time to time, as the Credit Parties deem appropriate
in its reasonable judgment, make all needful and proper repairs, renewals, replacements, and additions thereto so that at all
times the efficiency thereof shall be fully preserved and maintained. The Credit Parties shall permit Buyer to examine and inspect
such Assets at all reasonable times upon reasonable notice during business hours. During the continuance of any Event of Default
hereunder or under any Transaction Documents, the Buyer shall, at the Companies’ expense, have the right to make additional
inspections without providing advance notice.


 


(g)
Maintain Insurance. The Credit Parties shall at all times insure and keep insured with investment grade rated insurance
companies, all insurable property owned by the Credit Parties which is of a character usually insured by companies similarly situated
and operating like properties, against loss or damage from environmental, fire and such other hazards or risks as are customarily
insured against by companies similarly situated and operating like properties; and shall similarly insure employers’, public
and professional liability risks.


 


(h)
ERISA Liabilities; Employee Plans. The Company and the Guarantors shall: (i) keep in full force and effect any and all
Employee Plans which are presently in existence or may, from time to time, come into existence under ERISA, and not withdraw from
any such Employee Plans, unless such withdrawal can be effected or such Employee Plans can be terminated without liability to
the Company and the Guarantors ; (ii) make contributions to all of such Employee Plans in a timely manner and in a sufficient
amount to comply with the standards of ERISA, including the minimum funding standards of ERISA; (iii) comply with all material
requirements of ERISA which relate to such Employee Plans; (iv) notify Buyer immediately upon receipt by the Company and the Guarantors
of any notice concerning the imposition of any withdrawal liability or of the institution of any Proceeding or other action which
may result in the termination of any such Employee Plans or the appointment of a trustee to administer such Employee Plans; (v)
promptly advise Buyer of the occurrence of any “Reportable Event” or “Prohibited Transaction” (as such
terms are defined in ERISA), with respect to any such Employee Plans; and (vi) amend any Employee Plan that is intended to be
qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 to the extent necessary to keep the Employee
Plan qualified, and to cause the Employee Plan to be administered and operated in a manner that does not cause the Employee Plan
to lose its qualified status.


 


(i)
Continued Due Diligence/Field Audits. The Credit Parties acknowledge that during the term of this Agreement, Buyer and
its agents and representatives undertake ongoing and continuing due diligence reviews of the Credit Parties and its business and
operations. Such ongoing due diligence reviews may include, and the Credit Parties do hereby agree to allow Buyer, to conduct
site visits and field examinations of the office locations of the Credit Parties, and the Assets and records of each of them,
the results of which must be satisfactory to Buyer in Buyer’s sole and absolute discretion. In this regard, in order to
cover Buyer’s expenses of the ongoing due diligence reviews and any site visits or field examinations which Buyer may undertake
from time to time while this Agreement is in effect, the Credit Parties shall pay to Buyer, within five (5) Business Days after
receipt of an invoice or demand therefor from Buyer, a fee of up to $5,000 per year (based on two (2) expected field audits and
ongoing due diligence of $2,500 per visit or audit) to cover such ongoing expenses. Failure to pay such fee as and when required
shall be deemed an Event of Default under this Agreement and all other Transaction Documents. The foregoing notwithstanding, from
and after the occurrence of an Event of Default or any event which with notice, lapse of time or both, would become an Event of
Default, Buyer may conduct site visits, field examinations and other ongoing reviews of the Credit Parties’ records, Assets
and operations at any time, in its sole discretion, without any limitations in terms of number of site visits or examinations
and without being limited to the fee hereby contemplated, all at the sole expense of the Credit Parties.


 






    	22



    	 



    

 


7.3
Reporting Requirements. The Credit Parties agree as follows:


 


(a)
Financial Statements. The Credit Parties shall at all times maintain a system of accounting capable of producing its individual
and consolidated (if applicable) financial statements in compliance with GAAP (provided that monthly financial statements shall
not be required to have footnote disclosure, are subject to normal year-end adjustments and need not be consolidated), and shall
furnish to the Buyer or its authorized representatives such information regarding the business affairs, operations and financial
condition of the Credit Parties as Buyer may from time to time request or require, including:


 


(i)
as soon as available, and in any event, within ninety (90) days after the close of each fiscal year, a copy of the annual audited
financial statements of Credit Parties including balance sheet, statement of income and retained earnings, statement of cash flows
for the fiscal year then ended, in reasonable detail, prepared and reviewed by an independent certified public accountant reasonably
acceptable to Buyer, containing an unqualified opinion of such accountant; which may be satisfied by transmitting electronically
to the Buyer copies of (or hyper links to) the Company’s reports filed with the SEC that contain the same information;


 


(ii)
as soon as available, and in any event, within sixty (60) days after the close of each fiscal quarter, a copy of the quarterly
financial statements of Credit Parties, including balance sheet, statement of income and retained earnings, statement of cash
flows for the fiscal year then ended, in reasonable detail, prepared and certified as accurate in all material respects by the
CEO or CFO of such Credit Party; which such obligation of the Company to deliver financial statements may be satisfied by transmitting
electronically to the Buyer copies of (or hyper links to) the Company’s reports filed with the SEC that contain the same
information;


 


(iii)
as soon as available, and in any event, within thirty (30) days following the end of each calendar month, a copy of the financial
statements of Credit Party regarding such month, including balance sheet, statement of income and retained earnings, statement
of cash flows for the month then ended, in reasonable detail, prepared and certified as accurate in all material respects by the
CEO or CFO of such Credit Party.


