Document:

Exhibit 10.1 

 

EMPLOYMENT AGREEMENT

 

BETWEEN

 

ELECTRONIC CIGARETTES INTERNATIONAL GROUP,
LTD.

 

And

 

Phil
Anderson

(Executive)

 

THIS EMPLOYMENT AGREEMENT
(this “Agreement”), dated effective as of January 15, 2015 (the “Effective Date”) is entered into by and
between Electronic Cigarettes International Group, Ltd, a Nevada corporation (the “Company”), and Phil Anderson, an
individual with a physical address at 60 West 23rd Street, Apartment 601, New York, New York 10010 (the “Executive”)
(collectively, the “Parties,” individually, a “Party”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive
has substantial experience in finance; and

 

WHEREAS, the Company
desires to commence the Executive’s employment on the terms and conditions set forth in this Agreement;

 

WHEREAS, the Company’s
board of directors (the “Board”) has determined that it is in the best interests of the Company, its affiliates, and
its stockholders to employ the executive as Chief Financial Officer, notwithstanding the possibility, threat, or occurrence of
a Change of Control (as defined in Article Seven herein); and

 

NOW, THEREFORE, in consideration
of the premises and the mutual covenants and agreements set forth herein, the Parties, intending to be legally bound, hereby agree
as follows:

 

 

 

Article
One

Definitions

 

1.             Definitions. As used in this Agreement:

 

(a)               
The term “Accrued Obligations,” when used in the case of the Executive’s death or disability shall mean
the sum of (1) the portion of Executive’s Base Salary that was not previously paid to the Executive from the
last payment date through the Date of Termination and (2) an amount equal 24 months’ salary at the level of the Executive’s
Base Salary then in effect,

 

(b)              
The term “Automatic Extension” shall have the meaning set forth in Section 2(b) herein.

 

(c)               
The term “Base Salary”, shall have the meaning set forth in Section 3(a) herein.

 

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(d)              
The term “Board” shall have the meaning set forth in the recitals.

 

(e)               
The term “Cause” shall have the meaning set forth in Section 4.3 herein.

 

(f)               
The term “Common Stock” shall mean the Common Stock, par value $0.001, of the Company.

 

(g)               
The term “Compensation Committee” shall mean the Compensation Committee of the Company.

 

(h)              
The term “Corporate Documents” shall mean the Company’s Articles of Incorporation, as amended and/or its
Bylaws, as amended.

 

(i)                
The term “Effective Date” shall have the meaning set forth in the preamble.

 

(j)                
The term “Good Reason” shall have the meaning set forth in Section 4.4 herein.

 

(k)              
The term “Initial Term” shall have the meaning set forth in Section 2(b) herein.

 

(l)                
The term “Severance Benefit” shall have the meaning set forth in Section 4.7(a)(i) herein.

 

(m)            
The term “Without Cause” shall have the meaning set forth in Section 4.3 herein.

 

(n)              
The term “Without Good Reason” shall have the meaning set forth in Section 4.7 herein.

 

 

Article
Two

POSITION & DUTIES

 

2.             Employment.

 

(a)               
Title. The Executive shall serve as the Chief Financial Officer of the Company and agrees to perform services for
the Company and such other affiliates of the Company, as described in Section 3 herein.

 

(b)              
Term. The Executive’s employment shall be for an initial term of three (3) years (“Initial Term”),
commencing on the Effective Date. The Executive’s employment shall be automatically extended on the day after the second
year anniversary of the Effective Date (“Automatic Extension”), and on each anniversary date thereof, for additional
two (2) year periods.

 

(c)               
Duties and Responsibilities. The Executive shall report to the Chief Executive Officer and in his capacity as an
officer of the Company shall perform such duties and services as may be appropriate and as are assigned to him by the Chief Executive
Officer and the Executive Chairman of the Board. During the term of this Agreement Executive shall, subject to the direction of
the Board of the Company, oversee and direct the financial operations of the Company together with the Chief Executive Officer
and the Executive Chairman, and shall perform such duties as are customarily performed by a Chief Financial Officer of a company
such as the Company or as are otherwise delegated to him from time to time by the Chief Executive Officer or Executive Chairman,
or such authority as implied by such position.

 

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(d)              
Performance of Duties. During the term of the Agreement, except as otherwise approved by the Board or as provided
below, the Executive agrees to devote substantially all his working time to the affairs of the Company and its subsidiaries. The
foregoing shall not, however, preclude Executive from devoting reasonable time, attention and energy in connection with the following
activities, provided that such activities do not materially interfere with the performance of his duties and services hereunder:

 

(a)               
serving as a director or a member of a committee of any company or organization, if serving
in such capacity does not involve any conflict with the business of the Company or any subsidiary and such other company or organization
is not in competition, in any manner whatsoever, with the business of the Company or any of its subsidiaries; 

 

(b)              
fulfilling speaking engagements; 

 

(c)               
engaging in charitable and community activities;

 

(d)              
managing his personal business and investments; and

 

(e)               
any other activity approved of by the Board. For purposes of this Agreement, any activity
specifically listed on Schedule A shall be considered as having been approved by the Board.

 

(e)               
Representations and Warranties of the Executive with Respect to Conflicts, Past Employers and Corporate Opportunities.
The Executive represents and warrants that:

 

(a)               
his employment by the Company will not conflict with any obligations which he has to any other
person, firm or entity;

 

(b)              
he has not brought to the Company (during the period before the signing of this Agreement)
and he will not bring to the Company any materials or documents of a former or present employer, or any confidential information
or property of any other person, firm or entity; and 

 

(c)               
he will not, without disclosure to and approval of the Board, directly or indirectly, assist
or have an active interest in (whether as a principal, stockholder, lender, employee, officer, director, partner, venturer, consultant
or otherwise) in any person, firm, partnership, association, corporation or business organization, entity or enterprise that competes
with or is engaged in a business which is substantially similar to the business of the Company; provided, however, that
ownership of not more than five percent (5%) of the outstanding securities of any class of any publicly held corporation shall
not be deemed a violation of this Section 2.5; provided, further, that any investment specifically listed on Schedule A shall not
be deemed a violation of this Section 2.5.

 

(f)               
Activities and Interests with Companies Doing Business with the Company. In addition to those activities and interests
of Executive disclosed on Schedule A attached hereto, Executive shall promptly disclose to the Board, in accordance with
the Company’s policies, full information concerning any interests, direct or indirect, he holds (whether as a principal,
stockholder, lender, executive, director, officer, partner, venturer, consultant or otherwise) in any business which, as reasonably
known to Executive, purchases or provides services or products to, the Company or any of its subsidiaries, provided that the Executive
need not disclose any such interest resulting from ownership of not more than five (5%) of the outstanding securities of any class
of any publicly held corporation.

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(g)               
Other Business Opportunities. Nothing in this Agreement shall be deemed to preclude the Executive from participating
in other business opportunities if and to the extent that: (a) such business opportunities are not directly competitive with, similar
to the business of the Company, or would otherwise be deemed to constitute an opportunity appropriate for the Company; (b) the
Executive’s activities with respect to such opportunities do not have a material adverse effect on the performance of the
Executive’s duties hereunder, and (c) the Executive’s activities with respect to such opportunity have been fully disclosed
in writing to the Board.

 

(h)              
Reporting Location. For purposes of this Agreement, the Executive’s reporting location shall be New York, New
York, which shall include the metropolitan area within a 25 mile radius from New York, New York.

 

 

 

Article
Three

compensation

 

3.             Compensation.

 

(a)               
Base Salary. Executive shall receive an initial annual base salary of Two Hundred and Fifty Thousand Dollars ($250,000.00),
payable according to the Company’s normal payroll policies and procedures (the “Base Salary”) and subject to
all federal, state, and municipal withholding requirements. The Base Salary shall be reviewed by the Board annually for adequacy
and may be increased (but not decreased) accordingly. Base Salary, as so increased, shall constitute “Base Salary”
thereafter.

 

(b)              
Cash Bonus. The Executive shall be eligible for a cash bonus up to an amount of two (2) times a target bonus, defined
as 50% of Base Salary (the “Target Bonus” and the “Annual Bonus” shall be twice the Target Bonus), as determined
by the Compensation Committee of the Board or by the independent directors (as that term is defined by the stock exchange or market
on which the Company’s shares may be the traded).

 

(c)               
Equity-Based Compensation. The Executive shall be entitled to participate in all equity-based compensation plans
offered by the Company and as determined by the Board of Directors.

 

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(a)               
As a sign-on incentive, the Executive will receive fifteen million (15,000,000) options, priced at $0.0473 per share,
which the Company will cause to be issued to him within thirty (30) days following the Effective Date.  The options shall
vest as follows: (i) 5,000,000 options shall be fully vested on the date of grant (the “Grant Date”); (ii) 5,000,000
options shall vest on the first anniversary of the Grant Date; and (iii) the remaining 5,000,000 options shall vest on the second
anniversary of the Grant Date; provided Executive must be employed by the Company on a vesting date in order to vest in that portion
of the options. Once vested, the options shall remain exercisable throughout their ten (10) year term, notwithstanding any termination
of Executive’s employment.

 

(b)              
the Executive understands that as of the date of this Agreement, the only stock-based plan offered by the Company
is the 2014 Long-Term Incentive Plan.

 

(c)               
Upon a Change of Control, all equity-based compensation will be deemed to have vested as of the Change of Control
Effective Date (as defined by Article 7 herein).

