Document:

Exhibit 10.32 

 

EXECUTION
VERSION

 

SECURITIES
PURCHASE AGREEMENT

 

THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of November 30, 2020, by and among KONA GOLD
BEVERAGE, INC., a Delaware corporation (formerly known as Kona Gold Solutions, Inc.) (the “Company”), and
YAII PN, LTD., a Cayman Islands exempt company (“Investor”).

 

WITNESSETH

 

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

 

WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the
Investor, as provided herein, and the Investor shall purchase a $100,000 (the “Convertible Debenture Purchase Price”)
secured convertible debenture substantially in the form attached hereto as “Exhibit A” (referred to as the
“Convertible Debenture”), which shall be convertible into shares of the Company’s common stock, par value
of $0.00001 per share (the “Common Stock”) (the “Conversion Shares”) which the Convertible
Debenture shall be issued and sold by the Company and purchased by the Investor within 1 business day following the date hereof
(the “Closing” and the date on which such Closing occurs the “Closing Date;

 

WHEREAS,
the Convertible Debenture shall be secured, “on an equal footing” basis by all assets of the Company that are subject
to (i) that certain security agreement by and between the Investor, the Company and the Company’s subsidiaries dated May
14, 2020 (all such security agreements shall be referred to as the “Security Agreement”) pursuant to which
the Company and its wholly owned subsidiaries agree to provide the Investor a security interest in Pledged Property (as this term
is defined in the Security Agreement), (ii) the intellectual property security agreement by and between the Investor, the Company
and the Company’s subsidiaries dated May 14, 2020 (all such security agreements shall be referred to as the “IP
Security Agreement”) pursuant to which the Company and its wholly owned subsidiaries agree to provide the Investor a
security interest in the intellectual property collateral (as this term is defined in the IP Security Agreement), and (iii) the
global guaranty by and between the Investor and the Company’s subsidiaries dated May 14, 2020 (the “Guaranty”)
(the “Guaranty” and collectively with the Security Agreement and the IP Security Agreement the “Security
Documents”) in favor of the Investor;

 

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

 

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

 

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

 

1.
CERTAIN DEFINITIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.
PURCHASE AND SALE OF THE CONVERTIBLE DEBENTURE.

 

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

 

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

 

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

 

3.
INVESTOR’S REPRESENTATIONS AND WARRANTIES.

 

The
Investor represents and warrants, that:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

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

 

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

 

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

 

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

 

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

 

(e)
Capitalization. The authorized capital stock of the Company consists of 2,500,000,000 shares of Common Stock and 10,000,000
shares of Preferred Stock, par value $0.00001, allocated into three different series: 1,200,000 shares of Series B Preferred Stock
(par value $0.00001), 250 shares of Series C Preferred Stock (par value $0.00001), and 500,000 shares of Series D Preferred Stock
(par value $0.00001) (collectively, the “Preferred Stock”) of which 778,052,603 shares of Common Stock, 4,000,000
shares of Series A Preferred Stock, 488,000 shares of Series B Preferred Stock, 140 shares of Series C Preferred Stock, and 500,000
shares of Series D Preferred Stock are issued and outstanding. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none
of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.
Except as disclosed in Schedule 4(e): (i) none of the Company’s capital stock is subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional
capital stock of the Company or any of its subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing indebtedness of the Company or any of its subsidiaries or
by which the Company or any of its subsidiaries is or may become bound; (iv) there are no financing statements securing obligations
in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of its subsidiaries; (v)
there are no outstanding securities or instruments of the Company or any of its subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to redeem a security of the Company or any of its subsidiaries; (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (vii) the Company does
not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and
(viii) the Company and its subsidiaries have no liabilities or obligations required to be disclosed in the OTC Markets Documents
but not so disclosed in the OTC Markets Documents, other than those incurred in the ordinary course of the Company’s or
its subsidiaries' respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse
Effect. The Company has furnished to the Investor true, correct and complete copies of the Company’s Certificate of Incorporation,
as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s
Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible
into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto.
No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance
and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to
the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    11

     

    

 

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

 

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

 

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

 

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

 

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

 

    12

     

    

 

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

 

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

 

    13

     

    

 

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

 

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

 

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

 

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

 

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

 

    14

     

    

 

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

 

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

 

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

 

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

 

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

 

    15

     

    

 

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

 

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

 

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

 

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

 

    16

     

    

                                                                                                                 
 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    17

     

    

 

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

 

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

 

(pp)
Subsidiary Security Interest and Global Guaranty. Each of the Company’s subsidiaries acknowledges and consents to
securing the Company’s obligations pursuant to the Transaction Documents as provided for in the Security Agreement and Global
Guaranty.

