Document:

ex10-2.htm

Exhibit 10.2

 

		
Arotech Corporation

 

1229 Oak Valley Drive

Ann Arbor, Michigan 48108

Tel:  (800) 281-0356   Fax:  (734) 761-5368

http://www.arotech.com

Nasdaq National Market: ARTX

Writer’s direct dial: +972-2-990-6612

Writer’s direct fax: +972-2-990-6688

Writer’s e-mail: ehrlich@arotech.com

	
Robert S. Ehrlich

Executive Chairman

 

November 14, 2014

Sampen Corporation

1133 East 22nd Street

Brooklyn, New York 11210

 

Re:           Second Amended and Restated Consulting Agreement

 

Gentlemen:

 

The following confirms our understanding with regard to the terms and conditions of the retention by Arotech Corporation (the “Company”) of Sampen Corporation (“Sampen”). This letter replaces and supersedes the amended and restated agreement between us dated May 13, 2013.

 

1.            Retention of Consultant; Scope of Duties and Services.

 

(a)           Effective October 1, 2014, the Company hereby engages Sampen, and Sampen hereby accepts such engagement and agrees to provide the Company with the services set forth herein.

 

(b)           Sampen shall provide to the Company the services of one of its employees, subject to the Company’s approval of such employee (which the Company may withhold for any reason or for no reason), for such employee to serve as President and Chief Executive Officer of the Company. Sampen shall give written notice to the Company in advance if it wishes to provide a different employee to the Company, and such change shall be subject to the Company’s approval (which the Company may withhold for any reason or for no reason). The individual provided by Sampen, as such individual may change from time to time, shall be referred to herein as the “Executive.” The Executive shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar executive capacity in publicly-held United States corporations. The Executive shall exercise his authority in a reasonable manner and shall report to the Chairman of the Board of Directors of the Company (the “Chairman”).

 

(c)           While Sampen is providing services to the Company hereunder, the Company shall use its best efforts to cause the Executive to be elected to the Board of Directors of the Company (the “Board”) and on the board of directors of such of the Company’s subsidiaries as the Chairman shall determine, as a member of such Board(s). The Company will use its reasonable best efforts to obtain, and to keep in place at all times that the Executive is a director or officer of the Company, a directors and officers liability policy covering the Executive in an amount and otherwise containing terms and conditions consistent with past practices.

 

  

 

  

 

 

 

(d)           The parties hereto agree that the services to be provided by Sampen hereunder shall be as an independent consultant, and not as employee or agent. The parties further agree that any personnel of, or retained by, Sampen who perform services hereunder are not and shall not be deemed to employees, agents or representatives of the Company. This Agreement shall not be construed to create the relationship of principal or agent, joint venturers, co-partners or any relationship other than that of independent Consultant and client, and the existence of any such other relationship is hereby expressly denied by the Company and Sampen.

 

(e)           Sampen acknowledges and agrees that it has the sole responsibility to pay any and all taxes due on fees received by it from the Company and to pay or withhold (as appropriate) all applicable social security, income withholding and other payroll or related taxes with respect to its employees (including without limitation the Executive), agents and other personnel who may perform services hereunder, and Sampen shall file or cause to be filed all tax returns and all reports and keep all records which may be required by any law or regulation of the country or countries to whose laws it is subject or any state or municipality or governmental subdivision with respect to its activities and the activities of any of personnel working for it.

 

(f)           Sampen shall allow the Company to use Sampen’s offices as an ancillary New York office for the Company, for meetings, mail and package deliveries, fax receptions, etc., the expenses of which shall be covered by the payment referred to in Section 3(b)(i) below. Additionally, Sampen shall be entitled to receive prompt reimbursement of all other expenses reasonably incurred by it or by the Executive in connection with the performance of its duties hereunder. Without limiting the generality of the foregoing, the Company shall pay all expenses in the use of telephones by Sampen and its employees for the Company’s businesses. Sampen shall be entitled to reimbursement of the Executive’s expenses and to receive room, board and travel reimbursement in connection with the performance by the Executive of Sampen’s duties other than at the principal executive office of the Company, as is customary for senior executives in publicly-held United States companies. All expense reimbursements made under this Section shall be tax-effected such that the amount of reimbursement received by Sampen net of any taxes and withholdings (including such amounts in respect of payments pursuant to this sentence) equals the expense incurred. Except as otherwise specifically set forth above or elsewhere in this Agreement, Sampen shall bear and be responsible for all costs and expenses incurred by it or its employees (including the Executive) in performing its duties hereunder.

 

(g)           Sampen's employees, including the Executive, shall be required to travel on a periodic basis. Air travel shall be business class.

 

2.            Term.

 

(a)           The term of this Agreement shall commence on and as of October 1, 2014 and shall continue until December 31, 2017, unless sooner terminated as hereinafter provided (the “Initial Term”). Notwithstanding the foregoing, all of the rights and remedies of the parties hereto under the terms of this Agreement and in law and in equity shall be preserved even after the termination or expiration of this Agreement.

 

  

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(b)           The Initial Term shall be automatically extended for additional two-year periods (each, an “Additional Term”) unless either party provides written notice to the other of its desire to terminate the Agreement which notice shall be given at least ninety (90) days prior to the expiration date of the Initial Term or Additional Term of this Agreement.

 

(c)           This Agreement may be terminated by the Company prior to the end of the Initial Term or any Additional Term under the following circumstances:

 

	
  

	
(i)

	
Upon the death of the Executive, unless Sampen provides a new individual who is acceptable to the Company to serve in that position.

 

	
  

	
(ii)

	
Upon the Disability of the Executive, unless Sampen provides a new individual who is acceptable to the Company to serve in that position. For purposes of this Agreement, “Disability” means a physical or mental infirmity which impairs the Executive’s ability to substantially perform Sampen’s duties under this Agreement which continues for a period of at least one hundred and eighty (180) consecutive days.