 

(d)              
Participation In Benefit Plans.

 

(a)               
Retirement Plans. Executive shall be entitled to participate, without any waiting or
eligibility periods, in all qualified retirement plans provided to other executive officers and other key employees.

 

(b)              
Taxes. The Company shall pay, on a grossed-up basis for federal, state, and local income
taxes, the amount of any excise tax payable by Executive as a result of the exercise of any stock options, the payments triggered
by this Agreement, or other compensation agreements between Executive and the Company, or any of its subsidiaries and any income
tax payable by Executive as a result of the exercise of any stock options, the payments in Common Stock triggered by this Agreement,
or other compensation agreements between Executive and the Company, or any of its subsidiaries, except as might otherwise be provided
such benefit plan.

 

(c)               
Employee Benefit Plans and Insurance. The Executive shall have the right to participate
in employee benefit plans and insurance programs of the Company that the Company may sponsor from time to time and to receive customary
Company benefits, if those benefits are so offered. Nothing herein shall obligate Executive to accept such benefits if and when
they are offered.

 

(d)              
Vacation.

 

(i)                
The Executive shall be entitled to take such vacations, with pay, as are customary among other
chief executive officers of organizations of similar size and nature, which vacation level shall be reviewed by the Compensation
Committee from time to time. No more than 1.5 times (1.5x) Executive’s authorized annual vacation allocation may be accrued,
at any given time. In the event that Executive has reached his maximum authorized vacation allocation, accrual will not re-commence
until Executive uses some of his paid vacation credit and thereby brings the balance below his maximum. Accrued paid vacation credit
forfeited because of an excess balance cannot be retroactively reapplied.

 

(ii)              
Pay will only be provided for any unused, accrued paid vacation credit at the time of Executive’s
separation from the business by the Company due to a reduction in force, by Executive upon retirement, upon the death of an employee,
or as otherwise provided in Article 4; provided that Executive has been a regular full-time employee for three calendar months
prior to such event. Termination of employment for Cause by the Company, or Executive’s resignation, will result in the forfeiture
of any unused paid vacation credit.

 

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(e)               
Paid Holidays. The Executive shall be entitled to such paid holidays as are generally
available to all employees. As of the date of this Agreement, the Company’s employees are permitted to observe ten (10) paid
holidays.

 

(e)               
Relocation and Business-related Expenses. In the event that Executive is required to move from his primary residence
and consents to such move, then Executive shall be provided with relocation assistance as provided below:

 

(a)               
Housing and Temporary Lodging. The Company will pay the costs, for the Executive and
his family, of house-hunting trips and the cost of transporting the Executive, his spouse, family, furniture, household effects,
and vehicles, to the area in which the Company will be headquartered. In addition, the Company will pay the cost of the Executive’s
travel, temporary living expenses, including housing, whether hotel or apartment, and meals, during the period prior to the Executive’s
move to the city in which the Company will be headquartered.

 

(b)              
Reimbursement. Executive shall be entitled to reimbursement within a reasonable time
for all properly documented and approved expenses for travel. The Company shall reimburse business expenses of Executive directly
related to Company business, including, but not limited to, airfare, lodging, meals, travel expenses, medical expenses while traveling
not covered by insurance, business entertainment, expenses associated with entertaining business persons, local expenses to governments
or governmental officials, tariffs, applicable taxes outside of the United States, special expenses associated with travel to certain
countries, supplemental life insurance or supplemental insurance of any kind or special insurance rates or charges for travel outside
the United States (unless such insurance is being provided by the Company), rental cars and insurance for rental cars, and any
other expenses of travel that are reasonable in nature or that have been otherwise pre-approved. Executive shall be governed by
the travel and entertainment policy in effect at the Company.

 

(c)               
Specific Business Expenses. In addition to the reimbursement of business expenses described
above, the Executive shall also be entitled to reimbursement by the Company for (i) the monthly cost of maintaining an office in
New York, New York, of the Executive’s choosing and (ii) the monthly cost of his office and cell phones and wireless data
service.

 

(f)               
Severance Benefit. In the event that Executive’s employment is terminated, other than for Cause, Executive
shall receive compensation pursuant to Section 4.7 herein.

 

(g)               
Payroll Procedures and Policies. All payments required to be made by the Company to the Executive pursuant to this
Article Three shall be paid on a regular basis in accordance with the Company’s normal payroll procedures and policies.

 

(h)              
Excise Tax Gross-Up.

 

(a)               
If any payment to or in respect of the Executive by the Company or any affiliate,
whether pursuant to this Agreement or otherwise (a “Payment”), is determined to be a “parachute payment”
as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) (such payment, a “Parachute
Payment”) and also to be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, being
herein collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional
payment from the Company (the “ Gross-Up Payment ”) in an amount such that the net amount of such additional payment
retained by the Executive, after payment of all federal, state and local income and employment and Excise Taxes imposed on the
Gross-Up Payment, shall be equal to the Excise Tax imposed on the Payment. Notwithstanding the foregoing or any other provision
of this Agreement, if it shall be determined that the Executive is entitled to a Gross-Up Payment but that the net present value
of the Parachute Payments (calculated at the discount rate in effect under Section 280G of the Code) do not exceed 110% of the
Reduced Amount (as defined below), then no Gross-Up Payment shall be made to the Executive and the aggregate amount of the Parachute
Payments otherwise payable under this Agreement shall be reduced to the Reduced Amount; provided, that the foregoing reduction
shall not be made if the Accounting Firm (as defined below) determines that the net after-tax benefit of the payments to the Executive
without the reduction imposed is more than 110% of the net after-tax benefit of the payments to the Executive with the reduction
imposed. For purposes of the foregoing, the term “Reduced Amount” shall mean the greatest amount of Parachute Payments
that could be paid to the Executive such that the receipt of such Parachute Payments would not give rise to any Excise Tax. The
determination of which Payments shall be reduced pursuant to this Section 3(h)(a) shall be made by an independent accounting firm
of recognized standing selected by the Company and reasonably acceptable to the Executive (the “Accounting Firm”),
in consultation with the Executive and shall be reasonably acceptable to him, and such determination shall be made at the time
it is determined whether any payments made to the Executive are subject to the Excise Tax.

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(b)              
Subject to the provisions of Section 3(h)(c) hereof, all determinations required to
be made under this Section 3(h), including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be made by the Accounting Firm. The initial determination
of whether a Gross-Up Payment is required, and if so, the amounts of the Excise Tax and Gross-Up Payment, shall be determined by
the Accounting Firm, whose written report shall be delivered to the Company and to the Executive. Not later than sixty (60) days
after any Payment, the Accounting Firm shall determine whether a Gross-Up Payment is due with respect to such Payment, and such
Gross-Up Payment shall be paid by the Company to the Executive (except to the extent any portion thereof is paid to the taxing
authorities on behalf of the Executive) not later than ten (10) days following the Accounting Firm’s determination. The Executive
and the Company shall cooperate in good faith as to the treatment of a Payment for tax reporting and withholding purposes.

 

(c)               
The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification shall be given as
soon as practicable but in no event later than the earlier of (i) thirty (30) days after the Executive is informed in writing of
such claim or (ii) fifteen (15) days before the date on which such claim is requested to be paid, and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

 

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i.        give
the Company any information reasonably requested by the Company relating to such claim;

 

                                                                                      
ii.       take
such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including
without limitation, accepting legal representation with respect to such claim by an attorney selected by the Company and reasonably
acceptable to the Executive;

 

                                                                                       
iii.      cooperate
with the Company in good faith in order effectively to contest such claim; and

 

                                                                                       
iv.      permit
the Company to participate in any proceedings relating to such claim;

 

provided,
however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold the Executive harmless for any Excise Tax or federal, state and local
income and employment tax (including interest and penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of this Section 3(h)(c), the Company shall control
all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or to contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an after-tax basis,
and shall hold the Executive harmless from any Excise Tax or federal, state or local income or employment tax (including interest
or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such
advance. The Company’s control of the contest, however, shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may by, any other issue raised
by the Internal Revenue Service or any other taxing authority. 

 

(d)              
If, after the receipt by the Executive of an amount advanced by the Company pursuant
to Section 3(h)(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject
to the Company’s complying with the requirements of Section 3(h)(c)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Section 3(h)(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.

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(e)               
In the event that the Excise Tax is subsequently determined to be less than initially
determined, the Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is determined
(but, if previously paid to the taxing authorities, not prior to the time the amount of such reduction is refunded to the Executive
or otherwise realized as a benefit by the Executive) the portion of the Gross-Up Payment that would not have been paid if the Excise
Tax as subsequently determined had been applied initially in calculating the Gross-Up Payment, with the amount of such repayment
determined by the Accounting Firm; provided that the amount of required repayment by the Executive shall be reduced, as the Accounting
Firm may determine, in order to avoid putting the Executive in a worse after-tax position than he would have enjoyed had the amount
of Excise Tax been correctly determined in the first instance, such determination to be made on a basis consistent with the intention
of this Section 3(h), which is to make the Executive whole on an after-tax basis on account of any Excise Tax (including related
interest and penalties). Similarly, if the amount of Gross-Up Payments actually made by the Company is subsequently determined
by the Accounting Firm to have been inadequate to satisfy the Company’s obligation to protect the Executive against the Excise
Tax (including related interest and penalties), additional Gross-Up Payments shall be made as directed by the Accounting Firm.
The Executive and the Company shall each have the right at all times to have the Accounting Firm review and confirm or revise earlier
calculations.

