Document:

SECURITIES
PURCHASE AGREEMENT

 

This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of April 25, 2019, by and between Verus International,
Inc., a Delaware corporation, with headquarters located at 9841 Washingtonian Boulevard, #390, Gaithersburg, MD 20878 (the
“Company”), and [        ], a [        ],
with its address at [        ] (the “Buyer”).

 

WHEREAS:

 

A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon Section 4(a)(2) of the Securities Act of
1933, as amended (the “1933 Act”) promulgated by the United States Securities and Exchange Commission (the “SEC”);
and

 

B.
Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement
a 5% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount
of $600,000.00 (which includes an original issuance discount of $90,000) (together with any note(s) issued in replacement thereof
or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible
into shares of common stock, of the Company, par value $0.000001 per share (the “Common Stock”), upon the terms and
subject to the limitations and conditions set forth in such Note.

 

NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

 

1.
Purchase and Sale of the Note.

 

a.
Purchase of the Note. On the Closing Date (as defined herein), the Company shall issue and sell to the Buyer and the Buyer
agrees to purchase from the Company the Note in the principal amount of $600,000.00 (which includes an original issuance discount
of $90,000 (the “OID”)).

 

b.
Form of Payment. On the Closing Date (i) the Buyer shall pay $600,000.00 (less the OID and $15,000 in legal fees) (the
“Purchase Price”) for the Note to be issued and sold to it at the Closing (as defined herein) by wire transfer of
immediately available funds, in accordance with the Company’s written wiring instructions, against delivery of the Note
in the principal amount equal to the Purchase Price, and (ii) the Company shall deliver such duly executed Note on behalf of the
Company, to the Buyer, against delivery of such Purchase Price.

 

c.
Closing Date. The date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”)
shall be on or about April 23, 2019, or such other mutually agreed upon time. The closing of the transactions contemplated by
this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

 

    	 

    	 

    

 

2.
Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company that:

 

a.
Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Note (such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.

 

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

 

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

 

d.
Information. The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the
Buyer or its advisors. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company.
Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material non-public information and will not disclose
such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer.
Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives
shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section
3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk.

 

e.
Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the Securities.

 

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f.
Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being
registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred
to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the
1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of
the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions,
which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only
in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined
in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.

 

g.
Legends. The Buyer understands that until such time as the Securities have been registered under the 1933 Act or may be
sold pursuant to Rule 144 or Regulation S without any restriction as to the number of Securities as of a particular date that
can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

 

“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

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The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of Securities as of a particular date that can then be immediately sold, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933
Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable securities
laws and prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided
by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation
S, within three (3) business days, it will be considered an Event of Default under the Note.

 

h.
Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms.

 

i.
Economic Risk. The Buyer has the financial ability to bear the economic risk of the Buyer’s investment, has adequate
means for providing for its current needs and contingencies, and has no need for liquidity with respect to an investment in the
Company.

 

3.
Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:

 

a.
Organization and Qualification. The Company and each of its subsidiaries, is a corporation duly organized, validly existing
and, except RealBiz Media Group, Inc., a Florida corporation, in good standing under the laws of the jurisdiction in which it
is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted.

 

b.
Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this
Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance
with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation
by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance
and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized
by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative,
and such authorized representative is the true and official representative with authority to sign this Agreement and the other
documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution
and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except
as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or law).

 

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c.
Issuance of Conversion Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion
of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of stockholders of the Company and will not impose personal liability upon the holder thereof.

 

d.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock
upon the issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

 

e.
No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Company’s
Amended and Restated Certificate of Incorporation, as amended, or Amended and Restated By-laws, or (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture, patent, patent license or instrument to which the Company or any of its subsidiaries is a party, or (iii) result in
a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company
or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected (except
for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually
or in the aggregate, have a Material Adverse Effect). All consents, authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof.
The Company is not in violation of the listing requirements of the OTC Markets Exchange (the “OTC MARKETS”) and does
not reasonably anticipate that the Common Stock will be delisted by the OTC MARKETS in the foreseeable future, nor are the Company’s
securities “chilled” by FINRA. The Company and its subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing. “Material Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the
Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other
transaction documents or (iii) the authority or ability of the Company to perform its obligations under any of the transaction
documents.