 

(qq)
Relationship of the Parties. Neither the Company, nor any of its subsidiaries, affiliates, nor any person acting on its
or their behalf is a client or customer of the Investor or any of its affiliates and neither the Investor nor any of its affiliates
has provided, or will provide, any services to the Company or any of its affiliates, its subsidiaries, or any person acting on
its or their behalf. The Investor’s relationship to Company is solely as an investor as provided for in the Transaction
Documents. 

 

5.
COVENANTS.

 

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

 

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

 

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

 

    18

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    19

     

    

 

(f)
Listing and Maintenance Requirements. The Company shall secure no later than December 31, 2020 that its Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

                         
 

    20

     

    

 

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

 

(i)
Reservation of Shares. On the date hereof, the Company shall reserve for issuance to the Investor 35,714,286 shares for
issuance upon conversions of the Convertible Denture (the “Share Reserve”). The Company represents that it
has sufficient authorized and unissued shares of Common Stock available to create the Share Reserve after considering all other
commitments that may require the issuance of Common Stock. The Company shall take all action reasonably necessary to at all times
have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect
the full conversion of the Convertible Debenture. If at any time the Share Reserve is insufficient to effect the full conversion
of the Convertible Debenture the Company shall increase the Share Reserve accordingly. If the Company does not have sufficient
authorized and unissued shares of Common Stock available to increase the Share Reserve, the Company shall call within 30 calendar
days and hold a special meeting of the stockholders within 90 calendar days of such occurrence, for the sole purpose of increasing
the number of shares authorized. The Company’s management shall recommend to the stockholders to vote in favor of increasing
the number of shares of Common Stock authorized. Management shall also vote all of its shares in favor of increasing the number
of authorized shares of Common Stock.

 

 

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

 

    21

     

    

 

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

 

(k)
Fees and Expenses.

 

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

 

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

 

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

 

(n)
Merger Transactions. Neither the Company nor any of its Subsidiaries shall consummate any mergers or acquisitions until
after the Registration Statement filed pursuant to the Registration Rights Agreement by and between the Investor and the Company
dated May 14, 2020 has been declared effective.

 

    22

     

    

 

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

 

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

 

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

 

(r)
Additional Registration Statements. So long as the Convertible Debenture is outstanding, the Company will not file a registration
statement under the Securities Act relating to securities that are not the Securities without including the Conversion Shares.

 

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

 

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

 

    23

     

    

 

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

 

(v)
The Company shall redeem all amounts due and outstanding Convertible Debenture, as provided for therein, directly from the gross
of the Third Closing as this term is defined in the Securities Purchase Agreement by and between the Company and the Investor
dated May 14, 2020.

 

6.
TRANSFER AGENT INSTRUCTIONS.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

   

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

 

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

 

    24

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    25

     

    

 

9.
INDEMNIFICATION.

 

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

 

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

 

    26

     

    

 

10.
COMPANY LIABILITY.

 

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

 

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

 

11.
GOVERNING LAW; MISCELLANEOUS.

 

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

 

    27

     

    

 

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

 

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

 

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

 

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

 

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

 

    28

     

    

 

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

 

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

        Telephone:
844-714-2224 

        Email:
        robert@konagoldhemp.com

	 	 
	With
a copy to: 

        (which
shall not constitute notice)
	Clark
Hill LLP 

        1055
West Seventh Street – 24th Floor 

        Los
        Angeles, CA 90017

	 	Attention:
Randolf Katz 

        Telephone:
213-417-5310 

        Email:
        rkatz@clarkhill.com

 

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

        1012
        Springfield Avenue

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

        Email:
        mangelo@yorkvilleadvisors.com

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

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

 

    29

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]

 

    30

     

    

 

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

 

	 	COMPANY:
	 	 	 
	 	KONA GOLD BEVERAGE, INC.
	 	 	 
	 	By:	 
	 	Name:	Robert
    Clark
	 	Title:	CEO
	 	 	 
	 	INVESTOR:
	 	 
	 	YA II PN, LTD.
	 	 
