Document:

Exhibit 10.1

 

SEVENTH AMENDMENT TO CREDIT AGREEMENT

 

THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of November 14, 2016 and effective as of the Seventh Amendment Effective Date (as hereinafter defined), is made and entered into by and among ISLE OF CAPRI CASINOS, INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors (together with Borrower, the “Loan Parties”), the Requisite Lenders party hereto (or that have separately consented to this Amendment), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Administrative Agent”), as one of the Requisite Lenders, Issuing Bank, Swing Line Lender and as the Administrative Agent.

 

RECITALS

 

A.                                    Borrower is a party to that certain Credit Agreement dated as of July 26, 2007, as amended by the First Amendment to Credit Agreement, dated as of February 17, 2010, by the Second Amendment to Credit Agreement and Amendments to Loan Documents, dated as of March 25, 2011, by the Third Amendment to Credit Agreement, dated as of November 21, 2012, by the Fourth Amendment to Credit Agreement and Amendments to Loan Documents, dated as of April 19, 2013, by the Fifth Amendment to Credit Agreement, dated as of July 2, 2013, and by the Sixth Amendment to Credit Agreement, dated as of October 29, 2014 (as amended and in effect immediately before giving affect to this Amendment, the “Existing Credit Agreement,” and as amended by this Amendment and as further amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Borrower, Administrative Agent, and the lenders party thereto from time to time.

 

B.                                    Borrower has requested that the Requisite Lenders agree to amend the Existing Credit Agreement in the manner set forth in Section 2 herein, subject to, and in accordance with, the terms and conditions set forth herein.

 

C.                                    The Requisite Lenders are willing to agree to enter into this Amendment, subject to the conditions and on the terms set forth below.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Requisite Lenders, Administrative Agent and the Loan Parties agree as follows:

 

1.                                      DEFINITIONS.  Except as otherwise expressly provided herein, capitalized terms used in this Amendment shall have the meanings given in the Existing Credit Agreement, and the rules of construction set forth in the Credit Agreement shall apply to this Amendment.

 

2.                                      AMENDMENT TO CREDIT AGREEMENT.

 

2.1.                            With effect as of the Seventh Amendment Effective Date, the following definitions are added to Section 1.1 of the Existing Credit Agreement in the appropriate alphabetical order:

 

 

“Seventh Amendment” means that certain Seventh Amendment to Credit Agreement, dated as of November 14, 2016 by and among Borrower, the other Loan Parties party thereto, the lenders party thereto and the agents party thereto.

 

“Seventh Amendment Effective Date” means the date on which the conditions set forth in Section 4 of the Seventh Amendment shall have been satisfied or waived.

 

2.2.                            From and after the Seventh Amendment Effective Date, Section 7.7(vi) of the Existing Credit Agreement shall be amended and restated in its entirety as follows:

 

(vi)                              From and after the Fourth Amendment Effective Date, Borrower and its Restricted Subsidiaries may make Asset Sales of (1) the Davenport Gaming Facilities, (2) the Lake Charles Gaming Facilities, and (3) assets having an aggregate fair market value not in excess of $100,000,000; in each case, provided that (x) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof; (y) no less than 75% of the consideration received for such assets shall be in the form of Cash, with the remainder in promissory notes, which notes shall be pledged to Administrative Agent pursuant to the applicable Collateral Documents; and (z) the Net Asset Sale Proceeds of such Asset Sales shall be applied as required by subsection 2.4B(iii)(a); provided, however, that in the case of an Asset Sale of the Davenport Gaming Facilities, any Expansion Capital Expenditures made with respect to the Davenport Gaming Facilities during the period from the Fourth Amendment Effective Date through the date of such Asset Sale shall be subject to the $100,000,000 basket set forth in this subsection 7.7(vi); provided further, however, that in the case of an Asset Sale of the Lake Charles Gaming Facilities, any Expansion Capital Expenditures made with respect to the Lake Charles Gaming Facilities during the period from the Seventh Amendment Effective Date through the date of such Asset Sale shall be subject to the $100,000,000 basket set forth in this subsection 7.7(vi).