 

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f.
Absence of Litigation. Except as set forth on Schedule 3(e) and as disclosed in the Company’s public filings,
there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against
or affecting the Company or any of its subsidiaries, or their officers or directors in their capacity as such, that could have
a Material Adverse Effect. The Company and its subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

 

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

 

h.
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances
that would require registration under the 1933 Act of the issuance of the Securities to the Buyer.

 

i.
Title to Property. The Company and its subsidiaries have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them which is material to the business of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects or such as would not have a Material Adverse Effect. Any real
property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as would not have a Material Adverse Effect.

 

4.
COVENANTS.

 

a.
Expenses. At the Closing, the Company shall reimburse Buyer for expenses incurred by it in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith,
including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees
for stock quotation services, fees relating to any amendments or modifications of the transaction documents or any consents or
waivers of provisions in the transaction documents, fees for the preparation of opinions of counsel, escrow fees, and costs of
restructuring the transactions contemplated by the transaction documents; provided, however, such reimbursement shall not exceed
$15,000 in the aggregate.

 

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b.
Listing. The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading
of its Common Stock on the OTC MARKETS or any equivalent replacement exchange, including the New York Stock Exchange, the NYSE
American, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market, , and will comply in all respects
with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory
Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any
notices it receives from the OTC MARKETS and any other exchanges or quotation systems on which the Common Stock is then listed
regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

 

c.
Corporate Existence. So long as any principal amount of the Note remains outstanding, the Company shall maintain its corporate
existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation
or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction
(i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith
and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTC MARKETS, the New York Stock Exchange,
the NYSE American, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market.

 

d.
Intentionally Omitted.

 

e.
Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default under the Note.

 

5.
Governing Law; Miscellaneous.

 

a.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county
of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. THE
COMPANY AND BUYER WAIVE TRIAL BY JURY. The prevailing party shall be entitled to recover from the other party its reasonable
attorney’s fees and costs. Each party hereby irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or any other transaction document by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted
by law.

 

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b.
Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.

 

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

 

d.
Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision hereof.

 

e.
Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein. No provision of this Agreement may be waived or amended other
than by an instrument in writing signed by the Company and the Buyer.

 

f.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
(iv) via electronic mail or (v) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such
other address as such party shall have specified most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received) or delivery via electronic mail, or the first business day following
such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or
(b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If
to the Company, to:

 

Verus
International, Inc.

9841
Washingtonian Boulevard, #390

Gaithersburg,
MD 20878

Attn:
Anshu Bhatnagar, CEO

 

    	8

    	 

    

 

With
a copy to (which shall not constitute notice)

 

Sheppard
Mullin Richter & Hampton, LLP

30
Rockefeller Plaza, 38th Floor

New
York, NY 10112

Attn:
Andrea Cataneo, Esq.

 

If
to the Buyer:

 

[        ]

 

Each
party shall provide notice to the other party of any change in address.

 

g.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other. Notwithstanding the foregoing, the Buyer may assign its rights hereunder to any person that
purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined
under the Securities Exchange Act of 1934, without the consent of the Company.

 

h.
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

i.
Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement
shall survive the Closing hereunder. The Company agrees to indemnify and hold harmless the Buyer and all of its officers, directors,
employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any
of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this
Agreement, including advancement of expenses as they are incurred.

 

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

 

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

 

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l.
Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity
of showing economic loss and without any bond or other security being required.

 

[signature
page to follow]

 

    	10

    	 

    

 

IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.

 

	VERUS INTERNATIONAL, INC.	 
	 	 