	 	By:	Yorkville
    Advisors Global, LP
	 	Its:	Investment
    Manager
	 	 	 
	 	By:	Yorkville
    Advisors Global II, LLC
	 	Its:	General
    Partner
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	SUBSIDIARIES*
	 	 	 
	 	KONA GOLD, LLC
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 

 

		*	Signed
Exclusively for the Representation and Warranty contained in Section 4(pp)

 

    31

     

    

 

	 	GOLD LEAF DISTRIBUTION LLC
	 	 	 
	 	By:	                    
	 	Name:	 
	 	Title:	 
	 	 	 
	 	HIGHDRATE, LLC
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    32

     

    

 

LIST
OF EXHIBITS:

 

Disclosure
Schedule

 

Exhibit
A – Form of Convertible Debenture

 

    33

     

    

 

DISCLOSURE
SCHEDULE

 

Schedule
4(a) – Subsidiaries 

 

		●	Kona
Gold, LLC

 

		●	Gold
Leaf Distribution LLC

 

		●	HighDrate,
LLC

 

Schedule
4(b) – Security Interests Granted – None, except in accordance with the earlier transaction between the parties hereto

 

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

 

Schedule
4(g) – Use of Proceeds 

 

$100,000
operating capital

 

    34

     

    

 

EXHIBIT
A

 

Form
of Convertible Debenture

 

    35Exhibit 10.1 

 

EXECUTION VERSION

 

AMENDED AND
RESTATED

 

INVESTMENT ADVISORY
AND MANAGEMENT AGREEMENT

 

BETWEEN

 

NMF
SLF I, Inc.

 

AND

 

NEW MOUNTAIN
FINANCE ADVISERS BDC, L.L.C.

 

Agreement
is made this 13th day of December, 2020, by and between NMF SLF I, Inc., a
Maryland corporation (the "Company"), and NEW MOUNTAIN FINANCE ADVISERS BDC, L.L.C., a Delaware limited
liability company (the "Adviser").

 

WHEREAS,
the Company is a closed-end management investment company that has elected to be regulated as a business development company ("BDC")
under the Investment Company Act of 1940, as amended (the "Investment Company Act");

 

WHEREAS,
the Adviser is an investment adviser that is registered under the Investment Advisers Act of 1940 (the "Advisers Act");
and

 

WHEREAS, the
Company and the Adviser are parties to the investment advisory and management agreement, dated January 22, 2020, by and between
the Company and the Adviser (the “Prior Agreement”);

 

WHEREAS,
the Company and Adviser desire to amend and restate the Prior Agreement in order to modify the Management Fee (defined below) payable
by the Company to the Adviser as reflected in Section 3 hereof and Annex A hereto, and to set forth the terms and conditions
for the continued provision by the Adviser of investment advisory services to the Company; and

 

WHEREAS,
the Company’s board of directors and stockholders have approved this amended and restated investment advisory and management
agreement (this “Agreement”) in accordance with the requirements of the Investment Company Act.

 

NOW,
THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree as follows:

 

1.            Duties
of the Adviser.

 

(a)            The
Company hereby employs the Adviser to act as the investment adviser to the Company and to manage the investment and reinvestment
of the assets of the Company, subject to the supervision of the Board of Directors of the Company (the "Board"),
for the period and upon the terms herein set forth. In the performance of its duties, the Adviser shall at all times conform to,
and act in accordance with, any requirements imposed by (i) the provisions of the Investment Company Act, and of any rules or
regulations in force thereunder, subject to the terms of any exemptive order applicable to the Company; (ii) the U.S. Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), if applicable; (iii) any other applicable
provision of law; (iv) the provisions of the Articles of Incorporation (the "Charter") and the Bylaws
of the Company, each as amended and/or restated from time to time; (v) the investment objectives, policies and restrictions
applicable to the Company as set forth in the Company's Registration Statement on Form 10, first filed with the Securities
and Exchange Commission (the "SEC") on November 22, 2019 (the "Registration Statement"),
as they may be amended from time to time by the Board upon written notice to the Adviser; and (vi) any other policies and
determinations of the Board provided in writing to the Adviser. Without limiting the generality of the foregoing, the Adviser shall,
during the term and subject to the provisions of this Agreement, (i) determine the composition of the portfolio of the Company,
the nature and timing of the changes therein and the manner of implementing such changes; (ii) identify, evaluate and negotiate
the structure of the investments made by the Company; (iii) execute, monitor and service the Company's investments; (iv) determine
the securities and other assets that the Company will purchase, retain, or sell; (v) perform due diligence on prospective
portfolio companies; (vi) vote, exercise consents and exercise all other rights appertaining to such securities and other
assets on behalf of the Company; and (vii) provide the Company with such other investment advisory, research and related services
as the Company may, from time to time, reasonably require for the investment of its funds. Subject to the supervision of the Board,
the Adviser shall have the power and authority on behalf of the Company to effectuate its investment decisions for the Company,
including the execution and delivery of all documents relating to the Company's investments and the placing of orders for other
purchase or sale transactions on behalf of the Company. In the event that the Company determines to acquire debt financing, the
Adviser will arrange for such financing on the Company's behalf, subject to the oversight and approval of the Board. If it is necessary
for the Adviser to make investments on behalf of the Company through a special purpose vehicle, the Adviser shall have authority
to create or arrange for the creation of such special purpose vehicle and to make such investments through such special purpose
vehicle (in accordance with the Investment Company Act).