 

3.                                      REPRESENTATIONS AND WARRANTIES.  To induce the Requisite Lenders to agree to this Amendment, Borrower and each of the other Loan Parties represents to the Lenders and the Administrative Agent that as of the date hereof and as of the Seventh Amendment Effective Date:

 

3.1                               Borrower and each of the other Loan Parties has all power and authority to enter into, execute and deliver this Amendment and to carry out the transactions contemplated by, and to perform its obligations under or in respect of, this Amendment;

 

3.2                               the execution and delivery of this Amendment and the performance of the obligations of Borrower and each of the other Loan Parties under or in respect of this Amendment have been duly authorized by all necessary action on the part of Borrower and each of the other Loan Parties;

 

3.3                               the execution and delivery of this Amendment and the performance of the obligations of Borrower and each of the other Loan Parties under or in respect of this

 

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Amendment do not and will not conflict with or violate (i) any provision of the articles or certificate of incorporation or bylaws (or similar constituent documents) of Borrower or any other Loan Party, (ii) any provision of any law or any governmental rule or regulation (other than any violation of any such law, governmental rule or regulation, or Gaming Law, in each case which could not reasonably be expected to result in a Material Adverse Effect or cause any liability to any Lender), (iii) any order, judgment or decree of any Governmental Authority or arbitrator binding on Borrower or any other Loan Party (other than any violation of any such order, judgment or decree, in each case which could not reasonably be expected to result in a Material Adverse Effect or cause any liability to any Lender), or (iv) any material indenture, material agreement or material instrument to which Borrower or any other Loan Party is a party or by which Borrower or any other Loan Party, or any property of any of them, is bound (other than any such conflict, breach or default which could not reasonably be expected to result in a Material Adverse Effect), and do not and will not require any consent or approval of any Person that has not been obtained;

 

3.4                               Borrower and each of the other Loan Parties has duly executed and delivered this Amendment, and this Amendment constitutes a legal, valid and binding obligation of Borrower and each of the other Loan Parties, enforceable against Borrower and each of the other Loan Parties in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law);

 

3.5                               after giving effect to this Amendment, no event has occurred and is continuing or will result from the execution and delivery of this Amendment or the performance by Borrower and the other Loan Parties of their obligations hereunder that would constitute a Potential Event of Default or an Event of Default; and

 

3.6                               each of the representations and warranties made by Borrower and the other Loan Parties in or pursuant to the Loan Documents, as amended hereby, shall be true and correct in all material respects on and as of the Seventh Amendment Effective Date as if made on and as of such date, except for representations and warranties expressly stated to relate to a specific earlier date, or which by their context relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date.

 

4.                                      EFFECTIVENESS OF THIS AMENDMENT.  This Amendment shall be effective only if and when:

 

4.1                               the Administrative Agent shall have received on behalf of the Lenders, this Amendment, duly executed and delivered by the Borrower, the Administrative Agent, the Requisite Lenders (or the duly executed and delivered written consent thereof), and the Subsidiary Guarantors;

 

4.2                               Borrower and each of the other Loan Parties shall have received all material governmental and third-party approvals and consents (including from Gaming Authorities) required in connection with this Amendment and the transactions contemplated hereby (if any), each of which shall be in form and substance satisfactory to the Administrative Agent and in full

 

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force and effect, and with respect to which all applicable waiting periods related thereto shall have expired without any action being taken by any applicable authority;

 

4.3                               each of the representations and warranties contained in Section 3 of this Amendment shall be true and correct in all material respects; and

 

4.4                               Borrower shall have paid to the Administrative Agent all reasonable expenses incurred by the Administrative Agent in connection with this Amendment, including, to the extent invoiced on or before the Seventh Amendment Effective Date, reimbursement or other payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by Borrower.

 

This Amendment shall be deemed to be effective on the date (the “Seventh Amendment Effective Date”) on which each of the foregoing conditions are satisfied.

 

5.                                      ACKNOWLEDGMENTS.  By executing this Amendment, each of the Loan Parties (a) consents to this Amendment and the performance by Borrower and each of the other Loan Parties of their obligations hereunder, (b) acknowledges that notwithstanding the execution and delivery of this Amendment, and except as expressly modified hereby, the obligations of each of the Loan Parties under the Subsidiary Guaranty, the Security Agreement, the Mortgages, the Ship Mortgages and each of the other Loan Documents to which such Loan Party is a party, are not impaired or affected and each of the Subsidiary Guaranty, the Security Agreement, the Mortgages, the Ship Mortgages and each such other Loan Document continues in full force and effect, (c) affirms and ratifies, to the extent it is a party thereto, the Subsidiary Guaranty, the Security Agreement, the Mortgages, the Ship Mortgages and each other Loan Document with respect to all of the Obligations as expanded or amended hereby and (d) reaffirms the security interests, Liens, mortgages and conveyances it has granted to or made in favor of or for the benefit of Administrative Agent under the Collateral Documents and confirms that such security interests, Liens, mortgages and conveyances continue to secure the obligations recited to be secured by the applicable Collateral Documents, after giving effect to this Amendment.