 






    	23



    	 



    

 


Except
as may be required in order to conform with GAAP or rules and regulations enforced by the SEC, no change with respect to the accounting
principles shall be made by the Credit Parties without giving prior notification to Buyer. The Credit Parties represent and warrant
to Buyer that the financial statements delivered to Buyer at or prior to the execution and delivery of this Agreement and to be
delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of the Company and the
Guarantors in all material respects. Buyer shall have the right at all times (and on reasonable notice so long as there then does
not exist any Event of Default) during business hours to inspect the books and records of the Company and the Guarantors and make
extracts therefrom.


 


(b)
Additional Reporting Requirements. The Credit Parties shall provide the following reports and statements to Buyer as follows:


 


(i)
Income Projections; Variance. On the Effective Date the Company shall provide to Buyer a projection showing, in reasonable
detail, its projection of consolidated revenues for the twelve (12) calendar months following the Effective Date (the “Income
Projections”). In addition, no later than the tenth day of every calendar month after the Effective Date, the Company
shall provide to Buyer a report comparing the Income Projections for the preceding month to actual results. Any variance in the
Income Projections to actual results that is more than ten percent (10%) (either above or below) will require the Company to submit
to Buyer written explanations as to the nature and circumstances for the variance.


 


(ii)
Use of Proceeds; Variance. No later than the tenth day of every calendar month after the Effective Date, each Credit Party
shall provide to Buyer a report comparing the use of the proceeds from the sale of Debentures set forth in the Use of Proceeds
Confirmation, with the actual use of such proceeds until all proceeds from the Debentures have been applied. Any variance in the
actual use of such proceeds from the amounts set forth in the approved Use of Proceeds Confirmation will require the Credit Parties
to submit to Buyer written explanations as to the nature and circumstances for the variance.


 


(iii)
Bank Statements. Each Credit Party shall submit to Buyer true and correct copies of all bank statements received by the
Credit Parties within five (5) business days after the Credit Parties’ receipt thereof from its bank.


 


(iv)
Interim Reports. Promptly upon receipt thereof, each Credit Party shall provide to Buyer copies of interim and supplemental
reports, if any, submitted to the Credit Party by independent accountants in connection with any interim audit or review of the
books of the Credit Parties.


 


(v) Aged
Accounts/Payables Schedules. The Credit Parties shall, no later than the tenth day of each and every calendar
month, deliver to Buyer an aged schedule of the accounts receivable of the Credit Parties, listing the name and amount due
from each Person and showing the aggregate amounts due from: (i) 0-30 days; (ii) 31-60 days; (iii) 61-90 days; (iv) 91-120
days; and (v) more than 120 days, and certified as accurate by the CEO or CFO of such Credit Party. Each Credit Party shall,
no later than the tenth day of each and every calendar month, deliver to Buyer an aged schedule of the accounts payable of
the Credit Parties, listing the name and amount due to each creditor and showing the aggregate amounts due from: (v) 0-30
days; (w) 31-60 days; (x) 61-90 days; (y) 91-120 days; and (z) more than 120 days, and certified as accurate by the CEO or
CFO of the Credit Party.


 






    	24



    	 



    

 


(c)
Covenant Compliance. The Credit Parties shall each, within thirty (30) days after the end of each calendar month, deliver
to Buyer a Compliance Certificate, confirming compliance by the Credit Parties with the covenants therein, and certified as accurate
by an officer of the Company.


 


(d)
View Only Access. The Credit Parties shall provide the Buyer view only access to any and all accounts listed on the attached
Schedule 6.21 and any and all other accounts of the Credit Parties as requested by Buyer in its sole and absolute discretion.
In the event the Credit Parties, with the Buyer’s prior written consent, open any new bank, deposit, credit card payment
processing accounts, or other accounts with any financial institution, and/or the Buyer discovers an account of the Credit Parties
that are in existence prior to the Effective Date but is not listed on Schedule 6.21, the Credit Parties shall provide
the Buyer view only access to such account(s) within one (1) Business Day following the opening or discovery of such account(s).


 


7.4
Fees and Expenses.


 


(a)
Transaction Fees. The Credit Parties agree to pay to Buyer a transaction advisory fee equal to two percent (2%) of the
amount of the Debentures purchased by Buyer at the First Closing, which fee shall be due and payable on the Effective Date and
withheld from the gross purchase price paid by Buyer for the Debentures. In the event of any Additional Closings, the Credit Parties
shall pay to Buyer a transaction advisory fee equal to two percent (2%) of the amount of the Debentures purchased by Buyer at
any such Additional Closings, which fee shall be due and payable upon such Additional Closing and withheld from the gross purchase
price paid by Buyer for the Debentures at such Additional Closing.