 

 

 

Article
Four

Termination OF EMPLOYMENT

 

4.1             Death.
The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment
Term.

 

4.2            Disability.
If the Company determines in good faith that the Disability (as defined below) of the Executive has occurred during the Employment
Term, the Company may give the Executive notice of its intention to terminate the Executive’s employment. In such event,
the Executive’s employment hereunder shall terminate effective on the 30th day after receipt of such notice by
the Executive (the “Disability Effective Date”); provided, that, within the 30-day period after such
receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this
Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties hereunder on a full-time
basis for an aggregate of 180 days within any given period of 270 consecutive days (in addition to any statutorily required
leave of absence and any leave of absence approved by the Company) as a result of incapacity of the Executive, despite any reasonable
accommodation required by law, due to bodily injury or disease or any other mental or physical illness, which will, in the opinion
of a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative,
be permanent and continuous during the remainder of the Executive’s life.

 

4.3           Termination
by Company.

 

(a)Termination for
Cause.

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The Company
may terminate the Executive’s employment hereunder for Cause (as defined below). For purposes of this Agreement, “Cause”
shall mean:

 

(i)the
willful and continued failure of the Executive to perform substantially the Executive’s duties hereunder (other than any
such failure resulting from bodily injury or disease or any other incapacity due to mental or physical illness) after a written
demand for substantial performance is delivered to the Executive by the Board or the Chairman of the Company, which specifically
identifies the manner in which the Board or the Chairman of the Company believes the Executive has not substantially performed
the Executive’s duties; or 

 

 

(ii)the
willful engaging by the Executive in illegal conduct or gross misconduct that is materially and demonstrably detrimental to the
Company and/or its affiliated companies, monetarily or otherwise.

 

For purposes
of this provision, no act, or failure to act, on the part of the Executive shall be considered “willful” unless done,
or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission
was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board, upon the instructions of the Chairman or another Board Member of Company, or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its affiliated companies. The cessation of employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than two-thirds of the entire membership of the Board then in office at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

 

(iii)the
Executive’s conviction of, or plea of nolo contendere to, any felony of theft, fraud, embezzlement or violent crime.

 

(b)Termination
without Cause.

 

All terminations
by the Company that are not for Cause, shall be considered Without Cause.

 

4.4           Termination
by Executive. The Executive may terminate the Executive’s employment hereunder at any time during the Employment
Term for Good Reason (as defined below). For purposes of this Agreement, “Good Reason” shall mean any of the
following (without the Executive’s express written consent): 

 

(a)The
assignment to the Executive of any duties inconsistent in any respect with the Executive’s position (including status, offices,
titles and reporting requirements), duties, functions, responsibilities or authority as contemplated by Section 2(c) of this Agreement,
or any other action by the Company that results in a diminution in such position, duties, functions, responsibilities or authority,
excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

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(b)Any
failure by the Company to comply with any of the provisions of Article 3 of this Agreement, other than an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; 

 

 

(c)The
Company’s requiring the Executive to be based at any office or location other than as provided in Section 2(h) of this Agreement
or the Company’s requiring the Executive to travel on the Company’s or its affiliated companies’ business to
a substantially greater extent than during the three-year period immediately preceding the Effective Date;

(d)Any
failure by the Company to comply with and satisfy Article 5 and/or Section 8(h) of this Agreement; or 

 

(e)Any
purported termination by the Company of the Executive’s employment hereunder otherwise than as expressly permitted by this
Agreement, and for purposes of this Agreement, no such purported termination shall be effective. 

 

For purposes of this Section 4.4, any good
faith determination of “Good Reason” made by the Executive shall be conclusive.

 

4.5
        Notice of Termination. Any termination of the Executive’s employment hereunder by the Company or by the
Executive (other than a termination pursuant to Section 4.1) shall be communicated by a Notice of Termination (as defined
below) to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written
notice which (a) indicates the specific termination provision in this Agreement relied upon, (b) in the case of a
termination for Disability, Cause or Good Reason, sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the provision so indicated, and (c) specifies
the Date of Termination (as defined in Section 4.6 below); provided, however, that notwithstanding any provision in this
Agreement to the contrary, a Notice of Termination given in connection with a termination by the Company for Cause or by the
Executive for Good Reason shall be given by the Company or Executive (as applicable) within a reasonable period of time, not
to exceed 120 days, following the occurrence of the event giving rise to such right of termination. The failure by the
Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of
Disability, Cause or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company
or the Executive from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights
hereunder.

 

4.6          Date
of Termination. For purposes of this Agreement, the “Date of Termination” shall mean the effective date of
termination of the Executive’s employment hereunder, which date shall be (a) if the Executive’s employment
is terminated by the Executive’s death, the date of the Executive’s death, (b) if the Executive’s
employment is terminated because of the Executive’s Disability, the Disability Effective Date, (c) if the
Executive’s employment is terminated by the Company (or applicable affiliated company) for Cause or by the Executive
for Good Reason, the date on which the Notice of Termination is given, (d) if the Executive’s employment is
terminated pursuant to Section 2.2, the date on which the Employment Term ends pursuant to Section 2.2 due to a party’s
delivery of a Notice of Termination thereunder, and (e) if the Executive’s employment is terminated for any other
reason, the date specified in the Notice of Termination, which date shall in no event be earlier than the date such notice is
given; provided, however, that if within 30 days after any Notice of Termination is given, the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties or by a final
judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal
having been perfected). 

    	11

    	 

    

 

 

 

4.7           Obligations
of the Company upon Termination. 

 

(a)           Good
Reason or Change of Control; Other Than for Cause. If, during the Employment Term, the Company (or applicable affiliated company)
shall terminate the Executive’s employment hereunder other than for Cause or the Executive shall terminate the Executive’s
employment either for (1) Good Reason or, (2) any reason (if during the Change of Control Period):

 

(i)the
Company shall pay to the Executive in a lump sum (A) the sum of (1) Executive’s Base Salary, if any, which has
been earned but not paid through the Termination Date, (2) the product of (x) the Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Termination Date and the denominator of which is 365, (3)
the prior year’s Annual Bonus, to the extent earned but not paid, (4) the amount of any unreimbursed business expenses incurred
by the Executive on or prior to the Date of Termination, and (5) any accrued vacation
or other pay pursuant to the Corporation’s vacation policy, to the extent not previously paid; and (B) an amount
equal to the sum of (1) an amount equal to 36 months of Executive’s Base Salary and (2) the Annual Bonus multiplied
by a factor of 3;

 

(ii)all stock options,
stock appreciation rights, and restricted stock shall immediately vest;

 

(iii)all stock options
and stock appreciation rights shall be payable in Common Stock and shall remain exercisable throughout the remainder of their ten
(10) year term;

 

(iv)all performance shares
shall immediately vest;

 

(v)the Company shall pay,
on a grossed-up basis (as determined in the same manner as under Section 3.4(b) herein the amount of any excise and income taxes
payable by Executive as a result of the exercise of any stock options, the payments in Common Stock triggered by this Agreement,
or other agreements between Executive and the Company, or any of its subsidiaries; and

 

(vi)to the extent not theretofore
paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program, policy, practice or arrangement or contract or
agreement of the Company and its affiliated companies (such other amounts and benefits hereinafter referred to as the “Other
Benefits”).

 

(b)
        Death. If the Executive’s employment is terminated by reason of the Executive’s death during the
Employment Term, this Agreement shall terminate without further compensation obligations to the Executive’s legal
representatives under this Agreement, other than for (i) payment of Accrued Obligations (which shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 90 days of the Date of Termination)
and the timely payment or settlement of any other amount pursuant the Other Benefits and (ii) treatment of all other
compensation under existing plans as provided by the terms and rules of those plans. 

    	12

    	 

    

 

 

(c)         Disability.
If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Term,
this Agreement shall terminate without further compensation obligations to the Executive, other than for (i) payment of
Accrued Obligations (which shall be paid to the Executive in a lump sum in cash within 90 days of the Date of
Termination) and the timely payment or settlement of any other amount pursuant to the Other Benefits, (ii) treatment of
all other compensation under existing plans as provided by the terms and rules of those plans, and (iii) payment of any
unreimbursed business expenses incurred by the Executive on or prior to the Date of Termination (which shall be paid to the
Executive in a lump sum in cash within 90 days of the Date of Termination). 

 

(d)
       Cause; Other than for Good Reason. If the Executive’s employment is terminated
for Cause during the Employment Term, this Agreement shall terminate without further compensation obligations to the Executive
other than the obligation to pay to the Executive (x) Base Salary through the Date of Termination plus (y) the amount of any compensation
previously deferred by the Executive and any accrued vacation or other pay pursuant to the Corporation’s vacation policy,
in each case to the extent theretofore unpaid, and (z) any unreimbursed business expenses incurred by the Executive on or prior
to the Date of Termination. If the Executive voluntarily terminates the Executive’s employment during the Employment Term,
excluding a termination either (i) for Good Reason or (ii) a Change of Control, this Agreement shall terminate without further
compensation obligations to the Executive, other than for (1) that portion of Executive’s Base Salary that was not previously
paid to the Executive from the last payment date through the effective date of the Executive’s voluntary termination, (2)
any accrued vacation or other pay pursuant to the Corporation’s vacation policy and the timely payment or provision of the
Other Benefits, as provided in any applicable plan, and (3) any unreimbursed business expenses incurred by the Executive on or
prior to the Date of Termination, and the Executive shall have no further obligations
nor liability to the Company. In all cases of payments in this Section 4.7(d), any amounts owed to the Executive shall be paid
to the Executive in a lump sum in cash within 90 days of the Date of Termination subject to applicable laws and regulations
(except in the case of Other Benefits, which shall be provided pursuant to the terms of the applicable plans, programs or arrangements,
if any). 