 

     

     

    

  

(b)            The
Adviser hereby accepts such employment and agrees during the term hereof to render the services described herein for the compensation
provided herein.

 

(c)            The
Adviser shall for all purposes herein provided be deemed to be an independent contractor and, except as expressly provided or authorized
herein, shall have no authority to act for or represent the Company in any way or otherwise be deemed an agent of the Company.

 

(d)            The
Adviser shall keep and preserve for the period required by the Investment Company Act any books and records relevant to the provision
of its investment advisory services to the Company and shall specifically maintain all books and records in accordance with Section 31(a) of
the Investment Company Act with respect to the Company's portfolio transactions and shall render to the Board such periodic and
special reports as the Board may reasonably request. The Adviser agrees that all records that it maintains for the Company are
the property of the Company and will surrender promptly to the Company any such records upon the Company's request, provided that
the Adviser may retain a copy of such records.

 

2.            Company's
Responsibilities and Expenses Payable by the Company.

 

All investment professionals
of the Adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services
hereunder (as opposed to the accounting, compliance and other administrative services set forth in clause (xxiii) below),
and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for
by the Adviser and not by the Company.

 

The Company will bear
its own legal and other expenses incurred in connection with the Company's formation and organization and the offering of its Shares,
including external legal and accounting expenses, printing costs, travel and out-of-pocket expenses related to marketing efforts
(other than any placement fees, which will be borne by the Adviser directly or pursuant to waivers of the Management Fee), up to
a maximum aggregate amount of $1 million.

 

In addition to Management
Fees, except as noted above, the Company will bear all other costs and expenses that are directly and specifically related to its
operations, including (without limitation) those relating to:

 

		(i)	all costs and expenses with respect to the actual or proposed acquisition, financing, holding,
monitoring or disposition of the Company's investments, whether such investments are ultimately consummated or not, including,
origination fees, syndication fees, due diligence costs, broken deal expenses, bank service fees, fees and expenses of custodians,
transfer agents, consultants, experts, travel expenses incurred for investment-related purposes, outside legal counsel, consultants
and accountants, administrator’s fees of third party administrators (subject to clause (xxiii) below) and financing
costs (including interest expenses);

 

    2 

     

    

 

		(ii)	expenses for liability insurance, including officers and independent directors liability insurance,
cyber insurance and other insurance (but excluding the cost of liability insurance covering the Adviser and its officers to the
extent that the assets of the Company are treated as “plan assets” for purposes of ERISA);

  

		(iii)	extraordinary expenses incurred by the Company (including litigation);

 

		(iv)	indemnification and contribution expenses provided, that the Company will not bear such
fees, costs or expenses to the extent that the relevant conduct is not indemnifiable under applicable law, including ERISA, if
applicable;

 

		(v)	taxes and other governmental fees and charges;

 

		(vi)	administering and servicing and special servicing fees paid to third parties for the Company's
benefit;

 

		(vii)	the cost of Company-related operational and accounting software and related expenses;

 

		(viii)	cost of software (including the fees of third-party software developers) used by the Adviser and
its affiliates to track and monitor the Company's investments (specifically, cost of software related to data warehousing, portfolio
administration/reconciliation, loan pricing and trade settlement attributable to the Company);

 