 


(b)
Due Diligence Fees. The Credit Parties agree to pay to the Buyer a due diligence fee equal to Fifteen Thousand and No/100
United States Dollars ($15,000.00), which shall be due and payable in full on the Effective Date, or any remaining portion thereof
shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related
to this Agreement.


 


(c)
Document Review and Legal Fees. The Credit Parties agree to pay to the Buyer or its counsel document review and legal fees
on an hourly basis (with a minimum amount equal to Twenty Five Thousand and No/100 United States Dollars ($25,000.00)), which
shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be due and payable on the Effective
Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement. The Credit Parties also
agree to be responsible for the prompt payment of all legal fees and expenses of the Credit Parties and its own counsel and other
professionals incurred by the Credit Parties in connection with the negotiation and execution of this Agreement and the Transaction
Documents.


 






    	25



    	 



    

 


(d)
Other Fees. The Credit Parties also agree to pay to the Buyer (or any designee of the Buyer), upon demand, or to otherwise
be responsible for the payment of, any and all other reasonable costs, fees and expenses, including the reasonable fees, costs,
expenses and disbursements of counsel for the Buyer and of any experts and agents, which the Buyer may incur or which may otherwise
be due and payable in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment,
subordination, waiver or other modification or termination of this Agreement or any other Transaction Documents; (ii) any documentary
stamp taxes, intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any
Governmental Authority in connection with this Agreement or any other Transaction Documents; (iii) the exercise or enforcement
of any of the rights of the Buyer under this Agreement or the Transaction Documents; or (iv) the failure by the Credit Parties
to perform or observe any of the provisions of this Agreement or any of the Transaction Documents. Included in the foregoing shall
be the amount of all expenses paid or incurred by Buyer in consulting with counsel concerning any of its rights under this Agreement
or any other Transaction Document or under applicable law. To the extent any such costs, fees, charges, taxes or expenses are
incurred prior to the funding of proceeds from the Closing, same shall be paid directly from the proceeds of the Closing. All
such costs and expenses, if not so immediately paid when due or upon demand thereof, shall bear interest from the date of outlay
until paid, at the highest rate set forth in the Debentures, or if none is so stated, the highest rate allowed by law. All of
such costs and expenses shall be additional Obligations of the Credit Parties to Buyer secured under the Transaction Documents.
The provisions of this Subsection shall survive the termination of this Agreement.


 


7.5
Advisory Fees. The Credit Parties shall pay to the Buyer, in consideration of investment banking and advisory services
rendered by the Buyer to the Credit Parties prior to the date hereof, which such services the Credit Parties hereby acknowledge
and agree that the Buyer has fully rendered to its satisfaction, an advisory fee in the amount of One Hundred Seventy Thousand
and No/100 United States Dollars ($170,000) (the “Advisory Fee”). The Advisory Fee shall be paid in the form of a
Fee Debenture. The Fee Debenture shall be issued by the Company to the Buyer on the Effective Date and shall be payable on the
maturity date set forth therein. Any amount due pursuant to the Fee Debenture which is not paid when due, whether at a stated
payment date, by acceleration or otherwise, shall at Buyer’s option bear interest payable on demand at the Default Rate.
The obligation to redeem the Fee Debenture shall be an Obligation of Credit Parties hereunder, secured by all Transaction Documents,
and failure by the Credit Parties to redeem the Fee Debenture as hereby provided shall be an immediate Event of Default hereunder
and under the other Transaction Documents. The Credit Parties’ obligation to redeem the Fee Debenture as hereby provided
shall be applicable and effective regardless of the amount or number of Debentures purchased hereunder.


 


7.6
Subsidiaries. Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of any Credit Party, as applicable,
following the date hereof, within ten (10) Business Days of such event, shall become an additional party hereto and guarantor
of the Credit Parties Obligation hereunder, and the Credit Parties shall take any and all actions necessary or advisable to cause
said Subsidiary to execute a counterpart to this Agreement and any and all other documents which the Buyer shall require. “Subsidiary”
shall mean, respectively, each and all such corporations, partnerships, limited partnerships, limited liability companies, limited
liability partnerships or other entities of which or in which a Person owns, directly or indirectly, fifty percent (50%) or more
of: (i) the combined voting power of all classes of stock/units having general voting power under ordinary circumstances to elect
a majority of the board of directors of such entity if a corporation; (ii) the management authority and capital interest or profits
interest of such entity, if a partnership, limited partnership, limited liability company, limited liability partnership, joint
venture or similar entity; or (iii) the beneficial interest of such entity, if a trust, association or other unincorporated organization.


 






    	26



    	 



    

 


ARTICLE
VIII


CONDITIONS
PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL


 


The
obligation of each Company hereunder to issue and sell the Securities to the Buyer at the Closings is subject to the satisfaction,
at or before the respective Closing Dates, 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:


 


8.1
Buyer shall have executed the Transaction Documents and delivered them to the Companies.


 


8.2
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 Dates 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 Dates.


 


8.3
The Company shall have received such certificates, confirmations, resolutions, acknowledgements or other documentation necessary
or advisable from all applicable Governmental Authorities, including, but not limited to, those Governmental Authorities located
in each Company’s State of incorporation or formation, as the Companies may require in order to evidence such Governmental
Authorities’ approval of this Agreement, the Transaction Documents and the purchase of the Debentures contemplated hereby.