 

4.8           Continuation
of Payments During Disputes. The Parties agree that in the case of:

 

 

(a)               
termination which the Company contends is for Cause, but Executive claims is not for Cause;
or 

 

(b)              
termination by Executive under Section 4.4 herein,

 

    	13

    	 

    

 

 

the Company shall continue
to pay all compensation due to Executive hereunder until the resolution of such dispute, but the Company shall be entitled to repayment
of all sums so paid, if it ultimately shall be determined by a court of competent jurisdiction, in a final non-appealable decision,
that the termination was for Cause or such termination by Executive was not authorized under Section 4.4 herein, and all sums so
repaid shall bear interest at the prime rate as published in The Wall Street Journal on the date on which such court makes
such determination. Any such reimbursement of payments by Executive shall not include any legal fees or other loss, costs, or expenses
incurred by the Company, notwithstanding any provision of the Indemnification Agreement, which is attached as Exhibit A
and is considered a part of this Agreement.

 

 

Article
Five

indemnification

 

5.             Indemnification. The Executive shall be indemnified and held harmless pursuant to the terms and conditions
set forth in the Indemnification Agreement substantially in the form attached as Exhibit A hereto and which is incorporated
herein by reference.

 

 

Article
Six

confidentiality

 

6.             Confidentially; Non-Competition; and Non-Solicitation. 

 

(a)               
Confidentiality. In consideration of employment by the Company and Executive’s receipt of the salary and other
benefits associated with Executive’s employment, and in acknowledgment that (a) the Company is engaged in the electronic
cigarette and related businesses, (b) maintains secret and confidential information, (c) during the course of Executive’s
employment by the Company such secret or confidential information may become known to Executive, and (d) full protection of the
Company’s business makes it essential that no employee appropriate for his or her own use, or disclose such secret or confidential
information, Executive agrees that during the time of Executive’s employment and for a period of two (2) years following
the termination of Executive’s employment with the Company, Executive agrees to hold in strict confidence and shall not,
directly or indirectly, disclose or reveal to any person, or use for his own personal benefit or for the benefit of anyone else,
any trade secrets, confidential dealings, or other confidential or proprietary information of any kind, nature, or description
(whether or not acquired, learned, obtained, or developed by Executive alone or in conjunction with others) belonging to or concerning
the Company or any of its subsidiaries, except (i) with the prior written consent of the Company duly authorized by its Board,
(ii) in the course of the proper performance of Executive’s duties hereunder, (iii) for information (x) that becomes generally
available to the public other than as a result of unauthorized disclosure by Executive or his affiliates or (y) that becomes available
to Executive on a non-confidential basis from a source other than the Company or its subsidiaries who is not bound by a duty of
confidentiality, or other contractual, legal, or fiduciary obligation, to the Company, (iv) as required by applicable law or legal
process, or (v) as is necessary to enforce Executive’s rights under this Agreement and/or any other written agreement between
the Company and/or any subsidiary or affiliate and the Executive.

 

(b)              
Non-Competition. During Executive’s employment with the Company and for so long as Executive receives any Severance
Benefit or is receiving any Severance Amount provided under this agreement in respect of the termination of his employment, Executive
shall not be engaged as an officer or executive of, or in any way be associated in a management or ownership capacity with any
corporation, company, partnership or other enterprise or venture which conducts a business which is in direct competition with
the business of the Company; provided, however, that Executive may own not more than five percent (5%) of the outstanding
securities, or equivalent equity interests, of any class of any corporation, company, partnership, or either enterprise that is
in direct competition with the business of the Company, which securities are listed on a national securities exchange or traded
in the over-the-counter market. For purposes of this Agreement, a lump sum payment equivalent made to Executive shall be judged
in relation to his most recent annual Base Salary to determine whether Executive is continuing to receive a Severance Benefit or
Severance Amount and shall be measured from the date such payment is received. It is expressly agreed that the remedy at law for
breach of this covenant is inadequate and that injunctive relief shall be available to prevent the breach thereof.

    	14

    	 

    

 

 

(c)               
Non-Solicitation. Executive also agrees that he will not, directly or indirectly, during the term of his employment
or within one (1) year after termination of his employment for any reason, in any manner, encourage, persuade, or induce any other
employee of the Company to terminate his employment, or any person or entity engaged by the Company to represent it to terminate
that relationship without the express written approval of the Company. It is expressly agreed that the remedy at law for breach
of this covenant is inadequate and that injunctive relief shall be available to prevent the breach thereof.

 

 

Article
Seven 

 

Change
of Control

 

7.             Certain Definitions.

 

7.1
         Change of Control Effective Date. The “Change of Control Effective Date” shall mean the first date
during the Change of Control Period (as defined in Section 7.2) on which a Change of Control occurs. Notwithstanding anything
in this Agreement to the contrary, if a Change of Control occurs and if the Executive’s employment with the Company (or
applicable affiliated company) is terminated prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of
a Change of Control, then for all purposes of this Agreement the “Change of Control Effective Date” shall mean
the date immediately prior to the date of such termination of employment. 

 

7.2          Change
of Control Period. The “Change of Control Period” shall mean the period commencing on the date of this
Agreement and ending on the third anniversary of such date; provided, however, that
commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof herein referred to as the “Renewal Date”), the Change of Control Period shall be
automatically extended so as to terminate three years after such Renewal Date. 

 

7.3
          Change of Control. For purposes of this Agreement, a “Change of Control” shall mean: 

 

(a)the
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either (A) the
then outstanding Common Shares the Company (the “Outstanding Shares”) or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding
Voting Securities”); provided, however, that for purposes of this Subsection 7.3(a) the following acquisitions shall
not constitute a Change of Control: (w) Company-sponsored recapitalization that is approved by the Incumbent Board, as defined
below; (x) a capital raise initiated by the Company where the Incumbent Board remains for at least at least 548 days after
the closing date of the raise, or (y) an acquisition of another company or asset(s) initiated by the Company and where the Company’s
shareholders immediately after the transaction own at least 51% of the shares of the combined concern; or

 

    	15

    	 

    

 

(b)individuals
who, as of the date of this Agreement, constitute the Company’s Board (the “Incumbent Board”) cease for any reason
to constitute a majority of such Board of Directors; provided, however , that any individual becoming a director of the Company
shareholders subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders was approved
by a vote of a majority of the directors of the Company then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Company Board; or 

 

(c)consummation
of a reorganization, merger, amalgamation or consolidation of the Company, with or without approval by the shareholders of the
Company, in each case, unless, following such reorganization, merger, amalgamation or consolidation, (i) more than 50% of,
respectively, the then outstanding shares of common stock (or equivalent security) of the company resulting from such reorganization,
merger, amalgamation or consolidation and the combined voting power of the then outstanding voting securities of such company entitled
to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Shares and Outstanding Voting
Securities immediately prior to such reorganization, merger, amalgamation or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger, amalgamation or consolidation, of the Outstanding Shares
and Outstanding Voting Securities, as the case may be, (ii) no Person (excluding a parent of the Company that may come into
being after the date of this Agreement through any transaction deliberately undertaken by the Company after an affirmative vote
of its Incumbent Directors and the Company shareholders), any employee benefit plan (or related trust) of the Company or such company
resulting from such reorganization, merger, amalgamation or consolidation, and any Person beneficially owning, immediately prior
to such reorganization, merger, amalgamation or consolidation, directly or indirectly, 15% or more of the Outstanding Shares or
Outstanding Voting Securities, as the case may be) beneficially owns, directly or indirectly, 15% or more of, respectively, the
then outstanding shares of common stock (or equivalent security) of the company resulting from such reorganization, merger, amalgamation
or consolidation or the combined voting power of the then outstanding voting securities of such company entitled to vote generally
in the election of directors, and (ii) a majority of the members of the board of directors of the company resulting from such
reorganization, merger, amalgamation or consolidation were members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, amalgamation or consolidation; or 

 

(d)consummation
of a sale or other disposition of all or substantially all the assets of the Company, with or without approval by the shareholders
of the Company, other than to a corporation, with respect to which following such sale or other disposition, (i) more than
50% of, respectively, the then outstanding shares of common stock (or equivalent security) of such corporation and the combined
voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by all or substantially all the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Shares and Outstanding Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding
Shares and Outstanding Voting Securities, as the case may be, (ii) no Person (excluding the Company, any employee benefit
plan (or related trust) of the Company or such corporation, and any Person beneficially owning, immediately prior to such sale
or other disposition, directly or indirectly, 15% or more of the Outstanding Shares or Outstanding Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 15% or more of, respectively, the then outstanding shares of common stock (or
equivalent security) of such corporation or the combined voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (C) a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Incumbent
Board providing for such sale or other disposition of assets of the Company; or

    	16

    	 

    

 

 

 

(e)approval by the shareholders
of the Company of a complete liquidation or dissolution of the Company.

