Exhibit
10.1


 


EXECUTION VERSION


 


SECURITIES PURCHASE AGREEMENT


 


THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of May 14, 2020, by and among KONA GOLD SOLUTIONS, INC., a
Delaware corporation (the “Company”), and YAII PN, LTD., a Cayman Islands exempt company (“Investor”).


 


WITNESSETH


 


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


 


WHEREAS, the parties
desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Investor, as
provided herein, and the Investor shall purchase up to $1,000,000 of secured convertible debentures substantially in the form attached
hereto as “Exhibit A” (collectively referred to as the “Convertible Debentures” individually
referred to as a “Convertible Debenture”), which shall be convertible into shares of the Company’s common
stock, par value of $0.00001 per share, (the “Common Stock”) (the “Conversion Shares”) of
which (i) a Convertible Debenture (the “First Convertible Debenture”) in the amount of $250,000 (the “First
Convertible Debenture Purchase Price”) shall be issued and sold by the Company and purchased by the Investor within 1
business day following the date hereof (the “First Closing” and the date on which such First Closing occurs
the “First Closing Date”), (ii) a Convertible Debenture (the “Second Convertible Debenture”)
in the amount of $250,000 (the “Second Convertible Debenture Purchase Price”) shall be issued and sold by the
Company and purchased by the Investor within 1 business day following the date of the filing by the Company of a registration statement
(the “Registration Statement”) with the SEC registering the Conversion Shares (the “Second Closing”
and the date on which such Second Closing occurs the “Second Closing Date”) and (iii) a Convertible Debenture
(the “Third Convertible Debenture”) in the amount of $500,000 (the “Third Convertible Debenture Purchase
Price”) shall be issued and sold by the Company and purchased by the Investor within 1 business day of the Registration
Statement being declared effective by the SEC (the “Third Closing” and the date on which such Third Closing
occurs the “Third Closing Date”) (individually the First Convertible Debenture Purchase Price, the Second Convertible
Debenture Purchase Price and the Third Convertible Debenture Purchase Price shall be referred to as a Convertible Debenture “Purchase
Price” and collectively shall be referred to as the “Convertible Debentures Purchase Price”);


 


WHEREAS, contemporaneously
with the Closing the Company shall issue to the Investor a warrant to purchase 20,000,000 shares of the Company’s Common
Stock (the “Warrant Shares”) in the form attached hereto as Exhibit B (the “Warrant”);


 






     


     


    

 


WHEREAS, contemporaneously
with the execution and delivery of this Agreement, (i) the Investor, the Company, and each subsidiary of the Company are executing
and delivering a Security Agreement (all such security agreements shall be referred to as the “Security Agreement”)
pursuant to which the Company and its wholly owned subsidiaries agree to provide the Investor a security interest in Pledged Property
(as this term is defined in the Security Agreement), (ii) the Investor, the Company, and each subsidiary of the Company are executing
and delivering an Intellectual Property Security Agreement (all such security agreements shall be referred to as the “IP
Security Agreement”) pursuant to which the Company and its wholly owned subsidiaries agree to provide the Investor a
security interest in the Intellectual Property Collateral (as this term is defined in the IP Security Agreement), and (iii) each
subsidiary of the Company is executing and delivering a Global Guaranty dated the date hereof (the “Guaranty”)
(the “Guaranty” and collectively with the Security Agreement and the IP Security Agreement the “Security Documents”)
in favor of the Investor;


 


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





 


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


 


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


 


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


 


1.          CERTAIN
DEFINITIONS.


 


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


 


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


 




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(c)          “Applicable
Laws” shall mean applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines,
ordinance or regulation of any governmental entity and codes having the force of law, whether local, national, or international,
as amended from time to time, including without limitation i) all applicable laws that relate to an entity holding cannabis related
licenses, cannabis cultivation, dispensing, extraction and or cannabis related production including but not limited to FinCen Guidance,
(ii) all applicable laws that relate to Anti-Money Laundering Laws and all applicable laws that relate to money laundering, terrorist
financing, financial record keeping and reporting, (iii) Anti-Bribery Laws and applicable laws that relate to anti-bribery, anti-corruption,
books and records and internal controls, (iv) OFAC and any Sanctions Laws or Sanctions Programs, (iv) CAATSA and any CAATSA Sanctions
Programs, Anti-Money Laundering Laws and (v) FinCEN Guidance.