 

	
  

	
(iii)

	
For “Cause,” which shall mean and include: (i) conviction for fraud, crimes of moral turpitude or other conduct which reflects on the Company in a material and adverse manner; (ii) a willful failure to carry out a material directive of the Board, provided that such directive concerned matters within the scope of Sampen’s duties, was in conformity with Section 1(b) hereof, would not give Sampen Good Reason to terminate this Agreement and was capable of being reasonably and lawfully performed; (iii) conviction in a court of competent jurisdiction for embezzlement of funds of the Company; and (iv) reckless or willful misconduct that is materially harmful to the Company; provided, however, that the Company may not terminate Sampen for Cause unless it has given Sampen written notice of the basis for the proposed termination (“Company’s Notice of Termination”).

 

(d)           This Agreement may be terminated by Sampen prior to the end of the Initial Term or any Additional Term under the following circumstances:

 

	
  

	
(i)

	
For “Good Reason,” which shall mean and include:

 

	
  

	
(A)

	
a change (1) in the Executive’s status, title, position or respon­sibilities which, in Sampen’s reasonable judgment, represents a reduction or demotion in the Executive’s status, title, position or responsibilities as in effect immediately prior thereto, or (2) in the primary location from which Sampen shall have conducted its business activities under this Agreement during the 60 days prior to such change;

 

	
  

	
(B)

	
a reduction in Sampen’s Base Payment (as hereinafter defined);

 

  

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(C)

	
the insolvency or the filing (by any party, including the Company) of a petition for the winding-up of the Company;

 

	
  

	
(D)

	
any material breach by the Company of any provision of this Agreement; and

 

	
  

	
(E)

	
any purported termination of this Agreement for Cause by the Company which does not comply with the terms of Section 2(c)(iii) of this Agreement;

 

provided, however, that Sampen may not terminate this Agreement for Good Reason unless it has given the Company (i) written notice of the basis for the proposed termination not more than thirty (30) days after Sampen has obtained knowledge of such basis (“Sampen’s Notice of Termination”) and (ii) a period of at least thirty (30) days after the Company’s receipt of such notice in which to cure such basis.

 

	
  

	
(ii)

	
if there is a “Change in Control” in Arotech. For purposes of this Agreement, a “Change in Control” shall mean any of the following events:

 

	
(A)  

	
The dissolution or liquidation of the Company;

 

	
(B)  

	
A merger, consolidation, reorganization or similar transaction involving the Company (a) in which the Company is not the surviving corporation or other surviving entity, or (b) that results in the Company becoming a subsidiary of another corporation (a “Transaction”);

 

	
(C)  

	
A sale or other disposition of all or substantially all of the assets of the Company to another corporation or other entity, as determined in accordance with the applicable law of the State of Delaware;

 

	
(D)  

	
Any other transaction (including a merger, consolidation, reorganization or similar transaction) that results in any corporation or other entity beneficially owning (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) immediately following the consummation of such transaction (a) in the case of voting securities acquired other than directly from the Company, more than 20% of the voting securities of the Company, or (b) in the case of voting securities acquired directly from the Company, more than 50% of the voting securities of the Company; or

 

  

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(E)  

	
The members of the Board of Directors of the Company on the date of this letter (the “Incumbent Board Members”) ceasing for any reason to constitute (a) at any time prior to the consummation of a Transaction, a majority of the Board, or (b) at any time following the consummation of a Transaction, a majority of the board of directors or other governing body of the corporation or other entity whose voting securities are issued to existing stockholders of the Company in such Transaction; provided, however, that any individual becoming a member of the Board or of such board of directors or other governing body, as the case may be, subsequent to the date of this Agreement whose appointment or nomination for election was approved by a vote of at least a majority of the Incumbent Board Members shall be deemed to be an Incumbent Board Member for purposes of this clause (v), but excluding, for such purposes, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors (or other members of any such governing body) or other actual or threatened solicitation of proxies or contests by or on behalf of a person other than the Board or such board of directors or other governing body, as the case may be.

 

Sampen shall give to the Company a Sampen’s Notice of Termination if Sampen desires to terminate this Agreement because there has been a Change in Control, such notice to specify the date of such termination which shall be not less than thirty (30) days after such notice is received by the Company. Any such notice, to be effective with respect to any Change in Control, must be sent no later than six (6) months after such Change in Control.

 

	
  

	
(iii)

	
if there is a “Change of Location.” For purposes of this Agreement, a “Change of Location” shall mean a change of more than 100 kilometers in the primary location from which the business activities of the Executive shall have been conducted during the 60 days prior to such change.

 

(e)           “Termination Date” shall mean in the case of the Executive’s death (or the death of any other Executive Sampen offers as a successor), the date of such death, or in all other cases, the date specified in the Notice of Termination subject to the following:

 

	
  

	
(i)

	
If this Agreement is terminated by the Company for Cause or due to Disability, the date specified in the Company’s Notice of Termination shall be at least thirty (30) days from the date the Notice of Termination is given to Sampen, provided that in the case of Disability the Executive shall not have returned to the full-time performance of its duties during such period of at least thirty (30) days assuming Sampen cannot provide a substitute Executive acceptable to the Company; and

 

	
  

	
(ii)

	
If this Agreement is terminated for Good Reason, or because there has been a Change in Control, the Termination Date specified in Sampen’s Notice of Termination shall not be more than sixty (60) days from the date the Notice of Termination is given to the Company.

 

(f)           Upon Termination, the Company shall pay Sampen all amounts of Base Payment and the benefits specified in clauses 3(b)(i), (ii) and (iii) of this Agreement earned or accrued hereunder through the Termination Date but not paid as of the Termination Date.

 

3.            Compensation; Benefits.

 

(a)           For the services rendered by Sampen under this Agreement, the Company shall compensate Sampen as follows:

 

	
  

	
(i)

	
A base payment at the rate of US $8,960 per month, or such larger amount as the Compensation Committee of the Board (the “Compensation Committee) may in its sole discretion determine following a review which shall be conducted by the Board and the Compensation Committee by not later than March 31 of each year, such larger amount to take effect retroactively to the January 1 immediately preceding such review (hereinafter referred to as the “Base Payment”). Such Base Payment shall be payable in equal monthly installments.