 


ARTICLE
IX


CONDITIONS
PRECEDENT TO THE BUYER’S OBLIGATIONS TO PURCHASE


 


The
obligation of the Buyer hereunder to purchase the Debentures at the Closings is subject to the satisfaction, at or before each
applicable Closing Date, of each of the following conditions (in addition to any other conditions precedent elsewhere in this
Agreement), 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:


 






    	27



    	 



    

 


9.1
First Closing. The obligation of the Buyer hereunder to purchase the Debentures at the First Closing is subject to the
satisfaction, at or before the First Closing Date, of each of the following conditions (in addition to any other conditions precedent
elsewhere in this Agreement), provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer
at any time in its sole discretion:


 


(a)
The Company, each Guarantor and/or the Chief Executive Officer (as applicable) shall have executed and delivered the Transaction
Documents applicable to the First Closing and delivered the same to the Buyer.


 


(b)
The representations and warranties of the Credit Parties 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 Article VI 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 First Closing Date as though made at that time (except for representations and warranties that speak as of a specific
date) and the Credit Parties 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 Credit Parties at or prior to the
First Closing Date.


 


(c)
The Buyer shall have received an opinion of counsel from counsel to the Credit Parties in a form satisfactory to the Buyer and
its counsel.


 


(d)
The Credit Parties shall have executed and delivered to Buyer a closing certificate, certified as true, complete and correct by
an officer of the Credit Parties, in substance and form required by Buyer, which closing certificate shall include and attach
as exhibits: (i) a true copy of a certificate of good standing evidencing the formation and good standing of the Credit Parties
from the secretary of state (or comparable office) from the jurisdiction in which each Credit Party is formed; (ii) the Credit
Parties’ Organizational Documents; (iii) copies of the resolutions of the board of directors of the Credit Parties as adopted
by the Credit Parties’ board of directors or managers, in a form acceptable to Buyer.; and (iv) copies of the resolutions
adopted by the shareholders or members of the Credit Parties, as applicable, approving and authorizing the execution, delivery
and performance of the Transaction Documents to which it is party and the transactions contemplated thereby, in a form acceptable
to Buyer.


 


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


 


(f)
The Buyer shall have received copies of UCC search reports, issued by the Secretary of State of the state of incorporation or
residency, as applicable, of the Credit Parties, dated such a date as is reasonably acceptable to Buyer, listing all effective
financing statements which name the Credit Parties, under their present name and any previous names, as debtors, together with
copies of such financing statements.


 






    	28



    	 



    

 


(g)
The Credit Parties 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, including a closing statement and
joint disbursement instructions as may be required by Buyer.


 


9.2
Additional Closing. Provided the Buyer is to purchase additional Debentures in accordance with Section 4.4 at an
Additional Closing, the obligation of the Buyer hereunder to accept and purchase the Debentures at any Additional Closing is subject
to the satisfaction, at or before the Additional Closing Date, of each of the following conditions:


 


(a)
The Credit Parties shall have executed the Transaction Documents applicable to the Additional Closing and delivered the same to
the Buyer.


 


(b)
The representations and warranties of the Credit Parties 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 Article VI 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 Credit Parties 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 Credit Parties at or prior
to the Additional Closing Date.


 


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


 


(d)
The Buyer shall have received an opinion of counsel from counsel to the Company in a form satisfactory to the Buyer and its counsel.


 


(e)
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.


 


(f)
The Credit Parties 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, including a closing statement and
joint disbursement instructions as may be required by Buyer.


 






    	29



    	 



    

 


ARTICLE
X


INDEMNIFICATION


 


10.1
Companies’ and Guarantors’ Obligation to Indemnify. In consideration of the Buyer’s execution and delivery
of this Agreement and acquiring the Securities hereunder, and in addition to all of each Company’s and the Guarantors’
other obligations under this Agreement, each Company and each Guarantor hereby agrees to defend and indemnify Buyer and its Affiliates
and subsidiaries and their respective directors, officers, employees, agents and representatives, and the successors and assigns
of each of them (collectively, the “Buyer Indemnified Parties”) and each Company and each Guarantor does hereby
agree to hold the Buyer Indemnified Parties forever harmless, from and against any and all Claims made, brought or asserted against
the Buyer Indemnified Parties, or any one of them, and each Company and each Guarantor hereby agrees to pay or reimburse the Buyer
Indemnified Parties for any and all Claims payable by any of the Buyer Indemnified Parties to any Person, including reasonable
attorneys’ and paralegals’ fees and expenses, court costs, settlement amounts, costs of investigation and interest
thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by applicable Law, through all
negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to: (i) any
misrepresentation or breach of any representation or warranty made by each Company and the Guarantors in this Agreement, the Transaction
Documents or any other certificate, instrument or document contemplated hereby or thereby; (ii) any breach of any covenant, agreement
or Obligation of each Company and the Guarantors contained in this Agreement, the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby; or (iii) any Claims brought or made against the Buyer Indemnified Parties,
or any one of them, by a third party 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 or thereto,
any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the
Debentures, or the status of the Buyer or holder of any of the Securities, as a buyer and holder of such Securities in each Company.
To the extent that the foregoing undertaking by each Company and each Guarantor may be unenforceable for any reason, each Company
and each Guarantor shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which
is permissible under applicable Law.