 


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


 


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


 


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


 


(g)          “Dollar
Value Traded” means, for any security as of any date, the daily dollar traded value for such security as reported by
Bloomberg, LP through its “Historical Price Table Screen (HP)” with Market: Dollar Value Traded function selected,
or, if no dollar value traded is reported for such security by Bloomberg, the dollar traded value of any of the market makers for
such security as reported in the OTC Markets Group Inc. (the “OTC Markets”).


 


(h)          “FinCEN
Guidance” shall mean the Financial Crimes Enforcement Network guidance released February 14, 2014.


 


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


 


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


 


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


 




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


 


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


 


2.          PURCHASE
AND SALE OF THE CONVERTIBLE DEBENTURES.


 


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


 


(b)          First
Closing Date. The Closing of the purchase and sale of the First Convertible Debenture shall take place at 10:00 a.m. Eastern
Daylight Time on the 1st business day following the date hereof, subject to notification of satisfaction of the conditions to the
First Closing set forth herein and in Sections 7 and 8 below (or such later date as is mutually agreed to by the Company and the
Investor (the “First Closing Date”)).


 


(c)          Form
of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on the First Closing Date, (i) the Investor
shall deliver to the Company such aggregate proceeds for the First Convertible Debenture to be issued and sold to the Investor
at the First Closing, minus the original issue discount applicable to such First Closing as set forth in the First Convertible
Debenture, and (ii) the Company shall deliver to the Investor a Convertible Debenture which the Investor is purchasing at
the First Closing duly executed on behalf of the Company.


 


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


 


(e)          Second
Closing Date. The Closing of the purchase and sale of the Second Convertible Debenture shall take place at 10:00 a.m. Eastern
Daylight Time on the 1st business day following the date the Company files the Registration Statement with the SEC, subject to
notification of satisfaction of the conditions to the Second Closing set forth herein and in Sections 7 and 8 below (or such later
date as is mutually agreed to by the Company and the Investor (the “Second Closing Date”)).


 


(f)          Form
of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on the Second Closing Date, (i) the
Investor shall deliver to the Company such aggregate proceeds for the Second Convertible Debenture to be issued and sold to the
Investor at the Second Closing, minus the original issue discount applicable to such Second Closing as set forth in the Second
Convertible Debenture, and (ii) the Company shall deliver to the Investor a Convertible Debenture which the Investor is purchasing
at the Second Closing duly executed on behalf of the Company.


 




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


 


(h)          Third
Closing Date. The Closing of the purchase and sale of the Third Convertible Debenture shall take place at 10:00 a.m. Eastern
Daylight Time on the 1st business day following the date the Registration Statement is declared effective by the SEC, subject to
notification of satisfaction of the conditions to the Third Closing set forth herein and in Sections 7 and 8 below (or such later
date as is mutually agreed to by the Company and the Investor (the “Third Closing Date”)).


 


(i)          Form
of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on the Third Closing Date, (i) the Investor
shall deliver to the Company such aggregate proceeds for the Third Convertible Debenture to be issued and sold to the Investor
at the Third Closing, minus the original issue discount applicable to such Third Closing as set forth the Third Convertible Debenture,
and (ii) the Company shall deliver to the Investor a Convertible Debenture which the Investor is purchasing at the Third Closing
duly executed on behalf of the Company.