 

  

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(ii)

	
On each anniversary of this Agreement or as soon thereafter as may be possible in order to determine the relevant results of the Company, (but in no event later than May 31 of each year), in a single lump-sum payment in cash, an annual bonus (if and to the extent earned according to the criteria below), as follows:

 

	
  

	
(A)

	
If, as of such anniversary, Arotech shall have attained 100% of Arotech’s Budgeted Number (as defined below) for the year preceding such anniversary, then Sampen’s bonus shall be equal to 25% of Sampen’s gross annual Base Payment as then in effect for the year preceding such anniversary;

 

	
  

	
(B)

	
If, as of such anniversary, Arotech shall have attained 110% of Arotech’s Budgeted Number (as defined below) for the year preceding such anniversary, then Sampen’s bonus shall be equal to 75% of Sampen’s gross annual Base Payment as then in effect for the year preceding such anniversary;

 

	
  

	
(C)

	
If, as of such anniversary, Arotech shall have attained more than 100% but less than 110% of Arotech’s Budgeted Number (as defined below), then Sampen’s bonus shall be calculated as follows:

 

B  =           (S x 25%) + (N-100)/10 x (S x 50%)

 

  

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Where:

 

B  =           The amount of Sampen’s annual bonus, as a percentage of Sampen’s gross annual Base Payment; and

 

N  =           The percentage of the Budgeted Number (as defined below) that was attained by Arotech in the immediately preceding fiscal year; provided, however, that N is more than 100 and less than 110;

 

S  =           Sampen’s gross annual Base Payment.

 

For the purposes of this Section 3(a)(ii), the Budgeted Number shall be the budgeted results of Arotech as agreed by the Board of Arotech prior to the end of each fiscal year for the fiscal year designated in such budget, and may include targets for any or all of the following factors: (i) revenues; (ii) cash flow, and (iii) EBITDA. In the event that some but not all targets are reached, the Compensation Committee shall made a determination as to what percentage of the Budgeted Number was attained.

 

(b)           It being in the Company’s interest that the Company have an additional office in the New York area and that the Executive be provided with certain benefits, including without limitation vacation and sick leave, the Company and Sampen agree that the Executive will be provided with the following benefits:

 

	
  

	
(i)

	
The Company will pay Sampen, to cover the cost of the Company’s use of Sampen’s office as an ancillary Company office and insurance, an amount equal to 16% of each monthly payment of the Base Payment.

 

	
  

	
(ii)

	
The Company agrees that Sampen shall provide the Executive with an annual vacation at full pay equal to 24 work days. Vacation days may be accumulated and may, at the Executive’s option or automatically upon termination, be converted into cash payments in an amount equal to the proportionate part of the Base Payment for such days; provided, however, that if the Executive accumulates more than two (2) times its then current annual entitlement of vacation days, such excess shall be automatically converted into the right to receive such a cash payment in respect of such excess. Payments to which Sampen is entitled pursuant to this Section 3(b)(ii) shall be made promptly after Sampen’s request therefore.

 

	
  

	
(iii)

	
Sampen shall provide the Executive with a maximum aggregate of 30 days of fully paid sick leave, accruing at the rate of 2.5 days per month. Sick leave may be accumulated and may, at Sampen’s option, be converted into cash payments in an amount equal to the proportionate part of the Base Payment for such days. Payments to which Sampen is entitled pursuant to this Section 3(b)(iii) shall be made promptly after Sampen’s request therefor.

 

  

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4.            Warranties.

 

(a)           Sampen warrants that all services provided by him hereunder will be rendered in a competent and professional manner and that such services will conform in all respects to (i) generally-accepted industry and professional standards then applicable to such services and products, (ii) all applicable laws, rules, regulations and professional codes, and (iii) any specifications and requirements applicable to the services and any products contracted for hereunder (including a delivery timetable) which may be set forth in an agreement between the Company and a third party or parties. The Company shall have the right to extend Sampen’s warranties herein to third parties and Sampen shall be liable thereon to the same extent as if such warranties were originally made to such third parties.

 

(b)           The warranties contained herein shall survive the termination and expiration of this Agreement regardless of the reasons therefor.

 

5.            Confidential Information; Return of Materials; Inventions.

 

(a)           In the course of his retention by the Company hereunder, Sampen will have access to, and become familiar with, “Confidential Information” (as hereinafter defined) of the Company. Sampen shall at all times hereinafter maintain in the strictest confidence all such Confidential Information and shall not divulge any Confidential Information to any person, firm or corporation without the prior written consent of the Company. For purposes hereof, “Confidential Information” shall mean all information in any and all medium which is confidential by its nature including, without limitation, data, technology, know-how, inventions, discoveries, designs, processes, formulations, models and/or trade and business secrets relating to any line of business in which the Company’s marketing and business plans relating to current, planned or nascent products.

 

(b)           Sampen shall not use Confidential Information for, or in connection with, the development, manufacture or use of any product or for any other purpose whatsoever except as and to the extent necessary for him to perform his obligations under this Agreement. Sampen shall assure that none of its employees uses such Confidential Information other than as permitted in this Agreement.

 

(c)           Notwithstanding the foregoing, Confidential Information shall not include information which Sampen can evidence to the Company by appropriate documentation: (i) is in, or enters the public domain otherwise than by reason of breach hereof by Sampen; (ii) is known by Sampen at the time of disclosure thereof by the Company; or (iii) is rightfully transmitted or disclosed to Sampen by a third party which owes no obligation of confidentiality with respect to such information.

 

  

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(d)           All Confidential Information made available to, or received by, Sampen or its employees shall remain the property of the Company, and no license or other rights in or to the Confidential Information is granted hereby.

 

(e)           All files, records, documents, drawings, specifications, equipment, and similar items relating to the business of the Company, whether prepared by Sampen or otherwise coming into his possession, and whether classified as Confidential Information or not, shall remain the exclusive property of the Company. Upon termination or expiration of this Agreement, or upon request by the Company, Sampen shall promptly turn over to the Company all such files, records, reports, analyses, documents, and other material of any kind concerning the Company which Sampen obtained, received or prepared pursuant to this Agreement.