 

6.                                      MISCELLANEOUS.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5- 1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.  This Amendment may be executed in one or more duplicate counterparts and, subject to the other terms and conditions of this Amendment, when signed by all of the parties listed below shall constitute a single binding agreement.  Delivery of an executed signature page to this Amendment by facsimile transmission or electronic mail shall be as effective as delivery of a manually signed counterpart of this Amendment.  Except as amended hereby, all of the provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect except that each reference to the “Credit Agreement”, or words of like import in any Loan Document, shall mean and be a reference to the Credit Agreement as amended hereby.  This Amendment shall be deemed a “Loan Document” as defined in the Credit Agreement.  Sections 10.17 and 10.18 of the Credit

 

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Agreement shall apply to this Amendment and all past and future amendments to the Credit Agreement and other Loan Documents as if expressly set forth herein or therein.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed by their officers or partners thereunto duly authorized as of the day and year first above written.

 

	
ISLE   OF CAPRI CASINOS, INC,
    	
 
    
	
a   Delaware corporation
    	
IOC-   CARUTHERSVILLE, LLC
    
	
 
    	
IOC   - BOONVILLE, INC.
    
	
By:
    	
/s/ Michael A Hart
    	
 
    	
IOC   - KANSAS CITY, INC.
    
	
Name:
    	
Michael A Hart
    	
 
    	
IOC   - LULA, INC.
    
	
Title:
    	
SVP   Accounting & Treasurer
    	
IOC   - NATCHEZ, INC.
    
	
 
    	
IOC   BLACK HAWK COUNTY, INC.
    
	
 
    	
IOC   HOLDINGS, L.L.C.
    
	
 
    	
ISLE   OF CAPRI BETTENDORF, L.C.
    
	
 
    	
ISLE   OF CAPRI MARQUETTE, INC.
    
	
 
    	
PPI, INC.
    
	
 
    	
ST.   CHARLES GAMING COMPANY, L.L.C.
    
	
 
    	
BLACK   HAWK HOLDINGS, L.L.C.
    
	
 
    	
CCSC/BLACKHAWK, INC.
    
	
 
    	
IC   HOLDINGS COLORADO, INC.
    
	
 
    	
IOC-BLACK   HAWK DISTRIBUTION COMPANY, LLC
    
	
 
    	
ISLE   OF CAPRI BLACK HAWK, L.L.C.
    
	
 
    	
IOC-VICKSBURG, INC.
    
	
 
    	
IOC-VICKSBURG,   L.L.C.
    
	
 
    	
IOC-CAPE GIRARDEAU LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael A Hart
    
	
 
    	
Name:
    	
Michael   A Hart
    
	
 
    	
Title:
    	
SVP   Accounting & Treasurer
    
	
 
    	
 
    
	
 
    	
RAINBOW   CASINO-VICKSBURG PARTNERSHIP, L.P.
    
	
 
    	
 
    
	
 
    	
By:   IOC-VICKSBURG, INC., its General Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael A Hart
    
	
 
    	
Name:
    	
Michael   A Hart
    
	
 
    	
Title:
    	
SVP   Accounting & Treasurer
    

 

[Signature Page to Seventh Amendment to Credit Agreement]

 

 

	
Acknowledged:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
WELLS   FARGO, NATIONAL 
   ASSOCIATION, as Administrative Agent, 
   Swing Line Lender, Issuing Bank and a 
   Lender
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Duc Dang
    	
 
    	
 
    
	
Name:
    	
Duc Dang
    	
 
    	
 
    
	
Title:
    	
Assistant Vice President
    	
 
    	
 
    

 

[Signature Page to Seventh Amendment to Credit Agreement]

 

 

	
CREDIT   SUISSE AG, CAYMAN ISLANDS 
   BRANCH, as Lender
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Robert Hetu
    	
 
    	
 
    
	
Name:
    	
Robert   Hetu
    	
 
    	
 
    
	
Title:
    	