 

 

 

Article
Eight

miscellaneous

 

8.             Miscellaneous.

 

(a)               
Benefit. This Agreement shall inure to the benefit of and be binding upon each of the Parties, and their respective
successors. This Agreement shall not be assignable by any Party without the prior written consent of the other Party. The Company
shall require any successor, whether direct or indirect, to all or substantially all the business and/or assets of the Company
to expressly assume and agree to perform, by instrument in a form reasonably satisfactory to Executive, this Agreement and any
other agreements between Executive and the Company or any of its subsidiaries, in the same manner and to the same extent as the
Company.

 

(b)              
Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of Nevada
without resort to any principle of conflict of laws that would require application of the laws of any other jurisdiction; provided,
however, that Nevada law shall govern with respect to the Executive’s rights under a Change of Control under Article
Seven herein.

 

(c)               
Counterparts. This Agreement may be executed in counterparts and via facsimile, each of which shall be deemed to
constitute an original, but all of which together shall constitute one and the same Agreement. Each such counterpart shall become
effective when one counterpart has been signed by each Party thereto.

 

(d)              
Headings. The headings of the various articles and sections of this Agreement are for convenience of reference only
and shall not be deemed a part of this Agreement or considered in construing the provisions thereof.

 

    	17

    	 

    

 

 

(e)               
Severability. Any term or provision of this Agreement that shall be prohibited or declared invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or declaration, without
invalidating the remaining terms and provisions hereof or affecting the validity or enforceability of such provision in any other
jurisdiction, and if any term or provision of this Agreement is held by any court of competent jurisdiction to be void, voidable,
invalid or unenforceable in any given circumstance or situation, then all other terms and provisions hereof, being severable, shall
remain in full force and effect in such circumstance or situation, and such term or provision shall remain valid and in effect
in any other circumstances or situation.

 

(f)               
Construction. Use of the masculine pronoun herein shall be deemed to refer to the feminine and neuter genders and
the use of singular references shall be deemed to include the plural and vice versa, as appropriate. No inference in favor of or
against any Party shall be drawn from the fact that such Party or such Party’s counsel has drafted any portion of this Agreement.

 

(g)               
Equitable Remedies. The Parties hereto agree that, in the event of a breach of this Agreement by either Party, the
other Party, if not then in breach of this Agreement, may be without an adequate remedy at law owing to the unique nature of the
contemplated relationship. In recognition thereof, in addition to (and not in lieu of) any remedies at law that may be available
to the non-breaching Party, the non-breaching Party shall be entitled to obtain equitable relief, including the remedies of specific
performance and injunction, in the event of a breach of this Agreement, by the Party in breach, and no attempt on the part of the
non-breaching Party to obtain such equitable relief shall be deemed to constitute an election of remedies by the non-breaching
Party that would preclude the non-breaching Party from obtaining any remedies at law to which it would otherwise be entitled.

 

(h)              
Attorney’s Fees. If any Party hereto shall bring an action at law or in equity to enforce its rights under
this Agreement, the prevailing Party in such action shall be entitled to recover from the Party against whom enforcement is sought
its costs and expenses incurred in connection with such action (including fees, disbursements and expenses of attorneys and costs
of investigation). In the event that Executive institutes any legal action to enforce Executive’s legal rights hereunder,
or to recover damages for breach of this Agreement, Executive, if Executive prevails in whole or in part, shall be entitled to
recover from the Company reasonable attorneys’ fees and disbursements incurred by Executive with respect to the claims or
matters on which Executive has prevailed. The Company shall promptly pay or reimburse Executive
for all legal fees and expenses he incurs in the negotiation, review, and preparation of this Agreement and related arrangements.

 

(i)                
No Waiver. No failure, delay or omission of or by any Party in exercising any right, power or remedy upon any breach
or default of any other Party, or otherwise, shall impair any such rights, powers or remedies of the Party not in breach or default,
nor shall it be construed to be a waiver of any such right, power or remedy, or an acquiescence in any similar breach or default;
nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party of any provisions of this
Agreement must be in writing and be executed by the Parties and shall be effective only to the extent specifically set forth in
such writing.

 

(j)                
Remedies Cumulative. All remedies provided in this Agreement, by law or otherwise, shall be cumulative and not alternative.

 

    	18

    	 

    

 

 

9.            
Amendment. This Agreement may be amended only by a written agreement signed by the parties hereto.

 

(a)               
In addition, to the extent that any of the payments hereunder are or may be governed by Section 409A of the Code, the parties
will work together in a commercially reasonable manner in good faith to amend any provisions as necessary for compliance or to
avoid the imposition of taxes or penalties under Section 409A of the Code in a manner that maintains the basic financial provisions
of this Agreement. In this connection, each party will make any amendments or adjustments reasonably requested by the other party
which satisfy the foregoing condition.

 

(b)              
It is the intention of the Company and the Executive that this Agreement comply with the requirements of Section 409A of
the Code, and this Agreement will be interpreted in a manner intended to comply with Section 409A. All payments under this Agreement
are intended to be excluded from the requirements of Section 409A of the Code or be payable on a fixed date or schedule in accordance
with Section 409A(a)(2)(iv) of the Code. To the extent that reimbursements or in-kind benefits due to the Executive under this
Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits
shall be paid to the Executive in a manner consistent with Treasury Regulations Section 1.409A-3(i)(1)(iv).

 

(c)               
Notwithstanding anything in this Agreement to the contrary, in the event that the Executive is deemed to be a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and the Executive is not “disabled” within
the meaning of Section 409A(a)(2)(C) of the Code, no payments hereunder that are “deferred compensation” subject to
Section 409A of the Code shall be made to the Executive prior to the date that is six (6) months after the date of the Executive’s
“separation from service” (as defined in Section 409A of the Code) or, if earlier, the Executive’s date of death,
if paying such payment(s) at their otherwise earlier scheduled due date(s) would violate Section 409A of the Code. Following any
applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest permissible payment
date. For purposes of Section 409A of the Code, each of the payments made hereunder shall be designated as a “separate payment.”

 

(d)              
For purposes of this Agreement, with respect to payments of any amounts that are considered to be “deferred compensation”
subject to Section 409A of the Code, references to “termination of employment” (and substantially similar phrases)
shall be interpreted and applied in a manner that is consistent with the requirements of Section 409A of the Code.

 

(e)               
The Executive’s right to any deferred compensation, as defined under Section 409A of the Code, shall not be subject
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, garnishment by creditors, or borrowing,
to the extent necessary to avoid tax, penalties and/or interest under Section 409A of the Code.

 

10.             
Entire Contract. This Agreement and the documents and instruments referred to herein constitute the entire
contract between the parties to this Agreement and supersede all other understandings, written or oral, with respect to the subject
matter of this Agreement.

 

11.             
Survival. This Agreement shall constitute a binding obligation of the Company and any successor thereto. Notwithstanding
any other provision in this Agreement, the obligations under Articles 3 through 6 shall survive termination of this Agreement.

 

    	19

    	 

    

 

 

12.             
Savings Clause. Notwithstanding any other provision of this Agreement, if the indemnification provisions in
Exhibit A hereto or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify Executive as to Expenses, judgments, fines, penalties and amounts paid in settlement with
respect to any Proceeding to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated
and to the fullest extent permitted by applicable law.

 

13.             
Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be
deemed to have been given (i) when delivered by hand or (ii) if mailed by certified or registered mail with postage prepaid, on
the third day after the date on which it is so mailed:

 

(a)           if to Executive:

 

Phil Anderson

60 West 23rd Street,
Apt. 601

New York, New York 10010

 

 

(b)           if to the Company:

 

Electronic Cigarettes International
Group, Ltd.

14200 Ironwood Dr., NW

Grand Rapids, Michigan 49534

Attn: Chairman, Compensation Committee

 

or to such other address
as may have been furnished to Executive by the Company or to the Company by Executive, as the case may be.

 

14.             
No Limitation. Notwithstanding any other provision of this Agreement, for avoidance of doubt, the parties
confirm that the foregoing does not apply to or limit Executive’s rights under Nevada law or the Company’s Corporate
Documents.

 

 

IN WITNESS WHEREOF,
the parties have set their hands and seals hereunto on the date first above written.

 

 

	
        ELECTRONIC CIGARETTES INTERNATIONAL GROUP, LTD.

         

        By:____________________________

        Name:

        Title: Chairman, Compensation
        Committee
	
        EXECUTIVE

         

         

        By:____________________________

        Name: Phil Anderson

 

    	20

    	 

    

 

 

 

Schedule A

 

Outside Activities

Phil Anderson

 

	
        Company or

        Project Name
	Nature of Business	Date Hired or Commenced Involvement	Position	Compensation	Annual Time Commitment, (time away from office)
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

 

 

 

 

 

 

 

 

 

Dated: 

 

Initials:Executive: _____Company: ______

 

    	21

    	 

    

 

 

Exhibit A

 

Indemnification Agreement

 

 

22Exhibit
4.1

 

NO
SALE, OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT OR ANY INTEREST THEREIN SHALL BE MADE UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH TRANSACTION IS THEN IN EFFECT, OR THE ISSUER HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THAT ACT. 

 

This
Warrant will be void after 5:00 p.m. New York Time on October 9, 2021.