		(ix)	expenses related to the valuation or appraisal of the Company's investments;

 

		(x)	risk, research and market data-related expenses (including software) incurred for the Company's
investments;

 

		(xi)	fees, costs and expenses (including legal fees and expenses) incurred to comply with any applicable
law, rule or regulation (including regulatory filings such as financial statement filings, ownership filings (Section 16
or Section 13 filings), blue sky filings and registration statement filings, as applicable) to which the Company is subject
or incurred in connection with any governmental inquiry, investigation or proceeding involving the Company; provided that
the Company will not bear such fees, costs or expenses to the extent that the relevant conduct is not indemnifiable under applicable
law, including ERISA, if applicable;

 

		(xii)	costs associated with the wind-up, liquidation, dissolution and termination of the Company;

 

		(xiii)	other legal, operating, accounting, tax return preparation and consulting, auditing and administrative
expenses in accordance with this Agreement and the administration agreement between the Company and New Mountain Finance Administration, LLC
(the "Administrator") and fees for outside services provided to the Company or on the Company's behalf;
provided that if the assets of the Company are treated as “plan assets” for purposes of ERISA, the Company will
not incur such expenses or fees, if such expenses and fees arise in connection with such services, to the extent that they are
performed by the Administrator;

 

		(xiv)	expenses of the Board (including the reasonable costs of legal counsel, accountants, financial
advisors and/or such other advisors and consultants engaged by the Board, as well as travel and out-of-pocket expenses related
to the attendance by directors at Board meetings), to the extent permitted under applicable law, including ERISA, if applicable;

 

		(xv)	annual or special meetings of the stockholders of the Company ("Shareholders");

 

    3 

     

    

 

		(xvi)	the costs and expenses associated with preparing, filing and delivering to Shareholders periodic
and other reports and filings required under federal securities laws as a result of the Company's status as a BDC;

  

		(xvii)	ongoing Company offering expenses;

 

		(xviii)	federal and state registration fees pertaining to the Company;

 

		(xix)	costs of Company-related proxy statements, Shareholders' reports and notices;

 

		(xx)	costs associated with obtaining fidelity bonds as required by the Investment Company Act and Section 412
of ERISA;

 

		(xxi)	printing, mailing and all other similar direct expenses relating to the Company;

 

		(xxii)	expenses incurred in preparation for or in connection with (or otherwise relating to) any initial
public offering or other debt or equity offering conducted by the Company, including but not limited to external legal and accounting
expenses, printing costs, travel and out-of-pocket expenses related to marketing efforts; and

 

		(xxiii)	only to the extent (i) “benefit plan investors”, as defined in Section 3(42)
of ERISA and any regulations promulgated thereunder, hold less than 25% of the Company's shares, or (ii) the Company's shares
are listed on a national securities exchange, the Company's allocable portion of overhead, including office equipment and supplies,
rent and the Company's allocable portion of the compensation paid to accounting, compliance and administrative staff employed by
the Adviser, or its affiliates who provide services to the Company necessary for its operation, including related taxes, health
insurance and other benefits.

 

Investment-related expenses with respect
to investments in which the Company invests together with one or more parallel funds (or co-investment vehicles) shall generally
be allocated among all such entities on the basis of capital invested by each such entity into the relevant investment; provided
that if the Adviser reasonably believes that such allocation method would produce an inequitable result to any such entity, the
Adviser may allocate such expenses among such entities in any other manner that the Adviser believes in good faith to be fair and
equitable.

 

3.            Compensation
of the Adviser.

 

(a)            The
Company agrees to pay, and the Adviser agrees to accept, as compensation for the services provided by the Adviser hereunder, a
management fee ("Management Fee") as hereinafter set forth. The Company shall make any payments due hereunder
to the Adviser or to the Adviser's designee as the Adviser may otherwise direct. For all services rendered under this Agreement,
the Management Fee will be payable quarterly in arrears.

 

(b)            Commencing
with the quarterly period ending December 31, 2020 and terminating with the quarterly period ending September 30, 2023,
subject to additional automatic extensions, each for an additional one year period, unless the holders of a majority of the Company's
then outstanding shares of common stock elect to forego any such extension upon not less than 90 days' notice to the Adviser (such
period, the "Investment Period"), the Management Fee shall be calculated at an annual blended rate with
respect to the Company's Assets Invested (defined below) at the end of each quarterly period by reference to (i) 0.70% in
the case of Assets Invested equal to or less than $500 million and (ii) 0.60% in the case of Assets Invested of greater than
$500 million, in each case, in the manner set forth in Annex A hereto. “Assets Invested” shall
mean, as of the end of each quarterly period, the sum of the Company’s (i) drawn Capital Commitments (as such term is
defined in the subscription agreements executed by each of the Company’s shareholders), and (ii) outstanding principal
on borrowings.

