EXECUTION COPY
NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT (the "Agreement"), dated as of August 19, 2019, by and
among Toughbuilt Industries, Inc., a Delaware corporation with offices located
at 25371 Commercentre Drive, #200, Lake Forest, CA 92630 (the "Company") and the
investor signatory hereto (the "Investor").
WHEREAS:
A. Concurrently herewith, the Company, the Investor and certain other investors
(the "Other Investors", and together with the Investor, the "Investors") have
entered into that certain Securities Purchase Agreement, dated August 19, 2019,
pursuant to which, among other things, the Investor shall acquire a senior
secured convertible note (the "Series B Note") of the Company (the "Securities
Purchase Agreement").
B. The Company and the Investor is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"), as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the 1933 Act.
C. The Investor has authorized the issuance of a new secured promissory Investor
Note in substantially the form attached hereto as Exhibit A, pursuant to the
terms set forth herein (collectively, the "Investor Note").
D. The Investor wishes to purchase the Series B Note from the Company pursuant
to the Securities Purchase Agreement and to issue the Investor Note in full
satisfaction, of the purchase price of the Series B Note (the "Series B Purchase
Price"), and the Company wishes to (x) sell the Series B Note to the Investor,
(y) acquire the Investor Note in full satisfaction of the Series B Purchase
Price and (z) pledge the Investor Note to the Investor as collateral for its
obligations under the Series B Note.
E. The Investor Note will be secured by a first priority security interest in
certain Eligible Assets (as defined in the Investor Note) (collectively, the
"Collateral") held in the collateral account of the Investor described in the
Investor Note (the "Collateral Account").
F. Concurrently herewith, each of the Company and the Investor are entering into
that certain Master Netting Agreement, in substantially the form attached hereto
as Exhibit B (the "Master Netting Agreement"), to provide further clarification
of its right (but not, in the case of Investor only, its obligation) to Net (as
defined below) certain Obligations (as defined in the Netting Agreement) arising
under and across this Agreement, the Investor Note, the Series B Notes and the
Securities Purchase Agreement (collectively, the "Underlying Agreements") and to
treat the Master Netting Agreement, this Agreement and the other Underlying
Agreements as a single agreement for the purposes set forth herein and this
Agreement and the Securities Purchase Agreement each as a "securities contract"
(11 U.S.C. § 741), or other similar agreements.
NOW, THEREFORE, the Company and the Investor hereby agree as follows:
1. PURCHASE AND SALE OF INVESTOR NOTE.
(a) Investor Note. Subject to the satisfaction (or waiver) of the conditions set
forth in Sections 5 and 6 below, the Investor agrees to issue and sell to the
Company, and the