 

 

COMMON
STOCK PURCHASE WARRANT

 

WARRANT
NO. 1

 

To
Subscribe for and Purchase Shares of

FLEXSHOPPER,
INC

 

(Transferability
Restricted as Provided in Paragraphs 8 and 9 Below)

 

THIS
CERTIFIES THAT, for value received, FORDHAM FINANCIAL MANAGEMENT, INC., or registered assigns, is entitled to subscribe
for and purchase from FLEXSHOPPER, INC., a corporation incorporated under the laws of the State of Delaware (the “Company”),
786,603 fully paid and non-assessable shares of Common Stock of the Company at the Warrant Price during the period hereinafter
set forth, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. This Warrant is one of
an issue of the Company’s Common Stock purchase warrants (herein called the “Warrants”), identical in all respects
except as to the number of Common Shares purchasable thereunder, and issued pursuant to the Placement Agent Agreement.

 

1.As
used herein:

 

(a)“Common
Stock” or “Common Shares” shall initially refer to the Company’s Common Stock, $.0001 par value per share,
as more fully set forth in Section 5 hereof.

 

(b)“Warrant
Price” shall be $.55 per share which is subject to adjustment pursuant to Section 4 hereof.

 

(c)“Placement
Agents” shall refer to FORDHAM FINANCIAL MANAGEMENT, INC., PAULSON INVESTMENT COMPANY, INC. and SPARTAN CAPITAL SECURITIES,
LLC.

 

(d)“Placement
Agent Agreement” shall refer to the Placement Agent Agreement dated April 17, 2014, as amended, between the Company and
the Placement Agents.

 

    	1

    	 

    

 

(e)“Warrants”
shall refer to Warrants to purchase Common Shares issued to the Placement Agent or its designees by the Company pursuant to the
Placement Agent Agreement, as such may be adjusted from time to time pursuant to the terms of Section 4 and including any
Warrants represented by any certificate issued from time to time in connection with the transfer, partial exercise, exchange of
any Warrants or in connection with a lost, stolen, mutilated or destroyed Warrant certificate, if any, or to reflect an adjusted
number of Common Shares.

 

(f)“Underlying
Securities” or “Warrant Shares” shall refer to and include the Common Stock issuable or issued upon exercise
of the Warrants.

 

(g)“Holders”
shall mean the registered holder of such Warrants or any issued Underlying Securities.

 

(h)“Memorandum”
shall mean the Company’s Confidential Private Placement Memorandum dated April 17, 2014, as supplemented, which is being
used (or was used) in connection with the private offering of Common Stock pursuant to the Placement Agent Agreement. 

 

(i)“Placement
Agent Securities” shall refer and mean the warrants and shares of Common Stock issued and/or issuable upon exercise of the
Warrants. 

 

(j)“Offering”
means the private offering of Common Stock in accordance with the Memorandum.

 

2.Exercise
and Payment. The purchase rights represented by this Warrant may be exercised by the holder hereof, in whole or in part at
any time, and from time to time, during the period commencing the date hereof (the “Commencement Date”) until October
9, 2021 (the “Warrant Exercise Term”), by the presentation of this Warrant, with the purchase form attached duly executed,
at the Company's office (or such office or agency of the Company as it may designate in writing to the Holder hereof by notice
pursuant to Section 14 hereof). The purchase price of the Common
Shares issuable pursuant to the Warrants shall be payable in by wire transfer, cash, certified bank check and/or in lieu of cash,
a warrant holder may exercise its Warrants through a cashless exercise. In this respect, at any time during the Warrant Exercise
Term, the Holder may, at its option, exchange the Warrants, in whole or in part (a “Warrant Exchange”), into the number
of fully paid and non-assessable Warrant Shares determined in accordance with this Section 2, by surrendering the placement agent
warrants which shall represent the right to subscribe for and acquire the number of Warrant Shares (rounded to the next highest
integer) equal to (A) the number of Warrant Shares specified by the Holder in its Notice of Exchange (the “Total Share Number”)
less (B) the number of Warrant Shares equal to the quotient obtained by dividing (i) the product of the Total Share Number and
the existing Exercise Price per Share by (ii) the Market Price (as hereafter defined) of a share of Common Stock. All documentation
and procedures to be followed in connection with such “cashless exercise” shall be approved in advance by the Company,
which approval shall be expeditiously provided and not unreasonably withheld.

 

The
Market Price of any shares of Common Stock to purchase shares so surrendered shall be based upon the value of the Common Stock
at the close of business on the day before exercise based upon the following: (i) if the shares of Common Stock are not listed
and traded upon a recognized securities exchange and there is no report of stock prices with respect to the shares of Common Stock
published by a recognized stock quotation service, by the Board of Directors of the Company in its reasonable discretion, it being
understood that the Market Price per share shall not be less than the most recent sale of Common Stock by the Company in an arms-length
transaction occurring no more than six (6) months prior to the exercise in question; or (ii) if the shares of Common Stock are
not then listed and traded upon a recognized securities exchange or quoted on the OTC Markets, and there are reports of stock
prices by a recognized quotation service, upon the basis of the last reported sale or transaction price of such stock as reported
by a recognized quotation service, or, if there is no last reported sale or transaction price on the day before exercise, then
upon the basis of the mean of the last reported closing bid and closing asked prices for such stock on the date nearest preceding
that day; or (iii) if the shares of Common Stock shall be then listed and traded upon a recognized securities exchange or quoted
on the OTC Markets, upon the basis of the last reported sale or transaction price at which shares of Common Stock were traded
on such recognized securities exchange or OTC Markets or, if the shares of Common Stock were not traded on the day before exercise,
upon the basis of the last reported sale or transaction price on the date nearest preceding that date. In the event the Company
is acquired for either stock, notes, securities, cash or any combination thereof, the holders of the Warrants shall have the option
to use the per share buyout price as the Market Price of the Common Stock. The Company agrees
that the Holder of the Warrants shall be deemed the record owner of such Common Shares as of the close of business on the date
on which the Warrants shall have been presented and payment made for such Common Shares as aforesaid. Certificates for the Common
Shares so purchased shall be delivered to the Holder of the Warrants within a reasonable time, not exceeding five (5) days, after
the rights represented by the Warrants shall have been so exercised. If the Warrants shall be exercised in part only, the Company
shall, upon surrender of the Warrants for cancellation, deliver a new Warrant evidencing the rights of the Holder hereof to purchase
the balance of the Common Shares which such Holder is entitled to purchase hereunder. Exercise in full of the rights represented
by the Warrants shall not extinguish the registration rights under Section 9 hereof and Section 9 of the Placement Agent Agreement.

 

    	2

    	 

    

 

3.Subject
to the provisions of Section 8 hereof, (i) this Warrant is exchangeable at the option of the Holder at the aforesaid office of
the Company for other Warrants of different denominations entitling the Holder thereof to purchase in the aggregate the same number
of Common Shares as are purchasable hereunder; and (ii) this Warrant may, at the reasonable request of the Holder, be reasonably
divided or combined with other Warrants which carry the same rights, in either case, upon presentation hereof at the aforesaid
office of the Company together with a written notice, signed by the Holder hereof, specifying the names and denominations in which
new Warrants are to be issued, and the payment of any transfer tax due in connection therewith. 

 

4.Subject
and pursuant to the provisions of this Section 4, the Warrant Price and number of Common Shares subject to this Warrant shall
be subject to adjustment from time to time as set forth hereinafter in this Section 4.

 

(a)If
the Company shall at any time subdivide its outstanding Common Shares by recapitalization, reclassification or split-up thereof,
the number of Common Shares subject to this Warrant immediately prior to such subdivision shall be proportionately increased,
and if the Company shall at any time combine the outstanding Common Shares by recapitalization, reclassification or combination
thereof, the number of Common Shares subject to this Warrant immediately prior to such combination shall be proportionately decreased.
Any such adjustment to the Warrant Price pursuant to this Section shall become effective at the close of business on the record
date for such recapitalization, reclassification, subdivision or combination.

 

(b)If
the Company after the date hereof shall distribute to all of the holders of its Common Shares any securities or other assets (other
than a distribution of Common Shares or a cash distribution made as a dividend payable out of earnings or out of any earned surplus
legally available for dividends under the laws of the State of Delaware), the Board of Directors of the Company shall be required
to make such equitable adjustment in the Warrant Price in effect immediately prior to the record date of such distribution as
may be necessary to preserve to the Holder of this Warrant rights substantially proportionate to those enjoyed hereunder by such
Holder immediately prior to the happening of such distribution. Any such adjustment made in good faith by the Board of Directors
shall be final and binding upon the Holders and shall become effective as of the record date for such distribution.

 

    	3

    	 

    

 

(c)No
adjustment in the number of Common Shares subject to this Warrant shall be required under this Section 4 hereof unless such adjustment
would require an increase or decrease in such number of shares of at least one percent of the then adjusted number of Common Shares
issuable upon exercise of this Warrant, provided, however, that any adjustments which by reason of the foregoing are not required
at the time to be made shall be carried forward and taken into account and included in determining the amount of any subsequent
adjustment; and provided further, however, that in case the Company shall at any time subdivide or combine the outstanding Common
Shares or issue any additional Common Shares as a dividend, said percentage shall forthwith be proportionately increased in the
case of a combination or decreased in the case of a subdivision or dividend of Common Shares so as to appropriately reflect the
same. If the Company shall make a record of the Holders of its Common Shares for the purpose of entitling them to receive any
dividend or distribution and legally abandon its plan to pay or deliver such dividend or distribution then no adjustment in the
number of Common Shares subject to the Warrant shall be required by reason of the making of such record.