Authorized   Signatory
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Nicholas Gess
    	
 
    	
 
    
	
Name:
    	
Nicholas   Gess
    	
 
    	
 
    
	
Title:
    	
Authorized   Signatory
    	
 
    	
 
    

 

[Signature Page to Seventh Amendment to Credit Agreement]

 

 

	
U.S. BANK N.A., as Lender
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Chad T. Orrock
    	
 
    
	
Name:
    	
Chad   T. Orrock
    	
 
    
	
Title:
    	
Senior   Vice President
    	
 
    

 

[Signature Page to Seventh Amendment to Credit Agreement]

 

 

	
CAPITAL ONE N.A., as Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   David Maheu
    	
 
    
	
Name:
    	
David   Maheu
    	
 
    
	
Title:
    	
SVP
    	
 
    

 

[Signature Page to Seventh Amendment to Credit Agreement]

 

 

	
CIT Bank, N.A, as Lender
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   John McNamara
    	
 
    
	
Name:
    	
John   McNamara
    	
 
    
	
Title:
    	
Managing   Director
    	
 
    

 

[Signature Page to Seventh Amendment to Credit Agreement]SECURITIES
PURCHASE AGREEMENT

 

This
SECURITIES PURCHASE AGREEMENT
(the “Agreement”), dated as of November 28, 2016, by and between VPR
BRANDS, LP, a Delaware corporation, with headquarters located at 4401 NW 167th Street, Miami,
FL 33055 (the “Company”), and DIAMONDROCK, LLC, a New York limited
liability company, with its address at 321 10th Avenue, Suite 202, San Diego, CA 92101 (the “Buyer”).

 

WHEREAS:

 

A.       The
Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”); and

 

B.       Buyer
desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement the 8%
convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of US$500,000.00
(together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, the “Note”), convertible into shares of common stock, of the Company (the “Common Stock”),
upon the terms and subject to the limitations and conditions set forth in such Note; and

 

C.       The
Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth
immediately below its name on the signature pages hereto.

 

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

 

1.       PURCHASE
AND SALE OF NOTE.

 

a.       Purchase
of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase
from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages
hereto, subject to the express terms of the Note.

 

b.       Form
of Payment. On the Closing Date (as defined below), the Buyer shall pay the $71,250.00 purchase price (the “Purchase
Price”) for the first tranche of the Note (equal to $75,000.00 after including the applicable original issue discount) by
wire transfer of immediately available funds, in accordance with the Company’s written wiring instructions, against delivery
of the Note, and (i) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer. If the Buyer
decides to pay, in their sole discretion, additional amounts (additional tranches) under the Note, as further described in the
Note, then such additional amounts shall be paid in accordance with the Company’s written wiring instructions as well.

 

    	 

    	 	 	 

    

 

c.       Closing
Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 5:00
P.M., Eastern Standard Time on or about November 28, 2016, or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to
by the parties.

 

2.       REPRESENTATIONS
AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Company that:

 

a.       Investment
Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable
(i) on account of interest on the Note or (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the
Note, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively
with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act.

 

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

 

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

 

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

 

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

 

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

 

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

 

The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act,
which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been removed, in compliance with all federal and state
securities laws and with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the
opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration,
such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

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

 

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h.       Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

 

i.
       Accredited
Investor. The Buyer warrants and acknowledges that the Buyer is an accredited investor within the meaning of Rule 506 of Regulation
D promulgated by the Securities and Exchange Commission under the Securities Act.

 

3.       REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Buyer that:

 

a.       Organization
and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated
and conducted. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition
or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership
interest.

 

b.       Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the
Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation
for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s
Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required,
(iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign this Agreement and the other documents executed
in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery
by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.

 

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c.       Capitalization.
Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans.
Sufficient shares are reserved for issuance upon conversion of the Note (as required by the Note and transfer agent share reserve
letter). All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully
paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights
of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company.
Except as disclosed in the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or
may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements
or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities
under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the
Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion
Shares. The Company has filed in its SEC Documents true and correct copies of the Company’s Certificate of Incorporation
as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the
date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the
Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written
update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

 

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

 

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

 

    	6

    	 	 	 

    

 

f.       No
Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance
of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation
or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of
its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or
its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company
or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company
nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and
neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or
both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has
taken any action or failed to take any action that would 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 by which
any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any,
are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law,
ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under
the 1933 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, governmental agency, regulatory agency, self-regulatory organization or
stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the
Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue
the Conversion Shares upon conversion of the Note. All consents, authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company
is not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”), the OTCQB or
any similar quotation system, and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB, the OTCQB
or any similar quotation system, in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.