 

    4 

     

    

 

(c)            During
the Investment Period, the Management Fee payable each quarter shall be reduced by an amount equal to the sum of the then applicable
fee rate multiplied by the Company's cumulative realized losses since inception (calculated net of any subsequently reversed realized
losses) (the "Cumulative Losses") on the Company’s portfolio of investments (collectively, the "Withheld
Amounts"). Any portion of such Withheld Amounts that is attributable to a subsequently reversed realized loss shall
be payable to the Adviser in the quarter in which such reversal occurs. In addition, upon expiration of the Investment Period,
the Adviser shall be entitled to an amount equal to the portion of such Withheld Amounts that would have been payable if Cumulative
Losses had been calculated net of cumulative realized capital gains on the applicable portfolios of investments.

  

(d)            After
the Investment Period, the Management Fee shall be calculated at a rate equal to the Applicable Ratio (as defined below) per annum
on the basis of the Company's Assets Invested as of the end of the most recently completed calendar quarter, and shall be payable
quarterly in arrears. The term "Applicable Ratio", as used in this Section 3(d), shall mean a percentage
calculated by (i) taking the sum of (A) the Assets Invested equal to or less than $500 million multiplied by 0.70%, plus
(B) the Assets Invested greater than $500 million multiplied by 0.60%, and dividing such total by (ii) the total Assets
Invested.

 

(e)            Any
Management Fees payable pursuant to this Section 3 shall be calculated based on the lower of the actual Assets Invested as
of the end of any quarter and the target Assets Invested for that quarter, as specifically set forth in Annex A hereto.
Management Fees for any partial quarter will be appropriately prorated.

 

4.            Covenants
of the Adviser.

 

(a)            The
Adviser agrees that its activities will at all times be in compliance in all material respects with all applicable federal and
state laws governing its operations and investments.

 

(b)            ERISA
Covenants:

 

(i)            The
Adviser agrees that during all periods when the assets of the Company are treated as “plan assets” for purposes of
ERISA, the Adviser shall qualify as a “qualified professional asset manager”, as defined in the U.S. Department of
Labor Prohibited Transaction Class Exemption 84-14, or any successor thereto (a "QPAM") and shall
be a QPAM with respect to the Company.

 

(ii)            The
Adviser acknowledges that during all periods when the assets of the Company are treated as “plan assets” for purposes
of ERISA, the Adviser will be (i) a “fiduciary”, as defined in Section 3(21) of ERISA, with respect to the
Company and with respect to each U.S. employee benefit plan or trust as defined in and subject to the provisions of ERISA
(an "ERISA Plan") that invests in the Company, and (ii) an “investment manager”, as defined
in Section 3(38) of ERISA, with respect to each ERISA Plan that invests in the Company.

 

(iii)            The
Adviser agrees that during all periods when the assets of the Company are treated as “plan assets” for purposes of
ERISA, the Adviser shall be registered as an investment adviser under the Advisers Act.

 

5.            Excess
Brokerage Commissions.

 

The
Adviser is hereby authorized, to the fullest extent now or hereafter permitted by law, to cause the Company to pay a member of
a national securities exchange, broker or dealer an amount of commission for effecting a securities transaction (including where
such member of a national securities exchange, broker or dealer (i) supplies, or pays for (or rebates a portion of the Company's
brokerage commissions to the Company for the payment of) the cost of, brokerage, research or execution services used by the Company
(ii) and/or pays for (or rebates a portion of the Company's brokerage commissions to the Company for the payment of) obligations
of the Company or the Company's share of obligations) in excess of the amount of commission another member of such exchange, broker
or dealer would have charged for effecting that transaction, if the Adviser determines in good faith, taking into account such
factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and
operational facilities of the firm and the firm's risk and skill in positioning blocks of securities, that such amount of commission
is reasonable in relation to the value of the brokerage and/or research services provided by such member, broker or dealer, viewed
in terms of either that particular transaction or its overall responsibilities with respect to the Company's portfolio; except
that, during all periods when the assets of the Company are treated as “plan assets” for purposes of ERISA, the Adviser
may use “soft dollars” to obtain products and services only to the extent that such products and services fall within
the parameters of Section 28(e) of the Securities Exchange Act of 1934, as amended, as such safe harbor is interpreted
by the SEC.