	By:	 	 
	Name:	Anshu
    Bhatnagar	 
	Title:	Chief
Executive Officer             	 

 

	[        ]	 
	 	 
	By:	 	 
	Name:		 
	Title:		 

 

    	11

    	 

    

 

EXHIBIT
A

NOTE
1- $600,000

 

    	12Exhibit

Exhibit 10.1

PERFORMANCE SHARE UNIT AGREEMENT
(ADJUSTED CASH FLOW)
PURSUANT TO THE
AMENDED AND RESTATED U.S. SILICA HOLDINGS, INC.
2011 INCENTIVE COMPENSATION PLAN

*  *  *  *  *

Participant:  

Grant Date:  

Number of Performance Share Units Granted at Target Performance:  

Number of Performance Share Units Granted at Maximum Performance:  

*  *  *  *  *

THIS PERFORMANCE SHARE UNIT AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between U.S. Silica Holdings, Inc., a corporation organized in the State of Delaware (the “Company”), and the Participant specified above, pursuant to the Amended and Restated U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee; and

WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the performance share units (“PSUs”) provided herein to the Participant.

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1.Incorporation By Reference; Plan Document Receipt.  This Agreement is subject in all respects to the terms and provisions of the Plan and the Company’s Executive Compensation Clawback Policy (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein.  Any capitalized term not defined in this Agreement (including Exhibit A hereto) shall have the same meaning as is ascribed thereto in the Plan.  The Participant hereby acknowledges receipt of a true copy of the Plan and the Executive Compensation Clawback Policy and that the Participant has read the Plan and the Executive Compensation Clawback Policy carefully and fully understands its content.  In the event of any 

	
			
	 
	 
	 

conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2.    Grant of Performance Share Unit Award.  The Company hereby grants to the Participant, as of the Grant Date specified above, the number of PSUs specified above.  Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the shares of Common Stock underlying the PSUs, except as otherwise specifically provided for in the Plan or this Agreement.  
3.    Vesting.
(a)    Performance-Based Vesting.  Subject to the provisions of Sections 3(b) through 3(d) hereof, one-third of the PSUs subject to this grant (each such third, a “Tranche”) shall become performance vested based on the level of achievement of the Performance Goal (as defined in Exhibit A hereto) for the applicable performance period set forth on Exhibit A hereto (each, a “Performance Period”), in accordance with the schedule below and Exhibit A hereto, provided that (subject to the provisions of Sections 3(c) and 3(d) hereof), the Participant remains employed with the Company or its Affiliates through the end of the third Performance Period:
	
		
	Performance Goal  
Achievement
	Number of PSUs Vested as Percentage of Target

	Less Than Threshold Amount
	0%

	Threshold Amount
	50% (Threshold)

	Target Amount
	100% (Target)

	Equal to or Greater Than Maximum Amount
	200% (Maximum)

To the extent that the actual level of achievement of the Performance Goal for a Performance Period hereunder is between any two levels provided in the table above, the number of PSUs to become performance vested with respect to the corresponding Tranche shall be determined on a pro rata basis using straight line interpolation; provided that no PSUs shall become vested with respect to a Tranche if the actual level of achievement of the Performance Goal for the corresponding Performance Period is less than the Threshold level of performance set forth in the schedule above; and provided, further, that the maximum number of PSUs that may become vested with respect to a Tranche shall not exceed the number of PSUs set forth in the schedule above corresponding to the Maximum level of performance set forth in the schedule above.  

Notwithstanding the foregoing, in the event that a Change in Control occurs prior to the last day of the third Performance Period, the number of PSUs that will become performance vested hereunder will be determined in accordance with this paragraph.  For any Performance Period that ends on or prior to the date on which such Change in Control occurs, the number of PSUs that will become performance vested with respect to the corresponding Tranche will be determined in accordance 

	
			
	 
	2
	 

with the schedule above based on the actual level of achievement of the corresponding Performance Goal.  For any Performance Period that is in effect on the date on which such Change in Control occurs, the number of PSUs that will become performance vested with respect to the corresponding Tranche will equal the number of PSUs that would have become performance vested in accordance with the schedule above based on (i) the actual level of achievement of the corresponding Performance Goal as of the date of such Change in Control (assuming for such purpose that such Change in Control had occurred on the last day of the Performance Period)] or (ii) the Target level of performance set forth in the schedule above, whichever is greater.  For any Performance Period that was scheduled to commence after the date on which such Change in Control occurs, the number of PSUs that will become performance vested with respect to the corresponding Tranche will equal the number of PSUs that would have become performance vested in accordance with the schedule above based on the Target level of performance set forth in the schedule above.  Following such Change in Control, the number of PSUs determined in accordance with the immediately preceding sentence will vest (x) on the last day of the Performance Period, if the Participant remains employed with the Company or its Affiliates through the end of the third Performance Period, or (y) if applicable, in accordance with the provisions of Sections 3(b) and 3(c) hereof.  