 


ARTICLE
XI


MISCELLANEOUS


 


11.1
Notices. All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:


 


	If
    to the Company:	Fat
    Brands Inc.
	 	9720
    Wilshire Blvd., Suite 500
	 	Beverly
    Hills, CA 90212 
	 	Attention:
    Andrew A. Wiederhorn
	 	Facsimile:
    (310) 319-1863
	 	Email:
    andy.wiederhorn@fccgi.com


 


	With
    a copy to:	Loeb
    & Loeb LLP 
	(which
    shall not constitute notice)	10100
    Santa Monica Blvd., Suite 2200
	 	Los
    Angeles, CA 90067
	 	Attention:
    Allen Z. Sussman, Esq. 
	 	Facsimile:
    (310) 919-3934
	 	Email:
    asussman@loeb.com


 




    	30



    	 



    

 


	If
    to the Buyer:	TCA
    Global Credit Master Fund, LP 
	 	3960
    Howard Hughes Parkway, Suite 500
	 	Las
    Vegas, NV 89169
	 	Attn:
    Mr. Robert Press
	 	E-Mail:
    bpress@tcaglobalfund.com
	 	 
	With
    a copy to:	Lucosky
    Brookman LLP
	(which
    shall not constitute notice)	101
    Wood Avenue South, 5th Floor 
	 	Woodbridge,
    NJ 08830
	 	Attn:
    Seth A. Brookman, Esq. 
	 	E-Mail:
    sbrookman@lucbro.com


 


unless
the address is changed by the party by like notice given to the other parties. Notice shall be in writing and shall be deemed
delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below,
then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal
Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day
after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand
delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00
p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notice, consents, waivers or
other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but shall be
deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation
from the receiving party) that the notice has been received by the other party.


 


11.2
Obligations Absolute. None of the following shall affect the Obligations of each Company and each Guarantor to Buyer under
this Agreement, Buyer’s rights with respect to the Collateral or any other Transaction Documents:


 


(a)
acceptance or retention by Buyer of other property or any interest in property as security for the Obligations;


 


(b)
release by Buyer of all or any part of the Collateral or of any party liable with respect to the Obligations (other than each
Company and the Guarantors);


 


(c)
release, extension, renewal, modification or substitution by Buyer of the debentures or any other Transaction Documents; or


 






    	31



    	 



    

 


(d)
failure of Buyer to resort to any other security or to pursue each Company or any other obligor liable for any of the Obligations
of each Company and the Guarantors hereunder before resorting to remedies against the Collateral.


 


11.3
Entire Agreement. This Agreement and the other Transaction Documents: (i) are valid, binding and enforceable against each
Company, the Guarantors and Buyer in accordance with its provisions and no conditions exist as to their legal effectiveness; (ii)
constitute the entire agreement between the parties; and (iii) are the final expression of the intentions of each Company, the
Guarantors and Buyer. No promises, either expressed or implied, exist between each Company, the Guarantors and Buyer, unless contained
herein or in the Transaction Documents. This Agreement and the Transaction Documents supersede all negotiations, representations,
warranties, commitments, offers, contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the
execution hereof.


 


11.4
Amendments; Waivers. No amendment, modification, termination, discharge or waiver of any provision of this Agreement or
of the Transaction Documents, or consent to any departure by any Company or the Guarantors therefrom, shall in any event be effective
unless the same shall be in writing and signed by Buyer, and then such waiver or consent shall be effective only for the specific
purpose for which given.


 


11.5
WAIVER OF JURY TRIAL. BUYER, THE COMPANY AND THE GUARANTORS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR ANY
OF THE OBLIGATIONS HEREUNDER, THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH
THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH BUYER AND THE COMPANY AND/OR THE GUARANTORS ARE ADVERSE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BUYER PURCHASING THE DEBENTURES.


 


11.6
MANDATORY FORUM SELECTION. TO INDUCE BUYER TO PURCHASE THE DEBENTURES, THE COMPANY AND GUARANTORS IRREVOCABLY AGREE 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 AND/OR FEDERAL COURTS LOCATED
IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, BUYER MAY, AT BUYER’S 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 FLORIDA LAW. EACH CREDIT PARTY 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. EACH CREDIT PARTY 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 AND GUARANTORS AS SET FORTH HEREIN IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE
OF COURT OR OTHERWISE.


 






    	32



    	 



    

 


11.7
Assignability. Buyer may at any time assign Buyer’s rights in this Agreement, the Debentures, any Transaction Document,
or any part thereof and transfer Buyer’s rights in any or all of the Collateral, and Buyer thereafter shall be relieved
from all liability with respect to such Collateral. In addition, Buyer may at any time sell one or more participations in the
Debentures. The Company and the Guarantors may not sell or assign this Agreement, any Transaction Document or any other agreement
with Buyer, or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder
or thereunder, without the prior written consent of Buyer, which consent may be withheld or conditioned in Buyer’s sole
and absolute discretion. This Agreement shall be binding upon Buyer, the Guarantors and the Company and their respective legal
representatives, successors and permitted assigns. All references herein to any Company or any Guarantor shall be deemed to include
any successors, whether immediate or remote. In the case of a joint venture or partnership, the term “Company”, “Companies”
or “Guarantor” shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally
liable hereunder.