 


3.          INVESTOR’S
REPRESENTATIONS AND WARRANTIES.


 


The Investor represents
and warrants, that:


 


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


 


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


 


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


 




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


 


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


 


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


 




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


 


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


 


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


 


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


 




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(i)          Receipt
of Documents. The Investor and its counsel has received and read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein and the Transaction Documents (as defined herein); (ii) all due diligence and other information
necessary to verify the accuracy and completeness of such representations, warranties and covenants; (iii) the Company’s
annual report for the period ending December 2019 filed with the OTC Markets, and (v) answers to all questions the Investor submitted
to the Company regarding an investment in the Company; and the Investor has relied on the information contained therein and has
not been furnished any other documents, literature, memorandum or prospectus.


 


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


 


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


 


4.          REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.


 


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


 


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


 


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


 




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


 


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


 




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(e)          Capitalization.
The authorized capital stock of the Company consists of 900,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock,
par value $0.00001, allocated into four different series: 5,000,000 shares of Series A Preferred Stock (par value $0.00001), 1,200,000
shares of Series B Preferred Stock (par value $0.00001), 3,300,000 shares of Series C Preferred Stock (par value $0.00001), and
500,000 shares of Series D Preferred Stock (par value $0.00001) (collectively, the “Preferred Stock”) of which
763,967,603 shares of Common Stock, 4,000,000 shares of Series A Preferred Stock, 488,000 shares of Series B Preferred Stock, -0-
shares of Series C Preferred Stock and 500,000 shares of Series D Preferred Stock are issued and outstanding. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except as disclosed in Schedule 4(e): (i) none of the Company’s capital
stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;
(ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or
any of its subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional capital stock of the Company or any of its subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any capital stock of the Company or any of its subsidiaries; (iii) there are no outstanding
debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness
of the Company or any of its subsidiaries or by which the Company or any of its subsidiaries is or may become bound; (iv) there
are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection
with the Company or any of its subsidiaries; (v) there are no outstanding securities or instruments of the Company or any of its
subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements
by which the Company or any of its subsidiaries is or may become bound to redeem a security of the Company or any of its subsidiaries;
(vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance
of the Securities; (vii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements
or any similar plan or agreement; and (viii) the Company and its subsidiaries have no liabilities or obligations required to be
disclosed in the OTC Markets Documents but not so disclosed in the OTC Markets Documents, other than those incurred in the ordinary
course of the Company’s or its subsidiaries' respective businesses and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect. The Company has furnished to the Investor true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”),
and the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms
of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders
thereof in respect thereto. No further approval or authorization of any stockholder, the Board of Directors of the Company or others
is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.


 


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


 




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(g)          No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Convertible Debentures,
and reservation for issuance and issuance of the Conversion Shares, the issuance of the Warrant, and the issuance of the Warrant
Shares) will not (i) result in a violation of any certificate of incorporation, certificate of formation, any certificate of designations
or other constituent documents of the Company or any of its subsidiaries, any capital stock of the Company or any of its subsidiaries
or bylaws of the Company or any of its subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities
laws and regulations and the rules and regulations of the OTC Markets’ OTCQB® Venture Market (the “Primary
Market”) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any
of its subsidiaries is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually
or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted, and shall not be conducted in violation of any material law, ordinance, or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable
state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated
by this Agreement of the Transaction Documents in accordance with the terms hereof or thereof. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof. The Company and its subsidiaries are unaware of any facts or circumstance, which might give rise
to any of the foregoing.


 


(h)          OTC
Markets Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the OTC Markets in connection with the listing of its Common Stock on the OTCQB during the 2 years
preceding the date hereof (or such shorter period as the Company was required by the regulations of the OTC Markets) (all of the
foregoing filed within the 2 years preceding the date hereof as amended after the date hereof and all exhibits included therein
and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to as
the “OTC Markets Documents”) on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Document prior to the expiration of any such extension (including pursuant to SEC from 12b-25). The Company
has delivered to the Investor or its representatives, or made available through the SEC’s website at http://www.sec.gov,
true and complete copies of the OTC Markets Documents. As of their respective dates, the OTC Markets Documents complied in all
material respects with the requirements of the OTC Markets Alternative Reporting Standards and the rules and regulations of the
OTC Markets promulgated thereunder applicable to the OTC Markets Documents, and none of the OTC Markets Documents, at the time
they were filed with the OTC Markets during such two-year period, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company
and its subsidiaries included in the OTC Markets Documents during such two-year period complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations of the OTC Markets with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements or the Convertible Debenture thereto, or (ii) in
the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
No other information provided by or on behalf of the Company to the Investor which is not included in the OTC Markets Documents
contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not misleading.