 

    	7

    	 	 	 

    

 

g.       SEC
Documents; Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being
hereinafter referred to herein as the “SEC Documents”). The Company has delivered to the Buyer true and complete copies
of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, 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 light of the circumstances under which they were made, not misleading. None of the statements made in any
such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have
been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present
in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in
the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements
of the 1934 Act. For the avoidance of doubt, filing of the documents required in this Section 3(g) via the SEC’s Electronic
Data Gathering, Analysis, and Retrieval system (“EDGAR”) shall satisfy all delivery requirements of this Section 3(g).

 

h.       Absence
of Certain Changes. There have been no material adverse change and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company
or any of its Subsidiaries.

 

i.       Absence
of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to
the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard
to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.

 

    	8

    	 	 	 

    

 

j.       Patents,
Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents,
patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service
names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); Except as disclosed in the SEC Documents, there is no
claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges
the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business
as now operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the
Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual
Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of their Intellectual Property.

 

k.       No
Materially Adverse Contracts, 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. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse
Effect.

 

l.       Tax
Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which it is subject (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) and 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 provisions 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. The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None
of the Company’s tax returns is presently being audited by any taxing authority.

 

m.       Certain
Transactions. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments
in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from
third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees
of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (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.

 

    	9

    	 	 	 

    

 

n.       Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the
Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct
in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements
made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has
occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations
or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under
the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

 

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

 

p.       No
Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would
require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the
Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes
of any shareholder approval provisions applicable to the Company or its securities.

 

q.       No
Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction
fees or similar payments relating to this Agreement or the transactions contemplated hereby.

 

    	10

    	 	 	 

    

 

r.       Permits;
Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there
is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company
Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company
Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received any notification with
respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults
or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 

s.       Environmental
Matters.

 

(i)       There
are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company,
no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of
the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing.
The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection
of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

(ii)       Other
than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials
were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during
the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the
Company’s or any of its Subsidiaries’ business.

 

    	11

    	 	 	 

    

 

(iii)       There
are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.

 

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

 

u.       Internal
Accounting Controls. Except as disclosed in the SEC Documents the Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient, in the judgment of the Company’s board of directors, 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, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.

 

v.       Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

w.       Solvency.
The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have
a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute
and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not,
after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action
that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company
did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect
to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue
a qualified opinion in respect of its current fiscal year. For the avoidance of doubt any disclosure of the Company’s ability
to continue as a “going concern” shall not, by itself, be a violation of this Section 3(w).

 

    	12

    	 	 	 

    

 

x.      No
Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement
will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment
Company”). The Company is not controlled by an Investment Company.

 

y.       Insurance.
Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors’
and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage, if any.

 

z.       Breach
of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth
in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered
an Event of default under Section 3.4 of the Note.

 

4.       COVENANTS.

 

a.       Best
Efforts. The parties shall use their commercially reasonable best efforts to satisfy timely each of the conditions described
in Section 6 and 7 of this Agreement.

 

b.       Use
of Proceeds. The Company shall use the proceeds from the sale of the Note for working capital and other general corporate
purposes and shall not, directly or indirectly, use such proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its currently existing direct or indirect Subsidiaries).

 

c.       Financial
Information. The Company agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns,
or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form
10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies
of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available
or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives
to such shareholders. For the avoidance of doubt, filing the documents required in (i) above via EDGAR or releasing any documents
set forth in (ii) above via a recognized wire service shall satisfy the delivery requirements of this Section 4(c).

 

    	13

    	 	 	 

    

 

d.       Listing.
The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the
Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB, OTCQB, OTC Pink or any equivalent
replacement exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”),
the New York Stock Exchange (“NYSE”), or the NYSE MKT and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and
such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any material notices it receives from
the OTCBB, OTCQB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued
eligibility of the Common Stock for listing on such exchanges and quotation systems.

 

e.       Corporate
Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading on the OTCBB, OTCQB, OTC Pink, Nasdaq, NasdaqSmallCap, NYSE or AMEX.

 

f.       No
Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of
the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.

 

g.       Failure
to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting
requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.