 

(d)Whenever
the number of Common Shares purchasable upon the exercise of this Warrant is adjusted, as provided in Section 4, the Warrant Price
shall be adjusted (to the nearest one tenth of a cent by multiplying such Warrant Price immediately prior to such adjustment by
a fraction, the numerator of which shall be the number of Common Shares purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and the denominator of which shall be the number of Common Shares so purchasable immediately thereafter.

 

(e)In
case of any reclassification of the outstanding Common Shares (other than a change covered by Section 4(a) hereof or which solely
affects the par value of such Common Shares) or in the case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result
in any reclassification or capital reorganization of the outstanding Common Shares), or in the case of any sale or conveyance
to another corporation of the property of the Company as an entirety or substantially as an entirety in connection with which
the Company is dissolved, the Holder of this Warrant shall have the right thereafter (until the expiration of the right of exercise
of this Warrant) to receive upon the exercise hereof, for the same aggregate Warrant Price payable hereunder immediately prior
to such event, the kind and amount of shares of stock or other securities or property receivable upon such reclassification, capital
reorganization, merger or consolidation, or upon the dissolution following any sale or other transfer, by a Holder of the number
of Common Shares of the Company obtainable upon the exercise of this Warrant immediately prior to such event; and if any reclassification
also results in a change in Common Shares covered by Section 4(a), the such adjustment shall be made pursuant to both this Section
4(e) and Section 4(a). The provisions of this Section 4(e) shall similarly apply to successive reclassifications, or capital reorganizations,
mergers or consolidations, sales or other transfers.

 

(f)(1)Upon
occurrence of each event requiring an adjustment of the Warrant Price and of the number of Common Shares obtainable upon exercise
of this Warrant in accordance with, and as required by, the terms of this Section 4, the Company shall forthwith employ a firm
of certified public accountants (who may be the regular accountants for the Company) who shall compute the adjusted Warrant Price
and the adjusted number of Common Shares purchasable at such adjusted Warrant Price by reason of such event in accordance with
the provisions of this Section 4. The Company shall mail forthwith to the Holder of this Warrant a copy of such computation which
shall be conclusive and shall be binding upon such Holder unless contested by such Holder by written notice to the Company within
thirty (30) days after receipt thereof by such Holder.

 

    	4

    	 

    

 

(2)In
case the Company after the date hereof shall propose (i) to pay any dividend payable in stock to the Holders of its Common Shares
or to make any other distribution (other than cash dividends) to the Holders of its Common Shares, (ii) grant rights to subscribe
to or purchase any additional shares of any class or any other rights or options, or (iii) to effect any reclassification of Common
Shares (other than a reclassification involving merely the subdivision or combination of outstanding Common Shares) or (iv) any
capital reorganization or any consolidation or merger, or any sale, transfer or other disposition of its property, assets and
business substantially as an entirety, or the liquidation, dissolution or winding up of the Company, then in each such case, the
Company shall obtain the computation described in Section 4(f)(1) hereof and if an adjustment to the Warrant Price is required
under this Section 4, the Company shall notify the registered Holder of this Warrant of such proposed action, which shall specify
the record date for any such action or if no record date is established with respect thereto, the date on which such action shall
occur or commence, or the date of participation therein by the Holders of Common Shares if any such date is to be fixed, and shall
also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on the Warrant
Price and the number, or kind, or class of shares or other securities or property obtainable upon exercise of this Warrant after
giving effect to any adjustment which will be required as a result of such action. Such notice shall be given at least ten (10)
days prior to the record date for determining Holders of the Common Shares for purposes of any such action, and in the case of
any action for which a record date is not established then such notice shall be mailed at least ten (10) days prior to the taking
of such proposed action.

 

(3)Failure
to file any certificate or notice or to mail any notice, or any defect in any certificate or notice, or any defect in any certificate
or notice, pursuant to this Section 4(f), shall not affect the legality or validity of the adjustment in the Warrant Price or
in the number, or kind, or class or shares or other securities or property obtainable upon exercise of this Warrant or of any
transaction giving rise thereto.

 

(g)The
Company shall not be required to issue fractional Common Shares upon any exercise of this Warrant. As to any final fraction of
a Common Share which the Holder of this Warrant would otherwise be entitled to purchase upon such exercise, the Company shall
pay the Holder the cash equivalent of such fraction of a Common Share.

 

(h)Irrespective
of any adjustments pursuant to this Section 4 in the Warrant Price or in the number, or kind, or class of shares or other securities
or other property obtainable upon exercise of this Warrant, this Warrant may continue to express the Warrant Price and the number
of Common Shares obtainable upon exercise at the same price and number of Common Shares as are stated herein.

 

5.For
the purposes of this Warrant, the terms “Common Shares” or “Common Stock” or “Warrant Shares”
shall mean (i) the class of stock designated as the common stock, $.0001 par value, of the Company on the date set forth on the
first page hereof or (ii) any other class of stock resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from no par value to par value, or from par value to no par value. If at any time,
as a result of an adjustment made pursuant to Section 4, the securities or other property obtainable upon exercise of this Warrant
shall include shares or other securities of the Company other than Common Shares or securities of another corporation or other
property, thereafter, the number of such other shares or other securities or property so obtainable shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 4 and all other provisions of this Warrant with respect to Common Shares shall apply on like terms to any
such other shares or other securities or property. Subject to the foregoing, and unless the context requires otherwise, all references
herein to Common Shares shall, in the event of an adjustment pursuant to Section 4, be deemed to refer also to any other securities
or property then obtainable as a result of such adjustments.

 

    	5

    	 

    

 

6.The
Company covenants and agrees that:

 

(a)
During the period within which the rights represented by the Warrant may be exercised, the Company shall, at all times, reserve
and keep available out of its authorized capital stock, solely for the purposes of issuance upon exercise of this Warrant, such
number of its Common Shares as shall be issuable upon the exercise of this Warrant; and if at any time the number of authorized
Common Shares shall not be sufficient to effect the exercise of this Warrant, the Company will take such corporate action as may
be necessary to increase its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purpose;
the Company shall have analogous obligations with respect to any other securities or property issuable upon exercise of this Warrant;

 

(b)All
Common Shares which may be issued upon exercise of the rights represented by this Warrant will, upon issuance be validly issued,
fully paid, nonassessable and free from all taxes, liens and charges with respect to the issuance thereof; and

 

(c)All
original issue taxes payable in respect of the issuance of Common Shares upon the exercise of the rights represented by this Warrant
shall be borne by the Company but in no event shall the Company be responsible or liable for income taxes or transfer taxes upon
the transfer of any Warrants.

 

7.Until
exercised, this Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company.

 

8.In
no event shall this Warrant be sold, transferred, assigned or hypothecated except in conformity with the applicable provisions
of the Securities Act of 1933, as amended and as then in force (the “Act”), or any similar Federal statute then in
force, and all applicable “Blue Sky” laws. 

 

9.The
Holder of this Warrant, by acceptance hereof, agrees that, prior to the disposition of this Warrant or of any Common Shares theretofore
purchased upon the exercise hereof, under circumstances that might require registration of such securities under the Act, or any
similar Federal statute then in force, such Holder will give written notice to the Company expressing such Holder's intention
of effecting such disposition, and describing briefly such Holder's intention as to the disposition to be made of this Warrant
and/or the securities theretofore issued upon exercise hereof. Such notice shall be given at least ten (10) days prior to the
date of such disposition. Promptly upon receiving such notice, the Company shall present copies thereof to its counsel and the
provisions of the following subdivisions shall apply:

 

(a)If,
in the opinion of such counsel, the proposed disposition does not require registration under the Act or qualification pursuant
to Regulation A promulgated under the Act, or any similar Federal statute then in force, of this Warrant and/or the securities
issuable or issued upon the exercise of this Warrant, the Company shall, as promptly as practicable, notify the Holder hereof
of such opinion, whereupon such Holder shall be entitled to dispose of this Warrant and/or such Common Shares theretofore issued
upon the exercise hereof, all in accordance with the terms of the notice delivered by such Holder to the Company.

 

    	6

    	 

    

 

(b)
If, in the opinion of such counsel, such proposed disposition requires such registration or qualification under the Act, or
similar Federal statute then in effect, of this Warrant and/or the Common Shares issuable or issued upon the exercise of this
Warrant, the Company shall promptly give written notice to the Holder of the Warrant, at the address thereof shown on the books
of the Company. 

 

10.
Incorporated by reference as if set forth herein in its entirety
is Section 9 of the Placement Agent Agreement, which describes certain registration rights that pertain to the resale of shares
of Common Stock issuable upon exercise of this Common Stock Purchase Warrant.

 

11.The
Company agrees to indemnify, defend and hold harmless the holder of this Warrant, or of Underlying Securities issuable or issued
upon the exercise hereof, from and against any claims and liabilities caused by any untrue statement of a material fact, or omission
to state a material fact required to be stated, in any such registration statement, prospectus, notification or offering circular
under Regulation A, except insofar as such claims or liabilities are caused by any such untrue statement or omission based on
information furnished in writing to the Company by such holder, or by any other such holder affiliated with the holder who seeks
indemnification, as to which the holder hereof, by acceptance hereof, agrees to indemnify, defend and hold harmless the Company.