 




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


 


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


 


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


 


(l)          FinCEN
Guidance. Neither the Company nor any director, officer, agent, employee or affiliate of the Company or subsidiaries, is:


 


(i)          Assisting
in the distribution of marijuana to minors;


 


(ii)         Participating
in the diversion of marijuana from states where it is legal under state law in some form to other states;


 


(iii)        Contributing
to adverse public health consequences associated with marijuana use;


 


(iv)        Facilitating
the growing of marijuana on federal property;


 


(v)         Facilitating
the possession of marijuana on federal property;


 




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(vi)        Facilitating
the flow of revenue from the sale of marijuana to criminal enterprises;


 


(vii)       Facilitating
violence or the use of firearms in the cultivation and distribution of marijuana; and


 


(viii)      Using
state-authorized marijuana activity as a cover or pretext for trafficking of other illegal drugs. 





 


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


 


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


 


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


 


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


 




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


 


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


 




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


 


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


 


(u)          No
General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection
with the offer or sale of the Securities.


 


(v)         No
Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would
require registration of the Securities under the Securities Act or cause this offering of the Securities to be integrated with
prior offerings by the Company for purposes of the Securities Act.


 




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


 


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


 


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


 


(z)          Title.
All real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries.


 


(aa)         Insurance.
The Company and each of its subsidiaries is insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its subsidiaries are engaged. Neither the Company nor any such subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a whole.


 




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


 


(cc)         Internal
Accounting Controls. The Company and each of its subsidiaries maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, and (iii) the recorded amounts for assets are compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.


 


(dd)         No
Material Adverse Breaches, etc. Neither the Company nor any of its subsidiaries is subject to any charter, corporate or other
legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has
or is expected in the future to have a Material Adverse Effect on the business, properties, operations, financial condition, results
of operations or prospects of the Company or its subsidiaries. Neither the Company nor any of its subsidiaries is in breach of
any contract or agreement which breach, in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect on the business, properties, operations, financial condition, results of operations or prospects of the Company
or its subsidiaries.


 


(ee)         Tax
Status. The Company and each of its subsidiaries has made and filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company
and each of its subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported
taxes) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


(ll)         Reporting
Status.  With a view to making available to the Investor the benefits of Rule 144 or any similar rule or regulation of
the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration, and as a
material inducement to the Investor’s purchase of the Securities, the Company represents and warrants to the following: (i)
the Company is, and has been for a period of at least 24 months immediately preceding the date hereof, subject to the reporting
requirements of the OTC Markets (ii) the Company has filed all required reports of the OTC Markets, as applicable, during the 24
months preceding the date hereof (or for such shorter period that the Company was required to file such reports), (iii) the Company
is not an issuer defined as a “Shell Company,” and (iv) in the reasoned opinion of McMurdo Law Group, LLC, co-counsel
to the Company, which opinion is dated April 2, 2019, and has been provided to, and accepted by, the Investor, the Company is not
an issuer that has been at any time previously an issuer defined as a “Shell Company.” For the purposes hereof, the
term “Shell Company” shall mean an issuer that meets the description defined in paragraph (i)(1)(i) of Rule 144.


 




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


 


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


 


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


 


5.          COVENANTS.


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 




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


 


(f)          Listing
and Maintenance Requirements. The Company shall secure no later than September 30, 2020 that its Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).