(b)    Termination due to death or Disability, without Cause or due to Retirement.  Subject to the provisions of Sections 3(c) and 3(d) hereof, in the event of the Participant’s Termination as a result of death or Disability, by the Company without Cause, or due to the Participant’s “Retirement” (as defined below) at any time prior to the end of the third Performance Period, the requirement that the Participant remain in the continued employment of the Company or its Subsidiaries through the end of the third Performance Period in order for the time-based vesting condition to be satisfied under Section 3(a) hereof shall be waived as of the date of such Termination.  Thereafter, the PSUs shall continue to remain outstanding until the Committee can certify the actual level of achievement of the Performance Goal for the third Performance Period, and the PSUs shall become vested or be forfeited based on actual performance on a pro rata basis (as determined in accordance with the following sentence) in accordance with the otherwise applicable vesting conditions set forth in Section 3(a) hereof, and shall be paid, to the extent so vested, as provided in Section 4 hereof.  For purposes of determining the pro rata number of PSUs to become vested under this Section 3(b), the number of PSUs that would have become vested based on actual performance for all three Performance Periods in accordance with Section 3(a) hereof shall be multiplied by a fraction, the numerator of which is the number of calendar days in the period beginning with the date of commencement of the first Performance Period and ending on the date of such Termination, and the denominator of which is one thousand ninety six (1,096).  For purposes hereof, the term “Retirement” shall mean the Participant’s voluntary Termination of Employment at or after age sixty-five (65) or such earlier date after age fifty (50), in either case, as may be approved by the Committee in its sole discretion with regard to the Participant. 
(c)    Change in Control.  Notwithstanding the provisions of Sections 3(a) and 3(b) hereof, in the event of the Participant’s Termination as a result of death or Disability, by the Company without Cause, by the Participant for “Good Reason” (as defined below) or as a result of the Participant’s Retirement, in any case, at any time upon or following a Change in Control but prior to the end of the third Performance Period, the PSUs shall become vested as of the date of such Termination to the extent that the Performance Goals for the Performance Periods, as determined 

	
			
	 
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in accordance with Section 3(a), were achieved as of the date of such Change in Control, and shall be paid, to the extent so vested, as provided in Section 4 hereof.  For purposes hereof, the term “Good Reason” shall mean (i) a material reduction in the Participant’s annual base salary rate of compensation; (ii) a required relocation of more than 50 miles from the Participant’s primary place of employment with the Company or its Affiliates; or (iii) a material, adverse change in the Participant’s title, reporting relationship, authority, duties or responsibilities; provided, however, that to invoke a Termination for Good Reason, (A) the Participant must provide written notice to the Company within thirty (30) days of the event the Participant believes constitutes Good Reason, (B) the Company must fail to cure such event within thirty (30) days of the receipt of such written notice and (C) the Participant must terminate employment within five (5) days following the expiration of the Company’s cure period described above.
(d)    Committee Discretion to Accelerate Vesting.  Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the PSUs at any time and for any reason.
(e)    Effect of Detrimental Activity.  The provisions of Section 10.4 of the Plan regarding Detrimental Activity shall apply to the PSUs.
(f)    Forfeiture.  Subject to the provisions of Sections 3(b) through 3(d) hereof, all unvested PSUs shall be immediately forfeited upon the Participant’s Termination for any reason.
4.    Delivery of Shares.
(a)    General.  Subject to the provisions of Sections 4(b) and 4(c) hereof, within two and one-half months following the vesting of the PSUs, the Participant shall receive the number of shares of Common Stock that correspond to the number of PSUs that have become vested hereunder; provided that the Participant shall be obligated to pay to the Company the aggregate par value of the shares of Common Stock to be issued within ten (10) days following the issuance of such shares unless such shares have been issued by the Company from the Company’s treasury.
(b)    Blackout Periods.  If the Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 4(a) hereof, such distribution shall be instead made on the earlier of (i) the date that the Participant is not subject to any such policy or restriction and (ii) the later of (A) the end of the calendar year in which such distribution would otherwise have been made, and (B) a date that is immediately prior to the expiration of two and one-half months following the date such distribution would otherwise have been made hereunder.
(c)    Deferrals.  If permitted by the Company, the Participant may elect, subject to the terms and conditions of the Plan and any other applicable written plan or procedure adopted by the Company from time to time for purposes of such election, to defer the distribution of all or any portion of the shares of Common Stock that would otherwise be distributed to the Participant hereunder (the “Deferred Shares”), consistent with the requirements of Section 409A of the Code.  Upon the vesting of PSUs that have been so deferred, the applicable number of Deferred Shares shall be credited to a bookkeeping account established on the Participant’s behalf (the “Account”).  