 

(f)           Confidential Information shall not include information brought to the Company by Sampen, where the Company does not subsequently utilize such information in the ordinary course of its business (including as a result of changes to its business).

 

(g)           Sampen undertakes not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise) at any time, during and for twelve (12) months following termination of this Agreement, to engage in or contribute its knowledge to any work or activity that involves a product, process, service or development which is then directly (in any material manner) competitive with any business that the Company has conducted during the term of this Agreement or any extension hereof on which Sampen worked or with respect to which Sampen had access to Proprietary Information while with the Company. Notwithstanding the foregoing, Sampen shall be permitted to engage in the aforementioned proposed work or activity if the Company furnishes it with written consent to that effect signed by an authorized officer of the Company.

 

(h)           During the period specified in 5(g) hereof, Sampen will not solicit or encourage any customer or supplier of the Company or of any group, division or subsidiary of the Company, to terminate its relationship with the Company or any such group, division or subsidiary, and Sampen will not, directly or indirectly, recruit or otherwise seek to induce any employee of the Company or any such group, division or subsidiary to terminate his or her employment or violate any agreement with or duty to the Company or any such group, division or subsidiary.

 

(i)           Sampen agrees that violations of the material covenants in this Section 5 will cause the Company irreparable injuries and agrees that the Company may enforce said covenants by seeking injunctive or other equitable relief (in addition to any other remedies the Company may have at law for damages or otherwise) from a court of competent jurisdiction. In the event such court declares these covenants to be too broad to be specifically enforced, the covenants shall be enforced to the largest extent as may be allowed by such court for the Company’s protection. Sampen further agrees that no breach by the Company of, or other failure by the Company under this Agreement shall relieve Sampen of any obligations under Sections 5(g) and 5(h) hereof.

 

  

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(j)           The provisions of this Section shall survive the termination of this Agreement. Sampen acknowledges that the provisions set forth in this Section of this Agreement are fair and reasonable, and Sampen agrees to cause its employees to comply with the above provisions.

 

6.            Miscellaneous.

 

(a)           This Agreement shall inure to the benefit of the Company and its successors and assigns.

 

(b)           This Agreement shall be subject to, governed by and construed in accordance with, the laws of the State of Michigan without regard to conflicts of law provisions and principles of that State, and the state and federal courts located in Washtenaw County, Michigan shall have exclusive jurisdiction and venue in respect of any dispute hereunder.

 

(c)           No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Sampen and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

 

(d)           Neither Sampen nor the Company will be deemed to have made any representation, warranty, covenant or agreement except for those expressly set forth herein.

 

(e)           This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The term the “Company” as used herein shall include such successors and assigns. The term “successors and assigns” as used herein shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operations of law or otherwise.

 

(f)           Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by Sampen or its legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Sampen’s legal representative.

 

(g)           Nothing to the contrary in the foregoing notwithstanding, Sampen may assign this Agreement to any company of which it is a “control person” within the meaning of the Securities Exchange Act of 1934, provided, that Sampen shall continue to be obligated to fulfill the duties set forth in Section 1 above, and provided, further, that Sampen shall continue to be bound by the terms and provisions of Section 5 of this Agreement notwithstanding any such assignment.

 

  

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If the foregoing satisfactorily reflects the mutual understanding between you and the Company, kindly sign and return to the Company the enclosed copy of this letter. On behalf of the Company, I want to take this opportunity to state that we look forward to our working relationship with you.

 

Very truly yours,

 

AROTECH CORPORATION

 

 

By: /s/ Robert S. Ehrlich                                                                

Robert S. Ehrlich

Executive Chairman

 

ACCEPTED AND AGREED:

 

SAMPEN CORPORATION

 

By:         /s/ Morris Esses                                                   

Morris Esses

President

 

 

  

-11-Exhibit
10.1

 

SECURITIES SETTLEMENT AGREEMENT

 

THIS AGREEMENT (“Agreement”)
is by and between Redwood Management, LLC (“CLAIMANT” or "Redwood") and the undersigned 3Dicon Corporation
("COMPANY" or "DEBTOR") and is entered into as of the effective date below, all with reference to the following
facts, which the parties agree are true and correct:

 

RECITALS

 

CLAIMANT acquired, on or about this date,
certain debt rights, noted below, along with the rights to common stock and conversion of a prior "assignor" as to the
COMPANY;

 

CLAIMANT is, therefore, both an investor
and a creditor of the COMPANY entitled to payment and conversion of outstanding debt securities, including common stock conversion
of such debt securities, as referenced in agreement(s) and document(s), including between the parties hereto, such as listed below;

 

DEBTOR seeks to avoid dispute, retire debt
from its books and records, make effort to improve its financial picture for potential acquisition and future fundings by eliminating
or limiting the extent of debt the DEBTOR faces, and honor such conversion and related rights acquired by the CLAIMANT;

 

THEREFORE, THE PARTIES AGREE TO SETTLE,
AND THE PURPOSE OF THIS AGREEMENT IS TO REFLECT SUCH SETTLEMENT;

 

NOW THEREFORE, the parties hereto hereby
represent, warrant, and covenant with and to each other and confirm all of the above and following to professionals, and the transfer
agent of COMPANY and others to whom it may concern, as follows:

 

1.     Obligations Owing. The above
Recitals are incorporated herein by reference. Reference is made to the debt securities identified on the signature page hereof
(the "Debt"). As to the Debt, any past or current dispute, potential defenses and disputed considerations, etc., are
waived by the COMPANY, and the debt obligation is hereby confirmed as owed. The COMPANY ratifies and confirms the validity of the
Assignment and Assumption Agreement by and between the CLAIMANT acting as an investor and the prior assignor and this includes
the common stock and conversion rights of the assignor surrendered to the CLAIMANT, which rights are aged in excess of 12 months.