 


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


 


(i)          The
Company is subject to the reporting requirements of the OTC Markets and has filed all required reports during the 24 months prior
to the date hereof;


 


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


 


(iii)        During
the Registration Period the Company shall not terminate its status as an issuer required to file reports under the OTC Market until
such time its Common Stock becomes registered pursuant to Section 12(b) or 12(g) of the Exchange Act and the Company is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act.


 


(iv)        From
and after the date on which the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and
until the end of the Registration Period the Company shall file with the SEC in a timely manner all required reports under Section
13 or 15(d) of the Exchange Act (the “SEC Documents”) and such reports shall conform to the requirement of the
Exchange Act and the SEC for filing thereunder;


 


(v)         
From and after the date on which the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
until the end of the Registration Period the Company shall not terminate its status as an issuer required to file reports under
the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination; and


 


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


 




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(h)          Use
of Proceeds. The Company shall use the proceeds from the issuance of the Convertible Debentures hereunder for the such use
of proceeds disclosed on Schedule 4(g) and the Company not pay any related party obligations, including any debts or other obligations
owed to Robert Clark from such proceeds of the Convertible Debentures. So long as any amounts are outstanding under the Convertible
Debenture, the Company shall not pay any related party obligations, including any debts or other obligations owed to Robert Clark
all of which related party obligations shall be subordinated to the obligations owed to the Investor1. Neither the Company
nor any subsidiary shall, directly or indirectly, use any portion of the proceeds of the transactions contemplated herein, or lend,
contribute, facilitate or otherwise make available such proceeds to any Person (i) to make any payment towards any indebtedness
or other obligations of the Company or subsidiary; (ii) to pay any obligations of any nature or kind due or owing to any officers,
directors, employees, or stockholders of the Company or subsidiary, other than salaries payable in the ordinary course of business
of the Company; (iii) to fund, either directly or indirectly, any activities or business of or with any Blocked Person, in any
Sanctioned Country, (iv) or in any manner or in a country or territory, that, at the time of such funding, is, or whose government
is, the subject of CAATSA Sanctions Programs or (iv) in any other manner that will result in a violation of Anti-Money Laundering
Laws, Sanctions Laws, Sanctioned Program, Anti-Bribery Laws or CAATSA Sanctions Programs.


 


(i)          Reservation
of Shares. On the date hereof, the Company shall reserve for issuance to the Investor 105,947,397 shares for issuance upon
conversions of the Convertible Denture and the Company shall also reserve such Warrant Shares for issuance to the Investor upon
exercise of the Warrant (the “Share Reserve”). The Company represents that it has sufficient authorized and
unissued shares of Common Stock available to create the Share Reserve after considering all other commitments that may require
the issuance of Common Stock. The Company shall take all action reasonably necessary to at all times have authorized, and reserved
for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect the full conversion of the Convertible
Debenture and exercise of the Warrant. If at any time the Share Reserve is insufficient to effect the full conversion of the Convertible
Debenture and exercise of the Warrant, the Company shall increase the Share Reserve accordingly. If the Company does not have sufficient
authorized and unissued shares of Common Stock available to increase the Share Reserve, the Company shall call within 30 calendar
days and hold a special meeting of the stockholders within 90 calendar days of such occurrence, for the sole purpose of increasing
the number of shares authorized. The Company’s management shall recommend to the stockholders to vote in favor of increasing
the number of shares of Common Stock authorized. Management shall also vote all of its shares in favor of increasing the number
of authorized shares of Common Stock.