	
			
	 
	4
	 

Subject to Section 5 hereof, the number of shares of Common Stock equal to the number of Deferred Shares credited to the Participant’s Account shall be distributed to the Participant in accordance with the terms and conditions of the Plan and the other applicable written plans or procedures of the Company, consistent with the requirements of Section 409A of the Code.
5.    Dividends; Rights as Stockholder.  Cash dividends on shares of Common Stock issuable hereunder shall be credited to a dividend book entry account on behalf of the Participant with respect to each PSU granted to the Participant, provided that such cash dividends shall not be deemed to be reinvested in shares of Common Stock and shall be held uninvested and without interest and paid in cash at the same time that the shares of Common Stock underlying the PSUs are delivered to the Participant in accordance with the provisions hereof.  Stock dividends on shares of Common Stock shall be credited to a dividend book entry account on behalf of the Participant with respect to each PSU granted to the Participant, provided that such stock dividends shall be paid in shares of Common Stock at the same time that the shares of Common Stock underlying the PSUs are delivered to the Participant in accordance with the provisions hereof.  For clarity, no such cash or shares shall be paid to the Participant with respect to any PSUs that are not earned or are forfeited.  Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any PSU unless and until the Participant has become the holder of record of such shares.  
6.    Non-Transferability.  No portion of the PSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the PSUs as provided herein, unless and until payment is made in respect of vested PSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder.
7.    Governing Law.  All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.
8.    Withholding of Tax.  The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the PSUs and, if the Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement.  Any minimum statutorily required withholding obligation with regard to the Participant may be satisfied by reducing the amount of cash or shares of Common Stock otherwise deliverable to the Participant hereunder; provided, however, that, at the Participant’s discretion, the number of shares of Common Stock otherwise deliverable to the Participant may be further reduced in an amount up to the maximum individual tax rate in the Participant’s particular jurisdiction, and only if the Company has a statutory obligation to withhold taxes on the Participant’s behalf, in such case only if such reduction would not result in adverse financial accounting treatment, as determined by the Company (and in particular in connection with the effectiveness of the amendments to FASB 

	
			
	 
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Accounting Standards Codification Topic 718, Compensation – Stock Compensation, as amended by FASB Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting).
9.    Legend.  The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Common Stock issued pursuant to this Agreement.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section 9.
10.    Securities Representations.  This Agreement is being entered into by the Company in reliance upon the following express representations and warranties of the Participant.  The Participant hereby acknowledges, represents and warrants that:
(a)    The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 10.
(b)    If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the shares of Common Stock issuable hereunder must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares of Common Stock and the Company is under no obligation to register such shares of Common Stock (or to file a “re-offer prospectus”).
(c)    If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issuable hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.
11.    Entire Agreement; Amendment.  This Agreement, together with the Plan and the Executive Compensation Clawback Policy, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter.  The Committee shall have the right, in its sole discretion, to modify or amend this Agreement from time to time in accordance with and as provided in the Plan.  This Agreement may also be modified or amended by a writing signed by both the Company and the Participant.  The Company shall give written notice to the Participant of any such modification or amendment of this Agreement as soon as practicable after the adoption thereof.
12.    Notices.  Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the 