 

2.     Exchange. CLAIMANT
and the COMPANY hereby agree to confirm the exchange of the Debt for securities of the COMPANY as follows: this securities settlement
agreement of the COMPANY to repay an amount equal to the principal amount of the Debt ("Principal") with interest at
a rate set below per annum ("Interest") by the "Maturity Date" (below) with conversion rights to the CLAIMANT
so that, at the election of the CLAIMANT, it may convert the Principal in whole or part from time to time into shares of common
stock in the COMPANY (the "Shares"). This obligation of the COMPANY is in the nature of a debenture but in lieu of issuing
a debenture of the COMPANY, the COMPANY shall honor the exchange, payment obligation and conversion rights per this Agreement.
Thus, concurrently with the execution of this Agreement, CLAIMANT surrenders hereby the Debt and its interest in the Debt strictly
for the payment, conversion, Shares and related rights under this Agreement. CLAIMANT will endeavor to use best efforts, for non
material file recording, to deliver to the COMPANY any promissory notes, commercial paper, or other evidences of the Debt but such
ministerial obligation shall not be a condition to the conversion, Shares, and enforcement rights of this Agreement by CLAIMANT.
With reference to Rule 144 promulgated under the Securities Act of 1933, as amended, the exchange hereby is made without any additional
consideration applicable.

 

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3.     Payment and Conversion Rights. The
COMPANY promises to pay to CLAIMANT the Principal and Interest on the Maturity Date, or sooner if required hereby, unless to the
extent of any completed conversion of Principal and or Interest as stated herein.

 

THE COMPANY MAY PREPAY ANY PORTION OF THE
PRINCIPAL AMOUNT AT 125% OF SUCH AMOUNT OR MAXIMUM ALLOWED PER LAW, WHICHEVER IS LOWER, ALONG WITH ANY ACCRUED INTEREST AT ANY
TIME UPON SEVEN DAYS WRITTEN NOTICE TO THE CLAIMANT, PROVIDED THE COMPANY IS NOT IN DEFAULT OF THIS AGREEMENT, SUBJECT TO THE TERMS
HEREIN.

 

"Event of Default," wherever
used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected
by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative
or governmental body):

 

(i)         any default in
the payment of the principal of, interest (including any Late Fees) on, or liquidated damages in respect to this Agreement, free
of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise);

 

(ii)        the COMPANY
or any of its subsidiaries or affiliates shall commence, or there shall be commenced against any of them, a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the COMPANY commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the COMPANY or any subsidiary thereof or there is commenced
against the COMPANY or any subsidiary thereof any such bankruptcy, insolvency or other proceeding; or the COMPANY or any subsidiary
thereof is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered;
or the COMPANY or any subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of
its property which continues undischarged or unstayed for a period of 60 Business Days; or the COMPANY or any subsidiary thereof
makes a general assignment for the benefit of creditors; or the COMPANY shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the COMPANY or any subsidiary thereof shall call a meeting
of its creditors with a view to arranging a composition, adjustment or restructuring of any debt or the COMPANY or any subsidiary
thereof shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing
or any corporate or other action is taken by the COMPANY or any subsidiary thereof for the purpose of effecting any of the foregoing
or adverse to this Agreement;

 

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(iii)       the
COMPANY shall fail to timely file all reports required to be filed by it with the SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise required by the Exchange Act, or cease to be subject
to the reporting requirements of the Exchange Act, or as required to be deemed a current public company as to disclosure including
on any exchange or over the counter trading medium and or the COMPANY is in, or accused of, being in violation of any law or regulation
by written demand, court proceeding or otherwise; 

 

(iv)       the material
breach of any promise or representation in this Agreement and or any related representation or agreement made by the COMPANY and
or any of its officers with the Claimant, which shall include, without limitation, the failure to deliver shares of common stock
due CLAIMANT on a conversion within three Business Days from the date of conversion or sooner, which delivery must be otherwise
made per reasonable specifications of the CLAIMANT (e.g. to brokerage firm account);

 

(v)        The COMPANY or
any subsidiary of the COMPANY shall default in any of its obligations under any other Debenture or any mortgage, credit agreement
or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement
of the COMPANY or any subsidiary of the COMPANY in an amount exceeding $25,000, whether such indebtedness now exists or shall hereafter
be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which
it would otherwise become due and payable;

 

(vi)      Any cessation
of operations by COMPANY or COMPANY admits it is otherwise generally unable to pay its debts as such debts become due, provided,
however, that any disclosure of the COMPANY’S ability to continue as a “going concern” shall not be an admission
that the COMPANY cannot pay its debts as they become due;

 

(vii)      The failure
by COMPANY to maintain any assets which are necessary to conduct its business (whether now or in the future);

 

(viii)     The restatement
of any financial statements filed by the COMPANY with the SEC for any date or period from two years prior to the date of this Agreement
and until all amount due to Claimant hereunder are no longer outstanding, if the result of such restatement would, by comparison
to the unrestated financial statement, have constituted a material adverse effect on the rights of the Claimant with respect to
this Agreement; or

 

(ix)        The Depository
Trust Company (“DTC”) places a “chill” on the deposit of additional securities of the COMPANY with DTC.

 

    	3

    	 

    

 

If the COMPANY fails to perform hereunder
by delivering Shares or paying Principal and or Interest within 5 Business Days of said being due, then for the first 30 calendar
days from the due date of said performance, the COMPANY shall also owe payable immediately an amount equal to $1,000 per day as
a reasonable "Late Fee" in addition to any other damages and reasonable attorney fees and costs payable, to cover, on
a non accountable basis, the time, expense, efforts and or distress of the CLAIMANT having to focus its management, advisors, and
counselors on the matter of the COMPANY failing to honor its written obligations, and said figure is deemed a reasonable liquidated
damages provision and is not an election of remedy and is non exclusive so the CLAIMANT can add and pursue all rights otherwise.

 

If any Event of Default occurs and is continuing,
the full Principal amount of this Agreement, together with Interest and Late Fees and other amounts owing in respect thereof, shall
become immediately due and payable in cash except the CLAIMANT may elect any part thereof to be paid in Shares as part of any conversion
hereunder in which case such Shares shall be due.