 

h.       Trading
Activities. Neither the Buyer nor its affiliates has an open short position (or other hedging or similar transactions) in
the common stock of the Company and the Buyer agree 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 of the Company. 

 

    	14

    	 	 	 

    

 

i.       Breach
of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies
available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.3 of the Note.

 

5.       Transfer
Agent Instructions. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion
Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can
then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement.
The Company warrants that: (i) no stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion
Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold
pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately
sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer
agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing) (electronically or in certificated
form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as
and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove
or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer
instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise
pursuant to the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect in any way the
Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements,
if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel
in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of
such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides
reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend,
in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section may be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other security being required.

 

    	15

    	 	 	 

    

 

6.       CONDITIONS
PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL. The obligation of the Company hereunder to issue and sell the Note to
the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto,
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:

 

a.       The
Buyer shall have executed this Agreement and delivered the same to the Company.

 

b.       The
Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

 

c.       The
representations and warranties of the Buyer 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 Buyer 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 Buyer at or prior to the Closing Date.

 

d.       No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

7.       CONDITIONS
PRECEDENT TO THE BUYER’S OBLIGATION TO PURCHASE. The obligation of the Buyer hereunder to purchase the Note 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 Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

 

a.       The
Company shall have executed this Agreement and delivered the same to the Buyer.

 

b.       The
Company shall have delivered to the Buyer duly executed Note (in such denominations as the Buyer shall request) in accordance
with Section 1(b) above.

 

c.       The
representations and warranties of the Company 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 such 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. The Buyer
shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited
to certificates with respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions
relating to the transactions contemplated hereby.

 

    	16

    	 	 	 

    

 

d.       No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

e.       No
event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not
limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act
reporting obligations.

 

f.       The
Conversion Shares shall have been authorized for quotation on the OTCBB, OTCQB or any similar quotation system and trading in
the Common Stock on the OTCBB, OTCQB or any similar quotation system shall not have been suspended by the SEC or the OTCBB, OTCQB
or any similar quotation system.

 

g.       The
Buyer shall have received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.

 

8.       GOVERNING
LAW; MISCELLANEOUS.

 

a.       Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard
to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts or federal courts of San Diego County, California. The parties to
this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer waive
trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and
costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

    	17

    	 	 	 

    

 

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

 

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

 

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

 

e.       Entire
Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company
nor the Buyer 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 majority in interest of the Buyer.

 

    	18

    	 	 	 

    

 

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

 

If
to the Company, to:

 

VPR
BRANDS, LP

4401
NW 167th Street

Miami,
FL 33055

E-mail:
kevin.frija@vprbrands.com

 

If
to the Holder, to:

 

DIAMONDROCK,
LLC

321
10th Avenue, Suite 202

San
Diego, CA 92101

E-mail:
Neil@DiamondRockCap.com

 

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

 

g.       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder to
any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that
term is defined under the 1934 Act, without the consent of the Company.

 

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

 

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

 

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

 

    	19

    	 	 	 

    

 

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

 

l.       Remedies.

 

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

 

m.       Publicity.
The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC,
OTCQB (or other applicable trading market), or FINRA filings, or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer,
to make any press release or SEC, OTCQB (or other applicable trading market) or FINRA filings with respect to such transactions
as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any
such press release prior to its release and shall be provided with a copy thereof).

 

[
- signature page follows - ]

 

    	20

    	 	 	 

    

 

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

 

	VPR
    BRANDS, LP	 
	 	 	 
	By:	/s/
    Kevin Frija	 
	Name:	Kevin
    Frija	 
	Title:
    	Chief
    Executive Officer	 

 

	DIAMONDROCK,
    LLC	 
	 	 	 
	By:
    	/s/
    Neil Rock	 
	Name:
    	Neil
    Rock	 
	Title:
    	President	 

 

	AGGREGATE
    SUBSCRIPTION AMOUNT:	 
	 	 
	Aggregate
    Principal Amount of Note:	US$500,000.00             
	 	 
	Aggregate
    Purchase Price:	US$475,000.00*           

 

*Buyer
shall pay the $71,250.00 purchase price for the first tranche of the Note (equal to $75,000.00 after including the applicable
original issue discount) within a reasonable amount of time after the full execution of the Note and related transaction documents.
Additional tranches may be funded by the Buyer, in Buyer’s sole discretion, in accordance with the terms of the Note.

 

    	21

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