 

    5 

     

    

 

6.            Limitations
on the Employment of the Adviser.

 

The
services of the Adviser to the Company are not exclusive, and the Adviser may engage in any other business or render similar or
different services to others including, without limitation, the direct or indirect sponsorship or management of other investment
based accounts or commingled pools of capital, however structured, having investment objectives similar to those of the Company,
so long as its services to the Company hereunder are not impaired thereby, and nothing in this Agreement shall limit or restrict
the right of any manager, partner, officer or employee of the Adviser to engage in any other business or to devote his or her time
and attention in part to any other business, whether of a similar or dissimilar nature, or to receive any fees or compensation
in connection therewith (including fees for serving as a director of, or providing consulting services to, one or more of the Company's
portfolio companies, subject to applicable law). So long as this Agreement or any extension, renewal or amendment remains in effect,
the Adviser shall be the only investment adviser for the Company. The Adviser assumes no responsibility under this Agreement other
than to render the services called for hereunder. It is understood that directors, officers, employees and shareholders of the
Company are or may become interested in the Adviser and its affiliates, as directors, officers, employees, partners, stockholders,
members, managers or otherwise, and that the Adviser and directors, officers, employees, partners, stockholders, members and managers
of the Adviser and its affiliates are or may become similarly interested in the Company as shareholders or otherwise.

 

7.            Responsibility
of Dual Directors, Officers and/or Employees.

 

If
any person who is a manager, partner, officer or employee of the Adviser or the Administrator is or becomes a director, officer
and/or employee of the Company and acts as such in any business of the Company, then such manager, partner, officer and/or employee
of the Adviser or the Administrator shall be deemed to be acting in such capacity solely for the Company, and not as a manager,
partner, officer or employee of the Adviser or the Administrator or under the control or direction of the Adviser or the Administrator,
even if paid by the Adviser or the Administrator.

 

8.            Limitation
of Liability of the Adviser; Indemnification.

 

The
Adviser and its officers, managers, agents, employees, controlling persons, members (or their owners) and any other person or entity
affiliated with it, shall not be liable to the Company for any action taken or omitted to be taken by the Adviser in connection
with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Company
(except to the extent specified in Section 36(b) of the Investment Company Act concerning loss resulting from a breach
of fiduciary duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services),
and the Company shall indemnify, defend and protect the Adviser (and its officers, managers, partners, agents, employees, controlling
persons, members and any other person or entity affiliated with the Adviser) (collectively, the "Indemnified Parties")
and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys' fees and
amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed
action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security
holders) arising out of or otherwise based upon the performance of any of the Adviser's duties or obligations under this Agreement
or otherwise as an investment adviser of the Company. Notwithstanding the preceding sentence of this Section 8 to the contrary,
nothing contained herein shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle
the Indemnified Parties to indemnification in respect of, any liability to the Company or its security holders to which the Indemnified
Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Adviser's
duties or by reason of the reckless disregard of the Adviser's duties and obligations under this Agreement (as the same shall be
determined in accordance with the Investment Company Act and any interpretations or guidance by the SEC or its staff thereunder)
or by reason of a breach of the Adviser's fiduciary duties under ERISA, if applicable.

 

    6 

     

    

  

9.            Effectiveness,
Duration and Termination of Agreement.

 

(a)            This
Agreement shall continue in effect for two years from the date hereof and thereafter shall continue automatically for successive
annual periods, provided that such continuance is specifically approved at least annually by (A) the vote of the Board, or
by the vote of a majority of the outstanding voting securities of the Company and (B) the vote of a majority of the Company's
directors who are not parties to this Agreement or "interested persons" (as such term is defined in Section 2(a)(19)
of the Investment Company Act) of any such party, in accordance with the requirements of the Investment Company Act. Notwithstanding
the foregoing, this Agreement may be terminated (i) by the Company at any time, without the payment of any penalty, upon giving
the Adviser 60 days' written notice (which notice may be waived by the Adviser), provided that such termination by the Company
shall be directed or approved by the vote of a majority of the directors of the Company in office at the time or by the vote of
the holders of a majority of the voting securities of the Company at the time outstanding and entitled to vote, or (ii) by
the Adviser on 60 days' written notice to the Company (which notice may be waived by the Company).