 


11.8
Publicity. Buyer 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 the Company; provided, however, that the Company shall be entitled, without
the prior approval of Buyer, to issue any press release or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations. Notwithstanding the foregoing, the Company shall use their best efforts
to consult Buyer in connection with any such press release or other public disclosure prior to its release and Buyer shall be
provided with a copy thereof upon release thereof. Buyer shall have the right to make any press release with respect to the transactions
contemplated hereby without Company’s approval. In addition, with respect to any press release to be made by Buyer, the
Company hereby authorizes and grants blanket permission to Buyer to include the Company’s stock symbols, if any, in any
press releases. The Company shall, promptly upon request, execute any additional documents of authority or permission as may be
requested by Buyer in connection with any such press releases.


 


11.9
Binding Effect. This Agreement shall become effective upon execution by the Company, the Guarantors and Buyer.


 






    	33



    	 



    

 


11.10
Governing Law. Except in the case of the Mandatory Forum Selection Clause in Section 11.6 above, which clause shall
be governed and interpreted in accordance with Florida law, this Agreement and all other Transaction Documents shall be delivered
and accepted in and shall be deemed to be contracts made under and governed by the internal laws of the State of Nevada, and for
all purposes shall be construed in accordance with the laws of such State, without giving effect to the choice of law provisions
of such State.


 


11.11
Enforceability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under
any jurisdiction, such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.


 


11.12
Survival of Companies’ and the Guarantors’ Representations. All covenants, agreements, representations and
warranties made by the Company and the Guarantors herein shall, notwithstanding any investigation by Buyer, be deemed material
and relied upon by Buyer and shall survive the making and execution of this Agreement and the Transaction Documents and the sale
and purchase of the Debentures, and shall be deemed to be continuing representations and warranties until such time as the Company
and the Guarantors have fulfilled all of its Obligations to Buyer hereunder and under all other Transaction Documents, and Buyer
has been indefeasibly paid in full.


 


11.13
Time of Essence. Time is of the essence in making payments of all amounts due Buyer under this Agreement and the other
Transaction Documents and in the performance and observance by the Company and the Guarantors of each covenant, agreement, provision
and term of this Agreement and the other Transaction Documents. The parties agree that in the event that any date on which performance
is to occur falls on a day other than a Business Day, then the time for such performance shall be extended until the next Business
Day thereafter occurring.


 


11.14
Release. In consideration of the mutual promises and covenants made herein, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Company and the Guarantors
hereby agree to fully, finally and forever release and forever discharge and covenant not to sue Buyer, and/or any other Buyer
Indemnified Parties from any and all Claims, debts, fees, attorneys’ fees, liens, costs, expenses, damages, sums of money,
accounts, bonds, bills, covenants, promises, judgments, charges, demands, causes of action, suits, Proceedings, liabilities, expenses,
Obligations or Contracts of any kind whatsoever, whether in law or in equity, whether asserted or unasserted, whether known or
unknown, fixed or contingent, under statute or otherwise, from the beginning of time through the Effective Date, including, without
limiting the generality of the foregoing, any and all Claims relating to or arising out of any financing transactions, credit
facilities, debentures, security agreements, and other agreements including each of the Transaction Documents, entered into by
the Company and the Guarantors with Buyer and any and all Claims that the Company and the Guarantors do not know or suspect to
exist, whether through ignorance, oversight, error, negligence, or otherwise, and which, if known, would materially affect their
decision to enter into this Agreement or the related Transaction Documents.


 






    	34



    	 



    

 


11.15
Interpretation. If any provision in this Agreement requires judicial or similar interpretation, the judicial or other such
body interpreting or construing such provision shall not apply the assumption that the terms hereof shall be more strictly construed
against one party because of the rule that an instrument must be construed more strictly against the party which itself or through
its agents prepared the same. The parties hereby agree that all parties and their agents have participated in the preparation
hereof equally.


 


11.16
Compliance with Federal Law. The Company and each Guarantor shall: (i) ensure that no Person who owns a controlling interest
in or otherwise controls the Company or any Guarantor is or shall be listed on the Specially Designated Nationals and Blocked
Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department
of the Treasury, included in any Executive Orders or any other similar lists from any Governmental Authority, foreign or national;
(ii) not use or permit the use of the proceeds of the Debentures to violate any of the foreign asset control regulations of OFAC
or any enabling statute or Executive Order relating thereto, or any other similar national or foreign governmental regulations;
and (iii) comply with all applicable Lender Secrecy Act laws and regulations, as amended. As required by federal law and Buyer’s
policies and practices, Buyer may need to obtain, verify and record certain customer identification information and documentation
in connection with opening or maintaining accounts or establishing or continuing to provide services.