 





 






1Notwithstanding
anything potentially to the contrary contained in this Section 4(h), and for clarity but not for limitation, upon the Company’s
receipt of payment from a third party of its promissory obligation to the Company in the amount of approximately $1.5 million (as
of the date of this Agreement), the Company may cause (i) one or more of its subsidiaries to repay $100,000 of their respective
obligations (in the aggregate) to Robert Clark, as memorialized in that certain Line of Credit Agreement of Mr. Clark in favor
of Kona Gold, LLC, dated April 4, 2019 or in that certain Line of Credit Agreement of Mr. Clark in favor of Gold Leaf Distribution,
LLC, dated August 29, 2019 and (ii) Kona Gold, LLC, to repay in full (approximately $400,000 as of the date of this Agreement)
of its obligations to Matthew Nicoletti, as memorialized in that certain Line of Credit Agreement of Mr. Nicoletti in favor of
Kona Gold, LLC, dated May 5, 2018. Further, the Company and the Investor agree that Mr. Nicoletti, although a major creditor of
the Company as of the date of this Agreement, was not, and is not deemed to be, a Related Party.


 




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


 


(h)          Fees
and Expenses.


 


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


 


(ii)         The
Company shall pay to YA Global II SPV, LLC, an affiliate of the Investor and as its designee (the “Designee”),
a due diligence and structuring fee of $15,000 of which $10,000 has been paid on or about April 14, 2020 and $5,000 shall be deducted
by the Investor from the proceeds of the First Closing and paid by the Investor to Designee on behalf of the Company.


 


(iii)        On
the Closing Date the Company shall issue to the Investor the Warrant.


 


(i)          Corporate
Existence. So long as any of the Convertible Debentures remain outstanding, the Company shall not directly or indirectly consummate
any merger, reorganization, restructuring, reverse stock split consolidation, sale of all or substantially all of the Company’s
assets or any similar transaction or related transactions (each such transaction, an “Organizational Change”)
unless, prior to the consummation of an Organizational Change, the Company obtains the written consent of the Investor, which shall
not be unreasonably withheld, delayed, denied or conditioned. In any such case, the Company will make appropriate provision with
respect to such holders’ rights and interests to insure that the provisions of this Section 5(l) will thereafter be applicable
to the Convertible Debenture.


 




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(j)          Transactions
With Affiliates. Except as may be provided in Section 4(h) above, so long as the Convertible Debentures are outstanding, the
Company shall not, and shall cause each of its subsidiaries not to, enter into, amend, modify or supplement, or permit any subsidiary
to enter into, amend, modify or supplement any agreement, transaction, commitment, or arrangement with any of its or any subsidiary’s
officers, directors, person who were officers or directors at any time during the previous 2 years, stockholders who beneficially
own 5% or more of the Common Stock, or Affiliates (as defined below) or with any individual related by blood, marriage, or adoption
to any such individual or with any entity in which any such entity or individual owns a 5% or more beneficial interest (each a
“Related Party”), except for (a) customary employment arrangements and benefit programs on reasonable terms,
(b) any investment in an Affiliate of the Company, (c) any agreement, transaction, commitment, or arrangement on an arms-length
basis on terms no less favorable than terms which would have been obtainable from a person other than such Related Party, (d) any
agreement, transaction, commitment, or arrangement which is approved by a majority of the disinterested directors of the Company.
“Affiliate” for purposes hereof means, with respect to any person or entity, another person or entity that,
directly or indirectly, (i) has a 10% or more equity interest in that person or entity, (ii) has 10% or more common ownership with
that person or entity, (iii) controls that person or entity, or (iv) shares common control with that person or entity. “Control”
or “controls” for purposes hereof means that a person or entity has the power, direct or indirect, to conduct
or govern the policies of another person or entity.


 


(k)          Merger
Transactions. Neither the Company nor any of its Subsidiaries shall consummate any mergers or acquisitions until after the
Registration Statement has been declared effective.


 


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


 


(f)          Restriction
on Issuance of the Capital Stock. So long as the Convertible Debentures are outstanding, the Company shall not, without the
prior written consent of the Investor, which shall not be unreasonably withheld, delayed, denied or conditioned, (i) issue or sell
shares of Common Stock or Preferred Stock without consideration or for a consideration per share less than the bid price of the
Common Stock determined immediately prior to its issuance, (ii) issue any preferred stock, warrant, option, right, contract, call,
or other security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration
less than such Common Stock’s Bid Price, as quoted by Bloomberg, LP (through its “Volume at Price” function)
and determined immediately prior to its issuance, (iii) enter into any security instrument granting the holder a security interest
in any and all assets of the Company, or (iv) file any registration statement on Form S-8.