	
			
	 
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General Counsel of the Company.  Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.
13.    No Right to Employment.  Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee.  Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or its Affiliates to terminate the Participant’s employment or service at any time, for any reason and with or without Cause.
14.    Transfer of Personal Data.  The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the PSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan).  This authorization and consent is freely given by the Participant.
15.    Compliance with Laws.  The grant of PSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto.  The Company shall not be obligated to issue the PSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements.  As a condition to the settlement of the PSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.
16.    Binding Agreement; Assignment.  This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns.  The Participant shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company.
17.    Headings.  The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
18.    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
19.    Further Assurances.  Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.

	
			
	 
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20.    Severability.  The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
21.    Acquired Rights.  The Participant acknowledges and agrees that:  (a) the Company may terminate or amend the Plan at any time; (b) the Award of PSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the PSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.
*  *  *  *  *

	
			
	 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

U.S. SILICA HOLDINGS, INC.

By:                        

Name:  Bryan A. Shinn

Title:  President and Chief Executive Officer

PARTICIPANT

    

Name:  

Exhibit A

1.    Performance Periods.  The Performance Periods are as follows:
(a)    The first Performance Period is the 2019 calendar year; 
(b)    The second Performance Period is the 2020 calendar year; and
(c)    The third Performance Period is the 2021 calendar year.
2.    Performance Goal.  The Performance Goal for each Performance Period is Adjusted Cash Flow.  
(a)    “Adjusted Cash Flow” means Adjusted EBITDA, minus Capital Expenditures, plus or minus the change in Working Capital, plus or minus Other Adjustments (as each such term is defined below). 
(b)    “Adjusted EBITDA” means Adjusted EBITDA as reported in the Company’s Management’s Discussion & Analysis set forth in the Company’s Annual Report on Form 10-K as filed with the U.S, Securities and Exchange Commission (the “Form 10-K”); provided, however, that if the Form 10-K does not set forth Adjusted EBITDA, “Adjusted EBITDA” shall mean Adjusted EBITDA as reported in the Company’s press release announcing full year financial results for the applicable year.
(c)    “Capital Expenditures” means “Capital expenditures” as set forth in the Company’s year-end Consolidated Statements of Cash Flows as reported in the Company’s Form 10-K.
(d)    “Other Adjustments” means other adjustments impacting the Company’s cash flows approved by the Committee, which were not anticipated or budgeted for by the Company in the Company’s annual budget for the particular year, including, without limitation, adjustments relating to the impact from asset sales; mergers & acquisition activities (including the impact of assumption of post-closing liabilities); unanticipated insurance proceeds or settlements; unanticipated legal expenses and judgments; cash incentive compensation paid to the Company’s employees; non-recurring items as determined in accordance with U.S. generally accepted accounting principles (“GAAP”); changes in accounting standards; changes in pension costs and discontinued operations; changes in currency exchange rates; changes in interest rates; and extraordinary items as determined in accordance with GAAP.
(e)    “Working Capital” means the change in net trade payables, plus net trade accounts receivable, plus net inventory, in each case of the Company and its Subsidiaries.
3.    Establishment of Threshold, Target and Maximum Amounts.  The Committee will establish the amounts of Adjusted Cash Flow that must be achieved for each Performance Period in order for the PSUs to become performance vested at the percentages corresponding to the Threshold Amount, Target Amount and Maximum Amount in the schedule set forth in Section 3(a) of the Agreement, no later than March 31st of such Performance Period.   
4.    Determination of Achievement of Performance Goal.  The Committee will certify the level of achievement of the Performance Goal for each Performance Period within 60 days after the end of such Performance Period (or the date on which a Change in Control occurs, if applicable); provided that, if a Change in Control occurs prior to the last day of a Performance Period, the Committee will certify the level of achievement of the Performance Goal for such Performance Period, no later than 30 days after the date of such Change in Control. 

	
			
	 
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