 


11.17
Termination. Upon payment in full of all outstanding Debentures purchased hereunder, together with all other charges, fees
and costs due and payable under this Agreement or under any of the Transaction Documents, the Company shall have the right to
terminate this Agreement upon written notice to the Buyer, provided, however, that if such termination occurs within the ninety
(90) days after the First Closing Date, then the Company shall pay to Buyer as liquidated damages and compensation for the costs
of being prepared to make funds available hereunder, an amount equal to two and one half percent (2.5%) of the amount of Debenture
purchased hereunder. The parties agree that the amount payable to pursuant to this Section 11.17 is a reasonable calculation
of Buyer’s lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early
termination of this Agreement.


 


11.18
Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.


 


11.19
Execution. This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and
considered one and the same Agreement, and same shall become effective when counterparts have been signed by each party and each
party has delivered its signed counterpart to the other party. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf’ format file or other similar format file, such signature shall be deemed an original
for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as
if such facsimile or “.pdf’ signature page was an original thereof.


 






    	35



    	 



    

 


11.20
Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of the Agreement.


 


11.21
Further Assurances. The Company and the Guarantors will execute and deliver such further instruments and do such further
acts and things as may be reasonably required by Buyer to carry out the intent and purposes of this Agreement.


 


11.22
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.


 


11.23
Confidentiality. Except as permitted below, the Buyer shall maintain the confidentiality of the items delivered pursuant
to Section 7.2(i) or Section 7.3 hereof (the “Confidential Materials”). The Confidential Materials, shall not
be disclosed to third parties (including, but not limited to, the media) without the express written approval of the Company,
except as otherwise provided in this Section or as required by federal or state securities law, rule or regulation. The Confidential
Materials shall not be introduced in evidence or used for any purpose except: (a) in an action to enforce this Agreement; (b)
to prove a defense to a claim or other legal form of action alleged to have been released herein; (c) in response to an order
directed to the Buyer from a judicial or governmental authority having jurisdiction over the Buyer, in which event the Buyer shall
notify the Company of the order; (d) in response to a subpoena or other process served on the Buyer by a third party seeking to
compel the disclosure of the Confidential Materials, in which event, however, the Buyer shall notify the Company of such subpoena
or process as soon as possible and grant it the opportunity to notify Buyer in writing within ten (10) days if the Company intends
to move to quash, seek a protective order or take other appropriate action, and, if so informed, the Buyer shall not make the
disclosure sought by the subpoena or notice unless the relief sought is denied or the Company – despite its or their notice
to the contrary – fails to seek the noticed relief within a reasonable time; or (e) as required by federal or state law,
rule or regulation. The Buyer also may, to the minimum extent necessary, disclose the Confidential Materials to the Internal Revenue
Service and/or any state taxing authorities and to its’ respective attorneys, accountants, auditors, professionals and other
financial advisors/consultants who have a legal or ethical obligation to hold the terms and information herein confidential, so
that they may perform their professional, business, or financial duties and obligations. To the extent possible under federal
or state law, rule or regulation, any disclosure by the Buyer subject to the confidentiality terms of this Section shall not reference
the Company. The determination of whether a federal or state law, rule or regulation requires the disclosure of the Confidential
Materials is left to the sole discretion of the Buyer, in consultation with its attorneys, accountants, auditors, professionals
or other financial advisors/consultants.


 


[signature
pages follow]


 




    	36



    	 



    

 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.


 


COMPANY:


 


FAT
BRANDS INC.


 


	By:	/s/
Andrew Wiederhorn	 
	Name:	Andrew
Wiederhorn	 
	Title:	Chief
Executive Officer	 


 


	STATE
    OF   _____________________________	)	 
	 	)
    SS.	 
	COUNTY
    OF ___________________________	)	 


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Andrew Wiederhorn, the
Chief Executive Officer of Fat Brands Inc., a Delaware corporation, who is personally known to me to be the same person whose
name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and
delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability
company, for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 


	 		 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	
	 	 	 
	 		 


 


[signature
page to Securities Purchase Agreement]


 




    	37



    	 



    

 


	BUYER:	 
	 	 	 
	TCA
    GLOBAL CREDIT MASTER FUND, LP	 
	 	 	 
	By:
    	TCA
    Global Credit Master Fund GP, Ltd.	 
	Its:
    	General
    Partner	 
	 	 	 
	By:
    	/s/
    Robert Press	 
	Name:	Robert
Press	 
	Title:	Managing
    Director	 


 


[signature
page to Securities Purchase Agreement]


 




    	38



    	 



    

 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR: 	 
	 	 	 
	FOG
    CUTTER CAPITAL GROUP, INC.	 
	 	 	 
	By:	/s/
Andrew Wiederhorn	 
	Name:	Andrew
Wiederhorn	 
	Title:	Chief
Executive Officer	 


 


	STATE
    OF   _____________________________	)	 
	 	)
    SS.	 
	COUNTY
    OF ___________________________	)	 


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Andrew Wiederhorn, the
Chief Executive Officer of Fog Cutter Capital Group, Inc., a Maryland corporation, who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she
signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation,
for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 





	 		 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	
	 	 	 
	 		 


 


[signature
page to Securities Purchase Agreement]


 




    	39



    	 



    

 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR: 	 
	 	 	 
	FATBURGER
    NORTH AMERICA INC.	 
	 	 	 