 




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(g)          No
Short Positions. Neither the Investor nor any of its affiliates
has an open short position in the Common Stock of the Company, and the Investor agrees that it shall not, and that it will cause
its affiliates not to, engage in any short sales of or hedging transactions with respect to the Common Stock as long as any Convertible
Debenture shall remain outstanding.


 


(h)          Additional
Registration Statements. So long as the Convertible Debentures are outstanding, the Company will not file a registration statement
under the Securities Act relating to securities that are not the Securities without including the Registrable Securities (as this
term is defined in the Registration Rights Agreement).


 


(i)          Review
of Public Disclosures. All OTC Markets Documents and other public disclosures made by the Company, including, without limitation,
all press releases, investor relations materials, and scripts of analysts meetings and calls, shall be reviewed and approved for
release by the Company’s attorneys and, if containing financial information, the Company’s independent certified public
accountants.


 


(j)          Disclosure
of Transaction. Within 4 Business Day following the date of this Agreement, the Company shall file a Supplemental Information
as an OTC Markets Document describing the terms of the transactions contemplated by the Transaction Documents in the form required
by the OTC Markets and attaching the material Transaction Documents (including, without limitation, this Agreement, the form of
the Convertible Debenture, and the form of the Registration Rights Agreement) as exhibits to such filing.


 


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


 


(k)          Increase
of Authorized Shares of Common Stock. The Company shall increase its authorized shares of Common Stock to 1,500,000,000 no
later than September 30, 2020.


 


6.          TRANSFER
AGENT INSTRUCTIONS.


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


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


 


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


 


(iii)        The
representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any
of such representations and warranties is already qualified as to materiality in Section 5 above, in which case, such representations
and warranties shall be true and correct without further qualification) as of the date when made and as of the First Closing Date
as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the First Closing Date.


 


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


 


(v)         The
Investor shall have received an opinion of counsel from co-counsel to the Company in a form satisfactory to the Investor, as to
whether the Company is an issuer defined as a “Shell Company,” as defined in paragraph (i)(1)(i) of Rule 144 or has
been at any time previously an issuer defined as a “Shell Company.”


 


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


 


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


 




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


 


(ix)         The
Company shall have created the Share Reserve.


 


(x)          The
Company’s controlling stockholder shall have provided the Investor a written agreement acknowledging his agreement to not
sell, transfer or otherwise dispose of his controlling block of shares including but not limited to preferred shares, or issue,
assign, grant or otherwise transfer such voting rights associated with such block of shares.


 


(xi)         
The Company’s controlling stockholder shall have provided the Investor a written agreement acknowledging his agreement to
vote in favor of any reverse stock split triggered under the Transaction Documents.


 


(xii)        The
Company’s controlling stockholder shall have provided the Investor a written agreement acknowledging his agreement to not
accept any payments in cash, shares of Common Stock, securities or otherwise of any debts or obligations of any kind owed to him
by the Company, except as provided in Section 4(h), above.


 


(xiii)       The
Company shall be current in all of its OTC Markets filings.


 


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


 


(i)          The
Company shall have filed the Registration Statement with the SEC.


 


(ii)         The
Investor shall have received an opinion of counsel from counsel to the Company in a form satisfactory to the Investor.


 


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


 


(iv)        The
representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any
of such representations and warranties is already qualified as to materiality in Section 5 above, in which case, such representations
and warranties shall be true and correct without further qualification) as of the date when made and as of the Second Closing Date
as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the Second Closing Date.


 




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


 


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


 


(vii)       The
Company shall be current in all of its OTC Markets filings.


 


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


 


(i)          The
SEC shall have declared the Registration Statement effective.


 


(ii)         The
Company shall have increased its authorized shares of Common Stock to at least 1,500,000,000.