 

(b)            This
Agreement will automatically terminate in the event of its "assignment" (as such term is defined for purposes of Section 15(a)(4) of
the Investment Company Act).

 

10.          Notices.

 

Any
notice under this Agreement shall be given in writing, addressed and delivered or mailed, postage prepaid, to the other party at
its principal office.

 

11.          Amendments.

 

This
Agreement may be amended by mutual written consent, but the consent of the Company must be obtained in conformity with the requirements
of the Investment Company Act.

 

12.          Entire
Agreement; Governing Law.

 

This
Agreement contains the entire agreement of the parties and supersedes all prior agreements, understandings and arrangements with
respect to the subject matter hereof. This Agreement shall be construed in accordance with the laws of the State of New York and
in accordance with the applicable provisions of the Investment Company Act. In such case, to the extent the applicable laws of
the State of New York or any of the provisions herein, conflict with the provisions of the Investment Company Act, the latter shall
control.

 

[Remainder of Page Intentionally
Left Blank]

 

    7 

     

    

 

*     *     *

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date above written.

 

	 	NMF SLF I, Inc.
	 	 
	 	By:	/s/ Robert A. Hamwee 
	 	 	Name:	Robert A. Hamwee 
	 	 	Title:	Chief Executive Officer
	 	 	 	 
	 	    NEW MOUNTAIN FINANCE ADVISERS BDC, L.L.C.
	 	 
	 	By:	/s/ Adam B. Weinstein 
	 	 	Name:	Adam B. Weinstein
	 	 	Title:	Authorized Person

 

    8 

     

    

 

Annex A

 

Management Fee Calculation

 

The following quarterly fee percentages shall be payable with
respect to the Company’s target Assets Invested from the quarter ending December 31, 2020 through the end of the Investment
Period:

 

	Quarter Ending	 	 	Quarter	 	 	Target Assets Invested(1) ($ in millions)	 	 	Quarterly Management Fee
 Percentage	 	 	Quarterly Dollar Amount(2) ($ in
 millions)	 
	 	12/31/2020	 	 	 	1	 	 	 	390.0	 	 	 	0.068250	%	 	 	0.6825	 
	 	3/31/2021	 	 	 	2	 	 	 	515.0	 	 	 	0.089750	%	 	 	0.8975	 
	 	6/30/2021	 	 	 	3	 	 	 	640.0	 	 	 	0.108500	%	 	 	1.085	 
	 	9/30/2021	 	 	 	4	 	 	 	765.0	 	 	 	0.127250	%	 	 	1.2725	 
	 	12/31/2021	 	 	 	5	 	 	 	890.0	 	 	 	0.146000	%	 	 	1.46	 
	 	3/31/2022	 	 	 	6	 	 	 	1,000.0	 	 	 	0.162500	%	 	 	1.625	 
	 	6/30/2022	 	 	 	7	 	 	 	1,000.0	 	 	 	0.162500	%	 	 	1.625	 
	 	9/30/2022	 	 	 	8	 	 	 	1,000.0	 	 	 	0.162500	%	 	 	1.625	 
	 	12/31/2022	 	 	 	9	 	 	 	1,000.0	 	 	 	0.162500	%	 	 	1.625	 
	 	3/31/2023	 	 	 	10	 	 	 	1,000.0	 	 	 	0.162500	%	 	 	1.625	 
	 	6/30/2023	 	 	 	11	 	 	 	1,000.0	 	 	 	0.162500	%	 	 	1.625	 
	 	9/30/2023	 	 	 	12 and beyond	(3)	 	 	1,000.0	 	 	 	0.162500	%	 	 	1.625	 

 

		(1)	For the avoidance of doubt, the Management Fee paid at the end of any quarter shall be calculated based on the lower of the
actual Assets Invested as of the end of any quarter and the target Assets Invested for that quarter.

 

		(2)	Reflects dollar amount of Management Fees payable for the applicable quarter based on the Company’s target Assets Invested
as of the end of such quarter.

 

		(3)	Reflects the Management Fee payable beginning in quarter 12 and extending through the end of the Investment Period.

  

    9

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