	By:	/s/
Andrew Wiederhorn	 
	Name:	Andrew
Wiederhorn	 
	Title:	Chief
Executive Officer	 


 


	STATE
    OF   _____________________________	)	 
	 	)
    SS.	 
	COUNTY
    OF ___________________________	)	 


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Andrew Wiederhorn, the
Chief Executive Officer of Fatburger North America Inc., a Delaware corporation, who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she
signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation,
for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 





	 		 
	 	Notary
    Public	 
	 	My
    Commission Expires:	
	 	 	 
	 		 


 


[signature
page to Securities Purchase Agreement]


 




    	40



    	 



    

 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR: 	 
	 	 	 
	BUFFALO’S
    FRANCHISE CONCEPTS INC.	 
	 	 	 
	By:	/s/
Andrew Wiederhorn	 
	Name:	Andrew
Wiederhorn	 
	Title:	Chief
Executive Officer	 


 


	STATE
    OF  _____________________________	)	 
	 	)
    SS.	 
	COUNTY
    OF ___________________________	)	 


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Andrew Wiederhorn, the
Chief Executive Officer of Buffalo’s Franchise Concepts Inc., a Nevada corporation, who is personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that
he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 





	 		 
	 	Notary
    Public	 
	 	My
    Commission Expires:	
	 		 
	 	 	 


 


[signature
page to Securities Purchase Agreement]


 




    	41



    	 



    

 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR: 	 
	 	 	 
	PONDEROSA
    FRANCHISING COMPANY	 
	 	 	 
	By:	/s/
Andrew Wiederhorn	 
	Name:	Andrew
Wiederhorn	 
	Title:	Chief
Executive Officer	 


 


	STATE
    OF  _____________________________	)	 
	 	)
    SS.	 
	COUNTY
    OF ___________________________	)	 


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Andrew Wiederhorn, the
Chief Executive Officer of Ponderosa Franchising Company, a Delaware general partnership, who is personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that
he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 





	 		 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	
	 	 	 
	 		 


 


[signature
page to Securities Purchase Agreement]


 




    	42



    	 



    

 


CONSENT
AND AGREEMENT


 


The
undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities
purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions
contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with
said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.


 


	GUARANTOR: 	 
	 	 	 
	BONANZA
    RESTAURANT COMPANY	 
	 	 	 
	By:	/s/
Andrew Wiederhorn	 
	Name:	Andrew
Wiederhorn	 
	Title:	Chief
Executive Officer	 


 


	STATE
    OF _____________________________	)	 
	 	)
    SS.	 
	COUNTY
    OF ___________________________	)	 


 


The
undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Andrew Wiederhorn, the
Chief Executive Officer of Bonanza Restaurant Company, a Delaware general partnership, who is personally known to me to be the
same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that
he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.


 


GIVEN
under my hand and notarial seal this _____ day of ________________, 20____.


 





	 		 
	 	Notary
    Public	 
	 	 	 
	 	My
    Commission Expires:	
	 	 	 
	 		 


 


[signature
page to Securities Purchase Agreement]


 




    	43



    	 



    

 


EXHIBIT
A


 


FORM
OF DEBENTURES


 




    	44



    	 



    

 


EXHIBIT
B


 


FORM
OF SECURITY AGREEMENT


 




    	45



    	 



    

 


EXHIBIT
C


 


FORM
OF GUARANTY


 




    	46



    	 



    

 


EXHIBIT
D


 


FORM
OF PLEDGE AGREEMENT


 




    	47



    	 



    

 


EXHIBIT
E


 


FORM
OF COMPLIANCE CERTIFICATE


 




    	48



    	 



    

 


EXHIBIT
F


 


FORM
OF FEE DEBENTURE


 




    	49



    	 



    

 


EXHIBIT
G


 


FORM
OF USE OF PROCEEDS CONFIRMATION


 




    	50



    	 



    

 


EXHIBIT
H


 


FORM
OF VALIDITY CERTIFICATE


 




    	51



    	 



    

 


SCHEDULE
2.30


 


PERMITTED
LIENS


 


N/A


 




    	52



    	 



    

 


SCHEDULE
6.1


 


SUBSIDIARIES


 


Fatburger
North America, Inc.


Buffalo’s
Franchise Concepts, Inc. (Nevada)


Buffalo’s
Franchise Concepts, Inc. (Georgia)


BFCI
of Georgia, Inc.


Ponderosa
Franchising Company


Bonanza
Restaurant Company


Ponderosa
International Development, Inc.


Puerto
Rico Ponderosa, Inc.


 




    	53



    	 



    

 


SCHEDULE
6.15


 


IP
RIGHTS


 


Please
see attachment


 




    	54



    	 



    

 


SCHEDULE
6.21


 


BANK
ACCOUNTS; BUSINESS LOCATIONS


 


Bank
Accounts


 


See
Attachment


 


Business
Location(s):


 


9720
Wilshire Blvd., Suite 500


Beverly
Hills, CA 90212


 




    	55