 


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


 


(iv)        The
representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any
of such representations and warranties is already qualified as to materiality in Section 5 above, in which case, such representations
and warranties shall be true and correct without further qualification) as of the date when made and as of the Third Closing Date
as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the Third Closing Date.


 


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


 


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


 


(vii)       The
shares of the Company’s Common Stock shall be trading at a price per share of $0.03 or greater, as quoted by Bloomberg, LP
(through its “Volume at Price” function).


 




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(viii)      The
Company shall be current in all of its SEC and OTC Markets filings (including, without limitation, all filings required under the
Exchange Act, which include Forms 10-Q, 10-K, and 8-K).


 


9.          INDEMNIFICATION.


 


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


 


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


 




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10.         COMPANY
LIABILITY.


 


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


 


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


 




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11.         GOVERNING
LAW: MISCELLANEOUS.


 


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


 


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


 


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


 


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


 


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


 




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(f)          Entire
Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor, the Company,
their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor any Investor makes any representation, warranty, covenant
or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument
in writing signed by the party to be charged with enforcement.


 


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


 


	If to the Company, to:	Kona Gold Solutions, Inc.
	 	746 North Drive STE A
	 	Melbourne, FL 32934
	 	
        Attention:  Robert Clark

        Telephone: 844-714-2224

        Email: robert@konagoldhemp.com

	 	 
	
        With a copy to:

        (which shall not constitute

        notice)
	
        Baker & Hostetler LLP

        600 Anton Blvd., Suite 900

        Costa Mesa, CA 92626

	 	
        Attention:   Randolf Katz

        Telephone: 714-966-8807

        Email: rwkatz@bakerlaw.com



 


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

        1012 Springfield Avenue

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

        Email: mangelo@yorkvilleadvisors.com

	 	 
	With a copy to:	David Gonzalez, Esq.
	(which shall not constitute	1012 Springfield Avenue
	notice)	Mountainside, NJ  07092
	 	Telephone:     (201) 536-5109
	 	Email:  dgonzalez@yorkvilleadvisors.com


 




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


 


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


 


(b)          No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.


 


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


 


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


 


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


 


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


 




    33


     


    

  


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


 


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


 


[REMAINDER PAGE INTENTIONALLY LEFT BLANK]


 




    34


     


    

 


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


 


	 	COMPANY:
	 	 
	 	KONA GOLD SOLUTIONS, INC.


 


	 	By:	/s/ Robert Clark
	 	Name:	Robert Clark
	 	Title:	CEO


 


	 	INVESTOR: 
	 	 
	 	YA II PN, LTD.


 


	 	By:	Yorkville Advisors Global, LP
	 	Its:	Investment Manager
	 	 	 
	 	By:	Yorkville Advisors Global II, LLC
	 	Its:	General Partner


 


	 	By:	/s/ David Gonzalez
	 	Name:	David Gonzalez
	 	Title:	Member of General Counsel


 




    35


     


    

 


LIST OF EXHIBITS:


 


Disclosure Schedule


 


Exhibit A – Form of Convertible Debenture


 


Exhibit B – Form of Warrant


 




     


     


    

 


DISCLOSURE SCHEDULE


 


Schedule
4(a) – Subsidiaries 


 


		·	Kona Gold, LLC



 


		·	Gold Leaf Distribution LLC



 


		·	HighDrate, LLC



 


Schedule
4(b) – Security Interests Granted – None


 


Schedule
4(e)– Capitalization – See Section 4(e)


 


Schedule
4(g) – Use of Proceeds 


 


$300,000 – Acquisitions


 


$300,000 – Inventory


 


$150,000 – Legal


 


$100,000 – Marketing and Advertising


 


$100,000 – A.G.P./Alliance Global Partners Consulting Agreement


 


$50,000 – Equipment


 




     


     


    

 


EXHIBIT A


 


Form of Convertible Debentures


 




     


     


    

 


EXHIBIT B


 


Warrant