 

12.
If this Warrant, or any of the Underlying Securities issuable pursuant hereto, require qualification or registration with, or
approval of, any governmental official or authority (other than registration under the Act, or any similar Federal statute at
the time in force), before such shares may be issued on the exercise hereof, the Company, at its expense, will take all requisite
action in connection with such qualification, and will use its best efforts to cause such securities to be duly registered or
approved, as may be required.

 

13.
This Warrant is exchangeable, upon its surrender by the registered holder at such office or agency of the Company as may be designated
by the Company, for new Warrants of like tenor, representing, in the aggregate, the right to subscribe for and purchase the number
of Common Shares that may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe
for and purchase such number of Common Shares as shall be designated by the registered holder at the time of such surrender. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case
of any such loss, theft or destruction, upon delivery of a bond of indemnity satisfactory to the Company, or in the case of such
mutilation, upon surrender or cancellation of this Warrant, the Company will issue to the registered holder a new Warrant of like
tenor, in lieu of this Warrant, representing the right to subscribe for and purchase the number of Common Shares that may be subscribed
for and purchased hereunder. Nothing herein is intended to authorize the transfer of this Warrant except as permitted by applicable
law. 

 

14.Every
Holder hereof, by accepting the same, agrees with any subsequent Holder hereof and with the Company that this Warrant and all
rights hereunder are issued and shall be held subject to all of the terms, conditions, limitations and provisions set forth in
this Warrant, and further agrees that the Company and its transfer agent may deem and treat the registered Holder of this Warrant
as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

 

15.All
notices required hereunder shall be given by first-class mail, postage prepaid; if given by the holder hereof, addressed to the
Company at 10801 Johnston Road, Suite 210, Charlotte, North Carolina 28226, with a copy to Morse & Morse PLLC, 1400 Old Country
Road, Westbury, New York 11590, or such other address as the Company may designate in writing to the holder hereof; and if given
by the Company, addressed to the holder at the address of the holder shown on the books of the Company.

 

    	7

    	 

    

 

16.The
Company will not merge or consolidate with or into any other corporation, or sell or otherwise transfer its property assets and
business substantially as an entirety to another corporation, unless the corporation resulting from such merger or consolidation
(if not the Company), or such transferee corporation, as the case may be, shall expressly assume, by supplemental agreement satisfactory
in form to the Placement Agent Holders, the due and punctual performance and observance of each and even covenant and condition
of this Warrant to be performed and observed by the Company.

 

17.(a)Each
Placement Agent is an accredited investor as such term is defined in the Securities Act of 1933, as amended (the "Securities
Act"), or Regulation D promulgated by the Securities and Exchange Commission thereunder, and under applicable state securities
laws. Each Placement Agent is an accredited investor because it meets one or more of the following criteria: 

 

(1)It
is a bank as defined in Section 3(a)(2) of the Securities Act, whether acting in its individual or fiduciary capacity.

 

(2)It
is a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting
in its individual or fiduciary capacity.

 

(3)It
is a broker or dealer registered under Section 15 of the Securities Exchange Act of 1934, as amended.

 

(4)It
is an insurance company as defined in Section 2(13) of the Securities Act.

 

(5)It
is an investment company registered under the Investment Company Act of 1940, as amended, or a business development company as
defined in section 2(a)(48) of that Act.

 

(6)It
is a Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958.

 

(7)It
is a plan established by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, and that such plan has total assets in excess of $5,000,000.

 

(8)(i)
It is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, with the
investment decisions being made by a plan fiduciary, as defined in section 3(21) of such Act, and the plan fiduciary is either
a bank, insurance company, or registered investment adviser, or (ii) it is an employee benefit plan that has total assets in excess
of $5,000,000, or (iii) it is a self-directed employee benefit plan and the investment decisions are made solely by persons that
are accredited investors.

 

(9)It
is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940, as amended.

 

    	8

    	 

    

 

(10)It
is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership not formed for the specific purpose of acquiring the securities offered, with total assets in excess of
$5,000,000.

 

(11)It
is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

 

(12)It
is an entity in which all the equity owners are accredited investors.

 

(a)               
Each Placement Agent has no present intention to sell the Warrant that it received as compensation in the Offering, nor a present
arrangement (whether or not legally binding) or intention to effect any distribution of any part of the Warrant, or the Underlying
Securities, to or through any person or entity; provided, however, that by making the representations herein, the
Placement Agent does not agree to hold the Warrant or the Underlying Securities for any minimum or other specific term and reserves
the right to dispose of the Warrant or the Underlying Securities at any time in accordance with Federal and state securities laws
applicable to such disposition. Each Placement Agent acknowledges that it (i) has such knowledge and experience in financial and
business matters such that each Placement Agent is capable of evaluating the merits and risks of its investment in the Company,
(ii) is able to bear the financial risks associated with an investment in the Warrant and the Underlying Securities and (iii)
has been given full access to such records of the Company and to the officers of the Company and the Subsidiaries as it has deemed
necessary or appropriate to conduct its due diligence investigation.

(b)              
Each Placement Agent understands that the Warrants and the Underlying Securities must be held indefinitely unless such securities
are registered under the Act or an exemption from registration is available. The Placement Agent acknowledges that it is familiar
with Rule 144 under the Act ("Rule 144"), and that the Placement Agent has been advised that Rule 144 permits
resales only under certain circumstances. The Placement Agent understands that to the extent that Rule 144 is not available, the
Placement Agent will be unable to sell any Warrants or Underlying Securities without either registration under the Act or the
existence of another exemption from such registration requirement.

(c)               
Each Placement Agent understands that the Warrants and the Underlying Securities are being offered and sold in reliance on a transactional
exemption from the registration requirements of federal and state securities laws and the Company is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and understandings of each Placement Agent set forth
herein in order to determine the applicability of such exemptions and the suitability of the Placement Agent to acquire the Warrants
and the Underlying Securities. Each Placement Agent understands that no United States federal or state agency or any government
or governmental agency has passed upon or made any recommendation or endorsement of the Warrants or the Underlying Securities.

(d)              
Each Placement Agent acknowledges that the Warrants and the Underlying Securities were not offered to each Placement Agent by
means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature,
including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media,
or broadcast over television or radio, or (ii) any seminar or meeting to which each Placement Agent was invited by any of the
foregoing means of communications. Each Placement Agent, in making the decision to purchase the Warrants and the Underlying Securities,
has relied upon independent investigation made by it and has not relied on any information or representations made by third parties.

    	9

    	 

    

18.The
validity, construction and enforcement of this Warrant shall be governed by the laws of the State of Delaware and jurisdiction
is hereby vested in the Courts of said State in the event of the institution of any legal action under this Warrant.

 

IN
WITNESS WHEREOF, FLEXSHOPPER, INC has caused this Warrant to be signed by its duly authorized officers under its corporate
seal, on October 9, 2014. 

 

FLEXSHOPPER,
INC 

 

By:
/s/ Brad Bernstein                   

Brad
Bernstein, President

    	10

    	 

    

 

 

PURCHASE
FORM

To
Be Executed

Upon
Exercise of Warrant, except for Cashless Exercise

 

The
undersigned hereby exercises the right to purchase _______ Common Shares evidenced by the within Warrant No. ___, according to
the terms and conditions thereof, and herewith makes payment of the purchase price in full. The undersigned requests that certificates
for such shares shall be issued in the name set forth below.

 

Dated:
, 20___

Signature

 

_________________________

Print
Name of Signatory 

Name
to whom certificates are to 

be
issued if different from above

 

Address:

__________________________

__________________________

__________________________

 

__________________________

Social
Security No. 

or
other identifying number 

 

If
said number of shares shall not be all the shares purchasable under the within Warrant, the undersigned requests that a new Warrant
for the unexercised portion shall be registered in the name of :

__________________________

(Please Print) 

 

Address:

__________________________

__________________________

______________________

Social
Security No. 

or
other identifying number 

_________________________

Signature 

    	11

    	 

    

 

 

PURCHASE
FORM

To
Be Executed Upon

Cashless
Exercise of this Warrant

 

The
undersigned hereby exercises the right to purchase _______ Common Shares evidenced by the within Warrant No. __ according to the
terms and conditions thereof and the undersigned hereby submits warrants to purchase ________ Common Shares as evidenced by the
within Warrant No. ___ to be in full payment of the _______ Common Shares exercised and purchased herein. The undersigned represents
that certificates for such purchased shares shall be issued in the name set forth below: 

 

Dated:
 , 20___

Signature

_________________________

Print
Name of Signatory 

Name
to whom certificates are to 

be
issued if different from above

 

Address:

__________________________

__________________________

__________________________

 

__________________________

Social
Security No. 

or
other identifying number 

 

If
said number of shares shall not be all the shares purchasable under the within Warrant, the undersigned requests that a new Warrant
for the unexercised portion shall be registered in the name of :

__________________________

(Please Print) 

Address:

__________________________

__________________________

_________________________

Social
Security No. 

or
other identifying number 

_________________________

Signature 

    	12

    	 

    

 

FORM
OF ASSIGNMENT

 

 

FOR
VALUE RECEIVED , hereby

sells
assigns and transfers to , Soc. Sec. No.

[
] the within Warrant, together with all rights, title and interest therein, and does hereby irrevocably constitute and appoint
attorney to transfer such Warrant on the register of the within named Company, with full power of substitution.

_______________________

Signature 

 

Dated:
, 20___ 

 

Signature
Guaranteed:

 

_______________________

 

 

              13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00239-of-00352.parquet"}]]