 

The CLAIMANT need not provide and the COMPANY
hereby waives any presentment, demand, protest or other notice of any kind, and the CLAIMANT may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable
law. Such declaration may be rescinded and annulled by CLAIMANT only in writing at any time prior to payment hereunder and the
CLAIMANT shall have all rights and elections it is entitled to hereunder and or under law. Unless otherwise noted expressly herein
in writing, no grace period applies.

 

At any time until both the Principal and
Interest is paid in full and all conversions have been honored by the COMPANY and this Agreement is no longer outstanding, this
Agreement, including interest and principal, shall be convertible into shares of Common Stock in the COMPANY at 58% percent of
the lowest traded VWAP, determined on the then current trading market for the COMPANY’S common stock, for 15 trading days
prior to conversion (the “Set Price”). The CLAIMANT shall effect conversions by delivering to the COMPANY the form
of Notice of Conversion attached hereto as Exhibit C (a "Notice of Conversion"), specifying the date on which such conversion
is to be effected (a "Conversion Date") and Shares shall then be delivered by the COMPANY within three Business Days
(72 hours). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice
of Conversion is provided hereunder. To effect conversions hereunder, the CLAIMANT shall not be required to otherwise physically
surrender anything to the COMPANY. If the COMPANY does not request, from its transfer agent, the issuance of the shares underlying
this Agreement after receipt of a Notice of Conversion within three Business Days (72 hours) following the date of Notice of Conversion,
or fails to timely (within 72 hours) deliver the Shares per the instructions of the CLAIMANT, free and clear of all legends in
legal free trading form, the COMPANY shall be responsible to also promptly pay CLAIMANT for any differential in the value of the
converted Shares underlying this Agreement between the value of the closing price on the date the Shares should have been delivered
and the date the Shares are delivered.  The CLAIMANT and any assignee, by acceptance of this Agreement, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion of a portion of this Agreement, the unpaid and unconverted
Principal amount of this Agreement may be less than the amount stated on the face hereof. The parties hereby agree that the COMPANY
will cover all legal costs associated with the issuance of Opinion Letter(s) to the Transfer Agent and other costs, expenses and
liabilities as to conversion and issuance. In addition, if the COMPANY fails to timely (within 72 hours, 3 business days), deliver
the shares per the instructions of the CLAIMANT, free and clear of all legends in legal free trading form, the COMPANY shall allow
CLAIMANT to add two (2) days to the look back (the mechanism used to obtain the conversion price along with discount) for each
day the COMPANY fails to timely (within 72 hours, 3 business days)) deliver shares, on the next two conversions.

 

    	4

    	 

    

 

If the COMPANY, at any time while this
Agreement is outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common
Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall
not include any shares of Common Stock issued by the COMPANY pursuant to this Agreement, including as interest thereon), (B) subdivide
outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares
of capital stock of the COMPANY, then the Set Price shall be either (i) as agreed in writing by the CLAIMANT in its discretion
or if not agreed to by CLAIMANT or reasonably objected to by the COMPANY in writing to the CLAIMANT promptly before any such corporate
change, (ii) be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding
after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the
determination of stock as to such dividend or distribution and shall become effective immediately after the effective date in the
case of a subdivision, combination or re-classification. Whenever the Set Price is adjusted as noted above in this paragraph the
COMPANY shall promptly, within one Business Day, deliver to each CLAIMANT a notice setting forth the Set Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.

 

    	5

    	 

    

 

If, at any time while this Agreement is
outstanding: (A) the COMPANY effects any merger or consolidation of the COMPANY with or into another Person, (B) the COMPANY effects
any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange
offer (whether by the COMPANY or another Person) is completed pursuant to which holders of Common Stock are permitted to tender
or exchange their shares for other securities, cash or property, or (D) the COMPANY effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "Fundamental Transaction"), then the CLAIMANT may declare this Agreement
in default or, if it elects in writing to the COMPANY, upon any subsequent conversion, the CLAIMANT shall have the right to receive,
for each underlying share that would have been issuable upon such conversion absent such Fundamental Transaction, the same kind
and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction
if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock of the COMPANY (the
"Alternate Consideration"). For purposes of any such conversion, the determination of the Set Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the COMPANY shall apportion the Set Price among the Alternate Consideration
in a reasonable manner, but only if consented to in writing by the CLAIMANT, reflecting the relative value of any different components
of the Alternate Consideration. If shareholders of Common Stock are given any choice as to the securities, cash or property to
be received in a Fundamental Transaction, then the CLAIMANT shall be given the same choice as to the Alternate consideration it
receives upon any conversion of this Agreement following such Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the COMPANY or surviving entity in such Fundamental Transaction shall issue to the CLAIMANT
a new Agreement consistent with the foregoing provisions and evidencing the CLAIMANT'S right to convert such Agreement into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring
any such successor or surviving entity to comply with the provisions of this paragraph and insuring that this Agreement (or any
such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. If
any Fundamental Transaction constitutes or results in a change of control of the Company, then at the request of the CLAIMANT delivered
before the 90th calendar day after such Fundamental Transaction, the COMPANY (or any such successor or surviving entity)
will purchase the Agreement from the CLAIMANT for a purchase price, payable in cash within 10 Business Days of such request, equal
to the 125% or maximum permitted by law whichever is lower, of the remaining unconverted Principal amount of this Agreement on
the date of such request, plus all accrued and unpaid Interest thereon, plus all other accrued and unpaid amounts due hereunder.

 

The COMPANY covenants that it will at all
times reserve and keep available out of its authorized and unissued shares of Common Stock solely a sufficient number of its shares
for the purpose of issuance upon conversion of this Agreement.

 

Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile, (iii) the first Business Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required
to be given.

 

Notwithstanding anything to the contrary
herein contained, the CLAIMANT may not convert this Agreement to the extent such conversion would result in the CLAIMANT, together
with any affiliate thereof, beneficially owning (as determined in accordance with Section 13(d) of the "Exchange Act and the
rules promulgated thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock, including shares issuable
upon such conversion and held by the CLAIMANT after application of this section. The provisions of this section may be waived by
the CLAIMANT, in whole or part , upon 61 days prior written notice.

 

Herein meanings are, unless otherwise defined
herein:

 

    	6

    	 

    

 

"Business Day"
means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which
banking institutions in the State of New York are authorized or required by law or other government action to close.

 

"Common Stock"
means the common stock of the COMPANY and stock of any other class into which such shares may hereafter have been reclassified
or changed.

 

"Person"
means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

 

"Securities Act"
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Except as expressly provided herein, no
provision of this Agreement shall alter or impair the obligation of the COMPANY, which is absolute and unconditional, to pay the
principal of, interest and liquidated damages (if any) on, this Agreement at the time, place, and rate, and in the coin or currency,
herein prescribed. This Agreement is a direct debt obligation of the COMPANY. This Agreement ranks pari passu on most favored terms
to benefit the CLAIMANT with all other agreements now or hereafter issued under the terms set forth herein but shall be treated
superior to all other obligations of the COMPANY. As long as this Agreement is outstanding, the COMPANY shall not and shall cause
it subsidiaries not to, without the consent of the COMPANY, (a) amend its certificate of incorporation, bylaws or other charter
documents so as to adversely affect any rights of the CLAIMANT; (b) repay, repurchase or offer to repay, repurchase or otherwise
acquire more than a de minimis number of shares of its Common Stock or other equity securities; or (c) enter into any agreement
with respect to any of the foregoing.

 

If this Agreement shall be mutilated, lost,
stolen or destroyed, the COMPANY shall execute and deliver another original of this Agreement.

 

So long as any portion of this Agreement
is outstanding, the COMPANY will not and will not permit any of its subsidiaries to, directly or indirectly, enter into, create,
incur, assume or suffer to exist any new indebtedness of any kind, on or with respect to any of its property or assets now owned
or hereafter acquired or any interest therein or any income or profits therefrom that is senior in any respect to the COMPANY'S
obligations under the Agreement without the prior consent of the CLAIMANT. All consents of CLAIMANT in this Agreement shall be
in the discretion of the CLAIMANT.

 

If it shall be found by court that any
Interest or other amount deemed interest due or aggregated hereunder violates applicable laws governing usury, the amount shall
automatically be lowered to equal the maximum permitted under law.

 

    	7

    	 

    

 

The COMPANY covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the COMPANY from paying all or any
portion of the principal of or interest on the Agreement as contemplated herein, or otherwise not honor this Agreement, wherever
enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Agreement, and the
COMPANY (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the CLAIMANT,
but will suffer and permit the execution of every such as though no such law has been enacted.

 

Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

In the event CLAIMANT shall refer this
Agreement to an attorney for collection in the event of a default, the COMPANY agrees to pay all the reasonable costs and expenses
incurred in attempting or effecting collection hereunder or enforcement of the terms of this Agreement, including reasonable attorney's
fees, whether or not suit is instituted.

 

4.     Claimant Status.
CLAIMANT represents and the COMPANY confirms such representation, as follows:

 

		a.	CLAIMANT believes it is not an affiliate, now or by way of this Agreement, and relies upon the
COMPANY knowledge of the members of the Board, officers and shareholdings, etc. in such regard (COMPANY represents to CLAIMANT
that it has concluded and CLAIMANT may rely upon same, that CLAIMANT is not and will not be, by way of this Agreement, an affiliate
of the COMPANY); and

 

CLAIMANT is (i) an "accredited investor"
as that term is defined in Rule 501 under the Securities Act of 1933and (ii) capable, by reason of the business and financial experience
of its officers (if an entity) and professional advisors, as a sophisticated investor, of evaluating, the merits and risks of the
prospective investment;.

 

5.     Other Concerns. CLAIMANT has
no responsibility for action or inaction by the DEBTOR nor faced or faces or will face responsibility for determinations of management
of the COMPANY. The parties also recognize and acknowledge that as a result of this Agreement, the parties have entered into a
confidential relationship as to this document, except to the requirements of law to the contrary, and they have negotiated and
entered into this Agreement in good faith and without any duress. COMPANY has, notwithstanding anything, obtained counsel of its
own choosing on the legality of the subject including the issuance of the Shares hereby without legend or restriction. The COMPANY
indemnifies and holds harmless CLAIMANT and its affiliates, including the counselors and advisors of CLAIMANT, for any breach
of any provision or representation by COMPANY herein.

 

6.     Miscellaneous. 

 

		A.	Gender. Wherever the context shall require, all words herein in the masculine gender shall
be deemed to include the feminine or neuter gender, all singular words shall include the plural, and all plural shall include the
singular.

 

    	8

    	 

    

 

		B.	Severability. If any provision hereof is deemed unenforceable by a court of competent jurisdiction,
the remainder of this Agreement, and the application of such provision in other circumstances shall not be affected thereby.

 

		C.	Further Cooperation. From and after the date of this Agreement, each of the parties hereto
agrees to execute whatever additional documentation or instruments as are necessary to carry out the intent and purposes of this
Agreement or to comply with any law. However, this shall not require any additional documents or acts by CLAIMANT for CLAIMANT
to obtain and dispose of the subject shares.

 

		D.	Waiver. No waiver of any provision of this Agreement shall be valid unless in writing and
signed by the waiving party. The failure of any party at any time to insist upon strict performance of any condition, promise,
agreement or understanding set forth herein, shall not be construed as a waiver or relinquishment of any other condition, promise,
agreement or understanding set forth herein or of the right to insist upon strict performance of such waived condition, promise,
agreement or understanding at any other time.

 

		E.	Expenses. Except as otherwise provided herein, or agreed in writing, each party hereto shall
bear all expenses incurred by each such party in connection with this Agreement and in the consummation of the transactions contemplated
hereby and in preparation thereof.

 

		F.	Amendment. This Agreement may only be amended or modified at any time, and from time to
time, in writing, executed by the parties hereto.

 

		G.	Notices. Any notice, communication, request, reply or advice (hereinafter severally and
collectively called "Notice”) in this Agreement provided or permitted to be given, may be made or be served by delivering
same by overnight mail or by delivering the same by a hand-delivery service, such Notice shall be deemed given when so delivered
or sooner as stated within this Agreement.

 

		H.	Captions. Captions herein are for the convenience of the parties and shall not affect the
interpretation of this Agreement.

 

		I.	Counterpart Execution. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same instrument and this Agreement
may be executed by fax.

 

		J.	Assignment. This Agreement is not assignable without the written consent of the parties
except CLAIMANT has the right to assign the obligations and Shares owed to it hereunder as it may determine.

 

    	9

    	 

    

 

		K.	Parties in Interest and Affiliates. Provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties, their heirs, executors, administrators, other permitted successors and
assigns, if any. Nothing contained in this Agreement, whether express or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than the parties to it and their respective successors and assigns. For
this Agreement, affiliated or affiliate, either word being capitalized or not herein, shall mean controlling, controlled by or
under direct or indirect common control with such person and includes shareholders, officers, directors, advisors, employees, attorneys,
accountants, auditors, subsidiaries, parent companies, related companies and founders, broadly defined, to be interpreted to protect
the CLAIMANT, beyond just persons and firms customarily considered affiliated under Federal securities laws and regulations.

 

		L.	Entire Agreement. This Agreement constitutes the entire agreement and understanding of the
parties on the subject matter hereof and supersedes all prior recent settlement discussions and verbal agreements and understandings
except in no way does this Agreement change or eliminate the terms of financial and related obligations to the CLAIMANT per past
agreements and instruments except as strictly modified in writing above.

 

		M.	Construction and Misc. This Agreement shall be governed exclusively by the laws of the State
of Florida without reference to conflict of laws and the exclusive venue for any action, claim or dispute in respect of this Agreement
shall be such court of competent jurisdiction as is located in Broward County Florida as the sole venue. The parties agree and
acknowledge that each has reviewed this Agreement and the normal rule of construction that agreements are to be construed against
the drafting party shall not apply in respect of this Agreement given the parties have mutually negotiated and drafted this Agreement.
The COMPANY irrevocably submits to the exclusive jurisdiction stated herein and the parties hereto agree that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. The parties hereto further waive any objection to venue in the said place.

 

THE DEBTOR IRREVOCABLY WAIVES
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING AND FURTHER AGREES THAT SERVICE OF PROCESS UPON
THE PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT
OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

The COMPANY waives personal
service of any summons, complaint or other process in connection with any such action or proceeding and agrees that service thereof
may be made, as the CLAIMANT may elect, by mail directed to the CLAIMANT at the last known principal business location or mailing
address or, in the alternative, in any other form or manner permitted by law, on a non-exclusive basis, as determined by the CLAIMANT.
No failure or delay on the part of the CLAIMANT in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privileges.

 

    	10

    	 

    

 

The
obligations to CLAIMANT and this Agreement cannot be set off against any real or alleged claim against the CLAIMANT.

 

		N.	Cooperation and Representations. The parties hereto agree to cooperate with one another
in respect of this Agreement, including reviewing and executing any document necessary for the performance of this Agreement, to
comply with law or as reasonably requested by any party hereto, or legal counsel to any party hereto. Representations of the COMPANY
shall survive the signing and closing of this Agreement.

 

		O.	Independent Legal Counsel. The parties hereto agree that (i) each has retained independent
legal counsel in connection with the preparation and of this Agreement, (ii) each has been advised of the importance of retaining
legal counsel, and (iii) by the execution of this Agreement, each has retained or waived retaining counsel except as otherwise
stated above.

 

		P.	Rights and Remedies. The COMPANY agrees that all
of the rights and remedies of the CLAIMANT hereto whether established hereby or by any other agreements, instruments or documents
or by law shall be cumulative and may be exercised singly or concurrently. CLAIMANT further waives the right to any notice and
hearing prior to the execution, levy, attachment or other type of enforcement of any judgment obtained hereunder. COMPANY shall
reflect the obligation of this Agreement in all financial statements and related disclosures.

 

Exhibits, and, if any, Additional Promises
and Representations:

 

		a.	EXHIBIT A. The DEBTOR hereby represents that attached is a letter of confirmation and representation
by the individual who is the principal executive officer of the COMPANY executed or to be executed and delivered this date.

 

		b.	EXHIBIT B. The DEBTOR hereby represents that attached is a duly authorized and effective irrevocable
resolution of the Board of Directors of the COMPANY confirming this Agreement as valid and binding on the COMPANY, executed or
to be executed this date. (Whether or not attached, or executed, the DEBTOR represents all corporate authorization has been obtained.)

 

		c.	EXHIBIT C. Form of Conversion

 

		d.	EXHIBIT D. Irrevocable Letter from Transfer Agent

 

		e.	EXHIBIT E. Transfer Agent Share Statement

 

Description of Debt: $205,000 Senior Convertible Note Dated
October 1st, 2013 (GCA Strategic Investment Fund Limited)

 

	Name of COMPANY: 	 	3DIcon Corporation
	State of Incorporation:   	 	Oklahoma
	Address of COMPANY: 	 	6804 South Canton Avenue Suite 150
	 	 	Tulsa, OK 74136

 

    	11

    	 

    

 

Effective Date: 8/15/14

Principal Amount due hereunder: $205,000 plus interest

Set Price: above

Interest due hereunder: (10%) Ten percent interest per annum

Maturity Date: date that is 12 months from the date of this
Agreement

 

Name of CLAIMANT: Redwood Management, LLC

 

Claimant Address: 16850 Collins Ave #112-341

 

Sunny Isles Beach Florida 33160

 

The undersigned hereby execute this document the Effective Date
noted:

 

"COMPANY/DEBTOR"

3DIcon Corporation

 

	 	 
	Name: Victor F. Keen	 
	Title: CEO	 
	 	 
	“CLAIMANT”	 
	 	 
	Redwood Management, LLC	 
	 	 
	By: 	 	 
	 	Gary Rogers, Manager	 

 

    	12

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